Why Are Gold Bugs Buying High?

Dear Reader,

Gold is still the talk of the town, as spot prices continue to tease the magical $3000/ounce milestone — which begs the question… 

Why would anybody risk buying more gold now? 

Going back to the most basic principle of investing — buy low and sell high — a historically high price would seem like the antithesis of good timing. 

Is there something the skeptics are missing?

Well, there is one thing, and I’ve been harping on it for a few weeks now. Gold may be trading at an all time high, but when adjusting for inflation, we’re still not quite there. 

All the way back in 1980, gold hit $850/ounce — more than $3400 in today’s money and almost $500 off from where we are at the moment. 

Gold Crashed For Two Decades After 1980's Historic Run

Nevertheless, the 35% ascent over the last year is notable, and it pays to look back into history to see what happens after major price milestones are hit.

In 1980, that all time-high came and went in what seemed like seconds, and after that a rapid decline of more than 50% which carried on for the next 2 decades.

It’s only since the turn of the century that gold prices have achieved somewhat of a mobility, and really only in the last 2 years where growth has caught the eye of speculators. 

It was in those last two years that gold became an investment for gain-seekers and not hedge investors, like the kind that keep the gold market nice and stable (where a good hedge should be).

And that’s exactly what gold has been ever since the current bull began — the sort of buy-low, sell-high investment that speculators love. 

The Point Of A Hedge Isn't To Get Rich. It's to Stay Rich

Hedges are supposed to be bought and kept, indefinitely, to be liquidated only in moments of dire need. 

That’s not what gold has always been, and that’s not what it’s become in today’s profit-hungry precious metals market. 

For a good hedge to be a good hedge, it can’t be the talk of the town. It needs to be boring and largely overlooked. 

And that’s exactly what gold’s poor country cousin, silver, remains to this day. 

Today’s gold/silver price ratio stands at 91/1, almost twice the 20th century average of 47/1.

On an inflation adjusted basis, silver is trading down, substantially, from decade highs. But more importantly, silver is a disappearing resource. 

60% of today’s demand comes from industry, and a vast majority of that silver is lost forever after manufacturing, as it cannot be economically recovered. 

Smartphones, tablets, phones, laptops, flat screens, solar panels… All of them contain silver. Unfortunately with silver so cheap, it makes no financial sense to go to the pains of recycling it.

And so it's simply tossed away, right along with the vast majority of our consumer tech products.

Silver: The Vanishing Metal

As demand grows, more and more of our reserves will slowly disappear.

Right now, however, the free market hasn’t caught up with that reality and silver continues to trade nicely and calmly in the $32-$33 range. 

So just to keep score here, silver is trading low, which qualifies it according to the most basic rule of investing. It’s boring and underbought, which makes it a good hedge investment. It’s in high demand with some of the biggest, wealthiest industrial buyers in existence, and as a result, is a vanishing resource. 

That's a pretty good argument to at least consider silver over gold when looking into ways to hedge or profit from precious metals investing. 

This leaves a very big question to answer: how do you do it?

A Silver Producers With An Exclusive Source

With silver exposure coming these days from a wide spectrum of funds and stocks, there are a lot of excellent cases out there for any investment goals. 

But to me, one stands apart from all the others. 

This company is in the business of silver production, but their methodology is like no other, and their source is all but untouchable by any other firm operating in the silver space today. 

With more than $7B in silver accessible only to them, this is more than just an opportunity to hedge. 

Get all the facts and figures, right here, and you’ll see what I mean.