Friday, June 01, 2007

Precious Metals Looking Up Again

1 June 2007

While precious metals - at least gold - had their fourth best month in history (in US dollar terms), precious metal mining stocks collapsed in May, particularly when denominated in Canadian dollars. Similarly, the metals themselves also fared poorly in terms of Canadian dollars.

It was an ugly month for our portfolio, making me wish I had cashed out for the month. We lost all of our 2007 gains and more, and all the losses occurred this month.

However, I am presently operating on the tsunami model. Gold and precious metal fundamentals remain extraordinary. Thus, I think we have just witnessed the tide pulling back in anticipation of an oncoming tidal wave. Almost every techinical indicator presages that gold and silver will perform outstandingly from present levels, and that is likely to propel the mining stocks, which have been in decline since May 2006.

So I will say it only once. If you aren't invested in gold and silver and the mining shares, sometime fairly soon may be the time to make your purchase. The next 12 months are likely to be very positive for precious metal investors in all asset categories, though we don't seem to have reached bottom yet....

It is worth rememebring that the tide goes to unprecedented lows before the tsunami rolls in. Right now, the tide is going out as the tsunami forms, literally taking every available drop of ocean water into it as it begins rolling its way towards the shore. This looks like a big one, so be prepared for something that may be unique and unexpected!


  1. Re: “While precious metals - at least gold - had their fourth best month in history (in US dollar terms), ...

    A “Federal Reserve Note” is not a U.S.A. dollar. In 1973, Public Law 93-110 defined the U.S.A. dollar as consisting of 1/42.2222 fine troy ounces of gold.

  2. Can't argue with you there. US federal reserve notes are best fitted for the shredder....

  3. To be accurate, it is worth noting that President Nixon removed the peg of the US dollar to gold in order to prevent the French under De Gaulle from redeeming the essentially worthless dollars in exchange for their nominal value in gold under Public Law 93-110. Of course, the French were wise to prefer gold to the in fact worthless currency, and Mr. Nixon confirmed what has become semi-official US policy since (the ineluctible devaluation of the dollar) by overturning Public Law 93-110.