I have always recommended buying bullion coins and taking delivery. Mining shares are leveraged. They can kill you in a decline. You must be willing to buy them in a crisis downward move. Few people have the stomach for this.
John Embry is an old-time gold bug. He manages the Sprott Asset Management. Sprott is heavily into gold bullion. You buy it as a proxy for holding bullion. It’s a good strategy for the fairly rich, although the richest man I know holds only bullion, not claims on bullion.
Embry was interviewed by Eric King. King asked him about gold’s recent downward move from $1900 to $1700. Embre replied: “Well I think we are continuing this lengthy consolidation that’s sort of after the takedown, post Labor Day. We’re rebuilding the market and we are getting close to the next major upleg. I’m actually encouraged in this belief by the fact the sentiment is quite negative.”
Very often people have figured out we are going to have a major move, but before that move takes place there is a huge counter-trend move down and it gets rid of all but the true believers. That’s actually extraordinarily healthy because when it goes, it goes really clean to the upside….
He is bullish on silver. “I’m just wildly excited about silver. I think it’s been consolidating here between $30 and $35, after having seen $50, and the fundamentals are impeccable. I have no problem with silver doubling in a reasonably short period of time.”
When asked about the mining shares, Embry stated, “Well, the mining shares have been almost tragic. I mean I’m shocked to the degree with which they’ve been beaten down. I have to believe there is a lot of nefarious activity going on, shorting and what have you, undeclared shorting.
But the fact is that I have never, ever seen a number of these good quality juniors as cheap, relative to the price of gold and silver, as they are now. If I’m correct and the gold and silver prices are on the cusp of major up-moves here, I think the potential in these stocks is staggering.
Silver mining investors are bearish. Good, he said.
Basically, it’s just a matter of patience and no leverage because if you’ve been levered here, you’ve been one of the sellers. People are conditioned by their most recent experience and their most recent experience has been terrible. So naturally they are all bearish and can’t see the potential.
Here is my view. Do you have physical bullion coins? If not, avoid mining shares. First things first.
For the full interview, click the link.