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Recently, public interest in gold and silver and gold/silver
mining stocks has been at multi-year lows. And that is a super bullish
contrarian indicator. In fact, a glance at the Gold Miners Bullish Percent
Index illustrates that sentiment to start the year was at a three-year low.
 
At the end of last year, there was a lot of chatter on
the internet, due to the end-of-the year slam down effected on gold and
silver futures by the global banking cartel, that silver prices were going go
collapse to $20 an ounce and gold prices were going to collapse well below
$1000 an ounce by the first quarter of 2012. We felt that these discussions
and the consequent, induced panic selling out of gold/silver mining stocks
and physical gold/silver at the end of 2011 was highly unwarranted and the
result of people falling for the global banking cartel price suppression
tricks. In fact, we sent Special Alerts to all of our clients at the end of
2011 informing them that the banking cartel often paints charts in gold and
silver to fool people and that one cannot make accurate predictive behavior
based upon the assessment of technical charts alone.
At SmartKnowledgeU, it has
always been our mantra that technical analysts often make huge mistakes in
their predictive calls due to their sole reliance on technical charting and
therefore often have to flip-flop like a politician on their calls regarding
gold and silver, one moment calling for a huge crash and to sell everything
gold and silver, the next moment calling for a huge run-up and to buy back
everything gold and silver. While nimbleness is a good trait to have given
the volatility of gold and silver assets and staying on the sidelines is
sometimes necessary, trying to get out of the market on every single weekly
downturn in gold and silver will surely drive an investor insane. Thus,
sometimes it is necessary to ride out difficult periods of volatility and
maintain your eye on the long-term trend instead of short-term banking cartel
tricks. We prefer to remain more long-term trends with our calls and to keep
our eyes grounded on a more fundamental outlook that incorporates technical
analysis with more than a decade of knowledge regarding global banking cartel
price suppression schemes. We have stated since day one of launching our
company in 2006 that gold/silver technical analysis performed without
incorporating the contextual nuances of global banking cartel price
suppression schemes will not be accurate, especially since the cartel’s
gold and silver price suppression schemes exert the most influence right now
over setting the futures and spot prices.
Last year, we informed our clients at the very start of
the year in January of 2011 that 2011 would yield massive volatility in gold
and silver assets, proclaiming the coming year as “The Year of
Volatility”. Before the year started, we knew that 2011 would
produce a fierce battle between the global banking cartel and the dynamics of
the physical markets for gold and silver as the global monetary crisis
deepened. And indeed it did. Though we can mark 2011 as a win for the global
banking cartel as they collapsed open interest in gold and silver futures
repeatedly throughout the year by raising initial and maintenance margins for
gold and silver futures (once raising margins on silver futures a ridiculous
five times in just 9 days when silver broached $50 an ounce) and by also
using the MF Global bankruptcy to force involuntary client liquidation of
gold/silver futures at the end of the year, I am confident that all the
banking shenanigans of 2011 has set the stage for a spectacular year ahead
for PMs in 2012. If you are interested in my thoughts about how the banking
cartel used the despicable MF Global fiasco to collapse gold and silver
prices, you can read about it here: Did Bankers Deliberately Crash MF Global to Crash Gold and
Silver Prices?
In 2011, due to the extreme volatility in gold/silver
mining stocks, there were periods we opted to cash out and sit on the
sidelines preceding banking cartel smash downs of gold and silver prices, and
other periods we opted to stay in the market and ride out the extreme
volatility due to our belief that the downside volatility would be
short-lived. Thus, admittedly we had to sacrifice short-term performance for
our mission of a longer-term reward with the gold and silver mining stocks in
2011. As you can see in the chart below, the HUI Gold Bugs Index re-tested
lows in the 490-500 range on five separate occasions last year and greatly
underperformed the metals themselves. No wonder bullish sentiment regarding
gold and silver stocks just recently hit a three-year low!
However, despite the severe underperformance of the
mining stocks last year, from the launch of our Crisis
Investment Opportunities portfolio in June 2007 to December 31, 2011,
even in light of our slight setback of 2011, our cumulative performance of
+135.18% during the past four-and-a-half year period has still respectively
outperformed the S&P 500, UK FTSE 100, and Australian ASX200 indexes by
whopping +153.12%, +152.37% and +169.20% margins. Furthermore, our Crisis
Investment Opportunities portfolio has even outperformed our closest
comparable index, the Philadelphia Gold/Silver Sector (XAU) index by a
whopping +104.75%. Thus we see 2011, as nothing more than a temporary setback
in gold/silver mining stocks, and we’ll explain why below.
More than 3 years ago, on October 16, 2008, I wrote an
article titled, JS Kim Uncovers Four Parallel Markets for Gold: Asia Futures,
NY Futures, Physical Bullion, Physical Coins. In
this article, I discussed the complicity of regulatory agencies such as the
CFTC in the global banking cartel price suppression scheme executed against
gold and silver that was, at the time, creating very significant premiums in
the futures and spot prices in Asia over the Western markets, and in physical
gold/silver prices over paper gold/ silver prices. Since the time I wrote
that article, I have followed up with many more articles that express my
belief that the premiums of physical gold/silver will increase, and
eventually in exponential fashion, over the prices of bogus global banking
cartel-produced paper gold/silver derivative products. Eventually, I believe
that the world will ignore these bogus paper gold/silver markets entirely
when setting prices for physical gold/silver. Because the global banking
cartel expended so many of their bullets in 2011 in keeping the price of gold
and silver much lower than their respective free market prices, it is of my
opinion that it will be much more difficult for them to contain the price of
gold and silver moving forward in 2012.
Today, there are still many reasons to expect a stellar
next couple of years from gold and silver performance, including the mining
stocks. From a technical standpoint, gold and silver appear to be on the
verge of making a very significant run higher. I’m not saying that this
will happen tomorrow, but it does look very probable within a short-time
period. From a manipulation factor standpoint, gold and silver also look
poised for a run higher too. So the two factors I use to assess gold and
silver’s direction both appear aligned with one another to move gold
and silver higher very soon.
As far as the timeframe? Currently, due to excessive
banker meddling in gold and silver futures markets, and the unknown factor of
when greater divergence will occur between physical and paper PM prices as public
awareness of the paper scam grows, the exact “when” part of the
equation is the most difficult to assess, though I still believe that we will
see some strong moves higher in gold and silver during the first quarter of
2012. Furthermore, I strongly believe that gold and silver will still both rise multiples higher than their current banker-suppressed
price and that 2012 will see periods of explosive growth for gold and silver,
more so for silver than gold, and that PM mining stocks, although accompanied
by great volatility once again, will perform much better than they did in
2011. I believe that the largest difference between 2012 and 2011 will be,
despite some continued large bouts of volatility in the PMs, a much stronger
annual trend higher for gold and silver.
The start of 2011 was a phenomenal start for junior
mining PM stocks but the latter half of the year was very negative. Still,
one could have done very well in 2011 with junior mining stocks by taking
profits off the table when they existed and letting one’s remaining
capital ride risk-free in the junior mining sector. In addition to using
discipline to protect profits when they exist in the junior mining sector,
the greatest friend of a gold/silver investor is patience. Sometimes one knows
that great moves higher are coming, but one’s timing may be off by a
mere six to nine months. Patience will allow one to still reap the bulk of
the rewards from these great moves higher as long as one isn’t shaken
out of the markets by the banking cartel induced price volatility in
gold/silver assets. To this end, I leave you with 10-year charts of gold and
silver. Sometimes, it really is necessary to step back and take a deep breath
to see the forest from the trees. To sign up for our free investment newsletter,
please visit SmartKnowledgeU
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