RE: RE: RE: 3 digits?SILVERSTOCKS3. I’m glad you found those charts.
It is often stated that the mining stocks have lagged behind bullion. None of my favorites have performed like I thought they would by now. In my opinion our sector lost a lot of support in the liquidity crisis of 2008. Occasionally we hear a poster tell of their fortunate timing to buy in at that low. But, we never hear from those that sold during the panic and maybe most have yet to come back.
While driving today I listened a little to radio host Larry Kudlow as he explained all that the Fed needs to do is an interest rate increase and the dollar would jump 15%. I think he’s correct. He also said that the price of Gold would then drop. I think he was correct there too. These low interest rates is what made paper credit easy and cheap. Raising the price of borrowing would certainly put upward pressure on the dollar’s value. But, Mr. Kudlow failed to tell “the rest of the story”.
And that is what those charts do. They tell us that the USA government has been spending far more that it receives. They tell us that the budgeted debt can only be relieved by default. They teach that consumer spending is now driven by cheap credit instead of Free market innovation and production. They say that there is little hope for future private sector employment. They tell us that the USA government will continue to spend far more that it receives.
Hind sight is 20/20 if we care to look back. The liquidity crisis was emergency demand for cash resulting from the sudden discovery of extremely leveraged bad debts. As the institutional investors ran for the exits, margin calls demanded the reserve fiat currency of the world; the dollar. The corporations found an immediate need to sell anything and everything of value so as to raise cash. Only Gold remained stable as even our mining shares were deeply discounted……….. only Gold remained stable.
There is a lot of fear that a general market crash will bring the mining sector misfortune again. Let me say why it will be different next time. The world doesn’t want any more dollars today. The world now knows that the issuer is not credit worthy. And the world now wants authentic money as proven by recent demand. China, Russia, India and Korea are all in the auction barn hoping that better quality will be put on sale.
Yes, mining shares have lagged. The Golden goose is worth more. That's why shares are a better value now than they were yesterday.
Mr. Kudlow should know by now that a higher dollar and lower Gold can only be a temporary condition. What might we fear that would make the USA dollar as good as Gold?
*
mineshack
*
*