Friday, November 26, 2010

A Note to a Friend

26 November 2010

I am still too busy to post much on my blog, so here is an excerpt from a note to a friend....

As you know, I so distrust the financial markets that the precious metals are the only sector in which I will invest. This decision has so far has proven rewarding as well as "safe." I don`t think I`m paranoid, though I got burned in the tech bubble (prior to beginning to study financial markets and how they work!).

I know what I`m looking for in terms of responsible fiscal policies, but don`t actually see ANY of what I`m looking for so far!

It does seem that a 30s scenario has been averted, but that is not the only problematic possible outcome. The most probable future certainly continues to present a picture of devalued dollars, increased taxes, continuing dislocations and imbalances, etc. The prudent will continue to bail out the reckless, and savers will be punished. So these are not really good signs!

I can only see "repair behaviour" being stimulated by a future crisis situation, probably "the funding crisis," when the US can no longer sell treasuries at low interest rates. (The Fed can only buy so many without destroying confidence in the currency.)

So if you're in the (gold and silver) ETFs, good for you!

One of my advisories (Aden Forecast) is calling for a temporary pullback in gold, so your next buying opportunity may be coming up. They are advising against new purchases at this time, so I pulled out a small amount of cash today to cover current travel expenses.

One of my new positions is Gold Resource. They have an inspiring dividend policy, which might interest you.

I am also following Copper Canyon closely, due to this company's lilnkage to the NovaGold Galore Creek project.

And I would never sell Alexco (Resource Corp.) under any circumstances! They are about the smartest people in the business, and are perfectly located in the Yukon's historic Keno Hill silver district....


  1. Hi, just been reading your popular Gold post, and thanks for the clear and simple fundamental explanation of current gold trends (best I found). I just want to give you a heads up that gold mining corps and gold price is two very different things. Look at gold corps during crashes vs Gold.

  2. Hakon, No argument. Gold is more stable than the gold miners during pullbacks. However, if you look at the long-term trends, the gold miners outperform gold. Why? Their profits increase at a higher percentage rate than the gold price - that is, profit leverage. As Canadians, we cannot easily own gold itself in a registered retirement account - a logistical consideration, but an important one. There are many ETFs, but so far, they are all in USDs, and you pay an exchange rate penalty both going in and going out - quite a deterrent! Maybe we require more diverse investment products in Canada - denominated in Canadian dollars!