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I am a
diehard Gold and Silver Bug...to the core. If you are reading this
article I assume that you are too and at some point over the past 10 years
you have bought gold/silver mining shares after analyzing the markets and
determining that metal "in the ground" is sold for a fraction of
the price as metal above ground. A common understanding is that mining shares
are "leveraged to the price of the metal" such that when the prices
of gold and/or silver rise the mining shares should rise exponentially.
Being the
brilliant investor that you are and having figured out that governments and
bullion banks around the world are illegally manipulating the prices lower,
the added leverage gained from owning the mining shares will make you rich
beyond your wildest dreams when the manipulation ends! The years of people
laughing at you for being a rabid gold bug will finally pay off and YOU
will be the one laughing all the way to the bank. Well, maybe not to a BANK,
but somewhere you can store your winnings and live the rest of your days in
luxury!
I too was
in your camp and rode the mining share roller coaster for a very long time
taking the wins and losses in stride knowing that at some point I would
"cash in". All that changed about 2 years ago when I realized I was
underestimating the magnitude of what gold and silver manipulation means and
the scenarios that may play out as the manipulation ends.
First of
all I'd like to tell you that I don't have all the answers for you, but I do
have a deep understanding of the Gold/Silver manipulation issues and my
current stance on the mining shares was developed by extrapolating different
scenarios mixed with some common sense.
The
question is... "Will mining shares payoff more than physical metal when
the manipulation ends?" My answer is "maybe" but only if the
fiat monetary system stays intact. If the coming monetary crash is as serious
as I think it will be, I don't see mining shares ever paying off! Don't
misunderstand what I'm saying here. I know that mining companies hold MASSIVE
wealth in the ground. THAT'S THE PROBLEM! It's not that the company's
reserves aren't valuable...IT'S THAT THEY'RE TOO VALUABLE!
Here is my reasoning:
1) When the
manipulation ends gold/silver will skyrocket many, many multiples of where
they are valued today. So much so that everyone will want answers to the
question "Why?". The manipulation story will come out and the
people will demand that the wealth of their nation be shared amongst the many
ordinary citizens that were duped.
2)
Globalization will likely end with a fiat monetary crash and every country
will close their borders taking care of their own citizens first. Non-citizen
claims of gold/silver mine ownership will be laughed at.
3) There
will be anger towards the "rich people" that caused the crash and
the destruction of their wealth. This includes the banksters as well as
anyone who may profit from their misery. The likely substitute for fiat money
will be gold and silver backed money and I doubt private ownership of a country's
supplies of new money in the ground will not be allowed.
4) There is
a massive amount of phantom shares floating around in every brokerage house
and at the DTCC (some say 1,000x+ for most mining shares). When everyone who
supposedly holds shares tries to cash in there will be no way to allocate
them because there will be so many legitimate claims. The mining share Ponzi
Scheme will come crashing down.
5) All of
the brokerage houses will likely fail with a monetary crash and there was
only $344M in net assets left in the SIPC insurance fund at the beginning of
2010 to insure $TRILLIONS in SIPC Member accounts.
http://www.sipc.org/pdf/2009%20Annual%20Report.pdf
6) The
chaos that will come with a global monetary crash will disrupt all mining
operations. Without proper banking services there will be no payroll, no
supplies bought, no permits granted, no shipping avenues or other necessary
components to profitably mine the metal.
7) A fiat
monetary crash may bring the elimination of global debt but many legal claims
as to the ownership of the mines and equipment. The mess will take years to
sort out...if ever.
8) The
"Tax Man" is pretty much guaranteed to take his share with some
kind of special taxes on the mining of the country's new money. Why do I
think gold and silver will be used as money? Well, because the "new
money" is already being printed!
Hidden
Meanings In The New $100 Bill!
http://www.roadtoroota.com/public/261.cfm
There is
more but you get the idea.
I know I
may be missing out on the "win of a lifetime" but with all the
reasons above I just can't see gold or silver mining shares paying off when
the official manipulation ends.
So now I
have sold all my mining shares, bought physical gold and silver coins and
decided that the gains on the physical metal would be enough to keep me
happy.
May the Road you choose be the Right
Road
Bix
Weir
Bix Weir is a freelance author and analyst dedicated
to exposing the long term manipulation of the gold and silver markets. He has
worked closely with the Gold Anti-Trust Action Committee helping to pull the
curtain away from the Cabal of International Bankers that have taken control
of our free market system.
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