This is not about gold cresting at $2,000 . . . Individual Prosperity remains the focus
The Bad News: There is no place to hide!
GUEST COMMENTARY–LarryMylesReports.com–Over the last three years has anyone noticed the (not too) subtle shift in the timbre of the national dialogue? During 2009, the entire western world had to suffer through a brash and overconfident Washington regime blathering on about how government would lead the way and return America to a time of financial recovery. There were also moments of pure comic relief – evidenced by Ben Bernanke resurrecting the term “green shoots‟. I would imagine he did not research previous financial geniuses who stumbled after using that hackneyed term. In 2010, many of us were acutely embarrassed by the much ballyhooed and incredibly short-lived “Summer of Recovery” roadshow. If I remember Washington’s confident pitch, their two-pronged attack consisted of almost limitless government money and millions of new green jobs (?) spearheading the drive, and America would find itself magically on the road to financial recovery.
Here we are three years later…the false bravado and whim-based confidence has been replaced with sneer and pout. The “Big Government Experiment” has delivered (only) fizzle and failure! Additionally, the shift in the national dialogue has now turned downright mean; including words straight out of the looter’s vocabulary in Atlas Shrugged: shared sacrifice, protecting the American people, class warfare, greedy and evil rich, working together for the common good, etc. “Recovery,‟ the elusive goal of all under-achievers, has completely disappeared from the national narrative.
Three years later, and the price of gold has doubled!
Three years later, and many of us have used the hard lessons learned in 2008 to reacquaint ourselves with common sense and reality. Benefitting from the purchase of physical gold at under $800 an ounce and maximizing our gains in the junior gold markets, many of us are now realizing the rewards of turning to gold are not scant and incidental; they are the precursor to enjoying honest prosperity. Equally important, many of my readers around the world have reported they have come to understand that American Exceptionalism has evolved into an inclusive concept, global in nature.
Three years later and the Big Sloppy Collectivist Government has no place to hide. Washington’s naïve policies and their 1970′s style, theoretical ivy-league socialism has failed, utterly.
The Good News: There is no place to hide!
Most of you know how I feel about Europe, and how that tangled and shapeless experiment will either completely dissolve, or morph into a rump socio-economic bloc of ever-diminishing global importance. Every time I hear one of the European power brokers even mention the word contagion my jaw clenches. Contagion; somehow implying the problems in Europe are akin to a disease. A disease or a condition that must be first contained and then eradicated! In their zeal to continue to administer their Keynesian based serum grown out of a culture of twisted and perverted debt, the bumbling Euro-quacks have been remiss in noticing a very important change – namely that their patient has died! What the Keynesian bumblers are calling contagion is in reality, nothing other than cadaver mould. Very soon the unwholesome and vile stench of failure will follow the Keynesians wherever they go, and hiding will be impossible. Where is the good news in all of this? The wily and observant folks in Europe can congratulate themselves on believing in the business of gold, because their orderly accumulation of physical gold and silver will minimize exposure to the spectre of another “Weimar Moment”.
Moving over to the bustle and earned confidence of India and China, the first thing I noticed is the refreshing lack of Keynesian nonsense and drivel. Thanks to enjoying Internet super-connectivity via Boxee-Box, I was able to bear witness to long lines of people waiting outside various bullion outlets. Even without sub-titles it was crystal clear to anyone watching the stacks of paper money being swapped out for physical gold and silver taking place!
The Really Good News: We (continue to) offer a hardball plan!
With barely a dash of my usual purple prose, allow me to get right down to the undisputable evidence found within the folds of the soiled sheet; gold has found a confident comfort level after cresting at $1600 an ounce. I am not worried about a (temporary) price correction. In fact, I am rooting for one, as our strategy should be all about accumulation…but especially buying gold on the dips! We have already passed the tipping point when it comes to fiat currency holding trust and value, so it is obvious the price of gold will move steadily toward $2,000 an ounce in the very near future. When Ben Bernanke was asked if gold was money, he should have manned up and given the true answer: gold is better than money.
I would think this would allow you to draw an obvious conclusion; participation in the junior gold market borders on the mandatory. One of my most market-savvy readers controls a large fund that made its bones in the oil and gas sector. We met just recently, and other than a modest handful of pinpoint and highly strategic investments in the energy sector, he is just about ‘all in’ when it comes to gold.
For the less intrepid, my guess is that you will be driven out of hiding and forced to confront the fact that your stack of mouldy dollars is not where you need to be. Want to be, maybe – but actually need to be? I am highly confident that simple math and the erosion of purchasing power for your dollars will bring you around. And please think twice about attempting to realize profit from playing the U.S. dollar versus Euro dollar game; all that amounts to is fiat cannibalism.
Staking out a position in the business of gold could make a noticeable difference in your fortunes as we move forward. Do not forget, we are all about prosperity and no other sector (currency metals) can provide the clean opportunity for personal financial success.
For those of you who have been here for a while, do you remember the third quarter of 2008? As the weak sisters were wringing their hands and making reservations for space on the window ledge, we were talking about the emergence of an incredible renaissance in gold. I railed against the paralysis of fear and recommended using that fear as a sharp tool. There were killings to be made in the junior gold market; and the first step was to breathe before knuckling down and getting back to working a disciplined due diligence process. NovaGold Resources Inc. (NG) was trading at $0.60; with all of that gold in the ground! Atac Resources Ltd. (ATC) was trading at $0.07, sporting decent early results, enough money to move forward and strong management. At this time of writing, both companies are now trading at over $9.00 a share. Common sense, reality-based investing and the courage to act while others cowered on the sidelines, translated into windfall profits. At least for those of you who did more than just read my report and nod your head up and down.
So here we are, three years later and (hopefully) much wiser. For those of us bent on prosperity, we have chosen to ignore the toxic whisperings of political leaders who have obviously taken direction from Grima Wormtongue. We have also shunned a mainstream media that I feel has crossed the line from bias to corrupt.
We deal in fact and fact-motivated opinion. Fact: Central banks are afraid and driven by stuttering fear. Result: The printing of money has reached historic (and ridiculous) levels. The purchasing power of the money printed continues to go down (inflation). At the same time the central banks are buying gold. Figure it out!
Large managed funds are breaking with tradition and increasing their total assets in gold. Reason: As paper money continues to lose value and gold continues to appreciate, why would a managed fund not make the intelligent move and increase their gold holdings? Many of the funds have already made the move to hold more gold; the rest will follow. Guaranteed.
As you are mulling this over, do not forget the Europeans from all walks of life have already accumulated gold and are still in the process of adding to their holdings. Lest you also forget, the people of India and China, are lining up like lemmings to buy gold (and gold’s stunted cousin – silver). And as sure as I am sitting here, I know that smart Americans are not sitting idly by as the lack of quality leadership in government lies fully exposed. Trekking toward the beacon of gold by concerned Americans can only increase.
The time is now for junior golds…
….but not without the basics
I firmly am of the opinion that the junior gold markets will experience a powerful renaissance of interest and activity. For that reason I am going to include a few basic pointers for your consideration. And only a suggestion of course; but the more seasoned and experienced penny market player may want to consider reviewing the basics of investing. Reason: the junior gold market is (imo) on the cusp of going ballistic and I would not want anyone to lose the due diligence discipline that got us here in the first place. A rising tide lifts all boats…
Management: I think it is important to invest in companies that can boast a strong management team; one with a proven track record. Prefer management that includes the building of a mine or a proven reserve of gold. That is where I start, but am certainly prepared to work down from this ideal as I consider the merit of the property. Of course, the success and work ethic of the company doing the work on the ground enters the equation here as well.
Timing: At heart I am a blue-sky investor. Right at this moment, with gold juniors on the threshold of hitting the global spotlight like never before, I look for a well-managed company with a property of merit. In addition, this property must have a proven resource and have the funds in place to continue drilling in an attempt to expand their resource. Sure, and I also wish I could sleep through the night. Again, working backwards – how about the company that has a property of merit, has taken the time to do all the necessary preliminary work, and has a financed drilling plan to move forward? A little more risk, but as long as the share price reflects the level of work and not the ham-fisted attempts at premature promotion, this would be a company that interests me. One look at a trading chart can give you an answer when it comes to unrealistic promotion.
Financial Disposition: A great sprawling property and an aggressive drill program are great – as long as the company has the means to complete the groundwork and initiate a meaningful drill program. Also, make sure the company is not carrying a load of debt and has more shares than China has people. I enjoy companies that raise money as they go, and in between financings the work has actually moved the company forward. I especially like one of my companies as providing the perfect model: three financings… all of them done at a market premium, all oversubscribed, and all non-brokered. So, the whole idea is financings that result in adding significant value to the company and shareholder value. Kind of basic, yes?
Share Structure: There are a couple of companies I am looking at right now that offer realistic studies of how I perceive success. One company has well over 100,000,000 shares out, with only modest success on the ground, and they will also need to raise more money in the not too distant future. The share price is languishing. Contrast this with the other company that has far less shares out, a full till, with management continuing to expand their work on the ground. All this and they continue to do the work as outlined during their last raise of capital. In other words, they set an objective and reach that goal…and have done so for the last three seasons. Thanks to warrants being exercised there is no need to raise more money, unless of course they expand an already aggressive and totally funded drill program. Some would object that their share price is loftier than it should be, but based on an exceptional management game plan, solid results from the field and a conspicuous lack of traditional promotion, it is my contention the share price is exactly where it should be…and obviously the market agrees.
Political Risk: I love this one! And yes – you must do your own individual due diligence and make your individual decision on what constitutes a realistic risk-reward scenario. It does not take a genius to invest in a company with a property of merit in Canada or the United States of America. Safe as church, and country risk assessment does not really factor into the due diligence process. I use the word individual because we all have our own threshold of pain and agony when it comes to investing our hard earned dollars in gold plays outside of proven and friendly borders. For instance, I would not invest a single dollar in any Mexican gold play – unless of course there was the chance of a complete financial home run and I could get in dirt-cheap. Remember: many people to give their company a mention in my reports pitch me aggressively. Some of the private and confidential comments made about Mexico leave me cold. Do I like Guyana? I do not dislike Guyana, but I would have to think long and hard before I recommended a Guyana gold company that was exploring anywhere near that country’s disputed border with cash-strapped Venezuela.
I do have a ’business of gold‘ investment page that is in dire need of an update; but even now it contains ideas worth reviewing when it comes to investing in the business of gold. And as usual, any and all comments are welcome. I am currently working my due diligence process on a select number of companies and will be back to you with a full report.
Larry Myles Reports
Larry Myles is neither a geologist nor a financial analyst. I do not purport to offer personal investment advice nor recommendations. While all statements of fact are derived from reliable sources, an d are believed to be accurate, I make no warrant that they are so. You must do your own research and check statements of fact for yourself. My opinions are precisely that, my opinions. I do not accept any responsibility for any gains or losses you may experience resulting from actions taken based on my opinions. If not otherwise qualified, you should consult with your own personal financial advisor before engaging in any investment activities. Larry Myles Reports does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment. Larry Myles may actively trade in the investments discussed in this publication. Larry Myles may have a substantial position in the securities recommended and may increase or decrease such positions without notice. I do not know your personal financial circumstances. I am not your personal financial advisor. You must do your own due diligence. By entering this web site, or reading LMR reports, you acknowledge and accept the foregoing.