SILVER .... A winning hand

  Any long term winning poker player would tell you they don't have any particular style of play. Instead, they size up their opponents style and then craft a strategy (style) to defeat them. Consider the childhood game of Rock-Papers-Scissors. If your opponents style is to show up with scissors, well you need to show up with Rock. Winning poker is the same, in that whatever the opponents style - there is a way to defeat it. Human nature dictates we are all creatures of habit. Play poker in the same habitual manner, and the pros will eat you alive. This is why less than 2% of all active poker players are long term winners. The other 98% all habitually play a particular style (maybe tight, loose, agressive, passive, nitty, etc...) which is the equivalent of always playing scissors in RSP. Could u imagine how simple it is to defeat someone who always plays scissors?

  The investment arena is very similar to poker in that about 2% make the Lion's share of the money, while the other 98% are mostly losers. The reason is the same as poker, in that those who make markets design them to move in such a way as to defeat all strategies. You trade off the technicals, they will get you. Trade off the fundamentals, they will get you too. Trade off momentum, you are going to lose. Trade off charts, you have no chance. Markets move in a manner which Bag as many people on both sides of a trade as possible - once you understand that - improving your investment returns is easy.

  Consider the Silver Market..... In the last 2 years price has fallen from $48 down to its current $22. As a consequence, the momentum traders are piling on the short side. Those who trade off charts will tell you the Silver Chart looks Horrid. The technicals are all screaming Sell. Right this very moment, the COT structure shows speculators with record size short positions. With 98% of market participants believing lower prices lie ahead, which way do you suppose prices will head from here?

   Want more proof? OK..How about the few brave contrarians who rightly think because the silver price has been cut in half & it must therefore be a bargain at these levels. So they head to their local coin shop to buy some silver, where they are greeted with record HIGH premiums. Speaking as someone with decades of experience in the Physical Silver markets, the premiums you have to pay above current market price to obtain physical silver has never been higher, both in terms of percentage And in nominal price.

  As an example, All thru the 1990's Silver Eagles could be bought RETAIL for 40-50 cents over spot. Nowadays, the same silver eagles would run $5 over - if you are lucky enough to find them. The high premiums have the effect of turning away would be buyers, because almost nobody has both the conviction to buy silver at these price levels AND the willingness to pay the high premiums too.  Record high premiums, has the effect of keeping would be buyers from getting long - while at the same time welcoming sellers to market by offering those high premiums to them. So with a current market environment of openly welcoming sellers While turning away buyers there is simply no possible way prices could be headed lower long term.  Think about it this way .... if the silver market was headed considerably lower from here, the powers that be would price silver with record LOW premiums to make it easier for anyone who wanted to get long, to do so. Those low premiums, would also discourage sellers (who would think they are not getting a fair price relative to market) - keeping them long for the ride lower.

   So lets consider all the current ingredients....Momentum traders short. Technical traders short. Chart traders short. Bargain hunters punished with high premiums, while sellers are welcomed with open arms. With everyone on the short side the only possible way 98% of market participants could be on the wrong side of the trade is if silver prices are headed higher. The whole move lower (from $48 down to $22) is a Giant bluff by the powers that be designed to trap the 98% on the wrong side of the trade. Do what any poker pro would do, man up - call their bluff & get long. F*ck the premiums. End of story.

Raping and Pillaging

  After the fall of the Roman empire, the world slid into the "dark ages" - a period seemingly bereft of humanity. The European continent was ruled by various clans. It was customary when one clan took over another, one of the first things they did - was rape all the women. Not enough to just kill all the men, no they had to rape all the women too. Thats how life went for centuries, it was a crude savage world. They called it the dark ages for a reason. Trading Silver (not owning Silver) is very much like living in the dark ages. There are 2 clans each looking to rape & pillage the other.  Bulls and Bears. Like clans, they draw lines, and stakeout territory. The $27 level, where silver sits right now - is huge. Just look at the chart above. 

 Silver is knocking on the proverbial door of $27 for the 4th time in the last 2 years.  There is tremendous support at that level - which also means there are lots of sell-stops set just below the $27 level. The paper aristocracy (leader of the bears) views those sell-stops like a hungry dog views red meat. The silver price won't just meander across the $27 level, triggering those stops & lightening the bull in the process. No, silver is a much more vicious beast. When it breaks, corrections of 25-30% in days are the norm. The way the banker clan sees it,  It is simply not enough to kill all the weak bull hands with their stops just below $27, no they will have to rape their women too. For this reason, the probability of a sojourn down to $19-$21 area is becoming increasingly likely. 

  I have said it before, but it bears repeating; Silver is a mans market. The corrections & the volatility within are like no other market. The $48 spring high of 2011 has left Silver in correction mode for 14 months now. Silver has the exact opposite problem of Gold. Gold has arguably corrected far enough down in terms of price, but has only been in correction mode for 9 months. Silver, on the other hand, has been in correction mode for 14 months; plenty of time to thin ranks. The problem is prior corrections in this Bull have seen the silver price contract by over 50% from peak to trough. We don't have that here. We are 14 months in, but silver has only contracted 45% to date. The banker clan, who control this market, will not be satisfied with a correction only in terms of time. Remember: they are raping & pillaging. When they rape, they want both tits in their mouth. TIME and PRICE. Only a trip to the $19-$21 range would qualify this a man size correction (60%) in terms of price. 

 The psychological pain on tap for the bulls the next few months, may well be unbearable. A trip down to long term support in the $19-$21 range will have the effect of thinning the bull ranks significantly, to be sure. The bear camp, will be growing, with technical traders & momentum traders piling on the short side. Observe the manner in which silver has bounced off $27 in the past, only to gather itself & attack that level again & again.     Each time from a lower high. This has left a descending right angle triangle on long term silver charts - an ominous pattern. Meaning, if and when $27 fails, look out below. 

  For all the reasons above, Bagholder is of the opinion long term silver bulls are about to get raped, yet again. You may have noticed an overtly dark tone to todays blog. Speaking as the staunchest of bulls, there is widespread apathy in the bull camp. This, in and of itself, means news isn't all bad for the bulls. If ever there was a recipe for higher prices, thin apathetic bull ranks & swelled bear ranks is it. Those things only exist at major bottoms. We here at Mytwocent$ will be scaling in deeper, all the way down. We suggest you do the same……   

As American as Apple Pie

Senator, we are all part of the same hypocrisy - MC  

  

 We are a nation of criminals - have been since the beginning. Our founding fathers made their bones thumbing their nose at the (Kings) rule of law. Even today, We celebrate criminals by writing books and making movies about them. It should then come as a shock to no one,  the people who run this country are some of the brightest minds the criminal class has to offer. While the size & scope of their criminal behavior rarely surprises Bagholder, their brazen manner of late (MF Global) is rather disturbing. They steal, in plain sight. No prosecutions, no perp walks, no one held accountable. In the parlance of our time, WTF?   

   Where is the media with explanations as to why some of the victims have been made whole, while others have to feed attorneys to make their claims for justice - a Sisyphusean task if there ever was one.   Where are the regulators  with the criminal indictments - or does the clown who ran the company & his minions get a pass, because he is a friend of Obama. Where is the public outrage over this nonsense? While some of you are thinking OWS movement, Bagholder would suggest there is a substantial difference in outrage between the Chinese guy who stood in front of the tank  and your average OWS protester. 

   Even more disturbing, is the why of all this. Why is JP allowed to cut to the front of the asset liquidation line, seizing physical metal in the process & leaving paper longs holding the bag, so to speak.  Lets be honest here, Jp and their ilk are the Paper Aristocracy who write the rules under which the rest of us plebs have to live. They have the power to loan unlimited amounts of cash into existence.  So, can it really be about the money? They have the political connections to write (and selectively enforce) their own laws. So, why thieve in broad daylight? 

  The elephant in the room is this:  they have not overturned the laws of the universe. As such, the Paper Aristocracy  does not have the power to will physical metal into existence. With that in mind comes this incriminating fact: those with cash in their MF Global accounts have (for the most part) been made whole. In the mean time, those paper longs & persons with actual physical metal on deposit are still victims. .

  The sum total of physical seized might be a few thousand tons of silver. Why would JP even stoop for such a pittance?  Having traded physical metal for decades,  Bagholder is well aware the physical market is stretched tight;  But not so tight, JP would resort to stealing scraps of silver in broad daylight. In the rare event Bagholder has misjudged the tautness of the physical market and JP has been forced to thieve in plain sight  - then the whole thing reeks of desperation. It also means the inevitable silver moonshot  will unfold over the next 18 months. While we believe this to be possible, it is not likely. We here at Mytwocent$ are of the opinion there is only one way JP's behavior makes sense. The MF Global seizing of assets is a trial balloon  for something much larger down the road. The crime itself (of jumping the bankruptcy line) is whats important here. Assuming this goes unchallenged, it becomes the roadmap for future confiscations. The precedent being set here, is the real danger.   

  At this point it should be obvious we live in JP's world. They show up,  in true mafia style, taking what they want. The 140,000 clients of MF Global are forced to squabble over what remains. The JP's of the world play under one set of rules, the rest of us saps are controlled with another set. The hypocrisy is astonishing. It seems Orwell had it right, as some are MORE equal than others. Those playing by the double standard should be exposed. Instead, our MSM seems complicit in the cover-up. Those playing by the double standard should also be prosecuted. But no prosecutions are likely, as the people who run this country are members of a select  lifelong club, all with licenses to steal.  

   With no punishment for their obvious crimes, going forward you can expect more of the same, only on a much grander scale.  The real lesson to take from all of this is to buy and hold physical metal. Futures accounts, brokerage accounts, GLD & SLV are all just paper claims. When push comes to shove, and it inevitably will - those claims will be denied by the Paper Aristocracy. Just ask MF Global clients. Don't be left holding the proverbial bag - buy physical today - while you still can……

  On a completely different note: the parlay of the day is  the Patriots & under 55.5 this Sunday. In the interest of full disclosure & spoken like a true gambler, Bagholder has lost 3 Super Bowls in a row - so I am due!!!

   

Silver Bullets

  Last week we discussed the 2011 chart for Gold. This week we look at the Silver chart for the last 2 years.....

1.  Silver, unlike its stodgy cousin Gold, is a MANS market. The 28% mid year rally in Gold was dwarfed by the 60% rally in Silver the first four months of 2011. In fact, that 60% rally was really the last half of an 8 month 150% rally which began in Aug 2010.  

2. Of course the pullbacks are Mansize too. We have two drops in 2011, which by themselves are both over 30% - in a matter of days. That is as vicious as it gets. 

3. Looking at this chart, Silver has only 3 gears - Long steady rallies, sharp corrections, and sideways trading. Note: there are no long steady declines or sharp rallies - like you find in bear markets & popped bubbles. 

4. Long sustained rallies punctuated by ultra-sharp pullbacks is textbook Bull market behavior. Price action like this is how we know silver is not in a Bubble, but rather in a still very young Bull. 

5. From peak to trough this year, Silver has corrected only about 40%. The last major correction in Silver (in 2008) was closer to 55% off. This suggests silver could correct further.

6. In terms of Time, silver has spent 8 months correcting. Prior corrections in this bull have lasted 8-12 months. This suggests another few months of down is a very plausible scenario.

7. The 8 month rally which culminated late April was so hypnotic it had the effect of sucking in newbies to the Silver Market. Bagholder is personally aware of multiple newbies who got long in the $40's. Until most of those folks get flushed out - this Bull is too heavy to resume its upward path. 

8. Despite the 60% rally to begin the year, silver finished the year down - giving new meaning to the word volatility

9. Having now given back 2/3 of the gains since the last bull upleg began (in Aug 2010), Fibonacci would suggest the Silver correction has run its course. 

10. If the January 2011 bottom of $27 holds on this current correction, It would make a technically beautiful double bottom (11 months apart) on a long term chart. 

11. A 150% rally from $27 would put us at $67 - while that may seem light years away, history says its as little as 8 months away. 

12. Downside risk from here is probably minimal as there is tremendous long term support in the $19-$20 range. 

13. Bagholder is of the opinion this Bull is so strong the next upleg will be bigger in percentage terms than the last, the only real question is will it commence from the $27 double bottom, or after a trip down to $20 to test the Aug 2010 breakout. Either way, Silver is poised for a big year. 

Pay No Attention to the Man Behind the Curtain

It is well known in Literary circles that Baum's masterpiece The Wizard of Oz is an allegory for monetary reform cleverly disguised as a children's fictional tale. Oz was written in the late 1890's when the single biggest political issue, by far, was monetary reform. Baum himself, placed a disclaimer in the introduction of the book stating "OZ" was just a children's tale. Thinking logically, why put a disclaimer in the book at all, unless its known, in advance, people will perceive the story to be something more than a fictional tale. The characters & the symbolism within are much too dead-on to be a mere coincidence. It speaks to Baum's Genius that he could condense the political/monetary landscape as well as all the players of the 1890's, into a fictional tale to which anyone could relate. His genius is further evidenced by the timelessness of "Oz". While the present political landscape is certainly different than the 1890's; The players and the lessons to be learned are even more applicable today.  

   The great and powerful Wizard of Oz himself, is the symbolic representation of Government (Gman). In todays world, Gman is looked to for answers to everybody's problems - just like the Wizard of Oz. He is seemingly all-powerful, unless you are fortunate enough to get a peek behind the curtain - where Gmans deceptions and ineptitude are made obvious. Truth is Oz, just like Gman today, has no answers. Gman is little more than a giant complex wealth re-distribution machine created to mislead people into believing the cure for what ails them requires looking to Gman, instead of an inward looking examination of self. This was a minor problem in the 1890's, today its an epidemic. 

 Then we have the Wicked Witch representing the interests of the Paper Aristocracy. They seek to control people - plain & simple.  The Witch used flying monkeys to further her cause, today's Paper Aristocracy uses the MainStream-Media (granted, they don't fly, but they are monkeys none-the-less). The Witch used a crystal ball for clairvoyance, todays Paper Aristocracy simply make the headlines. The Witch used fear as her chief instrument of control. Today's Paper Aristocracy has gathered most every form of human frailty known including fear, greed, vanity, power, and ignorance; and forged them into the finest instrument of control mankind has ever seen - paper money.   

  Dorothy symbolizes the will of the people, the electorate. As a group - they are not particularly savvy - but they do have common sense. Dorothy, like the US electorate is not perfect, as her reasoning is easily swayed by emotion, distraction, and specious tales of woe. Dorothy was a lost soul looking only for a way back home, to a simpler more black and white world.  She buys into the proffered nirvana of the Emerald city (read: green paper) just as the US electorate bought into the Bankers pitch of fiat paper money.  Dorthy and her companions obsession with the Emerald city (and its supposed answers to their problems) is no different than peoples blinding obsession with paper money today. Just think how many folks you know who would tell you their lives would be so much better if they just had more, green paper. The victims come from all walks of life too. Farmers (scarecrows), industrial kings (lions),  workers (Tin men), and munchkins (poor) all have their share of wretched souls lost beneath a sea of paper money.

Once Dorothy gets to the Emerald city, she realizes immediately the system is fraudulent. She and her companions discover they held the answers to their problems, all along. In her case the Ruby slippers, which are not Ruby at all. Hollywood made them Ruby red to stand out on screen, taking advantage of the fact Wizard of Oz was among the first color films ever made.  In the book they are silver slippers which gave Dorothy the means to go where she wanted. In other words, to be free. Free people, by definition are not controlled, which explains why the silver slippers were so coveted by the witch. The key to Dorothy's freedom was silver. In today's world, buying physical silver is the only way to unlock and remove the shackles of paper money. Slaves keep their money in paper, free men keep theirs in Silver. 

   In Oz, the yellow brick road is the path to nirvana. Everybody knows it, but until Dorothy comes along - nobody follows it. Is Gold really any different today? History is clear, a Gold standard is the answer to todays economic woes. Just like the munchkins of Oz who wouldn't follow the yellow-brick road, the masses today continue to play the rigged games (stock, bond, and money markets) of the paper aristocracy, becoming more impoverished every day. Gold was the path in the 1890's, it is the path today. The Paper Aristocracy (just like the wicked witch) is doing all they can to push people off the Gold path. They know Gold is the anecdote to the paper disease they spread. 

  Perhaps the best lesson to be taken from Oz is While the yellow brick road may have led into the Emerald city, it also led out. Emerald city, like paper money, is one giant con. It has only the power we give it. Real power, the power to change the way things are, lies within. You are not obligated to play the fiat money game, any more than Dorothy and her companions were required to stay in the Emerald city. You have the power to buy precious metals and take control away from the Paper Aristocracy.  Dorothy needed the Lion, Scarecrow, and Tin man to make her journey. In like manner, you need  brains, heart, and courage to recognize Gold for what it is - the only way out of the FIAT paper hell.

 Remenber, In Oz, the yellow brick road was not without scare.  In today's world, we have msm monkeys screaming "bubble" on every Gold rally & "popped bubble" on every pull back, hoping to push the lost souls off the yellow brick road!! Do not be fooled, this is a clear cut case of life needing to imitate art. Follow the yellow brick road!! Follow follow follow follow follow the yellow brick road!!

The great and powerful Bagholder, hath spoken. 

Unemployment ... Users Guide

 There is a growing angst in this country which manifests itself differently for everyone. The unease is palpable as very few can put into words the exact source of it, but they know its there. This is part and parcel of what the OWS (occupy wall street) demonstrations are all about - misdirected angst. In our last blog we discussed how rising prices are not possible in a capitalist society with sound money. Today we will discuss another little known fact about a capitalist society with sound money, Unemployment is not possible either. Did you know the word unemployment was not added to Webster's dictionary until the 1930's. For centuries, with the using of sound money there was no such thing as unemployment.

 It took the creation of the FED in 1913 less than 20 years to generate a problem (unemployment) where there never was one before. Now, just like with rising prices - people think rising unemployment is the natural state of being; when in fact it is created intentionally by the "haves"  to lower the real wages paid to the "have nots" here in America.

It wasn't too long ago where a college degree guaranteed a job for life. Nowadays, not only does that degree not even guarantee work - but it usually comes saddled with a student loan the size of a mortgage which is not erasable by bankruptcy. In other words, you have to pay it. As we all know - debt is the money of slaves. So in effect, those with student loans outstanding lucky enough to find jobs, are little more than indentured servants of the state. And you thought slavery was abolished - lolol

  As the best & brightest this country has to offer graduate College (in debt to their eyeballs), they tend to gravitate towards one of the 3 power professions - Politicians, Lawyers, and Bankers. Problem is, none of those professions create anything tangible as they are all parasites feeding off those who produce. Meanwhile, the people who actually make things (and create jobs) have to kiss the rings & line the pockets of said parasites long before ever opening a business and/or producing anything.  Until this fact is addressed, unemployment will continue to grow like a weed. 

  My apologies in advance if this comes as a shock, but wages paid in this country are much too high.  If you are an employer, then you know what I mean. If you are an employee, chances are you lack the proper vantage point (and education) to understand why real wages paid in this country are headed significantly lower (including yours). Looking big picture, why would any employer hire an American worker (with an obscene list of Gman given rights) for 10 bucks an hour, when there are Billions of people worldwide willing to do the same job for 10 bucks a day. Oh, and without all the Gman granted employee rights...... 

Most of the world is willing to work today for the paper equivalent of a dollar an hour. Market forces will demand wages paid here in the US get more in line with wages paid around the world. If they don't, Unemployment will continue to grow. While it may seem unimaginable today, within a decade labor here in America will be working for the equivalent of a dollar an hour, just like the rest of the world does today. If you expect unemployment to fall there really is no alternative, as the Haves can either pay a 150 million Americans less - or pay billions worldwide more. You don't need a Doctorate in Economics to know how that will progress.

  As if high real wages & obscene government regulations aren't driving jobs overseas fast enough, the intellectuals in Washington currently have the corporate tax rate set at the 2nd highest of any nation on the planet. Only Japan (another comatose economy) has a higher tax rate.  I doubt seriously, our leaders will even acknowledge there is a connection between high tax rates & growing unemployment.

  Perhaps the most sinister element of  Gmans behavior is his marginalizing of the problem by changing the way the "unemployed" are counted.   John Williams at shadowstats claims unemployment today stands at 26% if measured like it was in the Jimmy Carter era. Those are depression level numbers.  So rigging the unemployment percentage down to, say 9% - like they claim it is today - has the effect of defending the "haves" from insurrection by convincing the "have nots"  things are not as bad they seem. Goebbels would be proud.

   For those who care to look at history, unemployment skyrocketed in the 1930's & 1970's.  Immediately following the rise in unemployment came HUGE US Dollar devaluations and ultimately a sharp fall in real wages paid to employees. Historically, its a familiar script.  Those playing the "great game" need a rise in unemployment today, to properly foment (ignorant) demand for the coming devaluation tomorrow of our beloved dollar.  The devaluation is necessary to bring the US labor market back in balance with the rest of the planet. We can't just start paying people here a dollar an hour as they would not accept the pay cut. What they will do however, is allow themselves to be boiled slowly like the "proverbial frog" as the US $$ is devaued by 90 percent over the next decade.

   The net effect a decade from now, will be to pay workers everywhere the equivalent of a dollar an hour. Sure, it will be called ten bucks an hour - but the purchasing power of that ten bucks a decade from now will be the same as one dollar today. Working man does not comprehend what is happening to his wages because he does not understand the distinction between real wages & nominal wages. This is the source of the national angst. Working man is focused on how many $$ he gets for his work (nominal) instead of what those $$ can buy (real). So he loses ... in spades. To properly comprehend what is happening to you, it is imperative you understand the distinction between nominal & real. 

 What is perhaps most interesting about the con is working man knows he is getting shafted, but cant figure out who or what or how - because he can't see it.  His nominal paycheck is as high as its ever been, but that check does not go as far as it used to - because the purchasing power of the actual wages paid is falling. In my parents era, it was possible to work a menial job, like say a janitor and support a wife & kids on that salary. Today, there is no chance of that for a janitor - because real wages paid in this country are falling at a staggering rate. Even worse, the current rise in unemployment portends that the falling rate of real wages paid is about to accelerate to the downside. Fcking Brutal.

 For 200 years in this country, It was part of the American dream that while the woking man toiled - he did so secure in the knowledge his children would have it better.  Ours may well have been the last generation in America to be raised by parents who believed that.  Despite the negative tone of today's blog, the news is not all bad. Now that you know about the coming dollar devaluation, there is nobody to blame but yourself if you do not start storing a signifigant portion of your wealth in something other than US dollars. Gold & Silver are ideal. Buy an ounce…take the ride.  

By the numbers

Most folks look at the current dollar price of Gold & Silver and think, Wow thats high. We here at mytwocent$ like to let the numbers be the judge.... 

There are roughly 5 billion ounces of Gold above ground at roughly $2000 the ounce means Gold is a 10 trillion dollar market.

There are roughly 1.25 billion ounces of silver above ground at roughly $40 means Silver is a 50 billion dollar market. 

Several things jump out when looking at the above two sentences. First, above ground gold is 4 times as plentiful as silver. So if gold is priced fairly at $1850 - one could argue based on availability silver should be $7400 the ounce. Yes, you read that correctly.

Second, the 10 trillion dollar Gold market is 200x the size of the paltry $50 billion silver market. Considering the two metals are found in the earths crust at a 15-1 ratio AND above ground silver is already rarer than Gold then silver at $650 the ounce would make the silver market 1/15th the size of the current  Gold market.  

 According to Gmans own website in March 1933 there was 20 Billion dollars in circulation, which was justified by Gmans decree making Gold $35/oz. A similar ratio today with 4.4 trillion in circulation (250 fold increase from 1933) gives a Dollar price today of $7700/oz.

 In 1935 a Barrel of oil was 67 cents, today its $90. Thats a 134 fold increase. The same for Gold would put it North of $4700. 

In the 1930's Gold & the dow traded at a 1 for 1 ratio, same thing was true in 1980.  To reach that ratio today - Assuming the Dow is fairly priced, Gold would have to trade over $11,300 the Oz. 

 In terms of percentage of global assets, from 1921 - 1981 Gold & Gold Mining shares averaged 26% of worldwide assets. Even at these "outrageously high gold prices" today, that number today is 1.5% (source: Erste group). So just to return to the historical average valuation for gold would require a 17 fold increase from here… $31,000/oz - for those scoring at home. 

The last 11 years, Gold has returned 20% per year, that pace puts the dollar Gold price at $16,500 sometime around 2020.  To be blunt, Bagholder believes this $16,500 estimate to be too Low. Price appreciation rate is always quicker in the second half of Bull markets. 20% per year will be pedestrian the next decade. 

The Idea that we could discover a new Gold mine tomorrow which would flood the market with new supply of Goldis absurd. All gold mined last year combined, added less than 1% to the existing above ground supply. Even if they discovered a new mine that would produce double what the richest mine produces today; that 1% yearly figure would still not be breached. In math terms, the new mines production is statistically insignificant. Besides, depending on the country where its discovered, the best case is it would be open in 10 years, worst case is it never gets opened. 

The silver price chart for the last 30 years is one giant "cup" of 30 years with a "handle" of 5 months (so far). Edwards & Magee (technical analysts extraordinaire) would say that from the bottom of the cup to the top is a 1600% increase, therefore after the breakout above $50, silver has a green light to $800/oz (that is a 1600% increase which equals the size of the cup). 

The current Gold bull market is ten years old, the two biggest corrections so far are 29% in 2008 and 23% in 2006. By comparison the 1970's bull had corrections of 39% &  52% along the way. This speaks to the tremendous underlying strength of & gargantuan size of,  the current bull specimen. The reason the corrections this time around have been shallow is because it has been under steady accumulation by those of us in the know. Before it gives up the ghost a decade from now - there will be multiple 50% off sales.  Only the staunchest bulls will pass that test.

Bagholder is firmly on the record as stating Silver will trade  with 4 digits to the left of the decimal & gold will trade with 5 - both before 2020. 

Gold & Silver - random thoughts

The Devil is like a strainer that separates the mud from the gold.
Carlos Santana 

-  Gold & Silver both, are very counterintuitive trades. It is very psychologically disturbing to work X number of hours to get $1600 together - hand it to the guy at the coin shop & he hands you a yellow hunk of metal not much bigger than a stick of gum. Sure, it has some heft - but $1600 - are you fckin kidding? That is peoples mindset, until their ability to reason overcomes that prejudice - they are going to miss the trade. 

- $1600 Gold & $40 Silver is not high. Everyone thinks that way because their opinion is based off where these metals have traded in the past. We here at Mytwocent$ are more forward looking. Relative to where these metals are headed, $1600 Gold  & $40 Silver is Low.

-  Gold & Silver are the simplest & safest means of storing wealth (and your labor) that exists. 

- Gold & Silver are antithetical to the way most people are raised. We are told from a young age to respect authority, have faith, and save (money) for a rainy day. Gold & Silver are the only way to profit from the fact all 3 of those ideas are absolute nonsense. 

- Gold & silver are the gambling equivalent of betting the don't pass at the crap table. Its the smart bet, and yet people just don't do it. Pride do cost - to use the parlance of our time.

- The fact Gold has made a high every year for 11 years now means anyone who has bought gold in the last decade, chose to do so at or near an all time high.  Psychologically, it is difficult to overcome the fear of purchasing something at or near an all time high.  This fact has kept GOLD very underowned. 

- The biggest complaint from the financial talking heads is Gold & Silver have no yield. While that is true, they also have NO counterparty risk; which is priceless considering the direction this country is currently headed. 

- Gold & Silver will continue to head higher until our political leaders address the debt issue and/or the currency collapses. Since the debt issue is now off the table until after 2012 - that sounds like a 16 month green-light for higher GOLD prices. 

- Speaking solely as a Gold-Bull - we here at Mytwocent$ will have to endorse Obama in that 2012 election. Gold was $740 (see Nov 08 on chart) when this nation elected Obama. Thats roughly a 120% return in 2.5 years. If he gets another term - we could do that 120% thing 2 more times!! That would put gold North of $8000 the ounce by the end of his 2nd term. HELL Yeah!! Lets do it!!

- Above ground in readily usable form, Silver is rarer than Gold.  Doubtful 1 person in a thousand is aware of this fact.

- In the 1970's gold bull, price rose roughly 24x, it was a US only phenomenon. This current Gold bull market will be a planet wide mania. With much wider demand, we can expect Gold to rise a lot more than 24x this time around. The 01 bottom was about $250 - 24 times that is $6,000. Yours truly might begin profit taking there. 

Play, or get played

 The life of Wimpy from the popeye cartoons just wasn't for me.  He was part of the reason I have always been a saver. Saving used to be easy when I entered the workforce 30 years ago.  My local bank in 1981 offered 30 year  bonds (to build a toll road) worth a  million dollars at maturity (about now) for 15 grand.  Now that was a tradel!!!  Even more amazing, is nobody wanted them. Conventional wisdom at the time was inflation will eat up the value of your savings and/or Gman will welch on the bond payoff.

  My parents,  relatives, teachers all thought that way. The compelling math (15 grand to a million), as presented by yours truly, didn't matter to them. What did matter, was a decades (1970's) worth of watching prices rise quickly  & the US dollar purchasing power fall dramatically.   As It turned out, locking up money long term at those double digit interest rates in the early eighties was arguably the single best trade to have made in any asset class  that whole decade. It should come as no surprise to anyone who understands the "great game", why that trade was universally despised at the time. 

   Most regular folk in the investing arena spend their time trying to spot the next trend into which the herd will stampede. If we are lucky to spot it early, have the nuts to get in, and the conviction to hold tight - the masses will pay us off when they decide to pile in - thats the goal anyway. For a select few however, its not about spotting the trend - but rather creating the trend.   Thats the gist of the "great game" as played by the uber-wealthy (Warburgs & Rockefeller's, etc).  Because this is their world, and we are just living in it - they actually create the circumstances that leads to the conventional wisdom which conditions the masses to lean the wrong way.  

  The great game is played best if 99%+ people are on one side of a trade, while a select few are on the other side. Wealth is easy to multiply under those conditions. So the question for the financial elite is how to get 99%+ on the wrong side of a trade. Well, even a fool doesn't need to touch a hot stove more than 3 or 4 times to know its going to burn. So the banksters throw 10 years of sharply rising commodity prices at the masses in the 1970's.

  The result was to condition the masses to believe they were best off storing their wealth in commodities (like Gold & silver). So, the whipped public scraped together what cash they could and threw much of it at the metals in the early eighties. The banking elite was happily taking that cash for metals & locking up all the bonds they could at those double digit interest rates. As usual, the banksters had it right & the masses were destroyed. 

Fast forward to today, a 30 year treasury worth a million dollars at maturity (in 2041)at prevailing rates would now cost north of 450k!!  As odd as it may seem, now everybody wants them. For the last 30 years people have been conditioned to believe there is nothing safer than US treasuries.   Today, pension funds, foreign countries, hedge fund managers, retired folks, you name it - they are ALL on the long side of the bond trade.

  Once again, the financial elite have everybody leaning one way. Todays bond markets (everyone is long) and precious metal markets (everyone is sold out) are so lopsided - multiplying your wealth the next 10 years is childs play.  If you understand the "great game", you know the conventional wisdom was created by the financial elite - for the purpose of getting everyone on the wrong side of the trade.The hardest part for normal folk is dismissing that conventional wisdom of "Bonds are safe" and "Gold is risky". We here at Mytwocent$ admire the diabolical genius of it all, really.

   

The banking elite know that if they hit the masses with a decade of sharply rising prices - like they did in the 1970's - the bonds everyone is paying 450k for today will plummet. Will they go all they way back down to 15K? Its certainly possible, even likely. Today's conventional wisdom of "safe" US treasuries will gradually give way to the same fears that gripped everybody in 1980. It won't matter how high interest rates go, because nobody will want anything to do with bonds after the upcoming devastation. At the same time the bond bubble is pricked - the masses will begin looking for places to stick their rapidly depreciating dollars. This is where Gold & Silver go parabolic. 

 If you want to multiply your wealth, just like the banksters do - you will need to be long Gold & Silver before the pricking of the bond bubble. That way you are in before the masses start looking to get in - its really that simple.

  Still not convinced? OK. Guess who was buying those precious metals at generational lows all thru the 90's & early 2000's. Yep, the banksters. They loaded up on gold at $300 & silver at $4 for 15 years!! Greedy bastards, they are still buying today. They got long metals at fire sale prices in preparation for the upcoming bond market rout. Once the masses are scared out of their bond holdings like they were in the seventies, the financial elite will be there to dole out their metal hoard a little a time at prices that are multiples of where they trade today. The banksters  are looking to scoop both sides of both trades (bonds & pm's) just like they did in the early eighties.  

That is how winners play, and its the essence of the Great game. You are either pitching or your catching - there is no middle ground. If you are going to play the great game - you best do it like the banksters. They understand, its a rigged game - they do the rigging. Once you come to the same realization - that its a rigged game - investment decisions like dumping bonds and getting long physical Gold & Silver right NOW become no brainers. 

Commodity markets & how to play them.

  A guy named Moe calls you with a business deal. He says put up 100 grand for 25% stake in a widget company. He tells you how the company will be building widgets for 50 cents, while the wholesale market is paying a dollar.  Sounds like a no brainer, until you meet him and  his two partners Larry & Curly.  At this point, most people I know would not come up with the 100k, even if they could. No sane person would willingly go into business with stooges - no matter how compelling the business model may seem. Now Imagine a second example. Same widgets, Same risk,  Same rewards, but this time the phone call comes from Warren Buffet , Mark Cuban, & Bill Gates.  Most people I know, would be looking for ways to beg, borrow, or steal 100k just to get a piece of that deal.

The only difference between the two deals is the "structure". In other words, who is on your side of the trade. Stooges or moguls? Structure is very often overlooked by most people,  who spend their time looking at other fundamentals like risk, price, model, return long before ever considering structure. While that thinking might fly in the stock & bond world, In the commodity world (read Gold & Silver) STRUCTURE is everything. Nothing else even rates - not price - not risk - nothing!!

If you haven't traded in the silver market before, the best way of following the structure is to familiarize yourself with the commitment of traders reports, the COT for short. In any industry, its the insiders - the people who deal in it everyday -that know which way a market is headed. Because its their business to know, they have the most accurate info on which to trade. The COT calls these folks the "commercials" - think moguls. Another group tracked are the "speculators".  These are people with no connection to the industry,  just looking to make a quick buck - think stooges. The COT is kind enough to split the speculator camp into large specs (hedge funds), and the small specs (gen public).  COT tracking of positions of these different groups (commercials & specs) over time enables us to get a feel for the structure of the market.

  If you are a veteran of the silver market, then you know back in the eighties the general public was getting long in a big way. They came in with rolls of cash and walked out with bricks of silver. So many bricks in fact,  we were routinely buying bullion off Banks and selling it to the public. The cash was going uphill to the suits from the public, while metal went downhill from the suits to the public. More than enough time has passed to see who got the best of that trade. Anyone who got long metals in the eighties was annihilated.  The suits, as usual,  cleaned up. 

  About 1990, after a ten year ride from $50 down to $5 where the public was getting long the whole time, The structure of the silver market changed. The public began selling as much, or more silver than they were buying. By the mid nineties there were 20 sellers for every buyer. The public sold relentlessly, right on cue at the bottom,  for 15 years straight into the teeth of one of the biggest generational bears in our lifetime. About 2005-06 there was another major structural change. The ratio of buyers to sellers became more balanced. 

This makes perfect sense if you look at structure as a pendulum that swings a generation at a time. Lets review the general publics behavior in silver for the last 30 years. 1980's was all buyers & no sellers (one extreme). Early nineties things balanced out (pendulum is back at 6 o'clock) and then began 15 years of all sellers (other extreme). 2005-06 market back in balance again (pendulum back at 6 o'clock). The last few years we are starting to find more & more buyers of silver - as the pendulum heads back to the all buyers extreme. This is how commodity markets function - they swing from one extreme to the other in structure - over and over again in generational long swings. 

I'm not sure where I heard it, but every deal made has two players - a fool and a thief. If you are going to play in the commodity world and expect to make a buck, you best align yourself with the thieves.  Problem is, thieves aren't exactly known for transparency; so how do we find out what they are doing? Its a fact, a select few (read: thieves) make all the money in commodities and they do it trading opposite the masses (the fools). Its the suits who bought up all the publics silver from 1990 thru 2005. Now that the pendulum is swinging back it will be those same suits (who are long now and still getting longer) that will be selling - and the public, I mean fools,  who will soon be looking to get long en masse. Thats an enviable position those suits are in as anybody who understands structure knows, that trade can only end one way. The only question is, how many zeroes will silver add to its price as the structure pendulum asserts itself & the general public becomes relentless buyers over the next decade? I have given a lot of thought to that very question.  In 2003, with silver at $4, I decided the answer was 3 zeroes. It has added one already - still time for you to snag a couple for yourself over the next decade. 

Leviathan - not quite Hobbes version - but close....

   I am forever being asked where silver is headed. People think because I have traded in the silver market for the last 25 years – I am supposed to have some special insight. The truth is I do not know where silver will be 6 months from now. It could be $21 or $61 – neither would surprise me. I am however, very comfortable in stating that silver will be adding zeroes to its price over the next decade. Those of you who know me personally will recall I said this 10 years ago too – when silver was under $4. I was right then, and I am right now. I defy anybody out there to show me any investment on the planet with more bullish fundamentals and less risk than silver – Right, there isn't one.

  The only real insight I can give you with regard to silver is this. There is no market on the planet that moves like Silver. It is a vicious beast – a Leviathan - if you will. In the last 6 years alone it has 4 different up moves ranging from 70%-120% each. In fairness, it also has had 4 corrections ranging from 30-60% off. In typical bull market fashion, the rally's took 4-8 months each – while the corrections were all measured in weeks.

   Another signature feature of bull markets is they travel light. The bull is forever trying to shake the longs out of their positions, while trapping the bears. With that in mind lets consider this recent correction in Silver in its proper context. There were many (new) people in this market getting long back in April when silver was in the forties. Those people are having their convictions tested now. While many are equating the steepness of the pullback in early May with the popping of the silver "bubble", the truth is it has been a very gentle correction in this Bull market. This correction has taken only 1/3 off the price; that is small potato's compared to the past. If this is a real correction, then silver is headed back to $21 to test last years breakout. A sojourn down there would shakeout all late arrivals as well as all but the staunchest Bulls. It is for this reason, $21 silver (coincidentally its about 60% off from the $50 peak) in 6 months will not surprise me.

   On the other hand, silver is very under owned. It is also a microscopically small market – this is why the moves are so vicious. There is also about a 300 million oz per year deficit between what we produce as a planet and what we consume. While we live in a country with a propensity for papering over deficits, fact is this deficit can only be resolved with much, much higher prices. When silver does move up, it moves up BIG. If the next leg is up, then 70 % from here puts us in the mid $60s – while 120% from here lands us in the mid $80s. Both are realistic targets for a year from now.

   The $64,000 question for traders is which way is the next move? While I have nothing concrete to go on, my gut tells me the next move is down. By the time its in the low $20's a few months from now the media will have the sheople convinced the bubble has popped. Those who are foolish enough to think this is 1980 all over again will be gripped by the fear of silver heading much lower than $21 – like it did in 1980 after it hit $50. They will abandon ship in droves, on cue, right at the bottom – then the bull will resume its march higher – much lighter too. I, for one, would love to get another crack at it in the low $20's. In conclusion, if you are long, stay long. Pray for a quick trip to the low $20's over the summer and load the wagon if we are lucky enough to get it. The smart ones, like me, will be scaling in deeper all the way down.  : )

  Thats my twocents on silver, will be on vacation for the next ten days....I promise a nice piece on the psychology of gamblers when I get back.....

HAPPY BIRTHDAY BABY!!! Has it been 10 years already?

Ten years ago this week the Gold price was bobbing along generational lows, until finally the first week of June 2001, the Great 21st century Gold Bull was born. Back then, it was trying (for the umpteenth time) to break $265 on the upside. That $265 level was the first hurdle it cleared - and its never looked back. To those of us in the market at the time, the $265 level seemed insurmountable. Little did we know what a rambunctious bull he would become. Ten years in now, he has ten straight years of gains to show  - and still people do not believe. We are truly a nation of cynics.

This isn't your normal bull market either - it is a Behemoth. This is evidenced by the fact this Bull hasn't even learned to buck yet. We are a decade in without a single 1/3 off sale; like this bulls 6 year old cousin Silver is offering right now. More proof of what a behemoth this bull is comes by looking at who is buying at these levels & who is selling.  In one corner, on the buy side we have central banks (some of the most powerful suits on the planet). In the other corner, on the sell side we have the general public (how else can you explain "sell your gold here" shops on every corner).  So basically you have the suits on one side and the masses on the other side of the trade. This can only end one way, because if there is one ironclad no fail way to make money in the investing arena it is this: bet opposite the masses. The smart money suits are doing it, are you?


Bull markets travel thru 3 phases. Accumulation - Runup - Distribution. This Bull is 10 years old and yet strong hands are still accumulating at these levels. Make no mistake, the strong hands buying today are not paying $1500 for gold to sell down the road at $2000 or $2500. The Strong hands play for Zeroes. Ten baggers, twenty baggers, or thirty baggers are more the norm for generational Bulls. When this bull finally gives up the ghost, 10-15 years from now - there will be "buy your gold here" shops on every corner. While this may seem crazy now, its not. Its distribution, and its how bull markets end.


  Enough of that, today is a Birthday celebration. My gift to you is this insight. As bull markets mature the price rises at an accelerated rate. The last 10 years have brought us 18% a year compounded - the next ten will dwarf that. Buy an ounce- take the ride!!

Tis but a flesh wound

  So silver is off 35% in 4 weeks, Remember this is war - I've seen  Worse.  Anybody cares to look at a chart of silver the last decade - you will notice multiple 60% off sales. Its the nature of the beast. Having lived thru multiple 60% corrections the last decade, I could do this one standing on my head.

  It would appear the Evil Empire is going to defend the $50/oz level in Silver. Bully for them. Nothing has changed from a fundamental perspective. It is not a question of how much higher silver is going, but rather how many zero's will it add over the next decade?

When should we sell our Gold & silver?

I am forever being asked when I plan on selling out my metals position. Seems everytime they pull back in price - the non-believers are out in force claiming the bubble has popped. This was written by me in 2008 when the world was crashing down - remember? It is just as applicable today as it was then. Those  of you who know me personally, know I have told anyone willing to listen for the last decade to buy Precious metals.  Here are some of the reasons why......


Subject: Golden Bull alive and well!!!
Date: Thu, 15 May 2008 01:06:24 -0700

    Several of you recieving this email have personally expressed disgust, frustration, and/or downright fear to me in the last 3 weeks over the health of the 21st century Golden Bull. The contrarian in me says that is a good thing. A scant 2 years ago $860 gold was percieved as outrageously high. Yet, here we are at $860 today and most of the people I know in this market are ready to throw in the towel. I feel your pain. What follows are the 10 reasons I look upon times like this, as an opportunity to buy Precious Metals(PM) on the cheap.

1.  There is still no interest in the PM market from the general public. At the end of bull
markets everyone and their brother is either in, or wants in. Take housing for example.
My plumber has 4 homes, my dentist  3. Even Vegas cabbies are getting in the act -
last xmas I listened all the way to the airport about the cab drivers "rental Properties".
It is a sure sign of a market top when  people  with no connection to an industry,
(housing in this case) like dentists, plumbers, and cabbies - just to name a few -  are
clamoring to get in - and doing it with leverage.  Take my word for it, we are
nowhere near that day in PM's.  

2.   There is no fever - like Gold fever.  We live in a bubble world. Tech bubble,
housing bubble, bond bubble are all going to look like childs play next to the
upcoming gold bubble. No worries, you will be able to spot the gold bubble yourself.
Cab drivers will be pimping the merits of bullion. Barborshops will have the
 "gold channel" on every time you visit. People like Oprah, will be hosting
prime-time specials about PM's, in fact she will probably give some gold  bars away
to her rabid fans. Atleast 2 miners (my guess is newmont & Barrick) will be added
to the Dow Jones Index. Almost all gold and silver mines on the  planet not located
in strong "rule of law" countries will be nationalized. 90% of high school graduates
will know what a kruggerand is (that number today might be 10%).

3.   The great game!! The rich have been doing it to the poor since the dawn of time.
Stock markets, bond markets, commodity markets, etc are the playgrounds of three
distinct groups. The rich, the well connected, and the wise. The rest of us, as they
say, are just guessing.  I am going to let you in on a secret - The rich, well
connected wiseguy doesn't want you to know. These markets, and the sheep that
trade in them, are best sheared in  a "generational manner". The people who run
these markets know this. The people who run these markets aregreedy bastards,
just like you and me. So guess what, Big moves in these markets tend to last

a generation. This bull market in PM's is only 6 years old - still plenty of time to
get aboard this generational Golden Bull!!

4.   Bull markets die with a wimper - not with a bang!! Anyone who thinks the
commodity bubble has been popped and the PM's are crashing back to earth,
is sorely mistaken. Bull market tops roll-over and die slowly down a "slope of
hope". Think of what the buyers in tech stocks have experienced the last 8
years. Tech stocks have largely slid down that very slope for 8 straight
years. Good news is they probably only have another 12 years or so down the slope
of hope to meet the generational requirement of a completed bear market. Sometime
around then,tech stocks will be a buy! In the meantime the Gold bull rages on! Gold
has basically shed 20% off its high in only 6 weeks.That is a nice "buck" by this bull
- but its not shaking me out. I've seen worse, several times.  A friend of mine
(former floor trader) once told me "it is the Bulls job to shake out non-believers".
Even in the 1970's gold bull, they wacked gold in half over a 2 year period. That
tested the very soul of every gold bull around in the 70's. Those that passed the
test, and bought after gold was cut in half were rewarded with an 8 fold runup in
less than 3 years. Somewhere in here, gold will find a bottom. Maybe $600, maybe
$700, or maybe it has already found it. Judging by the pessimism in the market at
present - I think we are close to that bottom.

5.   The microscopic size of the PM markets ensures that when even a modest amount
of capital starts to flow their way, The price will go parabolic. The most important
word in that sentence is "microscopic". When the day arrives and the public wants in
there will be, as my dear departed dad would say "2 kinds of people in the world,
son". There will be those that have gold (and can name their price) and those who
don't (and will pay dearly to get it).  Which one are you?

6.   The Dollar - what a joke. Listen People. Americans take a great many things for
granted. Chief among them would be the stability of their currency, aka the
"dollar". To most, its continued supremacy & stability is expected along with the
arrival of daylight each morning. It is an embarassment to our educational system
 that not 1 person in 100 in this country comprehends what an anachronism
 the idea of a stable, universally accepted paper "FIAT" currency is in the history
of the planet. Here is some wisdom for you: some ideas sound so good in theory,
that they can fail 100 consecutive times in practice and people are still willing to
try it. At the same time there are ideas that may sound bad, but work every time
they are tried - yet many people still refuse to try it. FIAT currencies and
socialism are examples of the former, excercise is an example of the latter.

 

7.   Warren Buffet, Bill gates, Robert Kiyosaki among others have all picked up
large silver positions in the last decade. There is a reason these are some of the
richest men on the planet. They get it. 28 years ago some oil boys (the Hunt's)
tried to corner the silver market. At the time, the U.S. alone had a 3 billion
Ounce stockpile - which along with some timely rule changes regarding
margin requirements was used to defeat the Hunts. Nowadays, there are no

government stockpiles to draw down on. In fact, as of last year the US mint is 

buying silver of the open market just so they can issue silver eagle coins. The 

problem is, as a planet we use roughly 300 mil Ounces more silver than we

mine every year. This has been going on for decades. Now that the stockpiles 

are gone, price has begun moving up to rebalance supply and demand. Problem

is most of the demand for silver is inelastic - and thus not responsive to price. 

One more thing those rich well-connected wiseguys know that John Q public 

doesn't, is this: Above ground, silver is rarer than gold. Most of the rest of the 

public is going to learn that fact over the next decade as Silver adds a couple 

zeros to its price.

 

8.  Countries around the world, one by one are delinking their currencies from
the Dollar. More and More Oil producing nations are demanding to be paid
in something other than "dollars". Although you will never hear it from the
mouth of our leaders this is why we invaded Iraq. Saddam said no more dollars
for oil - game was on. It is no coincidence that you are hearing what an evil

empire Iran is now. They too are threatening no more dollars for oil. Let's see
what happens if they cross that Rubicon. This is putting tremendous
downward pressure on the purchasing power of our beloved dollar. This is
already happening - why do you think Gas costs triple what it did 3 years
ago? You see "dollars" are nothing more than governmental iou's. China is
sitting on a trillion of the damn things.That's right - we owe them trillions. In
any typical debtor/lender relationship (believe me , i know about those) there
can come a point where the lender won't take anymore Iou's. We are there now.
Instead the lender starts buying anything he can get of value with those Iou's.
On a national scale, a country like china might trade those Iou's for our wheat,
grain, or our PMs! You think there is inflation now, wait til china starts bidding
up commodities with those trillions. Those days are coming.

9.  The great game is played best in a generational manner. That's true, in the
short term however there are tactical tricks those in the know use repeatedly.
The trick is simple, Market makers do everything in their power to get the
retail investors leaning one way - and then they take the market the other
way - shearing the retail sheeople in the process. If you are looking for it,

you see it played over and over an over ad nauseum. Do you know anyone
who wasn't getting long tech stocks 8 years ago? Or real estate 2 years ago?
I don't. It is no coincidence that with everyone piling on the long side of
the trade that they are now taking those markets the other way. Thats how the
game works. 20 years ago when I got into the gold business - we used to buy
gold from refiners and sell it to the public. Yep, back in the eighties it was cash

going up from the public to us and on to the refiners, while PMs went downhill.
Then about 1990 with gold and silver at record lows, business changed.
We became net buyers. In fact we have been net buyers ever since.
The public has been selling relentlessly for 18 years. Nowadays, Metal is flowing
up from the public into stronger hands while fiat cash is rolling downhill.
The exact opposite of 20 years ago!!  If there is one thing I have learned in
my decades of investment experience its this: The public is always on the wrong
side of the trade. That by itself should be enough to convince even the most
hardened skeptic that this bull has a long way to go.

10. Last, but certainly not least is the manner in which Bull markets progress.
This is the real beauty. Price accelerates at an increasingly faster rate as bulls
mature. Look at the stock bull from 1980's. The dow jones was at 800 in 1979.
It doubled roughly 4 times in the next 20 years. Notice the first double took
8 years, the second double only 6 years, third double only 4, and the last
double in less than 3 years. Pretty textbook stuff. Turning to gold we see the first

double (from $260 to $520) of its bull took 5 years, the 2nd double (from $500
to $1000) was less than 3 years.  With Gold at $860 today and the next
double due in about 2 years - sounds a lot like opportunity today.

   As for the Haircut given to the PM's and the mining shares over the last 2 months, I am not happy about it - but I have seen it before in Both July 06 and Aug 07. They were both tremendous buying opportunities. Perhaps we are near another one now. Like my dad used to say "there are 2 kinds of people in the world, son". He was right. There are those who are long PM's and those who aren't. Put another way, there are those who believe and those who don't. Put me in the former
camp.