Great Investment Articles

This article by Laurie McGuirk discusses the reasons why the author is a "raving precious metals bull. Here are some excerpts:

On the subject of inflation

I think we're headed for a situation in coming years where there is further massive inflation of what we “need” (food, water, energy, metals, store of wealth – real stuff) and deflation of what we want (boats, cars, racehorses, plasma TV’s, the 3rd house, high end consumables etc). Just my opinion but am keeping a few fillies as a hedge! Actually, two that we bred ourselves are racing for some serious prize money down here tomorrow. We have our fingers crossed.

The gold stocks are behaving dreadfully and indicating that we’re headed back to $600 or worse in the near future. It will take a lot of physical metal to do so for very long, IMO. Be ready and loaded to go. Something is out of whack with the shares. The HUI was 330 when gold was $540 earlier in the year. Today we see HUI at 325 and gold is some $135 an ounce higher. I‘m buying selected stocks at these levels and am looking at the mid-tiers most closely. Of the big boys, Goldcorp (GG), the “bomb-proof” gold exposure in my opinion, is off 25% from its high last week. Fair dinkum, I reckon they are a steal with gold up here. Getting paid $88 to produce their 100% un-hedged gold, is rather attractive to me! That is a real “printing press,” one that Sir Alan would have dreams about I reckon. Others have copped harder hits than -25%, and I reckon this is an opportunity to pick up some very cheap metal equities, especially for those with a longer outlook than next month's performance bonus. The equities do not reflect the metal price and they certainly do not price in the inherent optionality of a precious metal share. Opinion only and never advice!

The silver/gold ratio that I love so much is getting back to levels that appeal. Silver is cheap compared to gold, IMO. At 54 it looks pretty good and I have an expectation that it breaches 20 before the decade is out. We set original positions at 64-66 and am looking to add opportunistically.

The last piece I wrote was titled “Gold at $700 will look cheap in a few years.” I have no edge or inside info. It’s just what I see as the only feasible result of what has occurred in the last 35 years, accelerated over the last 5-8 years. I am confident in saying such because the world is in a significantly worse position than it was when gold was last at this price in nominal dollar terms. In 1971 the USA was the world’s biggest creditor with huge manufacturing production and not much debt. How times change. Gold doesn’t.