Bull In a Bull Market


The further this bull market in precious metals rages the more bull, you know what, you hear.

For longer than I care to remember a group of steadfast "bulls" have been the go to guys in the mainstream media.  These "bulls" are widely read and quoted in all sorts of mainstream press who just so happens to be the most widely read and circulated publications.

These experts are nearly always saying gold has to pullback, or silver looks extended here to me.  It never fails.

Yet, they steadfastly recommend having generally somewhere between 5% to 10% of your wealth in the metals.  The funny thing is they never say now is a great time to buy!

There is no doubt whatsoever that calling tops and bottoms is a fools game, but in reality any significant pullback of more than 5% should be bought.  And the odd time we do get a 10% pullback in this raging precious metals bull market, well, back up the truck…and borrow your neighbours, your cousins, you in-laws, and your bosses trucks too.

James Turk has been spot on, in my view, by consistently saying to average in.  Buy a certain dollar amount every month.  Whatever you can afford, and if that figure goes up, or down, as time passes, so be it.

The important thing is to keep accumulating, and now is not too late.  Not even to late to begin.

In fact, some very close associates of mine have only just finally after years of me saying the same thing over and over, begun to accumulate physical metal.

One of them called the local bank manager and asked for a price on a 100 oz bar of Silver.  He was told, "I don't know, nobodies ever asked that before.  Let me get back to you".

I doubt he is the one ever dealing with the purchase of metals, but if it was at all common he would know about it being the manager and all.

The point is it's very early still.

Now that that's out of the way I'd like to mention the fact that in the Gold and Silver markets specifically, facts, well, they aren't facts.

When you hear supply and even worse, demand figures, please take them with a grain of salt.  These "bulls" who compile these figures are in fact guessing.

There are two main sources of these numbers/guesses.

Recently the visionary Eric Sprott mentioned at a conference how the demand figures for Silver were a joke.  I can say this and so can you and it wouldn't matter.  But Eric said they were a joke because his firm bought more than the entire demand figure mentioned by this group during the year referenced!

Let me repeat this.

Eric Sprott alone bought more Silver than was widely believed to have been bought in the whole world during this timeframe!!!

The good lord/reader knows I am frustrated weekly by false and massaged government numbers, so now it's fact that we can't even believe numbers from these private organizations.

The one who Eric mocked actually charges £5,450 for a Quarterly report on Silver alone.  I wish I could get away with publishing something, mostly made up, only four times a year and be paid that much!

I try and publish something every weekend that is based on facts or news stories, but still has the odd error and certainly grammatical errors, but I do it for FREE!

Maybe if I was paid that much I'd only want to sit down and work four times a year too.  Got to spend all that money somehow, and working won't do it!

The latest garble came out today where the World Gold Council said that "Indian Gold Demand Vital to Global Gold Market".

First off, why say Gold is basically dependent on India?

Why not write bullishly and talk about growing investor demand, or even that investor demand is far outpacing accepted demand numbers.

While it's true that the Indian Gold market is important and large, accounting for about 15% of the supposed worldwide demand, that number is subjective and investment demand will surely surpass their number if it hasn't already.

Oh, you may say.  Well how would YOU know that?

Well I don't.

But I will refer you to a piece over at Zero Hedge yesterday.  While most of their incredibly in depth and comprehensive work makes my brain hurt, this one stuck out like a soar thumb.

The article in question is, "Is GLD Overdue To Buy Two Hundred Tons Of Actual Gold?"  It's short and relatively simple by Zero Hedge standards and should be read.

They surmise wisely that in fact while Gold has risen some 14% since late June the GLD holdings have been flat.

How could this be?

Using the Net Asset Value of GLD they calculated that the GLD ETF needs to buy approximately 200 tonnes of Gold in the not too distant future in order to full-fill their mandate of being backed by physical gold.

This is going to be a stretch and if they actually do, it should push prices up by well over $100.

How did I get $100, I guessed!  Why not.  Everyone else does 😉

200 tonnes of Gold is about 7.5% of the annual production of 2,500 tonnes.

If 200 tonnes were to be bought it would be 32,150 oz Gold per tonne multiplied by say, $1,400 which equals $45,011,045 per tonne.

Multiply $45,011,045 by 200 tonnes and that gives you a staggering $9,002,209,040.  Slightly more than $9 billion dollars.

In other words we could see a $9 billion investment in physical Gold in the near future which represents roughly 7.5% of annual world Gold supply.

Maybe I should guess higher!  In all likelihood Jim Sinclair's $1,650 target for early 2011 is very reasonable and easily attainable if GLD fulfils their mandate.

And my target of $1,500 by spring 2010 or thereabouts is all but assured.  Sure, I was six months off in timing, but we're almost there now, and at least I've been and remain, a real bull.

In closing I will say.  Don't listen to me, don't listen to the "bulls", don't listen to anyone.  Look at the charts of Gold, Silver and nearly any currency in the world and most certainly the US Dollar chart.

They tell a great story.

Dennis Gartman says often something like; if the chart goes from the lower left to the upper right then it's a bull market.  The opposite would obviously be true.

Now head out to your favourite chart site and look at a few ten-year charts and decide where you want to put your money.

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Last weekend I attended Deer Camp and I'm glad to say no deer were injured or killed during our weekend there, but sadly a few cases of brew did see their demise.

If you'd like more timely correspondences on trades I do which are precious metal related as well as high-flyers please take a look.

While I don't necessarily agree with war in general, especially the ones being waged today, I do thank those who have served and are serving from the bottom of my heart.

You have so much courage and your heart is in the right place.

Thank you.

Happy Veteran's day and Remembrance Day.

Until next time, take care and thank you very much for reading.

Warren Bevan

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