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I know it
seems monotonous, but my point about mining share investment could not be
more important – which is:
The
chances of losing EVERYTHING are far greater than making an
‘extraordinary’ return.
Let that very
simple statement sink in; particularly as the primary reason
people invest in Precious Metals is to hedge the possibility of
catastrophic political, economic, and/or social deterioration. You could lose
EVERYTHING in what are ironically touted as “safe” investments;
or, in some circles, “insurance.” But insurance they are
not, as mining shares are just another PAPER
investment; to boot, fraught with more risks than nearly ANY other.
Again,
this is not to say you cannot “make money” in mining
shares; as some have over the years. However, the overwhelming majority
have not; done in by fear-induced selling – care of relentless Cartel
PAPER raids; naked shorting; and a host of operational, jurisdictional,
environmental, labor and other issues. And, oh yeah; miserable profits
and margins – largely due to Cartel suppression of end product prices.
Moreover,
as the ENTIRE WORLD transitions to socialism to compensate for the
“economic cancer” inflicted by the GLOBAL FIAT CURRENCY REGIME,
capital gains rates will rise dramatically;
such as what is scheduled to occur in the U.S. at year-end. In other words,
investors will encounter higher tax rates simultaneously with the
increased nationalization risks that inevitably accompany surging PM
prices and inflation…
HUGH HENDRY: Buying Gold Mining Stocks Is
‘Insane’
The past
five-plus years have been an outright CATASTROPHE for mining share investors;
as large-caps barely budged while small-cap “juniors” are
down – on average – by 50% – 75%. Margins – for the handful
of actual producers – have declined; the aforementioned operational
risks have ALL come to fruition; capital availability and investment have
plunged; and Cartel naked shorting has reached epic proportions.
Worse yet,
not a single mining executive has made a peep about the
industry’s most important issue – Cartel suppression of PM
prices on the New York PAPER exchange. Consequently, mining shares have been
a DISASTER, production levels have stagnated, and PHYSICAL gold and silver
prices have risen each year…
Global
gold mine output is expected to rise just 0.7% in 2013, the slowest pace
since 2008.
- Barclays
Research
At some
point, EVERYONE reaches their “loss limit.” Care of relentless
mining share losses, I started divesting mining shares in late 2008;
eventually reaching my limit in mid-2011, when I moved 100% of my
liquid net worth into PHYSICAL PMs. Hopefully, this year’s mining share
DEBACLE will convince others as well; leaving the “trading” to government
algorithms programmed to DESTROY anyone that enters their PAPER realm. If
this is the case, the growing ARMY of anti-miner, pro-PM advocates can make a
significant dent in the Cartel’s armor; or, perhaps, DESTROY it!
It’s
that simple. Less mining investment – in a sector already desperate for
capital – will only cause more production declines; less investment
capital; and ultimately, the bankruptcy of hundreds of exploration
companies. The “majors” rarely explore anymore, so they would be
forced to acquire exploration companies – for pennies on the dollar
– and re-establish exploration programs; just as occurred in the oil
industry 10-15 years ago. Such a process – involving HUGE retrenchments
along the way – takes years to develop; which I know too well,
working as an oil industry analyst from 1996-2005. And by the way, have you
seen what oil prices have done since?
Mining giants speed up spending cuts, asset sales
The same
will occur in PMs, but exponentially more so; as not only will
production continue to stagnate, but demand will explode as the GLOBAL
fiat currency regime collapses. Not to mention, the destruction of the
price-suppressing Cartel, as it runs out of “tools” to manage
PAPER prices lower.
Again,
there is no “guarantee” what any specific stock will do –
nor of the mining share sector in general. However, the RISKS of
“investing” in PAPER shares are astronomic, while
“saving” PHYSICAL gold and silver is essentially riskless.
Plus, by selling mining shares, you are simply exaggerating what the
Cartel has inadvertently been doing over the past decade; that is,
depriving the sector of the ability to dilute itself with increased
production.
Plus
– equally importantly – you will SLEEP LIKE A BABY!
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