Have you ever heard of a national or international champion baseball,
football, or basketball team that won every single game it played in a
season? How often does even the best tennis player win every set in a match,
or every match on his or her way to a championship? Or even within a single
game, how often does one side win every possession or score every point?
To the sports fans among us – please don't send me answers to these
questions: they are rhetorical. The point is to recognize and accept that setbacks
are normal, even on the way to the greatest victories.
Further, lower-ranked teams can and do beat top-ranked competitors.
Similarly, outnumbered military forces can win battles, and dark-horse
candidates can win elections.
The main attribute of a winner is not necessarily superiority but
perseverance.
It helps to be right, of course, to be the best – but many people are
completely in the right, or are very strong, and still fail. Failure, alas,
is all too common. Courage in the face of adversity is not – and that's why
real champions are so rare, and so rightly admired.
Shifting gears to the world of finance, let me ask: what prices move
in straight lines? Only prices set by policy. In a market, prices fluctuate –
as well they should – in response to changes in costs, demand, and myriad
other factors. This isn't just normal, it's necessary (and government
attempts to prevent it always lead to disaster, sooner or later).
The Imperative
Combine these truths – what it takes to be a winner, and the imperative
of free-market price discovery – and you can see where I find the courage to
be a contrarian. In order to win, one must be able to overcome obstacles and
deal with setbacks. Perfection is not required – which is a good thing, as no
mortal ever is. What is required is the courage to endure – to stick with the
game plan and see it through.
You've heard it before, so I won't repeat the whole story of the 2008
crash. I will simply reiterate that what truly distressed me the most was the
wholesale panic among people who should have known better and ended up
inverting the "buy low, sell high" formula.
My friends – and I have met enough of you at conferences or have
exchanged emails with enough of you that I do consider you my friends – we
have a game plan that is tried and true.
Part of this plan is an expectation that prices will fluctuate –
greatly. Doug Casey was neither kidding nor exaggerating when he called our
stocks the most volatile on earth. This is why we buy in tranches and prepare
stink bids for big fluctuations.
Well, we've got a big fluctuation on our hands, so it's time to go
hunting with stink-bid bullets and see if we can bag ourselves some big game.
It is precisely when others are panicking that courage offers its greatest
rewards.
Critical Point: Price and value are not the same thing.
That a given stock is up or down when the whole market sector is up or down
means absolutely nothing about the merit of the particular play. If the stock
is higher and the value of the company hasn't changed, that's a signal to
consider taking profits. If the stock is lower and the value hasn't changed,
that's a signal to consider buying more. It's the very fact that price and
value often differ that makes speculation possible.
And that's really what the International
Speculator is all about.
It is precisely at times like the present when Doug Casey, Rick Rule,
and even yours truly have made the most money. We are and will be putting our
own money into the market, just as we're recommending you do. If we're wrong,
we will take the same losses. But we expect to be right, and we expect those
who place their bets alongside us to make a fortune. Literally.
Short version: If you want to win, you must stay the course.
Gold and Silver HEADLINES
American Eagle Early 2013 Gold Bullion Coin Sales
Soar (Mineweb)
The US Mint reports that gold bullion coin sales increased a whopping
283% this February to 80,500 ounces. Gold coin sales in the first two months
reached 230,500 ounces, up 56% compared to the same period of 2012.
Silver coin sales grew 127% year-on-year in February 2013 (3.4 million
ounces and 1.5 million ounces respectively).
On one hand, we have a lot of informational noise about the end of
gold bull market. On the other hand, bullion sales suggest demand isn't
letting up. And you know our viewpoint: we think buying on dips is wise.
China Reserves Ample to Buy World’s Gold Twice (Bloomberg)
In its Chart of the Day, Bloomberg
shows that China's foreign currency reserves have soared more than 700% since
2004 and now surpass the value of all official bullion holdings by a factor
of two.
About two-thirds of China's US$3.3-trillion assets are
dollar-denominated, with another 25% in euros. At the end of 2012, this
amount accounted for 30.2% of the world's total, compared with 14% in the
beginning of 2004.
There is a lot of speculation on how these reserves may be utilized.
Diversification into gold is very probable, yet not officially documented, as
Chinese authorities do not report their gold reserves regularly. We have only
indirect evidence that this process continues – growing gold demand within
the country that involves massive imports, while the country is itself the
biggest gold producer and lets little of the gold mined to
leave the country.
Infographics on a History of Gold Confiscation (Mining.com)
Mining.com has created an infographic providing background on
historical precedents of gold confiscation that turned out to be a
not-so-uncommon practice when push came to shove.
Visualizing All the Silver in the World (Zero
Hedge)
This infographic "visualizes the 1.411 million tonnes of silver
that has been mined in history, and compares that to the world government
reserve holdings (and gold)."
This Week in International
Speculator and BIG
GOLD – Key Updates for Subscribers
International Speculator
- One of our favorite exploration-stage companies
announced
a deal that
provides a lot of upside exposure to its shareholders.
BIG GOLD
- This gold producer has found itself in a
catfight with another company for an acquisition. Here's our take.
