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Several years ago we published an
advisory report for our ten rules on investing in gold and silver. It was so
well received some of our colleagues, friends, and analysts asked for
permission to copy and republish this work. We gave that permission and it
was widely reprinted among those reporting on precious metals in our
industry.
In today’s report, in light of
changing social and economic conditions, we decided to redo this story and
add some twists making the effort more relative to a new and changing
atmosphere for not only gold and silver but for some base metals as well.
We think these ideas are very important
for traders and investors to consider. Please read them carefully and see how
they relate to your accounts and personal trading plan. We suggest all of
those busy buying and selling precious metals have these ideas available.
Hopefully they can be applied to avoid new risks and focus on potential gains
in the years ahead.
General Facts and Our Personal Opinions
There have been powerful political and
financial groups that have been squashing precious metals prices for years.
They let them trade somewhat freely but only within rather tight perimeters.
These folks have an agenda to maintain the status quo and precious metals
have a propensity to screw up their financial and social games if allowed to
rally too freely.
These same groups disparaging gold with
powerful media are key Wall Street players, fund managers, big private
investors, and those who need precious metals prices held down to avoid
negative events in their own portfolios.
While all of this is busily going on,
these same folks knocking precious metals as trading vehicles and investments
are busy buying gold and silver in prodigious amounts after they slam the
prices to new and recent lows.
Central banks and bankers have been
buying gold in large amounts in recent years for a very long time. It has
grown so obvious they cannot hide it and prefer not to discuss it.
Central banks and bankers, to support
the anti-gold paradigm over the several past years, were net gold sellers
doing their level best to smash the prices down and hold them down. One
economics minister in England made such a poor gold sale trade on his central
bank gold he cost the bank over $5 billion.
As the world’s economies sink
toward the cellar and gold becomes ever more important on higher prices,
national governments that have gold stored in foreign vaults are demanding
their gold be shipped back to the owners’ homeland. This is beginning
to become very serious, as it appears (or has been alleged) that much of
their gold may have been secretly leased out, sold to others for income or
sold off out of commingled, unsegregated storage facilities. Louder critics
wonder if there is any gold left in the vaults at key USA locations, as
audits have been absent for decades in some cases.
Key non-USA central banks and heavy
private buyers of gold bullion, gold mines, and gold and silver mining shares
have been accelerating purchases of metals in very large and obvious amounts.
In some cases mammoth sales in the millions go unreported.
China is a big producer and non-exporter
of gold and some silver. India has long been a heavy buyer of gold and
silver; primarily gold for their flourishing jewelry industry. Asians have
historically been buyers, traders and investors of precious metals. In the
past few years their buying sprees have gone ballistic. Fiat bonds and
currencies are a very and growing real threat to portfolios public and
private. Those in the know are moving fast for security.
Middle Easterners having the wealth to
buy are huge investors and buyers. We know of one case where a Saudi investor
flew to visit an African mine to purchase some gold. After his visit he
purchased ten tons of gold and took it home on his 747 and bought the entire
mine for cash.
Russia is a large owner/buyer of
precious metals and we think they own much more than has been reported
publicly. Those involved in this business prefer to keep purchases and
ownership under the radar for many reasons.
We could see it coming several years ago
but now the appropriation (theft) by some governments has made it very risky
to be an invested miner in some jurisdictions. Dictators and related national
so-called leaders encourage investment by the mining companies ensuring them
their investments and properties will be safe.
After things are running smoothly and
the business is highly profitable, they come with the taxes, increasing
exponentially, and then comes the outright theft of
entire businesses. Venezuela is a prime example. The damage there has been
especially focused on the energy industry where Total and Exxon sustained
massive losses and are in court trying to recover their money.
In the USA, bullion dealers have been
generally left alone, but surveillance has been increased to monitor what
they buy and sell and who has the goods, where the money is coming from and
where the metal is going.
In Switzerland it has become increasing
difficult for Americans to do business in banking. For now the precious
metals business is being watched more carefully but remains open and
tradable.
Now that we have discussed current
conditions, what do we do?
Now that we have discussed current
conditions, what do we do?
Ten Rules for Trading and Investing in
Gold and Silver
Please keep in mind these are
generalized rules and personal account size (as well as other personal
situations) can change or bend these rules somewhat. We’ve tried to
make the ideas applicable to the majority of investors and traders in gold
and silver.
1.
We prefer coins rather than
bullion bars or wafers. Coins are easier to trade and hold for many reasons
including insurance, transport, verification of
authenticity, grading and quality. Keep in mind investments in bullion and
coins won’t create a tax event until you exit and/or re-enter. Check
with your CPA on these rules to be sure.
2.
Under current market conditions
silver might grow in value faster. As such we like silver coins the most as
of this date. Obviously this can change down the road but for now that is the
preference. Large buyers and investors might be buyers of bars and other
forms of bullion, as their intentions might be more for commercial uses in
the future.
3.
We recommend that precious metals
buyers and investors (not numismatic collectors) buy coins in the amount of
10% of the first $100,000 in an account. If your accounts are larger you have
to adjust and balance within reason, practicality and common sense.
4.
We strongly suggest you take
personal possession and be responsible for security. Storage in banks is
particularly risky as has been proven in some sad cases on the west coast.
The old joke is two people can keep a secret as long as one of them is dead.
In a family you really must have two people with knowledge of storage
locations.
5.
If you are looking to own mining
shares, we like a select small group of juniors having three years of
operations cash in the till, proven management, a property next door to a
senior mine in operation and a proven track record.
6.
The best mine locations in our
opinion would be Alaska, Canada, Northeast Nevada, Northern Mexico and
precious few other spots near those states and nations. There are plenty of
choices located in that geography. There is no need to run all over the world
and be in places with little knowledge and more risk. There are a few
exceptions and we have some in our Trader Tracks Newsletter.
7.
Trading is not investing and
investing is not trading. Coins should be the page one safest program where
you begin. Owning the right shares has more risk but not much more at this
time. Trading futures using the proper tools can be as safe as shares but you
need experience or must use the skills of someone who has proven they can do
this work. Trading in shares and futures is becoming more risky primarily
because of market manipulation and untoward interference.
8.
Those trading shares at this date
might prefer the intermediate operating miners for good growth and more
security. Select juniors (very few) offer even more potential upside but you
have to be smart and selective. Senior mining shares are too slow and
ponderous but big investors like them as a place to park money and let it
ride, so to speak.
9.
When you enter the markets for
gold and silver shares, note the annual cycles and enter when they begin and
take some profits near the highs. Forget tops and bottoms; take a slice from
the middle and be happy. Good intermediate sized operating companies can
still earn 25% twice a year in the normal calendar cycles. The days of buy
and hold are mostly gone except for those with huge deep pockets where they
purchase millions of shares in senior miners or growing juniors, letting them
sit invested for years.
10. Please be
discreet about things of value that you own whether they are shares, physical
metals, expensive art or whatever. We are in the middle of decades-long
international depression. Shoot your mouth off and you could invite big
trouble.
Hard Assets are the Best Investment -
Not Fiat Paper
It is obvious to us hard assets are the
answer. It all starts with physical gold and silver.
Somebody please tell us when global bond
markets crash for good and we’ll tell you when this can all get better
and we start over again, maybe with a gold-backed currency. –Trader Rog
Roger Wiegand
www.webeatthestreet.com
Contact Claudio Bassi, at Trader Track’s New York City publishing offices
for a trial subscription. Call
718-457-1426 Monday through Friday, 9:30am to 5pm or,
e-mail cbassi@miningstocks.com
Recommendations made in “Trader Tracks”
are exclusively those of Roger Wiegand and the
publication is also exclusively the editorial content provided by Roger Wiegand. TAYLOR HARD MONEY ADVISORS, INC. (THMA)
LOCATED AT 33-42 61ST STREET, WOODSIDE, N.Y. 11377, ASSISTS IN THE MARKETING
OF “TRADER TRACKS.” However, the views expressed in Trader
Tracks do not necessarily reflect those of THMA (Website:
www.miningstocks.com). Because individual investment objectives vary, this
summary of investments should not be construed as advice to meet the needs of
any particular reader or subscriber. Opinions expressed in Trader Tracks are
statements of judgment expressed at the date and time they were written, and
as such, are subject to change without notice. Roger Wiegand
is not a CFA nor an investment advisor, but a private individual who studies the
markets extensively and offers summary opinions. Before any type of
investment is made, you should always seek advice from your attorney, CPA,
registered broker, or financial advisor. There is considerable risk in market
speculation and investing. There are no guarantees regarding performance and
past performance provides no guarantee of future performance. Your trading
accounts are always subject to the potential for severe or total losses. This
service will involve SPECIAL EMAIL ALERT TRADING RECOMMENDATIONS PROVIDED
AT ANY TIME Roger Wiegand believes it is
opportune to trade either in or out of the market in question. AS SUCH,
THIS SERVICE WILL BE CONSIDERED A PREMIUM SERVICE. The management of
THMA, Inc. does not anticipate trading in the securities recommended in
Trader Tracks. No statement or expression of any opinion expressed herein
constitutes an offer to buy or sell the securities mentioned herein. Trading
futures contracts may not be suitable for all investors. You may lose a
substantial amount of money in a very short period of time. The amount you
may lose is potentially unlimited and can exceed the amount you originally
deposit with your broker. This is because trading futures is highly
leveraged, with a relatively small amount of money used to establish a
position in assets having a much greater value. If you are uncomfortable with
this level of risk, you should not trade futures contracts. If you need a
broker, contact mine, Ryan Olson, Managing Partner, Jackson-Olson commodities
at 800-352-5228 or by e-mail rolson@jacksonolson.com Contact Jackson-Olson
Commodities, LLC, 5510 Abrams Road, Suite# 101, Dallas, Texas 75214. Local
Telephone is 214-691-8600. Fax is 214-691-8614. Jackson-Olson clears trades
through R. J. O’Brien founded 1914. They provide clearing and execution
services in virtually all markets around the globe. To subscribe to Trader
Tracks stocks & bonds, futures & commodities, contact Claudio Bassi with e-mail CBASSI@MININGSTOCKS.COM
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