The Gold Report: Byron, anyone who reads your reports knows two things: you like to tell stories and you like precious metals. The gold price has spent the last 11 years trending higher. Do you see it continuing upward?

Byron King: I anticipate that gold, silver and platinum will all continue to rise in price. There are currency-driven reasons why metal prices are going to keep rising, as well as other issues with overall supply and falling production.

In terms of production, the gold and the platinum production spaces are very precarious. A few very bad things could happen at random and knock global production for a loop and seriously impact supply. Think in terms of a major mine accident in, say, South Africa. Supply could fall off a cliff overnight.

In terms of politics and monetary issues, precious metals create an outside limit on people’s political power. Thus I expect massive amounts of manipulation as we roll along, too. The dollar value of gold, silver or platinum will tend to rise over time, but we could see price spikes up and down due to that manipulation.

TGR: The junior precious metals sector fell hard in 2011. You tend to stick toward the midtier and major precious metals producers with strong cash flow. Those names often have lower risk, but risk can rear its head in that space, too. Major gold producer Kinross Gold Corp. (K:TSX; KGC:NYSE) watched about $3.1 billion (B) of its market cap get buzz sawed off in mid-January after it announced that it would take a $4.6B write-down on its Tasiast gold mine in Mauritania. Kinross spent $7.1B acquiring Tasiast and other assets in the September 2010 takeover of Red Back Mining. Does this serve as a warning to the other majors?

BK: It might be 15 years past the Bre-X scandal, but when it comes to buying and selling gold mines, no amount of due diligence is too much. It gets back to Mark Twain’s comment about how to define the term gold mine. It’s a hole in the ground with a liar standing at the opening of the shaft.

The Kinross writeoff is scary. They’re supposed to be better than that. So when you own physical gold, you can go to bed and close both your eyes. With gold mining shares, you still need to keep one eye open.

TGR: Were you recommending Kinross?

BK: Kinross has been in the Outstanding Investments portfolio for over four years. I’m hanging on to it in the hopes that it will go higher, but it’s been disappointing. It’s not been able to get the share price up and keep it up despite a gold price that has quadrupled.

TGR: Its strategy was to grow through acquiring assets. Apart from buying Red Back Mining, Kinross bought Underworld Resources in the Yukon and Aurelian Resources in Ecuador. Do you believe that was the wrong strategy?

BK: Much of the gold mining investing business is about takeovers. The large companies with, say, 10 million ounces (Moz) a year of output couldn’t discover that much just by sending out their own geologists with rock picks. Gold mining requires an entire process of prospect developers, generators and joint ventures. The better assets get picked up by the larger companies. In fact, Pan American Silver Corp. (PAA:TSX; PAAS:NASDAQ) just announced a takeover of Minefinders Corp. (MFL:TSX; MFN:NYSE). Minefinders is a one-trick pony, but it’s one heck of a pony. It’s the Dolores play in Mexico.

TGR: Sure, acquisitions are key, but many analysts believe that Kinross paid too much for Red Back and it’s now writing down three-quarters of what it paid. Will companies be more loath to spend big dollars in takeovers now?

BK: The acquiring companies have to be smarter and cheaper about takeovers. They have to pay less. Then again, you’re lucky if you get what you pay for, and you never get what you don’t pay for.

The news from Kinross could serve as a wet blanket for the rest of the intermediate and junior mining space. Future takeout plays might see more lowball offers.

It gets back to the idea that an allegedly savvy company like Kinross could make as bad a mistake as it did—at least in retrospect. It’s a wakeup call to the industry. I suppose in the boardrooms of the big mining companies they’re sitting around saying, “We’re much smarter than those guys at Kinross.” All I can say is to be careful of admiring yourself too much in the mirror because I’m sure Kinross thought it was doing the right thing, too.

TGR: In an ironic twist, some analysts are now speculating that Kinross could become a takeover target. Keith Wirtz, chief investment officer at Fifth Third Asset Management, said, “Every dollar lower pushes the stock higher up the list of potential takeovers. That will attract the sharks in the water.” Do you think Kinross will be taken out in 2012?

BK: Kinross has made a big mistake. Now the company has a big bull’s eye pinned on its back. Kinross has some very strong assets. I’m sure other companies are looking at these assets and thinking they could do a much better job at managing them than the guys running the show right now.

TGR: Something else of note in the large-cap gold space is the increase in dividends as gold companies jockey for investor attention with other instruments like real estate investment trusts, exchange-traded funds and even master limited partnerships. One company in particular, Goldcorp Inc. (G:TSX; GG:NYSE), recently raised its dividend again. Do you prefer gold companies with a significant dividend or are other factors more important?

BK: All things considered, I like companies that pay dividends. I like the idea that they bring the shareholders into the equation by sharing some of the wealth. There’s a certain capital discipline in running a company that comes with the knowledge that it has to write a check to the shareholders as well.

TGR: What are some of the major gold producers that are running a dividend that you like?

BK: Newmont Mining Corp. (NEM:NYSE), Barrick Gold Corp. (ABX:TSX; ABX:NYSE), IAMGOLD Corp. (IMG:TSX; IAG:NYSE) and Goldcorp are nice dividend players.

TGR: Which one has the strongest growth profile?

BK: Goldcorp. Five years from now, it could be the best overall return.

TGR: Are you following any midtiers?

BK: I’ve been following Minefinders, but it just got bought. I’m waiting for the development at Donlin Creek, Alaska, to come through for NovaGold Resources Inc. (NG:TSX; NG:NYSE.A). Investors are going to have to be patient with this one. It’s over 30 Moz of gold. It’s partnered up with Barrick, but the development has been slower, longer and more painful than I expected. However, over enough time, NovaGold could be quite rewarding to a patient resource investor.

TGR: What undervalued junior or midtier producers could rebound in 2012?

BK: Carlisle Goldfields Ltd. (CGJ:CNSX) at Lynn Lake, Manitoba. It’s an old copper-nickel producing area, but it has had a very aggressive drilling program. I am waiting for an updated NI 43-101 to come out, which could show an expanded resource base.

Reservoir Minerals Inc. (RMC:TSX.V), a spinout of Reservoir Capital Corp. (REO:TSX.V), is a play on mineralization in Serbia. Reservoir Capital was a hydropower and geothermal company with some mining assets as well. Last fall, it spun out the mining assets into Reservoir Minerals.

It’s now a copper project that is joint ventured with Freeport-McMoRan Copper & Gold Inc. (FCX:NYSE). It has had extremely good drilling results in a historic gold producing area in Serbia that was one of the richest gold mines in Europe in its day. It was sealed up just before World War II and not unsealed until about two years ago.

Reservoir also controls numerous other mineralized areas in Serbia, which is a very well-run, mining-friendly jurisdiction. That is, we’re not dealing with the Serbia of the 1990s. This isn’t the Serbia that NATO bombed in 1999. This is a modern, European country that is looking desperately for investment. Reservoir Minerals is a key part of the future of Serbia.

TGR: Carlisle has the historic MacLellan mine. What stood out when you visited that project?

BK: It’s in Precambrian greenstone in a shear zone, in a known mineralized district. The greenstone and the shearing outcrop at the surface. Carlisle has great land position in terms of following the strike. It has a very aggressive drilling program, and while results aren’t out officially, from what I can gather from my own examination of the cores, there is a very nice consistency of mineralization all along the strike. I think that when Carlisle gets done with its analysis we’re going to see a very nice resource number at very respectable, mineable grades.

TGR: What investment themes do you expect will be prevalent in the gold space this year?

BK: The gold price should continue the 11-year trend of increasing nearly every year with the possibility of a big jump if a one-off type of event, such as a mine accident, chokes off a large amount of the world’s gold supply. I know accidents aren’t ever supposed to happen—nuclear plants in Japan and cruise ships in Italy are failsafe, right? We have to watch that.

TGR: What about increasing tension in the Middle East?

BK: Tension in the Middle East always seems to drive up the price of oil and the price of gold. People move their resources from one jurisdiction to another, from one form of investment to another. I went to one of the gold souks at the grand bazaar in Istanbul about two years ago. I was astonished that people were mobbing the gold souks, throwing money down and grabbing all the gold coins that they could get their hands on. I saw Russians and people from across Europe just peeling out these €500 notes and buying as much gold as they could take. It was fascinating.

TGR: Surreal.

BK: It was surreal to literally watch people scoop up gold, put it in their pockets and walk out of the stores. People were trying to get rid of cash and buy gold. There’s an entire gold-buying culture that a lot of people in the West are not used to seeing.

TGR: What about the protests, violence and economic sanctions being brought to bear on certain Middle Eastern countries? It seems like the tensions there are certainly hotter than they have been since the early ’80s.

BK: War is bad for business, but the rumors of war are sometimes good for business. I think if the Strait of Hormuz closed or if there was a shooting war in the Middle East, it would drive the price of gold upward. As the price of gold goes up, it’s going to lift the share price for the miners that have good fundamentals.

Right now the stock market is barely paying for fundamentals. It really doesn’t respect stories, let alone blue sky. But if the price of gold keeps going up, the companies with decent fundamentals will also rise.

TGR: Thanks for your insight, Byron.

Byron King is the resident energy and natural resource expert at Agora Financial, LLC. A geologist by training, he worked for the former Gulf Oil Co. and has followed oil industry developments for over 30 years. King’s career path also took him into the U.S. Navy, both in active duty and reserve. In the 1990s and 2000s, King engaged in a vigorous private law practice. For the past five years, King has been writing about energy and natural resource issues for an international audience. Currently, King writes and edits Daily Resource Hunter, Outstanding Investments and Energy & Scarcity Investor. He holds degrees from Harvard, the U.S. Naval War College and the University of Pittsburgh.

The USD is posed for the next downleg which will help power gold’s explosive upleg dragging silver and platinum with it. FACTA will drive more demand for BitCoins. Those who took my advice to buy bitcoins last month are sitting on a 56% gain. For those who want to spend some bitcoins you can buy RunToGold and HowToVanish products with bitcoins. Good job!

Hopefully we will do as well with the precious metals in this next upleg.

The Gold Report: When you last spoke with The Gold Report in August, the gold:silver ratio was about 40:1. Today it’s about 53:1. In August, you were looking for a lower gold:silver ratio that you thought would probably be more reasonable under the circumstances. Yet it seems to have gone the other direction. What do you think has happened here? Was silver drastically overpriced or not able to keep up with the gold?
Chen Lin: In the last interview, I was pretty evenly bidding between gold and silver. I don’t have a particular preference. At that time, there were some major funds buying silver. Historically it has been lower—as low as 10:1 a very long time ago. But, right now, it’s in a reasonable range. So, I’m not saying that one is overvalued and the other is undervalued. Silver has some industrial components to it while gold is mainly monetary. I’m personally looking for the silver:gold ratio to go lower over the long run. Right now, the financial crisis has pushed central banks to actually start buying more gold in the past quarter. So, that’s probably keeping the gold price higher.

TGR: So, what you’re saying is the European debt crisis is the thing that’s really driving the gold price higher.

CL: Two or three of the central banks have put a historical amount of gold on their books, which tells you there’s more focus on gold because of the European crisis.

TGR: What do you think is going to happen with metals prices if this Eurozone situation deteriorates further?

CL: That’s a hard question. I think it’s in the hands of the policymakers. When Greece said we’re going to do the referendum and that Greece could be kicked out of the Eurozone, the Greek people were rushing to their banks to get the euro out. If the euro starts falling apart, I think gold could be one of the hard assets people in Europe will try to get their hands on. That could be very positive for gold. I can see Germany give in to the other euro countries and basically agree to use the European Central Bank to print money. That’s probably the most likely outcome. That would delay the crisis and investors would focus on other countries such as Japan and the United States. Then Europe may quiet down a little bit. But, that would be very positive to gold as well. Gold can potentially have a very explosive move on the announcement.

TGR: You’ve had pretty spectacular performance since you started your portfolio with about $5,000. In August, it was down about 10% for the year. What’s happened here in the last three or four months?

CL: It’s been down between 10% and 15% so far, it has been quite flat this year. Considering that I own a lot of junior stocks, those stocks can be very volatile.

TGR: It’s been a tough year for everybody and not easy to show any spectacular gains in 2011. How about some of the individual stocks in your portfolio; do you have some nice winners that you’d like to talk about?

CL: Prophecy Platinum Corp. (NKL:TSX.V; PNIKD:OTCPK; P94P:Fkft) was a spectacular winner. The rest have been holding on. However, I’m quite optimistic because some of the stocks have some major news coming in the next few months.

TGR: You mentioned platinum, which always used to trade at a pretty substantial premium to gold. It’s obviously a lot rarer than gold. Yet somehow, it’s faded into obscurity in the last few years. Do you have any opinions on why that might be the case?

CL: In fact, I was out telling everybody that I’m loading up on platinum. Platinum is less than 10% of the global production of gold. Some 75% of global production comes from South Africa, which is having problems with electricity, labor disputes and other issues. Right now platinum is trading at a discount to gold. It’s almost unheard of. It used to be platinum was twice as much as gold. There could be hedge funds that may be long platinum and short gold and are having some problems and may be unwinding some positions. Over the long run, I think platinum is probably a very good investment.

TGR: Tell us more about Prophecy Platinum.

CL: This stock has been a spectacular winner for me this year. It’s up from less than $1/share to over $6/share in quite a short time. Now it’s pulled back to about the $3/share range. Prophecy just completed a private placement, of which 25% was participation by the insiders. That’s very strong insider participation. The price right now is at around the private placement price. Prophecy has a huge platinum group metals (PGM) deposit in the Yukon. It’s 12 million ounces in the NI 43-101. Prophecy just had some very nice drill holes. When the next update comes out, it will probably have more PGM and the gold. So, that’s looking very good. It has a sister company called Prophecy Coal Corp. (PCY:TSX; PRPCF:OTCQX; 1P2:Fkft), which owns about 45% of Prophecy Platinum. If you deduct its cash and the value of its Prophecy Platinum holdings, you get the coalmine in Mongolia for free. Plus you have leverage to this platinum play.

TGR: The platinum price situation is just hard to believe—the way it has fallen back. Maybe it has something to do with less industrial demand.

CL: The industrial demand will slow down a little bit. But, it’s not this dramatic. I feel it’s like when silver dropped to $10/ounce in 2008. The price dropped so low that I think it’s an opportunity for investors to buy platinum and platinum stocks on the cheap.

Another platinum producer I like is Stillwater Mining Company (SWC:NYSE). That’s the largest platinum producer in North America.

TGR: Stillwater. That’s the only producer in the U.S. that I’m aware of.

CL: Right. It fell very hard recently and lost two-thirds of its market cap. It now has a little bit of a rebound. I bought it pretty close to the bottom and I’m still holding it.

TGR: You recently returned from a visit to Haiti where you went to take a look at the Majescor Resources Inc. (MJX:TSX.V) gold property. What kind of report do you have on that?

CL: Oh, I was very excited about that. The property has a huge potential and Newmont Mining Corp. (NEM:NYSE) is also in the area. Newmont has been very interested in Majescor’s drilling program and even invited Majescor’s company executives to its office when I was there. That tells you how much focus it has on this drilling program by Majescor. It will have drilling results coming out in December. First, it was targeting copper and copper-gold and then it will drill out the area with some very high gold intercepts. In a previous release, Majescor showed 10 meters of something like 70 grams per ton. It will drill that next year. Basically, it’s a gold and copper or copper and gold project, depending on where you focus on it.

TGR: So, we’re going to wait for results next month and see how that goes, correct?

CL: Exactly. Its market cap is only $15 million and it could have a world-class deposit. Plus all the majors are looking at the drilling results.

TGR: So there may be a good chance that it will get taken out pretty quickly if the stock doesn’t go crazy.

CL: Majescor has been working on this project for two or three years and finally the drilling starts. It’s a pretty exciting time for shareholders.

TGR: Back in August you were also pretty positive on Pretium Resources Inc. (PVG:TSX). The company has a couple of properties that look pretty interesting at Snowfield and Brucejack. What’s been going on with those properties since last August?

CL: I visited its property and it was very, very exciting. The high-grade gold intercept was fantastic. Right now, the market is in a holding mode and we haven’t seen much movement in the past few months. Once people see how good a deposit it is and recognize how undervalued it is, I think we should see some good upside movement on this stock.

TGR: You also visited the Romios Gold Resources Inc. (RG:TSX.V; RMIOF:NASDAQ; D4R:Fkft) and the NovaGold Resources Inc. (NG:TSX; NG:NYSE.A) properties up in Northwestern B.C. last summer. What’s going on there?

CL: Romios started releasing drilling results and you can see it has some pretty good intercepts. It is still looking for the sweet spot and will probably need to take more time to drill out this area to find the center of the deposit.

TGR: When do you expect some significant news?

CL: Depending on the next round of drilling results, it could mean Romios needs to come back next year to do more drilling. It already released a few rounds of results and I think it has maybe one or two rounds of results left.

TGR: Romios is near NovaGold. Do you think there’s some possibility that NovaGold may try to take a run at Romios?

CL: NovaGold has a new CEO and plans to sell this Galore Creek deposit. Last time I think I was hoping it would have fantastic drilling results and then we would have a takeover situation. But, now it looks like it has found a deposit and needs to drill more. So, you probably need a little bit more patience to see how it develops, probably into next year.

TGR: What about NovaCopper?

CL: NovaGold wants to spin copper projects off and potentially the name could be NovaCopper. We’ll have to see what kind of deal it has and what direction that property goes.

TGR: What about other companies in your portfolio? Any developments there that our readers should be aware of?

CL: I’m still holding a lot of OceanaGold Corp. (OGC:TSX; OGC:ASX). The company is a producer in New Zealand and is starting up its new gold mine in the Philippines. It’s probably one of the cheaper gold producers you can find. I also own Coeur d’Alene Mines Corp. (CDM:TSX; CDE:NYSE). That’s a big silver producer and just had a management change. The company has two new silver mines going and half a billion dollar cash flow each year. It’s building up a third mine, which is a gold mine, and a fourth mine, a silver mine. It doesn’t have much in capital requirements coming and I hope will end up paying a dividend. I’ve been holding the stock for a while and expect to keep holding it.

TGR: What are your expectations as far as market performance in the last weeks of the year? Then what happens next year with the precious metals and mining stocks?

CL: A lot depends on the European solution. I think the most likely result would be a massive money printing in the Eurozone. That would be very positive for gold. As far as gold mining, we have seen the general lack of capital in mining stocks. That’s why I try to stay with companies with a strong cash flow. Many exploration companies and emerging producers are trading at very low valuation. Still, the market doesn’t give them recognition. If we have any solutions in the Europe situation, these stocks can have a huge run.

TGR: Are there any other parting thoughts you might want to leave with our readers as far as how they should be playing this market?

CL: Gold stocks are extremely undervalued right now versus the gold price. I personally believe that gold will go much higher. How high will gold stocks go? I think this depends on market conditions. Gold stocks have two faces. One is related to gold. The other is related to the capital markets. Mining companies need to raise money to produce gold. It’s a very capital-intensive industry. So, if the capital market doesn’t improve, gold mining stocks may lag behind gold for some time. But, once we have some stabilization, I can see some extremely undervalued gold stocks out there. Another idea to think about is to try to follow what the majors like. A company like Majescor clearly has the interest from majors. Majors are flooded with cash and can afford to pay a reasonable market price for a property. So, I think it’s probably a good time to follow the trades of the majors.

TGR: You’ve given us some good information and food for thought. Thanks for joining us today.

CL: Thanks for having me.

Chen Lin writes the popular stock newsletter What Is Chen Buying? What Is Chen Selling?, published and distributed by Taylor Hard Money Advisors, Inc. While a doctoral candidate in aeronautical engineering at Princeton, Lin found his investment strategies were so profitable that he put his Ph.D. on the back burner. He employs a value-oriented approach and often demonstrates excellent market timing due to his exceptional technical analysis.

Scientists define volatile organic compounds as naturally occurring or man-made chemicals with low boiling points, a condition that allows these molecules to easily evaporate into the air, potentially causing irritation and creating an explosive environment. As Global Resource Investments Founder and Chairman Rick Rule predicted last March, man-made volatility has clouded the economic environment for the last month and could continue to do so for the next 12 months, according to his analysis. But volatility doesn’t have to be painful, he says, if you prepare yourself with plenty of cash and courage. “Volatility is like cyclicality. It is really a series of opportunities to buy low and sell high. And, if you understand volatility for what it is and accept it, it could be a tool as opposed to a threat. ”

The Un-Recovery
First, he outlines the reasons for the volatility. Rule doesn’t see a recovery in the United States. “I see government-induced liquidity in the market and I see some recovery in equities prices as a consequence of very, very, very low—make that negative—real interest rates as well as hope on Wall Street and in Washington,” he says. The problem with this paper recovery is that liquidity wasn’t what caused the recession. The issue is that individual and government balance sheets are unbalanced. Many of the assets are ephemeral. Unfortunately, liabilities are almost always real. “As a society, we owe an amount that is unserviceable relative to what we produce,” he says.

By encouraging people to spend more money they don’t have, the government is making the problem worse. Instead, he thinks people should rebalance their balance sheets and invest more in this country. “The idea that we can fix the fact that we owe too much money by encouraging borrowing and spending is an example of the idiocy that comes out of Pennsylvania Avenue and will continue to weigh down the recovery.” He says, “Until we deal with the problems that confront us in society, we are not going to have a U.S. economic recovery.”

Rule points to a war against savers. “The Fed has declared war on productive elements of society in order to distribute the benefits to the less productive elements of society. This is not the key to prosperity.” Drilling down interest rates punishes savers and rewards spenders. “This is perverse, truly perverse,” he says. He equates “quantitative easing” to a fancy way of saying “counterfeiting.” Increasing the nation’s money supply without increasing society’s ability to create utility through the provision of goods and services is simply fraud. You can’t maintain the value of a currency unit if you create it out of thin air far in advance of the society’s ability to generate value. That is true in the U.S. and abroad. “I have always said that the U.S. dollar is the worst in the world except perhaps for all the others,” he jokes. Rule is not alone in his low opinion of paper currency. Casey Research Chairman Doug Casey famously noted that the U.S. dollar is an I.O.U. nothing. The euro is a “who owes you” nothing. “It’s an artificial construct,” Rule says. “Europe truly is the triumph of politics over economics.”

One example of the irrational European economic policy now in fashion is the decision to “bail” Greece out of the trouble it was having servicing debt that was 150% of GDP by requiring the struggling country to service debt that is 165% of GDP. “I defy the European Union to explain to me how by adding a big column of negative numbers they end up with a positive number; very, very, very problematic,” Rule says. And, problems get deeper. “Because of the extremely close ties between the big banks on both sides of the Atlantic with large amounts of primary capital represented by sovereign debt, many of the large private sector banks have multiples of shareholder equity invested in securities by issuers like Italy, Spain, Portugal, Ireland and Greece that are insolvent. This means by real accounting standards most of the big banks in Europe are broke.”

This economic reality doesn’t mean that banks are going to fail any time soon, Rule explains. It simply means that the shareholder’s equity in the bank—the value of assets minus the value of the liabilities—is probably negative if the securities that these banks have in sovereign—as opposed to solvent—issuers were removed. “The test going forward will be the test between those two words,” Rule says. “Sovereign does not make solvent.” He takes issue with the words of the famous CEO of Citicorp, Walter Wriston, who said countries don’t go broke. “That was wrong. Countries do go broke. Countries will go broke. The question in Europe now is whether the savers—Finland, Austria and Germany—will decide that they and their children are going to carry the lifestyle of the rest of the Europe.”

The discussion going on in Europe right now is the same as the one going on in the United States, he says. “Who should benefit from production—the producer or the non-producer?” He points to a war worldwide between these two factions. “Sadly, non-producers outnumber producers and, in a democracy, the war is often won by the non-producer.” He likens democracy to a vote by five coyotes and a lamb over what to have for lunch. “That’s really the nature of the debate that’s taking place in the United States and Europe today.”

Free-ish China
“The good news about China,” Rule says, “is that over the last 30 years the place has become more, as opposed to completely, free. More than 30 years ago, Deng Xiaoping, then leader of the Chinese Communist Party, said ‘to become rich is glorious’ and China has become very glorious as a consequence of that.” Ironically, in this allegedly Communist country, there is no social safety net, meaning that people are on their own in China, Rule says. “As a consequence, savings are extraordinarily high, as much as 40% of a household income. So, China is generating enormous, enormous, enormous savings in direct contradiction to us, of course.”

Rule also points to more capital investment-friendly tax laws in the East. “In the United States if a big producer builds a big piece of manufacturing equipment, it may be required to amortize that equipment for tax purposes over 30 years. In China, that same producer is allowed to expense the equipment, meaning that there is a huge incentive to add the capital necessary to raise the utility of the workers operating that machinery. China is much, much, much friendlier to capital formation. The United States is much, much, much friendlier to consumption.” For these reasons and many more, Rule says “China, India and the frontier markets appear legitimately to be on the road to progress—a very different road than their European and North American cousins appear to have chosen.”

But, all is not bright in China. “Some 10,000 people rule 1.3 billion people and official sector misallocation is always a threat. The government decides what sectors should succeed, what sectors should fail. Expect the road to progress in China to be bumpy,” Rule warns.

The combination of domestic and international challenges on the horizon set the stage for more volatility, Rule concludes. “So many black swan events are looming that they resemble a flock of black swans. The idea that one of those black swans could precipitate an event like the ‘07–’08 liquidity crisis appears to me to be a very, very, very good possibility.” He goes so far as to suggest that in the next 18 months to 2 years, we could see a shut down for some period of time in interbank lending and frozen debt market liquidity. “In that set of circumstances you would want to have some cash,” he warns.

Golden (and Platinum) Opportunities
All of this darkness could shine a light on the metals—gold, silver, platinum and palladium, Rule says. “The most important part of the pricing of these metals is the continued debasement of fiat currencies. Metals prices worldwide are denominated in U.S. dollars. If the value of the denominator itself continues to decline, which I think it will, the nominal price for precious metals should continue to increase.” The increase may not be steady. “I suspect that these prices both up and down will be volatile for a few reasons,” Rule says. “Gold markets in particular, maybe silver markets as well, are determined by both of the primary economic motivators in the world—greed and fear. A raging bull market, which I think we might get into, compels people to buy gold bullion because they are afraid of the depreciation in dollars. This, in turn, stimulates the greed buyer who buys simply because the price went up and he or she understands the thesis. The price escalation in bullion that was driven by the greed buyer reinforces the fears of the fear buyer. And, the prices reverberate higher and higher as fear buyers and greed buyers compete with each other. That’s the market that we saw in 1979–1981—the single strangest bull market that I have experienced in my career. I suspect that we are likely in the early stages of a market that resembles that.”

The second set of circumstances Rule identifies as pushing gold prices up over the next year is supply-based. “In classical economics you are taught that higher product prices lead to increased supply. Because mining is a capital-intensive business, the response of the producers to increased commodity prices is not direct or immediate, particularly if interbank lending dries up debt financing needed for the large capital-intensive projects. There will be supply constraints that are, in some fashion, artificial.”

For supply-side reasons, Rule is increasingly attracted to the platinum business. More than 80% of platinum and palladium—PGM metals—come from three countries: South Africa, Zimbabwe and Russia. He cites local political turmoil as a limiting factor in the continued production in these areas. “Increasingly, South African governments are calling for more social rent—higher taxes, government participation in wage negotiations and, in some cases, outright nationalization. This will absolutely constrain the industry from making the investments in increasing production and sustaining their existing production over the five to seven years. Given that South Africa is the most important platinum producer in the world and it’s highly likely that the South African platinum producers will continue to constrain working capital investments, I would suspect that on a five-year going forward basis platinum production will falter.”

Moving north to Zimbabwe, Rule is no more optimistic. “President Robert Mugabe and his associates stole everything in the country that had any value. Now they have decided that about 150 people should control 51% ownership of the platinum mines in Zimbabwe. If you look at the track record of the black political elite in Zimbabwe managing the assets they have stolen over the last 20 years, you will see that the potential impact on platinum supplies as a consequence of their stealing productive capacity will be catastrophic.”

Rule sees Russia as a bright spot. “Russia gets slowly better over time. Yes, there are problems. The place is corrupt. They tend to attempt to mediate commercial disputes by shooting each other. There are problems with alcoholism. But, gradually things are improving in Russia. The difficulty isn’t Russian politics, but the fact that the big platinum and palladium producer there is running into lower and lower grades and having to go farther and farther down in the mines. Its production problems are organic as opposed to political.”

The bottom line for Rule is that there are going to be supply-side challenges in the platinum business at the same time that demand for platinum both as a precious metal for investment purposes and as an industrial metal for auto catalysts continues to increase. Rule acknowledges that a slowdown in the economy in Western Europe and North America will constrain vehicle demand there, but cites exploding vehicle demand in emerging markets, particularly China and India. Western air quality standards being imposed in both of these countries means that auto catalysts using platinum and palladium have kept pace with vehicle sales in those markets. “Strong demand and declining supplies point to very, very, very interesting opportunities in platinum markets,” he concludes.

Disconnected Equities
Good news for commodity prices has not always translated to rising junior mining stock prices. Rule sees four reasons for this disconnect. The first is historical. He credits the dramatic rise in precious metal stocks five years ago to an anticipation of the increase in bullion prices. “Some of the reaction that you might have expected in the equities prices might have occurred before the event took place,” he explains.

The second reason is what he calls “dismal corporate performance” over the last 10 years. “One would expect with the gold price increasing from $260 an ounce (oz.) to $1,800/oz. and silver increasing from $4/oz. to $40/oz. would result in absolutely skyrocketing free cash flows generated from the companies, but that didn’t happen. The operating response relative to the increase in product prices was, to be charitable, anemic.” The financial services industry, which had spectacular cash-generating expectations based on the returns of the 1970s, has been particularly disappointed. “There has been widespread disgust among gold share investors to the cash-generating performance of the companies relative to the escalation in their product prices,” Rule says.

The third factor is sector market-cap explosion. “Issuers—the mining companies and their cohorts in the financial services community—were engaged in inflation in the same way that governments around the world have issued lots of paper. Mining companies have issued billions of shares so that although the share price escalation has not been dramatic, the combined market capitalization of the precious metal sector producer, developer and explorer has grown at an extraordinary pace. There are many more issuers now than there were 10 years ago and every one of those issuers has many, many, more shares outstanding. You have to be very careful when you buy these things.”

The fourth point Rule makes is another cautionary one. “In the junior exploration sector, as many as 90% of market participants have absolutely no value. They are worth nothing. So, the sector as a whole can’t experience dramatic price appreciation when 90% of the paper in the sector is counterfeit or valueless. In fact, the gold shares are suffering from the same type of value depreciation as the U.S. dollar. You need to pay particular attention to defending yourself and your portfolios from these valueless, zombie security issuers.”

Rule stresses the importance of carefully evaluating a portfolio now, before the precious metals equity markets start experiencing price appreciation in the next three to six months. Why now? “Any price appreciation anticipation is over,” he says. “There is no premium built into the metals prices relative to the commodity anymore. In fact, this disparity has been noted. We think for the first time in some time the precious metals equities are reasonably priced relative to the metal itself,” Rule says.

Rule is also more positive on the issue of executive competence. “Corporate performance, which has lagged terribly over the last five years has begun to increase,” he says. For the last two or three years, the industry as a whole has generated about $2 billion (B)–$2.5B a year in surplus cash. This year, he expects the industry to generate between $4.5B–$5B, a clean double in 12 months. “The performance that hasn’t occurred hitherto is beginning to occur now,” he says. This cash on company balance sheets will enable them to do many things—greenfield and brownfield developments in their own portfolios along with mergers and acquisitions.

These are all positives for company prospects, Rule says. “We are now truly in a discovery cycle. For the last nine years the exploration industry has been well funded and well staffed. That spending cycle is beginning to yield discoveries. There is nothing, nothing that adds both liquidity and courage to junior equities markets like discovery.” Rule points to the last discovery cycle in ‘95 and ‘96 when some stocks went from $0.30 to $30.00 in 19 months. “My suspicion is that the underperformance of select precious metals equities for the next three to six months is over. Will it be volatile? It will absolutely be volatile. But, the fact is anticipation is no longer in the market; there isn’t a bullish outlook, which perversely is good. There is liquidity in the system. There is the will and the urge to merge so consolidation will take place. And, all of this will be punctuated by discovery.”

Rule also advises balance when it comes to choosing between seniors and juniors. “For those of you who are investors, for those of you who look at a return on capital employed rather than praying for a return of capital employed, you would go to the senior producers and the senior producers would do well. We particularly favor acquisition strategies that involve buying select seniors and your global broker can help you in that selection. And, then selling puts and calls against core positions. That is, allowing the market to pay you to buy low and sell high or acquiring the position simply by selling a put. We think the seniors are uniquely priced. We don’t think, by the way, that you pile in and build 100% position right now. We think you take a third position or a half position relative to where you want to end up because we are going to experience incredible volatility. But, we think this is the time to begin to establish positions.”

Rule cautions that investors need to be willing to take more risk with juniors. “The volatility will be more pronounced the farther out the quality scale you become. But the potential for reward is outsized too.” He anticipates a lot of mergers with juniors acquiring each other and juniors being acquired by the intermediates and intermediates and juniors being acquired by the seniors. “Given the relative underperformance of the juniors this year to last year, in November and December of this year—during tax-loss selling seasons—could be a once-in-a-decade acquisition opportunity.”

Rule ends by reiterating his words of warning about the volatility in the air. “This will not be stair steps to heaven. This market will not go straight up. The buzz word and I’m going to say it again and again and again in this broadcast is going to be volatility.” Again, he looks to the past to illustrate what could happen in the coming year. “Some of you will remember the 1970s bull market in precious metals when the price advanced from $35/oz. to $850/oz., a truly breathtaking ascent. You need to bear in mind that in 1975, in the middle of that ascent, the gold price fell from $210/oz. to $104/oz., a 50% decline. And the share price decline in the mining shares was even more dramatic. Did it matter over the course of a decade? No. Did it matter to people who suffered through the decline personally? Absolutely. So, while we think the sector is a good place to be don’t think of it as a place without risk.”

Founder and CEO of Global Resource Investments (GRI), Rick Rule began his career in the securities business in 1974 and has been principally involved in natural resource security investments ever since. He is a leading American retail broker specializing in mining, energy, water utilities, forest products and agriculture. Rule’s company has built a sterling reputation for its specialist expertise in taking advantage of global opportunities in the resources industries. Last month, Rule closed a landmark deal with Eric Sprott, another famous powerhouse in the arena. With GRI now a wholly owned subsidiary, Sprott, Inc. manages a portfolio of small-cap resource investments worth more than $8 billion and boasts a workforce of more than 130 professionals in Canada and the U.S. This article is based on Rule’s August 31Global Resource Investments webcast. Listen to the entire webcast.

READER QUESTION – WHERE ARE YOU?

I have not written for a few weeks and received a rather funny email from a reader: “Did you call this about 15 months ago? POT  NYSE You sly Mofo. Where are you? Did someone threaten you like Lindsay Williams was?”

I figure the response may be helpful to all. Yes, about 18 months ago on Business News Network in Canada I did make a buy call on Potash Co. (POT). It has since rocketed higher. I have been bouncing around in the clouds flying around tiny islands, including Saint Kitts and Dominica, with Bill Rounds, my co-author of How To Vanish.

I was only threatened by one person, an attractive female Customers and Border Patrol agent in Puerto Rico. Because ATC diverted us around a military exercise we were late arriving and I did not call. Then on the way back through Puerto Rico I failed to call again and while searching our plane she actually got out a Geiger counter, seriously! What is it with women always wanting you to call them back? So, next time I am headed through Puerto Rico and since my smile did not work to appease her if anyone knows where I can get a cell phone like Gordon Gekko so that I can call CBP next time I would be extremely grateful.

SILVER BACKWARDATION AND INTEREST RATES

The monetary metals have an interest rate which is the percentage difference between the future price and spot price. Currently the market treats only gold as a primarily monetary commodity. Silver, platinum and palladium are treated as quasi-monetary commodities. Gold is produced primarily to be hoarded while most silver, platinum and palladium demand is for a wide variety of industrial uses like a Gordon Gekko cell phone.

In early 2009 I wrote about the silver backwardation. James Turk, Chairman of GoldMoney, made several insightful observations about silver’s backwardation in his 4 December 2010 article about the Scramble For Physical Metal.

These supply and demand differences is a primary reason why I am extremely bullish on platinum and recommended accumulating it in July 2009 around $1,118 per ounce. My opinion is that during The Great Credit Contraction the monetary demand for silver, platinum and palladium will increase for all the same reasons why gold functions as money. It will no longer be fiat currency, such as FRN$, Euros, Yen, British Pounds, etc. versus only gold but instead versus gold and every other commodity.

This paradigm shift from a debt-based consumption cycle to an equity based savings cycle will be a sea change like an upside down house to many. The real interest rates of the commodities are a function of their storage and attrition costs. Thus, silver, platinum and palladium will have tremendous advantages over alternative commodities like rice, corn, oil, etc.

The New York Sun reported Alan Greenspan’s 15 September 2010 remarks to the Council on Foreign Relations:

If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it. … Fiat money has no place to go but gold.

Like Mr. Greenspan I favor using gold as one’s numeraire but my prognostication is a little broader. Not only does fiat currency have gold to move into but also silver, platinum and palladium unless he knows something about future worldwide monetary policy that has not been publicly released.

With quantitative easing and the zero interest rate environment the fiat currency interest rate structure is extremely distorted. This increases demand for silver in the immediate term because the cost of fiat currency is so low while demand is waning and storage fees are perceived to be less expensive than the estimated counter-party risk cost. It takes a bailed out zombie to know a bailed out zombie!

The net effect are negative real interest rates. So long as negative real interest rates are persistent the gold bull market, with silver and platinum having an R-squared correlation coefficient of about 98%, will remain intact. But as Adrain Douglas has astutely observed if there is increased monetary demand for silver then this correlation can be disrupted or change completely.

INCREASED SILVER MONETARY DEMAND

So an important issue becomes has there been a material increase in silver’s worldwide monetary demand?

The United States Mint recorded January 2011 sales of American Silver Eagles to be 6.42 million which easily surpassed the previous monthly record of 4.26 million in November 2010. This increase in demand was in spite of the price of silver increasing by about $2 per ounce in November while it declined about $3 per ounce in January. Increased demand for silver in India was about 70 million ounces in 2010 while China went from exporting about 40 million ounces in 2009 to importing 40 million ounces in 2010. Then there is John Embry’s revelation that it took about two months to stock the Sprott silver trust. Additionally, there appears to be shortages developing for 100 ounce silver bars.

Because of the increased demand for silver as a monetary instrument by Americans in the form of legal tender coins and 100 ounce bars, the incredible increase in demand from India and China of about 150 million ounce difference between 2009 and 2010, about 25-30% of worldwide production, and the creation of the Sprott silver trust (PHYS) therefore it appears that there is a material and consistent increase in the worldwide demand for silver as a monetary instrument. Because of the deficiencies of the GLD ETF and similar unusual activity with the SLV ETF it is interesting to note that significant redemptions are being made which implies the ETFs are being tapped as a source of physical bullion to meet immediate delivery demands.

The aboveground stockpiles of silver are tiny compared to gold. On the other hand, central banks around the world have created $20-50 trillion of new currency digits over the past few years. To remain liquid and risk-free in terms of either (1) counter-party or (2) hyperinflation, the value represented by these imaginary units sometimes printed on colored coupons have primarily nowhere to go in regards to monetary commodities but gold, silver, platinum and palladium.

CONCLUSION

Monetary demand for silver is primarily from savers who consume less than they produce and want a liquid and safe store of value while they are engaged in other activities, like flying around in the clouds. The current interest rate structure is likely causing headaches for the arbitrageurs dealing in large amounts who are attempting to squeeze profits off a penny or two per ounce because of the tremendous amount of risk they expose themselves to as savers demand delivery physical metal.

With the worldwide bailout of the financial system, the Irish central bank printing billions of Euros, the Federal Reserve engaged in quantitative easing and general competitive currency devaluations worldwide it appears the current fiat currency and fractional reserve banking system has been duck taped together and is not at significant risk of imminent failure; largely because there is no significant alternative.

With demand from the American and European public, India, China and the Sprott silver trust therefore it appears that the gold and silver bugs have mutated into much larger organisms and are preparing for currency upheaval and perhaps even a new worldwide currency system. There is a high probability that gold, silver, platinum and palladium will continue to increase in price relative to fiat currencies.

After all, fiat currencies are merely a confidence game and it is hard to have confidence in a figment of the imagination that is being rapidly increased in amount. Thus, a prudent saver should continue accumulating the monetary metals on a regular and consistent basis from reputable firms like Apmex or GoldMoney as gold, silver, platinum and palladium have become performing insurance against fiat currency failure.

When allocating capital for longer than a millisecond or two, like the parasitic high frequency trading operations, one of the key metrics I use is the 200 day moving average.

WHAT IS THE 200 DAY MOVING AVERAGE

The 200 day moving average is actually fairly simple. The sum of the close from the previous 200 trading days divided by 200.

WHY THE 200 DAY MOVING AVERAGE

The decision to use 200 days instead of 199, 50 or 500 is fairly arbitrary and dependent completely on the preferences of the capital allocator. I like the 200 day moving average because (1) the numeraire par excellence is so heavily manipulated that price and value are bifurcated, (2) a static point with an undefined entity like the FRN$ is meaningless, (3) a moving average provides a dynamic figure and (4) two hundred days is long enough to filter out short term abnormalities providing objectivity.

Consequently, while gold may be extremely volatile day to day the 200 day moving average shows a completely different picture; a nice gently sloping bullish trend line. In the financial markets, the 200 day moving average exerts a force much like gravity on the current price.

HOW TO USE THE 200 DAY MOVING AVERAGE

The 200 day moving average is merely a technical tool in the capital allocator’s arsenal. For example, on 14 July 2009 in Platinum Liquidity Increases I argued the case for why platinum was undervalued, a good buy and made a recommendation to purchase it. Of course, the foundation was the market fundamentals; low worldwide production, scarcity, lack of stockpiles, durability, fungibility, industrial demand and legal tender status. Then came the technical factor, the 200 day moving average of the platinum to gold ratio.

THE RELATIVE PRICE

One way I use the 200 day moving average is to calculate the relative price of an asset which is the 200 day moving average divided by the current price. Then I look at the relative price over time to determine when an asset is cheap or expensive.

I have found that during this secular bull market, gold in relation to FRN$ is valued by the market as cheap when its relative price is around .99, average value between 1.00 and 1.25, expensive between 1.25 and 1.35 and very expensive above 1.35. This can be accomplished by looking at the relative price and using standard deviations to form trading ranges.

APPLYING THE RELATIVE PRICE AND 200 DAY MOVING AVERAGE

Back in July 2009 platinum was trading at $1,118 per ounce with a 200 day moving average of 1.21 ounces of gold per ounce of platinum and a historical ratio closer to 2.0. Thus, with bullish fundamentals and being cheap relative to gold based on the 200 day moving average relationships I purchased platinum and it is currently at $1,540 per ounce with a 200 day moving average of 1.31. The trade has resulted in the goal: an increase of net worth when measured in gold ounces, the numeraire.

CHARTS TO HELP YOU QUICKLY VALUE PRECIOUS METALS

To be honest, I got tired of having to click a few times in order to quickly determine the 200 day moving averages for the various precious metals. Consequently, I had a gold price chart, silver price chart and platinum price chart (all three charts are available on this precious metals price page) created that contains the spot price, 200 day moving average and relative price along with a legend stating whether the metal is cheap, average value, expensive or very expensive based on historical trading ranges.

PLATINUM IS CURRENTLY THE BEST VALUE

With the precious metals I recommend accumulating physical metal on a regular basis, either monthly or quarterly. I recommend using a reputable coin dealer like Gainesville Coins for smaller purchases like a single Silver American Eagle or a trusted third party vaulting service like GoldMoney for larger amounts when you do not want the headache of guarding it yourself.

But how does one quickly determine whether they should buy gold, silver or platinum? As you can see from the charts, currently gold with a relative price of 1.0366 is the most expensive relative to its 200 day moving average while silver is in the middle at 1.0267 and platinum is the cheapest at 1.0109. This is confirmed with the platinum to gold ratio which is currently 1.303 compared to 2.0. Thus, if you were to purchase any of the precious metals then I would recommend purchasing platinum because it currently appears to be the best value.

Remember, at all times and in all circumstances gold, silver and platinum remain money and currency. Consequently, you can always trade platinum for gold or gold for silver. The capital allocator’s goal is not necessarily to have the most amount of gold ounces but instead the highest net worth using gold as the numeraire.

CONCLUSION

When it comes to allocating capital I like to focus on intrinsic value. Buy low and sell high and I think money is made when you buy not when you sell. To accurately perceive value I use gold as the numeraire and the 200 day moving average to filter out daily noise and aberrations. Sure, as The Great Credit Contraction grinds on and being able to secure and multiple one’s wealth has become more difficult.

But there are always opportunities and deals to be made. The issue is whether you buy valuable assets on the cheap or when they are expensive. These precious metal price charts will allow you to quickly and easily discern the current prices of the metals and their relative value over the previous 200 days to determine whether to buy gold, silver or platinum.

DISCLOSURES:  Long physical gold, silver and platinum with no position the problematic platinum, SLV or GLD ETFs.

GLENN BECK AND REPRESENTATIVE WEINER

Representative Anthony Weiner was first elected in 1998 to the New York 9th District and roosts on the Energy and Commerce committee and Judiciary committee. His top campaign contributor is ActBlue at $44,500 and his #2 campaign contributor is M&R Management with $19,200. ActBlue describes themselves as ‘the nation’s largest source of funds for Democrats’.

CBS News recently reported,

Weiner accused Beck and other conservative spokespeople (among them Mark Levin and Fred Thompson) of using “their shows to prey on the public’s fears of inflation and socialist takeovers while actively promoting the purchase of gold coins as insurance against this purported government overreach.” …

Weiner, who is on the House Subcommittee on Commerce, Trade and Consumer Protection, says Beck “should be ashamed of himself.” He has written letters to the SEC and FTC asking them to investigate Goldline and is proposing legislation to force the company to “fully disclose their dishonest business practices” by showing consumers “their astronomical markups, and deceitful promises of profitability.”

Mr. Weiner may want to tame his defamatory tongue where he is asserting that Goldline engages in ‘dishonest business practices’ and ‘deceitful promises’. If these assertions are false and a reasonable investigation would cause the reasonable person to conclude that Goldline were not involved in dishonest business practices or deceitful promises then Goldline should consider suing Mr. Weiner for defamation. Think of all the free publicity!

After a reasonable investigation the facts appear to reveal that Goldline’s customers, unlike those of Monex who has an F with the BBB, are pleased with the company’s business practices and there appears to be no evidence of anyone, besides Mr. Weiner who is probably not a Goldline customer anyway, claiming that Goldline has acted in a dishonest or unscrupulous way.

But perhaps this is to be expected language from those defaming ilk like Mr. Weiner. Where does ActBlue get their funding? One example is Martin Matthews the Director of Government Affairs for Merck & Co. who gave ActBlue $750. And what does Merck & Co. do for business?

On 6 October 2004 The Wall Street Journal reported,

Merck & Co.’s arthritis drug Vioxx may have led to more than 27,000 heart attacks and sudden cardiac deaths before it was pulled from the market last week … citing a study by the Food and Drug Administration, said that from Vioxx’s approval in 1999 through 2003, an estimated 27,785 heart attacks and sudden cardiac deaths

WebMD Health News citing a recent study published in the Archives Of Internal Medicine asserts ‘Merck should have known Vioxx was deadly years before they pulled the drug from the market, a study of Merck’s own data suggests.” And where did those profits from Merck’s sale of Vioxx go? Into Mr. Weiner’s campaign pocketbook. And how does he use them? As a bully pulpit against profitable companies with a sterling BBB reputation.

GOLD AND SILVER DEALER REVIEW

While I consider RunToGold a fun hobby I also require it to be self-sufficient since that is the only way to ensure it will be sustainable. While it is fun I will not allow it to be black hole on my balance sheet. Fortunately, sales of The Great Credit Contraction and donations from readers like you have been sufficient to provide for the thousands of dollars of cash costs associated with its operation. Free speech can be quite expensive!

Over the years with RunToGold I have been approached by many gold and silver dealers, including Goldline, about advertising but I never found the right fit. While I had my own sources for purchasing bullion, not numismatic coins, and I recommended those companies when asked; for the most part I have shied away from publicly endorsing any particular company besides GoldMoney because to do so requires me to stake some creditability and why should I?

But I am finding that many readers are reporting back to me with both good and bad accounts of interactions with gold and silver dealers. Consistent with the ounce of prevention rule I have undertaken to pool the collective experiences of my readers along with my own so that I can direct new readers who decide on buying gold, silver and platinum towards a provider that offers the best value being (1) credible and reputable and (2) having the best prices. This is an example of what I found:

GAINESVILLE COINS

So who is Gainesville Coins? I had never heard of them before a few months ago when one of my readers, V.B., strongly suggested I investigate them. She had earlier asked me for advice on who to buy about $50,000 of bullion from and I had suggested A****. She did further research and bought from Gainesville Coins because she could drive down and pick up the order.

I likewise made an order, drove down to pick it up and found it a tremendous value, especially on lower dollar amount purchases. Additionally, I talked with the owners and if you call and mention RunToGold then you may get a shipping discount or use the discount code ‘RunToGold‘ on the website and, if they have any left, a postcard of the Liquidity Pyramid.

CONCLUSION

Owning gold, silver and platinum is something every responsible person should do. When deciding who to buy bullion from I can now confidently recommend Gainesville Coins if you want possession or GoldMoney if you want a third-party storage service. I think both forms are wise.

Additionally, I would shy away from taking any advise from Mr. Weiner. So long as the transaction is voluntary, unlike those Mr. Weiner engages in like voting YES on the Health Care Bill to give Merck more money from involuntary premiums, I am more concerned with the number of ounces the buyer gets. With Gainesville Coins I am confident you will, in the vast majority of transactions, get more ounces than when buying from any competitors. Of course, do your own due diligence.

DISCLOSURE: Long physical gold, silver and platinum with no interest the murderous Merck (MRK), problematic SLV or GLD ETFs or the platinum ETFs.