Precious Metals A Hot Spring Amid Advancing Economic Winter

By simon yao | November 25 2011 12:15 PM

Gold followed an ironically similar set of historical circumstances, neglected and misunderstood by the American public since 1933. As a result of Franklin D. Roosevelt’s gold confiscation act, “Presidential Order 6102”, the government confiscated the public’s gold, marked the price up 60%, and sold it to foreigners. Probably the most harmful societal impact of Order 6102, was the ban on personal bullion ownership maintained until 1974. The absence of individual gold holdings during those decades created a socio-cultural void, and as a consequence, an absence of formal academic teachings related to gold. This may help explain why Wall Street carries an entire generation of PhD’s & MBA’s who scoff at gold because it “cannot be valued and does not produce a dividend.”

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Much like the difficulty of describing colors to a blind man, how do you convey the importance of gold to two generations of people never exposed to it, or formally taught about its monetary functions? This writer speculates the only way the public will earn a monetary education is through monetary upheaval—or in layman’s terms—by losing all their money when the currency and bond markets reset.

Across the oceans however, eastern and indigenous peoples have understood the true value of gold for centuries. Their modern descendants are snapping up physical gold, silver and mining investments at exponential rates—while the American public stands idly by. [v] China and India alone currently represent 55% of global gold consumption![vi]

With every penny added to the gold price, the warmth of precious metals investments grows. In looking at third quarter 2011 financial statements from major mining companies (the most secure and conservative of the sector) we see outstanding revenue growth performance:

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While economic frostbite and monetary upheaval continues to threaten investors worldwide, let us consider a new vocabulary word: “Aurumeotherapy” – (from latin, “aurum” meaning “shining dawn”) defined as the process of exposing oneself to gold and silver related investments. Also used as a verb, “Auruminate”, one may say, “to Auruminate my portfolio—I will add exposure to gold and silver”.

Another item to keep in mind is the smart money is already moving into precious metals. Enjoying an abundance of cheap opportunities, hedge fund manager David Einhorn has further “Auruminated” Greenlight Capital portfolios in 2011, pushing gigantic amounts of new cash into mining stock investments.[vii][viii]

George Soros, the master politician, takes a page from the U.S. government playbook by condemning gold as the “ultimate bubble”--while shaking the ground violently with each new gold position he buys for the Soros Fund.[ix]

As the general public eventually catches on, new investors will move in and prices will go far higher. The question to ask yourself now is—do I choose to accept a condemned investment idea? Or do I trade my life savings in for a monetary education learned the hard way? If you’re not sure, ask Soros. He’ll tell you what he thinks.

In this writer’s opinion, the choice for investors couldn’t be any clearer.

Have any thoughts? Please share them.

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By Tekoa Da Silva Bull Market Thinking