Monday, April 21, 2008

The Golden Bull Market

This is one heck of a golden bull market in gold and silver.

Since there is a down side to higher gold and silver prices, the increasing steepness of the slope of gold and silver prices is on the unnerving side. Unnerving as in Great Depression unnerving. It's definately feasable to have a Great Depression with hyper inflation happening at the same time. In some countries, particularly in the US, a shortage of gold and silver can develope between anti-mining crowds, and federal treasuries / central banks not wanting their citizen units having safe stores of value.

It is not just the US dollar that is being devalued. It is happening with most government fiat tokens.

That means demand for gold and silver is increasing in most places in the world. Thus their higher prices, thus demand being higher than supply, thus the metals being harder and harder to get your hands on. From anecdotal reports this may already be happening with silver in the US. Do not wait for a default in the silver futures contracts trading on the COMEX in New York.

The financial mass media basically do not talk about this 7 year old golden bull market that is in progress. At least they mention gold once in a while which is different than mentioning the bull market that it is in.

Unlike gold and silver, what "The Street" will not even mention is the golden bull that the mining stocks are in. HUI up about 800% in about 7 years, and not a peep out of CNBC or the Wall Street Journal. Gee, wonder why? The powers that be do not want people having value stored in a medium that the government and The Street can not steal from.

In regular business, if you want to increase your annual absolute profits as much as possible, work to drive down the price of your good or service. The lower you can get your price, the more people will buy from you, the more units you will sell. Think Henry Ford's model T car, computer chips, memory storage and TVs that even most of the "poor" in some countries can afford. Assuming the same profit margins, the lower your price can be, the higher your absolute profits should be.

However in financial markets, it works the opposite way. The higher the price of something, the more people will want it. In financial markets, the crowd is always wrong when it comes to buying low and selling high. So, right now, ** still ** the crowd doesn't know that this golden bull market exists, yet; but they will one day. And, it will be a site to behold when they catch on to what is really happening which is their digital bits on someone else's hard drive being devalued like they're going out of style.

Don't wait for the crowd to catch on. Don't let 'em put a ring in your nose.

"Gold still represents the ultimate form of payment in the world...." Alan Greenspan (May, 1999)

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