Servias Ministries Blog

Right on the heels of my blog is the expected all out assault on the precious metals.  Each and every time that there is a major economic event that should put gold & silver in a positive light, the opposite happens.  It is my belief that this is a managed attempt to dissuade the market from look at the true state of the economy.  Unfortunately the markets are not free and independent but subject to manipulation by the large investment banks who get their instructions from those who believe they are in ultimate control.

The net result of manipulating gold, silver, and related stocks downward is to provide China and India with buying opportunities at lower prices.  It works well for those of us who believe that the upward trend in prices is still in place.  The U.S. economy is not getting stronger, the U.S. debt crisis has not been solved nor will be under the current system.  The toxic debt and derivative weapons of mass destruction are still looming.  The currency war has not ended but is getting into full swing.

If you do not leverage your investments you will sleep better and look at this current environment as a buying opportunity.  If you believe that the current system has been fixed, you should sell your hard assets and convert to U.S. Dollars and disregard the raw U.S. Government statistics that John Williams at shadowstats.com has faithfully reported and summarized in my previous blogs.  Only Our Heavenly Father knows what is coming down the pike.

I have spent the last two years slowly accumulating gold & silver shares as funds have allowed.  I don’t give financial advise but I do share with others what I am doing myself.  Based on my personal observations and navigating through all the macroeconomic numbers, there is a true lack of ethics and integrity at the highest levels of governments around the world.  With few exceptions, the elite think they have all the answers yet they continue to take actions that would indicate the opposite.  If we were truly in a recovery, the Fed would not continue its Quantitative Easing campaigns.  We would not be constantly dealing with another fiscal cliff.  Government debt continues to grow.  In the midst of all of this economic ugliness the average person is simply trying to retain value and acquire some form of insurance against economic calamity.  In my view, hard assets have the best chance of retaining value.

The following chart provides us with a clue to the opportunity this year:

If a person can acquire a portfolio of solid gold & silver mining, and energy stocks, the portfolio appears to be set for a substantial return on investment this year.  My family owns shares in Silvercorp (SVM), Goldcorp (GG), McEwen Mining (MUX), Penn West Energy (PWE), Lexam VG Gold (LEX.TO), Chevron (CVX), and others.  With the Federal Reserve creating new money at a record pace, the hard assets should increase in value.  Well managed companies should see their share values increase.  A global severe recession could change all of these assumptions and crush stock values.  However, the underlying hard assets will still have value in a recovery.  Dividends from senior producers are a plus.

Disclosure and Disclaimer Statement: The author has personal investments in gold and silver bullion, as well as in gold, silver, uranium and base metal mining shares. The author’s objective in writing this article is to interest potential investors in this subject to the point where they are encouraged to conduct their own further diligent research. Neither the information nor the opinions expressed should be construed as a solicitation to buy or sell any stock, currency or commodity. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions. The author has neither been paid nor received any other inducement to write this article.

Let’s first review my view from last year-

Silver:  “It is clear the silver has greater volatility attached to it, especially with an 81.9% move in 2010.  At this writing, I expect to see a drop similar to 2008.  Those that have the ability to manipulate the price will attempt to remove anyone who is “long” silver in a leveraged position.”

The price began the year at $28.78 and is ending the year around $30.00, a 4.2% increase.  It had a $10 swing during the year.  That is volatility.

Gold:  “I expect gold to move between 1,500 and 2,100 for 2012 unless the Iran conflict heats up or the European crisis reveals worse financial losses than previously reported. “

We began the year at $1,598 and gold closed at $1,657, a 3.7% increase.  The low was $1,540 and the high was $1,791, a $251 swing.

Both metals performed about how I expected.  Summertime is typically down for metals as it was this year.  Documented manipulation kept both metals at the lower end of my expectation, especially gold.

In 2013, I expect gold to break the $2,000 price level and silver should break $40.  Right now my focus is on the gold and silver mining shares.  I believe they are 20% underpriced versus the metal.  I believe that accumulation of the physical metal is insurance.  Your safe deposit box may be heavy but it did better than bank Certificates of Deposit this year.  I don’t provide recommendations for other people’s investments, I simply share what I am doing for my family.  I bought silver in the $28 range this year as well as the $32 range.  It matters not to me about the volatility since I believe the price is in an upward trend.  Obviously I would love to buy at the low.  I simply buy a little as I get some extra cash.  If the price seems a little high, I wait until it moves back down.

If the currency wars really heat up, the sky is the limit on precious metal prices.  It we have another financial system meltdown, people will flee to the safety of gold & silver.  If the various governments around the globe curb spending, become fiscally responsible and begin in earnest to pay off fiscal debt, the metals could suffer.  I don’t think that will happen.  My conclusion is that gold and silver will continue their upward trek.  Gold’s channel will move between $1,600 and $2,200.  Silver appears to have built a $28 base and could see $45-50 this coming year.  A black swan event could bust the highs overnight.

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Why don’t we?

I don’t think so.

“Courtesy of ShadowStats.com”