If you’re new to the world of gold and silver J.S. Kim gives a good run down on some of the major points of interest and discussion…
Bankers have engaged in a huge misinformation campaign against gold and silver to deliberately keep people out of buying physical gold and physical silver and the best mining companies, that while paper, are backed by actual physical gold and physical silver. If you’re a newbie thinking about buying gold and silver assets for the first time ever, here’s what you need to know.
(1)True gold and silver bulls are NOT permabulls, but many stock bulls are permabulls.
All those that truly understand the gold and silver markets understand that bankers support the global Ponzi fiat currency system by deliberately creating massive volatility in gold and silver paper derivative markets, and thus, the reflected prices in physical markets. Thus, we expect gold and silver to be volatile every year, we expect periods of significant downside volatility due to banker raids in gold and silver futures markets, we expect the bankers’ use of HFT algorithms to deliberately distort prices in gold and silver markets, and we expect various CME regulatory changes designed to force longs to liquidate their positions in futures markets. True gold and silver bulls will never tell their clients to buy gold & silver 24/7, 365 days a year, always attempt to manage volatility every year and never advocate purchases of gold and silver at year highs but do advocate purchases of gold and silver on dips at yearly lows. Just see this article “Fear & Panic are the Banking Cartel’s Weapons V. the Gold & Silver Bull. Patience and Logic are the Best Defense” as an example of how we advocate buying gold and silver assets on huge dips when they happen versus chasing them higher when they go on huge runs.
To the contrary, the global commercial investment industry is perpetually trying to deceive clients with their permabull strategies in terribly performing global stock markets. They will point out the fact that US stock markets have doubled from their lows a few years ago, but simultaneously warn you against ever buying gold and silver stocks because of the huge volatility of this asset class, even though the HUI gold bugs index has nearly tripled from its lows in October 2008 and slaughtered the performance of the S&P 500 when respectively comparing both indexes from their lows in 2008. But no commercial investment advisor will ever tell you this fact, because if daily trading volume picks up in the mining shares, manipulating their share prices becomes much more difficult a task for the bullion banks. Thus, their strategy is to keep people out of the mining stocks, even during times when their valuations are ridiculously low, as they were in October of 2008 and as they were in May of this past year.
While it is true, that mining stocks are wildly volatile at times, if you wanted to take the unwise strategy of buy and hold that commercial investment industry advisers always advocate, one would still have been vastly better off invested in the HUI index versus the S&P 500 index over a long “buy and hold” period. From January 1, 2001 to present day, the HUI gold bugs index has returned a nominal, cumulative yield of 917.30%. The S&P 500? Though a laughable 7.44% return over the past 12 years, advisers at commercial investment firms have been, and are still, telling clients that buy and hold is the best strategy for 12 straight years! PM mining stocks sometimes return the entire 12-year yield of the S&P 500 in two days. If you have never invested in gold and silver assets, it would be unwise to start to do so without the guidance of someone that understands the volatility of these assets and that can guide you into purchasing at the low-risk, high-reward price points that develop every year or to do so without taking the time to truly learn how gold & silver markets operate. Learn the truth about the mechanisms that control gold and silver markets, and the risk of volatility can be greatly mitigated and subdued.
(2) Volatility Does Not Equal Risk
Bankers deliberately and artificially create significant bouts of volatility in gold and silver assets from time to time to create the perception that gold and silver are risky assets. Volatile? Yes. Risky? Laughable (as is Goldman Sachs’s recommendation last week to their clients to sell gold). Obviously I’ve demonstrated to you that yes, gold and silver are volatile, but even in the very volatile mining stocks, they returned a cumulative yield 123X’s greater than the S&P 500 index in the same past 12-year investment period. So are gold and silver assets (barring the dubious GLD, SLV and futures contracts) risky? No.
(3) Gold and silver are still CHEAP, not EXPENSIVE
People erroneously confuse relative price with valuation all the time. Just because gold and silver have risen 70% in a short-time period or have risen 300%+ over multiple years, people believe that gold and silver are expensive. Perhaps this is why, of all investable assets in the US, only 0.1% own gold (probably less own silver). Globally, only 1% of all global investable assets are allocated into gold, while 49% are in bonds, 36% in equities, money markets, 9% and other 4%, according to the latest study by the World Gold Council. If one understood the banking cartel’s price suppression schemes, which I have documented in general on my blog (www.theundergroundinvestor.com) since 2006 (and documented in depth for my members), then one would understand that the price of gold and silver are heading much much higher, which still makes their price cheap today. If you believe this just to be an empty prediction from someone you have never heard of, then just go check 7-year my track record on my aforementioned blog. My predictions about the behavior of gold and silver prices are there in black and white dating from 2006 when I was urging people to buy gold at $580 an ounce and silver at a fraction of its current price.
Sure it would have been better to buy back then, but this does NOT mean that gold and silver prices today still are not cheap, and that you cannot build great wealth with gold and silver going forward. On the other hand, you can find a prominent employee at some major global bank every single year of this existing gold bull that has told you that gold was expensive at $400 an oz, $500 an oz, $600 an oz, $700 an oz, $800 an oz, $900 an oz, $1000 an oz, $1,100 an oz, $1,200 an oz, $1,300 an oz, $1,500 an oz and now at $1,700 an oz. Furthermore, the great majority of the 1% invested in gold is in paper futures and ETFs. Along with some others, I’ve been urging people to stay away from the GLD and SLV ETFs, and finally our message seems to be gaining traction. Over the past few years, there has been a movement away from ETFs into physical instead. Just think of what will happen to gold (and silver) prices when 5% of global investment assets, instead of the existing 1%, pour into gold and silver.
(4) Gold and Silver Prices ARE actively suppressed by bankers
No, this is not a conspiracy but simply fact. Don’t let the analysts out there that say such claims are conspiracy and false convince you of their misinformation campaign. The circumstantial evidence of Central Bank and bullion bank gold and silver price suppression schemes is as overwhelming as the circumstantial murder evidence that existed against OJ Simpson. I’ve outlined some of this evidence in the video below for your review. As well, visit www.gata.org for a mountain of evidence. Thus, since all banking forces conspire to keep gold and silver prices low and not to drive the price higher, this supports my thesis that gold and silver prices are still cheap today. Remember, I was making these claims more than six years ago and ridiculed for my claims back then though the claims of gold and silver price suppression are much more accepted as fact today. Remember, the philosopher Arthur Schopenhauer said this about truth:“All truth passes through three stages: First, it is ridiculed; Second, it is violently opposed; Third, it is accepted as self-evident.” In 2006, many in the commercial investment industry ridiculed for my firm stance that gold and silver prices were being manipulated downward by bankers. I believe that now we are still in the stage when the truth about gold and silver price manipulation schemes are still being violently opposed but that we will soon be moving into the stage when this truth becomes self-evident.
Always remember the plethora of examples that already exist when others were ridiculed for their commitment to exposing the truth about the global financial industry. When the first people publicly claimed that evidence was overwhelming that bankers were criminally manipulating LIBOR, they were uniformly ridiculed. Now, we all know this to be true. There is a psychological tendency to reject information that is new and novel to us and to stick our acceptance of the familiar. This is largely the reason why so many people continue to reject the notion that gold and silver prices are being widely manipulated today even though the evidence is overwhelming.
(5) Never leave your mining shares unencumbered.
Many people do not know that it is a common practice among brokerage firms to lend out gold and silver mining shares in a margin or options account to short-sellers that work against the best interests of those holding long positions in gold and silver mining shares. One can prevent this practice by holding all shares in a cash or Type 1 account and avoid holding any PM shares in a margin account (often called a “cash and margin account”) or an option account (often called a “cash, margin and option account”). If you own PM mining shares, do NOT leave them unencumbered by holding them in a margin account. If you leave them unencumbered, chances are nearly guaranteed that your brokerage firm WILL lend them out to short-sellers that will try to drive the price of your PM shares down. Of course, firms will still naked short stocks all the time and we can’t stop this practice, but at a very minimum, we should prevent our PM shares from being lent out to short-sellers. In general, avoid margin accounts as some brokerage firms will lend out your shares even if you have zero debt in your margin accounts. Finally, call your brokerage firm after you transfer or change your account to a cash account or Type 1 account, or if you already own a Type 1 account and request that they do not lend out any of your shares. Part of any margin account agreement is the “hypothecation and re-hypothecation” clause whether you read the fine print in your contract when you signed it or not. This clause allows a brokerage firm to lend out (“hypothecate”) securities held in any margin account to short-sellers without your knowledge, which basically means that they will do this, and hurt your stocks in the process. With PM mining stocks in particular, one person ensuring that their PM stocks can not be lent to short-sellers will likely not make a difference, but if every single PM stock owner holds their stocks in a Type 1 account, this just may make a huge difference in muting or curtailing some of the raids that bankers periodically conduct against PM mining shares.
“The Essential Newbie Buying Guide for Gold & Silver”
Here are a few other videos that will help you truly understand the gold and silver market:
About the author: JS Kim is the Managing Director of SmartKnowledgeU, an independent gold & silver based research and investment firm fiercely dedicated to fighting the fraud of Main Street and promoting a return to sound money as a way to gain freedom from the debt enslavement tactics of global bankers. Follow us on twitter @smartknowledgeu.