“Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria” –Sir John Templeton

Nearly ten years ago I began studying gold and silver bullion. Fresh out of high school, I sacrificed many nights of socializing to consume writings and interviews by the greats of the investment business--Marc Faber, Rick Rule, James Turk, and Jim Puplava, to name a few. As I began learning of the baby calf growing in precious metals, I put on my bargain-hunting cap and went to work buying bullion.

My first year accumulating gold and silver was through second-hand purchases, as I was unaware of online dealers. In buying directly from individuals, I learned nobody wanted to own bullion! Most sellers thought I was naive for wanting to buy from them. Even more interesting, were the reactions of friends and family when I showed off my purchases: their eyes glazed over, while urging me to buy a condo and “stop wasting my time with dirty coins.”

Through solitary days and nights mentally consulting with the greats, I began recognizing that when everyone around you is selling what you’re buying, you’re likely on the right side of the trade.
I share this memory with you now, nearly ten years later, because I see a changing market in bullion, and an eerily familiar market in mining shares. Let me explain.

Today’s bullion market is more liquid and deep, meaning there are far more people interested in buying your gold and silver today than ten years ago. Therefore, it is quick and easy to sell your bullion to someone you know.

Strangely, it is difficult to find anyone interested in buying your mining shares. Not only is it difficult to find that person, but in their stead are five individuals telling you why you shouldn't own mining shares! Their reasons for avoiding mining shares are as wise as reasons for avoiding bullion in 2002.

Mining share skeptics use the 2008 market collapse, stock manipulation, and management scams as reasons to avoid investing in mining shares. Ironically, a great number of the constituency one would expect to support mining shares (i.e., the gold and silver bugs) oppose and argues against owning them!

The gold and silver bug’s most common reasons to avoid mining shares are nationalization risk and financial system collapse (i.e., all paper asset claims defaulting). While anything is possible, including a Mad Max style breakdown of society, the negative sentiment I see in emails and phone calls from all over the world--tells me we’re in a mining share market resembling the golden dawn of bullion in 2002. In other words, the mining share pessimists of today sound the same as the bullion pessimists of 2002. Coincidentally, most of the bullion pessimists of 2002 have moved into the bullish camp.

In this writing I include no charts or graphs, as you’ve seen more than enough of them in the last few years. My opinions come from my gut, direct conversations with the greats I used to only read about, and countless messages from new investors telling me to stay away from mining shares and invest in physical bullion only.

As gold and silver move relentlessly higher, mining shares may get bid into the stratosphere. Newcomers may argue over which new silver exploration IPO is going from $1.00 to $100.00 a share within weeks. It will be your task as an investor to move away from the euphoria and into another asset class stymied by pessimism.

If you’re just getting started in mining shares, consult knowledge from the “greats” of the investment business. As the baby calf in mining shares becomes a raging bull, many investors will become extraordinarily wealthy.

Have any thoughts? Please share them.

Tekoa Da Silva