Gold, Silver, Platinum and Palladium Investing Opportunities Roundtable
What happens when you bring together four of the top minds in the precious metals investing space to share insights from the front lines of gold, silver platinum and palladium investing? These excerpts from a Sprott Resources Roundtable featuring Gloom, Boom and Doom Report Publisher Marc Faber, Sprott Asset Management Chief Investment Strategist John Embry, Sprott Global Resource Investments Founder Rick Rule and Sprott Asset Management Founder Eric Sprott prove that great minds think big.
Sprott Resources: Marc Faber, help us understand the Federal Reserve's recent announcement regarding tapering.
Marc Faber: When the Fed began Quantitative Easing 1 (QE1) in 2008, I said it would continue until QE99. So I'm not so surprised by the "no tapering decision." But this money printing has numerous unintended consequences and actually does not help the economy much. Asset purchases benefit maybe 1% of the population, the super-rich. I'm not complaining because I own stock, bonds and real estate, but from a social point of view, it's undesirable because it creates widening wealth inequality and dissatisfaction among the majority of voters. This could lead to more votes for a populist leader who will then tax the wealthy more heavily.
SR: You are based in Asia. China, India and Russia have been very big buyers of gold bullion. What is behind that trend?
MF: In the Far East, we have a tradition of owning physical gold, but what is new is the Chinese government encouraging citizens to own gold. I believe that in the face of political instability and a lack of faith in the U.S. dollar, Asians will continue to accumulate physical gold and silver.
SR: What is the component that you have in your own portfolio of precious metals? And to add onto that, would you comment on the fact that precious metals shares are vastly oversold and they are a complement to physical bullion holdings?
MF: I recommend an asset allocation of about 25% in equities; 25% in fixed income, securities and cash; 25% in real estate; and 25% in precious metals—gold, silver. I think I have around 25% in gold whereby I don't value my gold. I have it and it's my insurance policy. It is important that one day when the so-called shit hits the fan—and I think the Fed is well on its way to creating that situation—you have access to your gold, that it is not taken away.
Read Marc Faber's latest interview with The Gold Report here.
SR: John Embry, you went through the market correction in 1975–1976. Would you share some perspective from that time?
John Embry: That's a very good question because there's a remarkable correlation with what is happening today. For the first three years of the 1970s, the gold price rose almost sixfold, and there was great enthusiasm. Then from 1974 to 1976, it was virtually cut in half. At that point, you could cut the pessimism with a knife it was so thick. Then, gold rose another eightfold from there. The price correction of the last two years has been even more counterintuitive than it was in the 1970s. The sentiment arguably is even more negative, yet the fundamentals are better than they were in the 1970s, so I think we're setting up for a major reversal. The only thing we're debating here today is whether it's going to happen tomorrow, next week or several months from now. It's just a matter of short-term timing because everything is in place.
SR: We have seen an incredible correction. During the upward trend we have seen during the past 10 years, we have had a number of corrections along the way, including some "puke" days. It looked like we had a bottoming at around $1,200 an ounce ($1,200/oz). We've corrected back to $1,300/oz, and now we seem to be heading upward. Can you help us put some perspective on that?
JE: We have had, from top to bottom, over a $700/oz correction in the past two years. That attests to the power of the central banks, the Bank for International Settlements (BIS), the bullion banks and their ability to control the paper market aggressively. I think that is coming to an end because it has driven the price down to remarkably undervalued levels. Talk of gold going to $1,000/oz and below is ridiculous. It's not going to happen. I think this is a fabulous opportunity because it's hugely undervalued and the fundamentals are compelling. We're just on the verge.
SR: What happened to the gold shares in that period?
JE: Gold shares were similarly under pressure, but their subsequent gains were historic. After gold topped in 1980 and then started to re-rally, the gold shares exploded again. You're talking in many cases, ten- or twentybaggers. So I wouldn't get discouraged here for the simple reason that I think gold and silver shares are now as cheap as they've ever been in history relative to where they are going. So it's a great buying opportunity, but very few people seem to be willing to take advantage of it.
Read John Embry's latest interview with The Gold Report here.
SR: Rick Rule, what is happening in the platinum and palladium sector?
MAKE SURE YOU GET PHYSICAL SILVER IN YOUR OWN POSSESSION. Don't Buy SLV, or Futures or Pooled Accounts or any other BS paper silver product .Remember anything on paper is worth the paper it is written on. Go Long Stay long the bull market have even started yet
Posted by Ciblek Alang