Gold & Silver

The following 27 charts provide a historical perspective on Gold in and of itself and its relation with Debt, Inflation and other factors. Anyone interested in gold should look at these charts.

It is my contention that the move in precious metals...[from] late 2008 through 2011 was largely a result of the expansion in central bank balance sheets and the perceived threat of runaway inflation. Since 2011, [however,] we’ve seen economic growth improve and inflation rates across the globe subside. As a result, investment banks and market strategists are arguing against owning gold, and making the case that, with a lack of inflation and an improved economy, the need for owning gold as an insurance hedge against inflation and currency debasement is no longer present. I strongly disagree.

Below is an infographic illustrating the different forms of investing in gold and their pros and cons.

Until the crisis in the international monetary system is resolved, the monetary aspect of silver will dominate its industrial aspect, and gold will keep its leadership role. As the silver price goes up, the more the industrial demand will decline, while the monetary demand will rise. The question is, in what proportions will this happen. Central banks and sovereign funds will dominate the gold market, whereas private investors will mainly dominate the silver market. There is no central bank that I know of that is buying silver today for its monetary reserves. Gold remains mainly a monetary metal, whereas silver has, above all, become an industrial metal that, in a monetary crisis like today's, can play a monetary role, as "poor man’s gold".

Today China came out with their Central Bank Gold Holdings reporting 1054 tonnes but this is impossible. Here is why.

The $650 decline in the price of gold since it hit $1900 in September 2011 is the result of a manipulative effort designed both to protect the dollar from Quantitative Easing and to free up enough gold to satisfy Asian demands for delivery of gold purchases.

[It has been] suggested recently that there must be collusion between America and China over the transfer of gold from Western capital markets. They assume that governments know what they are doing, so there is a bigger game afoot of which we are unaware. The truth of the matter, though, is simply that China and Western capital markets view gold very differently. Let me explain.

The price ratio of gold to silver has fallen precipitously in raging bull markets for the metals, so the silver price could have an upwards move at four times the rate of any gold price increase. I think that the fundamentals look better than ever, and...[that] there is an explosive move coming in 2014. [Indeed,] I think that within a reasonable timeframe silver will probably trade over $100.

Gold is technically set up for a massive rally to $7,000 to $9,000 per ounce in three to five years based on a collapse of confidence in the dollar and other forms of paper money.

I'm not going to predict a speedy recovery for gold prices. That said, I continue to believe that gold offers investors safety in an uncertain world and, while I remain optimistic about the recovery of the U.S. economy and stellar financial performance of some companies, there is reason for concern on a global level. That's why I think every investor...must own gold.