While Longwave subscribers are invited to submit questions on economics to our President, Ian Gordon, please note that due to the sheer volume, Ian is unable to answer all queries. On a best efforts basis, Ian will focus on answering subscriber questions which are deemed to be of widespread interest.
Question: July 13, 2012
"As stated I am long with your top 3 picks..barker, tmex and pc. I have a few bucks in Atlanta gold as well is that one finished?
Please update your website as soon as possible with news about barkerville regarding the investigation.
There is no investigation. Once a company puts out a resource compiled by an independent geologist, that geologist has 45 days to submit his report as to how he arrived at his number, which in Barkerville's case is very large. This report is then reviewed by the British Columbia Securities commission, which either approves the estimated resource or requires amendments. In Barkerville's case it is quite likely that the Commission will rule that the geologist, Mr. Peter George, has overstated the deposit ounces and require that it be amended lower. Whatever, given the number of drill holes, the deposit will very likely still be very large.
As for Atlanta Gold, the company was removed from my website many months ago, because I believed that Management had not been forthright. I sold my shares at that time. I no longer follow the company, but since the shares are trading at only $0.025 I don't believe that it will last much longer.
"Barkerville tanked, how disappointing. I averaged in at 93 cents should of waited I guess."
It’s pretty hard to buy at the bottom and sell at the top. If Peter George’s report on the deposit comes in anywhere near the 10.6 million ounces, this is going to be a huge winner. Even if the 10.6 million ounces is cut by 25%, we still get almost 8 million ounces. If the potential resource of between 65 million and 90 million ounces is cut by 75% , we still get a potential resource of between 16.25 million ounces and 22.5 million ounces. So, however far you cut it this is going to be a very big deposit and will be very attractive to major gold mining companies
"In your latest edition of investment insights you are suggesting adding NUGT/A to the portfolio.
Since this is a highly leveraged ETF with daily re-balancing is this suitable for a long term hold?
I understand this is better suited for short term trades as it deteriorates over time. I don't
fully understand the full intricacies of these highly leveraged ETF's and would appreciate your further clarification
and the pros and cons etc?
I realize that the daily re-balancing of highly leveraged ETFs can fail to mimic the actual price move in the underlying security. But what I am looking at is new record highs in the gold stock indexes, which should then at least give this triple gold stock ETF a chance of going to or beyond its old highs.
"I enjoyed reading your July 6/2012
Investment Insight. I just checked the Barkerville
BGM.V chart and it is trading at 82 cents. What is
your gut feeling on the stock? Why is
the BC Securities Commission suspicious
of Peter George's results? Is there any
further information that you can share
after you wrote the July 6 report?
Under Barkerville in Companies We Like, please check out the latest information that Ian has written regarding Barkerville.
Question: November 8, 2011
In paragraph 4 on page 3, pasted in below, is the word "not" missing?
"Regardless, we must all act very defensively with respect to investing at this time. To that end, as I have already discussed with you, I have
been selling any stocks that I own that are pure exploration plays, even though these sale prices, for the most part, are below what I have
paid for them. However, I have been putting the proceeds into companies that do have compliant precious metals assets in the ground."
I think you are meaning that the word 'not' should follow 'into companies that do'---(not). If that is where you see the word 'not' being placed, no that is absolutely not what I was wanting to say, What I am saying there is exactly what I mean to be saying. I am taking money out of pure exploration plays, and putting the proceeds into companies that already have gold/silver in the ground such as Temex and PCGold, but I could have added many others like Colibri, Barkerville, Freegold Ventures, Northern Freegold, Terraco etc. See Economic Winter- 'Junior gold stocks……..'My intention here was to show you where I am deploying my money and at this time I think PCGold and Temex are exceptionally cheap, given the ounces that they have in the ground and the location of their properties-Ontario, Canada.
Question: October 21, 2011
I have to confess I find this piece to be more of an Ian' Insight than Winter Warning. In addition, it was a bit contradictory as well. On the one hand, his writings have discussed "Dow 1000 is not a silly number" , he has closed his short positions believing equities will stage a big rally yet recently wrote that he thought September was the top and the markets would bottomin September 2012. Hmmm.........
Maybe it's me but the information flow seems to have slowed as well.
Not sure if any other subscribers have made this comment.
Thank you for the comments regarding the latest "Economic Winter" publication. I agree that it is much closer to an 'Ian's Investment Insights', than perhaps the typical Economic Winter publication, but it was a topic that my team agreed needed to be addressed. Some subscribers have indicated to me their concerns about the price action of the junior precious metals mining stocks and I wanted to consider those concerns in this publication.
At our team meetings we plan the next four or five Economic Winter publications and whether it will be Chris Funston or I, who is responsible for writing the selected topic. The subject of Junior Precious metals mining shares was selected at a team meeting about six weeks ago. The next topic selected is The Debt Markets and Chris Funston will be writing on that subject.
For the most part in our 'Economic Winter' publication we try to show our readers parallels between the previous economic winters and our present winter. We do this to show that history is indeed following a similar pattern and as a result we can make reasonable projections about how the future might unfold.
As for the flow of information, I don't believe that it has slowed. We aim to publish 17 'Economic Winters' each year or once every three weeks. This year we have published 12 and Chris's debt issue will be published this month, which will leave us to complete 4 more publications in November and December. We will do that. In addition in October you have received the Canadian Business article and my interview with the 'Gold Report'. We also have some great guest articles on the site. I love to read Kiron Sarkar, which we forward almost every day.
With regards to my change from bearish to bullish, I'm still of the opinion that the Dow will collapse to 1,000 points or lower, but in the intermediate term I have turned bullish, simply on account of what the charts are telling me. They all appear to have made an important bottom in the week ending October 7th,2011.There were so many key point reversal bottoms made in that week that it would be imprudent to ignore the signs that we are perhaps changing direction to the upside for at least a few weeks and why wouldn't we try and take advantage of that trend reversal. As Keynes said "when the facts change, I change my opinion'. Well in my opinion the facts have changed from bearish to bullish and I have changed my opinion accordingly. In the long run my opinion stays the same, I am very bearish.
Question: October 3, 2011
I'm a subscriber of your website and a big fan of your work!
I hear a lot of negative things about gold. People expect it to go down and correct to $1100 per ounce. I am still up in profit territory on gold but the stocks are down substantially. I know that corrections are normal, but it seems when the market tanks everything tanks right with it. Do you have any feeling or opinion how low it could go and how long this correction phase in Gold could last? Any feedback is appreciated.
I will address your question in the next winter warning due October 12th. However , let me tell you do not, under any circumstances, be frightened out of your physical gold holdings, the world paper currencies are collapsing which leaves only gold as the currency of choice. As for the gold stocks they will ultimately come into their own when gold becomes the only investment left standing.
Question: September 20, 2011
This email may be my last resort! I've been trusting my "investment losses" to traditional brokers, money managers & financial advisors for decades now & it's quite possible that I could probably have lost just as much money all on my own, but perhaps saved the fees!
To cut a long story short, I feel that the wellbeing of my family & my retirement is threatened by the current debt crisis. I've watched the manufacturing industry that my small company depended on move out to the so-called low cost geographies & I have nightmare visions of having to work at a coffee drive through 'til the day I die!
For several months now, I have been reading & browsing the internet furiously to see if I could find a sane voice in the wilderness & I think that might be you. Frankly, I'm stealing your advice, from the LongWave website, & I'm contacting the President to ask this : if I subscribe to your site, will I find specific stock or asset recommendations that your feel relate to your analysis of the Kondratieff cycle? I'm so beat up from trying all the wrong things that I'm now reeling from the overwhelming amount of information out there & I need some guidance & handholding.
I'm not looking for that ever elusive guarantee of returns, nor am I expecting miracle picks. I'm simply looking for someone that truly believes in what he is saying & who supports that with specific examples that I can follow. At my own risk of course!
I'm hoping the LongWave subscription offers that kind of information & I look forward to hearing from you.
- P.W., ON, Canada
I'm sorry that you haven't had success investing your money. I was a broker for many years and went out of the business to do my own thing, which is to guide my subscribers in making money in these very difficult times, which I have been forecasting since 1999. To that end I have been 100% invested in gold and gold equities since that time, as were my clients until I left the business in 2009. My compounded return on my investments since 2000 to the end of 2010 was 75% and that includes the substantial losses that I experienced in 2008, which by the way I anticipated in a piece that I wrote and published in November 2007 entitled "This Is It." Anyway this year I am down on my investments but to the plus side on my ownership in physical gold.
I think you'll find my site very helpful and yes I do give specific investment ideas to try and help my readers. I want them to make substantially more than the subscription price in following my advice, but of course there are no guarantees.
Thank you very much for your feedback & I apologise for my delay in sending you this thank you note. I not only appreciated your prompt reply but perhaps even more appreciated the honest tone in your email & I immediately signed up on the website after reading it. The website, of course, is where I have squandered my entire afternoon & is the reason for my delayed response. However, it might be the best "squandering time" I've ever spent! It's interesting to note, that with all the folks I've met over the years, I knew more about your portfolio after a single email exchange than I did for any of those people that were advising me in previous years.
I will spend some more time understanding the information you share & then I hope to put some of your thoughts into practice. Thank you again.
I look forward to being fortunate enough to make the right choices for me & to sending you reports on that activity for your testimonial page in the coming years.
Must dash, I have a lot more reading to do!
- P.W., ON, Canada
here in British Columbia. Anyway thank you for your very thoughtful question. I hope my answer has been helpful to you.
Question: September 2, 2011
I'm a subscriber of your website and a big fan of your work!
While I have hundreds of questions on my mind but thought I would as the question below as it might be on the minds of many people other than just me. Feel free to post in on your website if you would like!
I have a question about paper money. I have heard you say that paper money will become worthless and that owning gold is a good idea. I don't question owning gold, but I can't seem to wrap my head around paper dollars becoming worthless.
My understanding is that dollars become worthless (or lose purchasing power) throughout the Autumn when there is a massive increase in debt and speculation. An increase is debt and speculation will expand the money supply through the fractional reserve system and debase a paper currency. Therefore, in the Winter, when everything reverses and debt is wiped out of the system, the money supply should contract and dollars should become more valuable (or increase purchasing power). Therefore, wouldn't it be a good idea to hold cash?
Thanks for your question. Normally in a Long Wave winter, after gold, cash is a very sound investment. But this winter I have my doubts that will be the case. Simply because cash is paper and I think it is very likely that paper will have to be rolled back, perhaps ten to one. In other words $10 will be priced at $1. Why would they do that. Well it would reduce debt by 90% and secondly if the new currency was to be backed by gold, which I am convinced that it will be, that will leave less outstanding $s, so the coverage could be set at a lower gold price than it might have to be without any roll back.
Question: September 1, 2011
Mr. G., at some point, the CB's will intervene in PMs in a big way. If they "limit the gold acquired individually and by the ETFs" - see below, couldn't/wouldn't that destroy the mining companies? In essence, the CBs would steal the demand, thus supply would not be needed and will be shut off since there won't be as many buyers in the "open market".
This is very important to us since we are invested substantially in mining companies.
WSJournal, NYTimes commentaries urge: Murder gold
- G.D., Arizona, USA
I just don't think that there will be a coordinated attack on gold by central banks. Because I don't think that the Chinese and the Russians are going to play in the game. The Chinese have been encouraging citizens to buy gold and Russia is buying lots of gold and anyway the Russian oligarchs probably own tons of the stuff and are beyond the reach of the Russian government. The people that want to own gold because they don't trust their governments will own gold even if they have to obtain it in a black market. When Roosevelt confiscated American citizens' gold the only way that Americans could own gold was through ownership in gold company shares and they did very well in the 1930s, as I have demonstrated to you on may occasions. Ithink your fears are unfounded you just give too much believe to the idea that governments will act in unison. They won't. They will always act in their own self interest first and foremost. I'll talk to when I get back,. In the meantime relax. Ian
Question: August 24, 2011
how's gold looking today?
- E.D., Canada
Gold, took quite a hit and I think there’s more to go on the downside, perhaps as I suggested in my latest short interview for the gold report. Everything looks very dangerous out there and we could be setting up for a stock market crash, maybe early September.
Question: August 11, 2011
I have read your latest piece from 28 of July where you paint the coming development only in the very darkest colours. As you I have invested a loot of time and brainpower making up my mind in what direction the economies are going and I would like to ask you a question:
Due to all the derivatives, their volumes and the fractal money-system used by the banks allowing them to have only 5 dollars for every 100 dollars lent it is very much possible that the world banking-system would not service a deflation crash ala 1929.
Assuming it would not, then investing in junior gold mining companies is really risky as no company can operate without a functioning system for payments.
How would they purchase and pay for hardware like diesel, drilling steels, electricity etc. and pay the employees for their work ?!
I expect that the whole industry would come to a halt.
During these circumstances the only really safe investment preserving the purchasing power would be Gold. Producing assets like farmland, forests,
water wells oil wells etc. is not to be excluded from an investor portfolio for investors who do not want to put all their eggs in one basket. However these assets would diminish in value as the whole economy comes crashing down. As you have stated, as the banks starts to go bust people will buy gold as the only really safe store of value. However, with all the fiat money on this planet the demand will be astronomical. I expect that it will not be for longer or shorter times able to purchase gold or silver on the open market at any price.
I have followed your work and homepage since I got the knowledge of Longwave group and Mr. Ian Gordon back in 2008. So I know your investment philosophy of investing 100 % in Junior-mining-stocks. Lately you have also stated that is time to buy gold.
After my comments, do you still recommend junior companies ?!?
For your reply I thank you in advance.
Your question is from a long time ago and I think it is very important that I answer it now. I don’t think the banks are going to survive this deflationary crash and the implications of that are horrendous as you suggest in your question. I have wrestled with this for many months. I was going to start an investment fund based on the Long Wave winter and we had almost got to the end when I decided to pull the plug on it, because I have been convinced that the world paper money system is collapsing and that means, as you have pointed out, that credit will collapse, too, and that means the entire economy comes to a standstill. So how do these junior miners keep going? Well if they have good gold in the ground assets they might well be taken over by major gold companies and the shareholders are likely to paid off in gold. If they are producing they will likely have to make their payments in gold. Payment will always have to be upfront. I continue to hold shares in junior companies with gold in the ground assets., like Temex, PC Gold, Colibri, Golden Goliath etc. I will be buying shares in Terraco, which has a great gold deposit in Idaho and a very good management team. I particularly like Barkerville, because it is in production,
Question: August 8, 2011
How do you interpret the present market for juniors? I am non-plussed by it.
ATAC, which is one of my favorites dropped 11% on no news yet they have eight drills working on prime targets.
Temex dropped to 0.23 yet has been issuing nothing but good news.
Fire Gold has not made an announcements for a while. The price is dropping. Does someoneknow something we dont - or is it just the way the market is?
Prosperity Gold (PPG.V) which is a spin off of Evolving Gold jumped 60% on Friday on the basis of a one page news release which included a colour photo of core with gold in it.
PC Gold has finally hired someone with technical skills comensurate with the job. This is great news. Your faith in the property (and mine) appear to be about to be confirmined.
- Brian, Geological Consultant Longwave Strategies
I think the issue facing all companies is that they are valued in paper money and the trust in paper money is quickly eroding. See my Winter Warning, "The Death of Paper Money." I don't follow Atac, but Temex has $5 million in cash, which is plenty of money to ride out the storm. PCGold has about $10 million. Fire River seems to be doing everything right and it too has plenty of cash and should be pouring gold soon. I don't know Prosperity, but Barkerville recently released a great drill hole with Visible Gold This company is in production and is adding significant ounces to its resource.
Question: June 2, 2011
I am a registered user of Long Wave Group website and have read alerts in the website about the possibility of a major global financial crisis in a near future.
I would really appreciate if you could please give me your answers to the following questions:
1) The financial market is making reference to QE3 and QE4 - what do they precisely mean and what is the estimated impact on the economy both at US and global levels?
2) Could a possible default of the US and / or European economies or the weakening of the US dollar and Euro become in any way bad for gold or silver investments?
3) Would recently purchased precious metals ETFs like GLD, DGP and SLV be a safe investment in a big market sell-off?
4) What is the best investment now if the investor is willing to protect his portfolio from the possibility of a big market crisis / sell-off?
5) What gold bullion product from the various market options (bars, coins, etc) has more liquidity and can you recommend a broker in Switzerland who sells it?
6) Is there any other investment, apart from precious metals, that can resist the currently predicted major global financial crisis?
Thank you for your questions. Here are my answers.
1. QE3 and QE4. QE2 is supposed to end at the end of this month. QE is short for Quantitative Easing. In effect the Federal Reserve buys US treasuries from the banks and credits the banks’ accounts with this money, which it hopes will be lent back into the economy. That hasn’t been happening, because these banks already have many bad loans on their books, so the money has simply been used by the banks to speculate in stocks and commodities. I feel sure that the Federal Reserve will have to continue buying US debt, but I doubt that they will refer to their buying as Quantitative Easing. They’ll have to use a more concealed method.
2. Think back to 2008 and you’ll remember that credit all but ceased to function. The entire stock market suffered a huge sell-off. This included precious metals companies. I am pretty sure that we face another credit crunch, which will hit stocks pretty hard. But for my part those companies that are in production have nothing to worry about and companies with gold in the ground assets and money in the bank also should be fine, even though their stock prices might be hit just as they were in 2008.
3. I don’t think that precious metals ETFs would be immune to a major sell off in the stock market.
4. The best investment in a major market sell-off is to own physical gold and silver. I prefer gold. But precious metals prices may also b e affected initially during the sell-off, because of margin calls and other investors, like Hedge Funds, simply dumping investments without any regard for what they are.
5. I like coins such as Canadian Maple leafs. I don’t know of any seller in Switzerland, but you might try Border Gold here in Canada.
6. Not that I can think of.
Question: March 3, 2011
I was just looking at the lifetime economic map you sent me, and was surprised by the following: I only have data for the S&P500 going back to 1881, while your graph shows data going back to 1800. Since I'm a subscriber, I was wondering if I could somehow access those series in order to use them.
- A.G, Buenos Aires, Argentina
Unfortunately, We don't have the S & P data. We get most of our historical data from Topline Investment Graphics and they also do the graphs for us. I have been using this company since about 1998 and have the highest regard for their work. The principal, John Carder, is very ethical and I have absolutely no reservations in trusting his data. John is in Colorado and can be reached at 303 440 0157 .
Question: March 2, 2011
In the article, Inflation or Deflation, on page 17 it says, “Paper assets, including paper money are destroyed during winter”. I can understand why it goes on to say that gold will soar but I don’t understand why paper money in a deflationary environment would be destroyed. I would think that the buying power of a dollar would improve, meaning that holding cash would be a good thing. Could you help me understand this point.
- J.L., Georgia, USA
Thank you for your question. Yes, you are correct and I might have been wrong when I wrote that “Paper assets, including paper money are destroyed during winter.” If you look at the circular chart-“Lifetime Economic ,Financial and Investment Map,” you will see the best investments in winter are Gold and Cash. But, I have a sense that this winter, it might be different because it is very possible that the paper money system might collapse under the weight of debt. Under these circumstances paper money might not be accepted in payment. After the collapse of John Law’s paper money scheme in France in 1720, it wasn’t, nor after the collapse of the French Assignats in the late 1790s. Only gold and silver became acceptable as money after these French currency collapses. Indeed, following the failure of the Assignat paper money scheme, the French returned to a gold standard system based on the Napoleon.
I think that it is prudent to hold sufficient cash to look after your needs for six months. I believe you should hold substantially more of your savings in physical gold and, to a lesser extent, silver, than in cash. If required, you can always convert some of your gold and silver holdings into paper dollars.
Question: February 8, 2011
Can you please advise when Ian is expected to complete his commentary on each of his Gold stock companies. I subscribed last year partly to have access to this information and have been disappointed in the time it has taken to provide Ian's commentary on why he likes some of these companies.
I would appreciate some feedback on this issue.
- B.N., Auckland, New Zealand
TI am sorry that I haven't completed so many of the write-ups on 'Companies that I like'. I am trying to finish them as fast as possible. I am currently finishing write-ups on Colibri and Atlanta. Colibri just issued some great news with regards to a joint venture agreement with Agnico Eagle on its Colibri property. It has also announced a drill program on its Ramard silver property. I own shares in Colibri and Atlanta. I will work hard to deliver write-ups on all the other companies listed on the site, but I do like them all and I own shares in almost all of them too. Please accept my sincere apologies for my tardiness.
Question: February 2, 2011
A question about ARICAN QEEN - AQ.V:
The stock was on the list of your selected juniors for 2011.
Lately the company released some data and the stock went down.
Is the stock still on the list? What do you think about the data?
- D.B., Hod Hasharon, Israel
Thank you for your enquiry regarding African Queen. I own shares in the company and will continue to do so, unless management fails to deliver. If African Queen has a problem it is that the company owns a has a vast array of different properties situated in many different African countries, but all these properties have excellent potential. It may be necessary for the company to farm out some of the properties for other companies to spend their money on exploration. One of the things that I emphasize when it comes to investing is that you must be patient. You just don’t get a double in every stock in ten months, but that is what you are looking for when you buy into each company. I only sell my position when I can’t see that potential double in ten months or if management does not deliver on its promises or if the focus of the company changes as in the case of Full Metal Minerals. If the situation changes negatively for African Queen I will let all subscribers know. I will be speaking to Irwin Olian, the President, at the PDAC in Toronto early next week and will try and give subscribers an update on the company following that meeting.
As for giving a monthly update on all companies listed on the website, I honestly just don’t have the time to do that. But as I have written to you, I will always let you know if I think the outlook has turned negative for any companies displayed on the site.
Question: January 16, 2011
I thought you might be interested in an article issued by Armstrong economics published on howestreet.com on Jan 14th. It has some comments on the K-wave cycles
- J.L., Georgia, USA
Thank you for alerting me to the article written by Martin Armstrong, I am a big fan.
I think the chances of financial and economic collapse are 100%. It's the debt that will overwhelm the abilities of governments and central banks to sustain the system.
How might such a collapse affect you? Well, I don't want to seem like an alarmist, but such a catastrophe could imperil your job. Cars will not be in great demand after an economic collapse. During the depression of the 1930s, 30% of the Canadian workforce was out of work. My ex-Father-in-law rode the rails looking for work. You should save as much money as you can put away at this time. You should get out of debt as fast as youcan. You should have a large percentage of your savings in physical gold and to a lesser extent, silver. Investment money should be in gold and silver companies.
Debasing currencies won't be that effective if all countries are trying to play the same game.
I wish you and your family all the best during these very difficult times.
Question: January 15, 2011
I have a number of position the you guys recommended.
Were in a well deserve correction I think now and hedged my positions for now (working very well )
Some very smalls are showing nice relative strength against mid and large caps.
I Read up on GNG (have 110k shares now) but doesn't tell you much about what they proven in the ground.
Ian says he has a large position my guess 100 or 200k $ not share ;-)
Just wondering if you care to share what your guys favorite / cheapest company at this juncture?
- P.M., BC, Canada
I have a very large position in Golden Goliath. Last Year an independent geologist estimated that the Los Bolas property could contain as much as 112 million ounces of silver. Since that report the company has drilled extensively and should have added considerably to that resource estimate. Agnico Eagle intends to earn in on this particular property. Once that agreement has been formalized, GNG will turn its exploration focus on its 100% Nopelera property, which is adjacent to Los Bolas and only 4 miles from the large Fresnillo discovery.
Question: January 12, 2011
I enjoyed reading your latest and vey informative edition of Winter Warning regarding your investment philosophy and portfolio.
However in a previous article you suggested taking a bear market protective position with FAZ, SKS AND DXD.
There was no mention of this in your latest article and would like to know if that was intentional or do you still
recommend that protective action in light of your long term bearish posture?
- R.M., Quebec, Canada
Yes, I still have positions in each of these inverse ETFs and the prices are down substantially. I will probably add to the positions in March of this year as I think that is when we will see a top in stock prices. This is my take on the stock market at this time. We may go down now through February. From that low we will likely rise into early April and that should be the peak of stock prices. From that point the bear market should resume and resume with a vengeance. I will keep all subscribers informed as to what I consider to be the appropriate investment tactics. Happy New Year and all the best to you and your loved ones throughout 2011
Question: January 11, 2011
Can you provide any recommendations for junior gold newsletter subscriptions? I believe Ian mentioned three that he likes. Also, what is the best way for me (US citizen) to invest in junior gold stocks? I don't believe that I can purchase them via my TD Ameritrade account. Would it be more advantageous for me to use a broker in Canada? I am interested in investing about 100K - 150K. Thanks for any help you can provide. I really enjoy the newsletter.
Thank you for your enquiries. These are the junior mining newsletter writers to which I subscribe:
HRA-Hard Rock Analyst-David and Eric Coffin
Mining Speculator-Greg McCoach
International Speculator-Doug Casey
Jay Taylor's Mining Newsletter.
I used To subscribe to Laurence Roulston's letter, which I think is pretty good ,too.
That being said, I don't think I have ever purchased a stock that has been recommended by these writers. I subscribe just to see if I'm missing anything. You have to understand that I have developed my own pipeline of companies. I believe that I was one of the first people to become actively involved in the junior precious metals mining sector, by assisting companies in raising funds. That all started as long ago as 1999, because by that time I had become very bullish on the sector. So I have gained a reputation over many years of helping companies raise money. By the way, I only supported companies, which I believed would make investors money. I think, I have gained a reputation for loyalty to these companies. That is as long as the management stays on track. I was the seed financier for Timmins Gold and the lead broker in the company's IPO. I was the lead broker in all of the company's subsequent financings. The company is now of course in production as laid out by management from its earliest days. I still have a relatively large shareholding in the company. My involvement with Golden Goliath has followed a similar path. So, even today I am meeting with several junior mining company executives. For example late last week I met with a small company Colibri, which is on my website as a company that I like. After I had been given an update on the company. I have to say that It is a company that should do very well for investors as long as the company can effectively promote its attributes. It helps that I live close to Vancouver, which is the home of most Canadian junior mining companies.
Subscribing to the Northern Miner is also very helpful. Here's why; Last night I read a very positive story about PC Gold in its on-line edition. Before the market open I phoned my broker and asked him to purchase more shares for my account. He was able to purchase a sizeable amount for me before the market got wind of the story. PC Gold was up about 12% on the day.
Unfortunately, I can't tell you the best way that you can purchase shares in junior mining stocks. I'm not sure how Americans do it, but they obviously have found a way.
Question: January 4, 2011
"TGR: When we reach that turning point where the Dow begins to dive, won't the junior mining stocks also drop rapidly?
IG: They didn't in the '30s because all the capital flowed to gold. There were huge discoveries.
TGR: So junior miners will have such opportunities due to the capital flowing toward gold.
IG: Right. People like my friend, Eric Sprott—who runs a whole host of funds as the chairman of Sprott Asset Management—are extremely bullish on the precious metals because, like me, he sees the potential of a significant economic and financial worldwide disaster. He, too, is very frightened about the potential outcome of a worldwide economic collapse. And, much the same as I do, he sees that money will flow into precious metals, including these junior companies. That's where he's invested and that's where I'm invested."
During 2008, the economy experienced a large credit destruction or Kondratieff Winter. All asset prices declined against the U.S. dollar and Japanese Yen. Ian has not given a valid explanation of why capital will flow to the junior miners during the Kondratieff Winter . The 1930 experience is not the same as what happened in 2008. During the 2008 Kondratieff Winter, the junior miners fell in price, as did all asset classes.
- A.C., CA, USA
The crash of 2008 might be likened to the first crash in October 1929, when all stocks crashed including gold stocks. By 1931, however the US banking system started to collapse and the move to own gold and finance companies looking for gold and producing it became the only medium that attracted money. Gold exploration in most of the gold producing countries became a major undertaking. Discoveries were made in all of these countries. Here, in Canada there were major discoveries made all along the prolific Abitibi greenstone belt. The current Osisko mine in Quebec was discovered and mined in the1930s. There were several other mines discovered along this belt and put into production during the 30s. The red lake camp in Ontario also experienced the same, as did areas in central British Columbia, including the Barkerville area, which is now being put back into production by Barkervile Gold. Worldwide gold production increased by 66 percent between 1933 and 1940; that couldn't have happened without a great deal of capital flowing to the industry. In the US there were 9,000 operating gold mines by 1940; which would have required huge amounts of money.
At this time, the Federal Reserve is trying to keep the old stock market game going via massive infusions of money into the banks. That is doomed to fail and when it does watch how anyone with any money will run to own gold and shares in gold mining companies.
Question: December 14, 2010
Would Mr. Gordon equally recommend any of the mines in the companies we like section? We are just starting mine investment. I did not know if there were some preferred over others if you were just starting. Maybe some companies have not done as well as expected or maybe some have gone up quite a bit already. We were going to spread our investment in six mines. Are there any 6 that prevail over the others?
Do you have recommendations for who to go thru to invest in the mines?
- J.H., MS, USA
Some of the companies that on on our website that we like have done very well already this year. What I do is look for the laggards. So in that vein, Golden Goliath, Lincoln, Full Metal Minerals, Temex have really not made a move, but I think that they will. I own them all. I still like Barkerville at these prices and a company that will probably coming on our site early next year is Freegold Ventures and I like this company, too as it has better than a million ounces in a property in Alaska. I will shortly be coming out with our outlook for 2011 and in that publication I am going to list my top ten junior precious metals stocks for 2010. So you may want to wait until then, although I'm pretty sure that Lincoln, Freegold Ventures and Temex will be in the top ten. Also I am going to publish in the next but one 'Winter Warning' "How I manage my investment account," that might be helpful to you, too.
Question: November 27, 2010
Here is a subject that I would love to hear comments from Ian. I am in the restaurant business and our prices keep going up. Porter Stansberry thinks we are going to have inflation in food. I agree with Ian about the coming deflation but can food prices continue up while deflation takes over?
It is a mystery that needs some explanation.
- D.H., WA, USA
Thank you for your question regarding food inflation. Here’s how I see it. There’s been a great deal of speculation in all commodities including food made possible by massive amounts of money fed to the banks, through quantitative easing, by the Federal Reserve. It’s true that China’s economy is on a tear, but the US economy is limping as is most of Europe’s and that’s where collectively you get the greatest demand for all commodities, particularly food. So there really isn’t any major shortage at this time, prices are being driven up by speculation. When the world economies sink into recognizable economic depression, the prices for all commodities will plummet as they did in the early 1930s and at that time that included food prices.
The only thing, as I see it, that could lead to food price inflation would be severe credit restriction worse than 2008, which is very likely. See my blog. I just don’t know how we are ever going to get out of the mess that central banks have landed us in.
I wish you and all your loved ones a happy holiday season and the very best in 2011, which I think might be a very difficult year as I will lay out to you and all subscribers in ‘The Outlook for 2011’, which will be published very early in the New Year.
Question: November 16, 2010
What does Ian think about silver? Would love to know… thanks
- A.W, CT, USA
I have never been as comfortable about silver as I am about gold, because in the early 30s there wasn’t the big rush to own silver as there was to own gold. The price of silver fell from $0.75 in 1929 to $0.25 by 1933. But the US minted its coinage down to and including the dime in silver at that time so I am sure that these coins were hoarded. On assuming office President Roosevelt made silver a strategic metal, which got all the US silver mines back into production and all the silver produced was purchased by the US government.
So I am pretty confident and have been that way since 2000 that you can’t go wrong by being invested in gold and gold shares, but you could be wrong by being invested in silver. That being said, Silver could easily take on a monetary metal role as poor man’s gold, this time.
Also, my friend Eric Sprott (Sprott Asset Management) is more bullish on silver than he is on gold. He has many compelling reasons for his belief. I listen carefully to anything Eric has to say.
Question: November 9, 2010
Apologies if asking a question about an individual stock is
inappropriate but I wondered if you new much about Yale Resources. I
have had it recommended by Jay Taylor and as a subscriber to you I was
hopeful you may also know something about them. If you are familiar
with them would appreciate any comment your prepared to make.
I'm enjoying my subscription immensely. Keep up the great work. If
your ever down in New Zealand please let me know and I would love to
show you around down here.
- A.W, CT, USA
I don’t know anything about Yale Resources. If you look at the companies that I like on the website, look for the low market cap ones, like Temex, Lincoln, Golden Goliath, Atlanta, Colibri etc. I think these companies will do very well and I own them all. Remember, that I am not an investment advisor and anything you buy you do at your own risk. I don’t know your risk profile. That being said, I am still very, very, bullish on gold. The real chaos of debt unwinding is still in front of us.
Question: November 8, 2010
I enjoy my new subscription very much. I know you follow Prechtor's work at EW from your writings and I wanted to know if you could address what appears to be a difference of opinion regarding the deflationary forecast.
Prechtor recommends to be out of everything including mining shares, except for a core position in precious metals, preferably accumulated at lower prices in the past and to hold safe dollars-short end T-bills, not because the dollar is a good currency, but because it is the sickest, a synthetic short covering rally so to speak when all of the gigantic dollar denominated debt must be destroyed.
His investment thesis essentially predicts that the "deflation" will be so bad that there will be no place to hide.
I find your thesis to be in agreement except for the need to be more heavily in the metals and shares. I personally find your position to be a little more comfortable.
I wanted to know if you had any thoughts on this or could address the issue in an upcoming post? Also was wondering what you felt about commodities, energy, Ag, etc as it appears some big money is moving into those areas as well to "hide" from a great inflation in the next few years that "everyone" is predicting. Perhaps a way to store value, if not make money.
Thanks for your great articles and website.
- M.A., California, USA
Thank you for your question(s) Dave.
I always enjoy answering questions that ask me to think, before I reply and your questions have certainly given me pause to think.. Let me say that I am a Robert Prechter fan and I subscribe to his letters. That being said, Mr. Prechter has been dead wrong on gold for many years. I think it is because he doesn't give gold the credit it deserves as a monetary commodity that people turn to when paper money is fast losing its value..If you go back in history you will see that every time a paper money system has collapsed, people, who have been subjected to paper money inflation, have always turned to gold, and to a lesser extent silver, as a store of value and ultimately as a means of payment. This is well documented in the book 'Millionaire' by Janet Glesson, which recounts the exploits of John Law's Mississippi scheme in France between 1716 and 1720, and Andrew Dickson White's book 'Fiat Money Inflation in France,' which analyses the attempt by the revolutionary government in France to resort a paper money issuance called Assignats between 1789 and 1796. I think both books are well worth reading.
As you know, that like Mr. Prechter, I too am a deflationist, which means that I do not see commodities as a store of value, because I envisaged the entire world being caught in the grips of a frightening economic depression, Under the circumstances, for all of us, it will be simply a matter of survival.
I am really concerned about what happens in the case of a failure of the world's paper money system. I am pretty sure that it's going to come to that. In that case what is the value of any asset denominated in paper money values? Of course this means will investors accept any paper money for their shares, indeed would prospective investors want to buy paper assets, especially gold shares? Would you? We've got a little time to ponder on this fundamental question.
Question: November 4, 2010
Quote from recent winter warning, “ We are now in the fourth Kondratieff winter deflationary depression when fiat, or, paper money will become distrusted and discredited.” You later went on to say that, “America has thoroughly mismanaged her monetary stewardship. That responsibility is about to be taken from her.” While I agree with this view, I still don’t fully understand why you feel we will have deflation in prices...
If the world loses confidence in paper money (especially the reserve currency), no one will want to hold it and therefore the velocity will increase. On the level of foreign exchange reserves, countries holding trillions of dollars will dump dollars in exchange for something else as they are already doing with gold. If a new reserve currency is issued that is somewhat commodity or gold backed, won’t the flight from dollars to the new currency happen so fast it will be like a sonic boom? The dollar would become worthless overnight! How is that not hyperinflation?
I absolutely agree with your work on the LongWave cycle and find it fascinating. And it is incredible how you have been dead right by getting into gold and gold stocks since 2000. However, I find it hard to believe that the Fed will not be able to overcome(print) the deflationary pressures like you say. Wouldn’t hyperinflation technically be a deflationary depression covered up by monetary collapse? When priced in gold, I do agree that financial assets and real estate will PLUNGE in value or “hyper-deflate.” But when priced nominally in dollars, prices could hyper-inflate, right? I feel your ratio prediction of Dow 1,000/Gold 4,000 is right on - but will we really see those levels nominally? I feel like Dow 5,000/Gold 20,000 or Dow 10,000/Gold 40,000 is more likely due to the ability to print.
I would like to hear your position on this if possible?
I also have another question that has been on my mind for a while now... You have stated that total us debt is somewhere around $60 trillion. How do derivatives play into this deflationary depression? It is estimated that their value, including the OTC market, is over $1,000 trillion. What does that even represent??? All I take from it, is that when the flight to safety(John Exters pyramid) really speeds up, all of the "value" in derivates will flow into gold. It boggles my mind on what that will do to the price! Jim Sinclair is always saying QE to infinity and OTC derivatives will take down the worlds financial system. Help me out with this concept if you can...
Thanks in advance for any help you can provide. I am enjoying my subscription so far!
H.S., Minnesota, USA
Thank you for your inquiry. As I attempted to explain in “Inflation or Deflation? That is the question,” deflation occurs because nearly all money in advanced capitalist countries is debt money. Credit cannot be expanded indefinitely, because the quality of borrowers is always deteriorating. When it reaches a saturation point as in 2006, debt money contracts as it is washed out of the economy either voluntarily (It’s paid back) or involuntarily (bankruptcy). That process of debt contraction takes many years and always occurs in the Kondratieff winter, because the biggest build-up of debt always occurs in the Kondratieff autumn.
I showed that total private debt (money), which is not government debt, amounts to $40 trillion. Most of this is going to be expunged this winter. That is deflationary. Also, most of asset values (real estate and stocks) are highly correlated to the debt growth, hence when the debt bubble implodes so to do the prices of these assets. We are witnessing that in real estate and to a lesser extent in stocks, but this asset price decline is also deflationary. The debt unwinding and the assets bubble price deflation have a lot further to unwind and price deflation will accelerate.
The dollar cannot collapse by itself. We have tried to show how closely this monetary crisis is following the monetary crisis of the previous Kondratieff winter. The dollar is the pound of the 1930s, a reserve currency backed by lots of debt. At that time, every country, just like today, attempted to devalue its currency to obtain trade advantage. When Britain abandoned the gold standard system because its trading partners preferred British gold to paper pounds, it effectively devalued the pound and the world monetary system collapsed and wasn’t resurrected until a new monetary system was introduced at Bretton Woods in 1944, effectively making the dollar the reserve currency and tying it to gold at $35 per ounce. Only countries were given the right to exchange their dollars for gold. This they did in increasing quantities as the US resorted to the printing press to fight her war in Viet Nam. So in August 1971, President Nixon took the dollar off gold and made the reserve currency a pure fiat currency. This is the cause of all economic, financial and monetary problems that are now tearing the world apart. The United States has taken gross advantage of the privilege accorded to the dollar. The world is about to rescind that privilege.
But the collapse of the dollar will collapse the world monetary system , just as the collapse of the pound in 1931 brought down the world monetary system at that time. It will take years to develop a new world monetary system as it did then. By the way that system was put in place in the waning months of World War II, when it became apparent to everyone that the US was the supreme economic, political and financial power.
As far as possible every country is going to try and keep the current monetary system alive, but you can see from what different country leaders are saying that its days are numbered. The US still taking advantage of its reserve currency status by attempting to devalue the dollar through such methods such as quantitative easing. The world is losing patience.
So there you have it. We are experiencing significant debt and asset deflation and there’s much more to come.
The days of dollar supremacy are numbered and a new world monetary system will evolve ,but it will take many years for this to happen. In the meantime the world will fall into a depression. Trade wars will erupt and local currency blocs will be established , such as the Far Eastern Bloc, the European bloc, the North American bloc and the South American bloc. I’m not sure where the Arab and African countries will fit into all of this, but I confidently predict that world demand for oil will drop substantially bringing down its price to the same extent.
Question: October 15, 2010
In the winter cycle bonds are ok after interest rates spike and then go down again..I am sitting on cash and wondering what event will make them spike as it doesn't look that rates are going up any time soon
Much like the last K Wave winter in the 1930s,this winter is moving along an almost identical path. During the 1930s the US was forced to raise rates to protect the dollar. During this winter rates might not be raised voluntarily as they were in the early 1930s, but involuntarily as countries abandon the dollar and US debt. We have a massive debt problem, so for my part investing in debt (bonds) seems like a high risk venture. It’s by no means too late to invest in gold. I can see utter chaos in our future. Sincerely, Ian
Question: August 18, 2010
Does the current K Winter pertain to the whole world or just to Western nations with Eastern Asia in a K Spring or Summer?
The Kondratieff cycle applies to all nations and they usually reach each season at approximately the same time. Obviously, at this point in the cycle Japan reached its winter in 1990 after the Nikkei had reached its high above 39,000 points. The Western world entered winter in 2000. That winter was benign until 2007. One could argue that the east is already in winter evidenced by the peak in the Shanghai index at 6,124 points in October 2007. The eastern winter up to this point in time as also been benign on account of massive stimulus spending. We don’t think that we are that from winter in the East becoming far colder. Remember, winter is brought about by excessive debt, which is washed out of all economies during that very frightening season.
Question: July 29, 2010
Firstly, to cut to the chase, you are recommending getting our of stocks now and I appreciate the reason why you are recommending this as we are now in the winter phase of the long wave cycle and this is not the time to be holding stocks etc. However, on the other hand, in your most recent memo of july 26th you are recommending some junior mining stocks. Is this not somewhat contradictory as all stocks will most likely also be brought down when the major correction come much like it did in 2008 when no stock category was exempted from the exodus and I don't expect anything different this time. When the panic starts they will sell everything and if this is valid then why hold unto any stocks even the junior mining stocks at this time?
Secondly, in your memo of July 19th, you would continue to recommend holding 3 inverse ETF's SKK, FAZ AND DXD . However in tthe memo of June 13th Rchard Russell in a recent Dow Letter quoted a professional subscriber on these volatile instruments and WHY THEY SHOULD BE AVOIDED AS A SUBSTITUTE SHORTING VEHICLE. I am once again puzzled as to why they
are being recommended in spite of Richard Russell's warning? I understand that these inverse ETF's can be an effective investing tool if used for short periods of time only but not held for the long term? Could you kindly advise further on this topic?
The recommendations on the junior mining shares is based purely on their respective positive chart patterns and has nothing to do with the overall general stock market outlook, which as you know is very bearish. However, I must tell you that the charts for the general stock market are somewhat conflicting; short term charts(daily price movements) are suggesting downward price action, whereas the intermediate charts(weekly price movements) are suggesting bottoming prices. What this means is that when the daily prices have finished correcting to the downside, we might anticipate an upwards price bias pulled by rising daily prices, which in turn might drive up the weekly prices. We shall see.
On another point, I just want to remind you that during the September to November 1929 stock market crash (DJIA down 48%),gold stocks also crashed. Then into the rally November 1929- April 1930 both the general stock market and gold stocks recovered. After that recovery it was almost straight down for the DJIA, whereas gold stock prices rose without any increase in the price of gold. So gold stocks are a separate breed from the general stock market. (See The Perpetual War-Gold versus Paper)
I did comment on the inverse ETFs in an earlier Technical Tips and I made note of the warning of such as outlined by Richard Russell. However, I still believe these are a very opportunistic way of shorting during a crash in stock prices, because during such times there is little requirement for adjustments to be made. I f you look at the prices of these investment vehicles you will see that they made the highest highs during the crash in prices in 2008 and not at the bottom in prices in March 2009.
Question: April 26, 2010
I read the tech tips with interest. This morning I sold some stock based on Mr. Gordon's advice. I am still considering his reco on RFN. If this works out, you have a subscriber for life. The thing that bothers me is this - I am a retiree and depend mostly on stock dividends for my income. Mr. Gordon's strategies appear to be directed mostly at people who are still working, ie very junior goldminers that are speculative. Can you comment on this?
- C.H., OH, USA
Re-“I sold some stocks on Mr. Gordon’s advice.” This is not advice as we make clear in the disclaimer, but it is simply my interpretation of the charts.
I understand your dilemma with regards to requiring dividend income to support your retirement income. But you will clearly see from reading my website that I believe that this time things are very different from anything we have experienced in the past. In other words, the Kondratieff winter is a very difficult time to invest profitably. The most important thing at this time is preservation of capital.