James Turk

James Turk interviews Matterhorn Asset Management‘s Egon Von Greyerz (one of the most brilliant minds in precious metals today) on the importance of owning physical gold (and silver of course) OUTSIDE the banking system.

GoldMoney founder James Turk interviews Hugo Salinas Price, president of the Mexican Civic Association for Silver, about silver’s potential to return as money and about sound money generally in a 22-minute video

Back in April 2007, I wrote about the three stages that appear in every bull market, and more to the point, that gold was approaching the end of stage one.  Gold back then was still trading around $690, and therefore well below its then record high of $850 reached in January 1980.  My view was that “gold looks ready to make a new all-time high. When that happens, stage two begins. There will not yet be widespread excitement about gold in the next stage, because that won’t occur until stage three. But when gold makes a new record high, and particularly after it breaks into a 4-digit price, people will begin paying attention.
I wrote a follow-up article in November 2009 entitled Welcome to Stage Two of Gold’s Bull Market, just two months after gold broke above $1,000.  Focusing on the change in prevailing sentiment, I noted how differently gold was being treated.  “During the first stage of a bull market, the media and most investors alike focus on past issues, rather than future potential.  Over the past decade one consequently heard all the reasons not to own the gold…But there is a notable difference in this stage compared to stage one.  Look how many people are writing and talking about gold.  Gold has moved from apathy and neglect – stage one characteristics – to growing attention.  But importantly, instead of embracing gold and analyzing it to determine relative value, today’s attention is one of widespread disbelief and skepticism that gold can climb higher.  These are exactly the responses one should expect to emanate from stage two.”  I concluded by noting that at some unpredictable point in the future, gold will enter stage three “when gold no longer is relatively good value.”
I did not make any mention of silver in the above two articles.  It too has three stages, but silver is still mired in stage one, which began in February 1991 after silver had collapsed to $3.50.  It was an astounding 93% decline from its January 1980 peak of $50.  But as we can see on the following chart, $3.50 was silver’s low, and its price has been rising ever since.
This chart shows a massive accumulation pattern, marked by the green lines.  This pattern is a story of strong hands and weak hands, specifically, of silver moving to the former from the latter. 
From its $50 high in January 1980 to its $3.50 low in February 1991, the weak hands were shaken out.  At that point, the accumulation by strong hands – who were buying because the recognized that silver was an exceptional bargain – became the dominant force.  Their buying power was stronger than the selling pressure of the weak hands, and the price of silver responded by starting to climb.  It was classic stage one action, but here’s the important point. 
Silver is still in stage one.  It won’t advance into stage two until $50 is exceeded, just like gold did not enter stage two until its previous high of $850 was hurdled.
I expect that silver will exceed $50 this year, which is a point of view I first mentioned in my outlook for 2010.
Admittedly, I was a little early with my forecast about when gold would enter stage two.  So perhaps I will again be early by forecasting that silver will enter stage two of its bull market this year.  Regardless of the accuracy of my timing, one thing is clear.  Because it is still in stage one, silver remains good value.

In his new commentary today, GoldMoney founder, Free Gold Money Report editor, and GATA consultant James Turk celebrates the spectacular performance of gold and silver in 2009. 
Turk reports that gold rose in all major currencies except the Australian dollar, and silver beat even that. Turk’s commentary is headlined “Gold Shines for the Ninth Consecutive Year” and you can find it at GoldMoney’s Internet site HERE

September 18, 2009 – Certain segments of the media rarely give gold a fair shake, particularly when it approaches important price levels. These publications time and again take bald pokes at gold. So when I see articles doing that, I like to poke fun at the article, but more importantly, set straight its misrepresentations and errors about gold.

One publication that is consistently on the wrong side of the gold market is The Economist. Using its pathetic record of anti-gold articles, I have already documented its curiously timed invectives with what I call “Gold’s Infallible Indicator“. See also “Gold’s Infallible Indicator – Six Months Later“.

The Lex column from the September 9th Financial Times is another case in point. This disparaging – and highly misleading – account of gold can have no other purpose but to keep people from buying gold. It does not offer analysis, but propaganda, which is not surprising given the FT’s longstanding role as an apologist of central banking and fiat currencies.

Had Lex offered an unbiased analysis, it would have mentioned gold’s attributes, including the fact that it has appreciated at doubt-digit rates for nine years in-a-row on average against all of the world’s major currencies, making it one of the best performing asset classes this decade. And gold has done this without any counterparty risk, which is perhaps its greatest attribute and is not even mentioned by Lex.

Given my penchant for dissecting anti-gold propaganda pieces, this Lex column needs to be skewered. So here is my analysis of it, to help people read between the lines and put its propagandistic anti-gold fervor into a proper perspective. What follows is the Lex column in italics, with my comments inserted in the text.

Like a cure-all tonic prescribed by a travelling rural huckster, gold [My goodness, Lex not being one to waste words, sets the disparaging tone of this article right from the start by comparing gold to a “huckster”.] somehow seems to be good for nearly everything that ails us. [Is it that gold just “seems” to be good, or could it be that gold really is that good?] Just consider the diverse economic backdrops that have caused its price to spike over the years: stagflation, financial panic, speculative mania and currency debasement. [Yes, and left unmentioned is the common denominator of all these problems, which is the mismanagement of national currencies by governments and central banks.]

Back in 1980, when the yellow metal hit $850 an ounce – still the record in real terms [Adjusting for inflation, it takes more than $2,300 to purchase today what $850 purchased in January 1980, using the US government’s current CPI calculator. However, the US government has since amended its CPI calculator numerous times. Fortunately, www.shadowstats.com makes available the same CPI calculator used when the Carter administration haplessly watched the gold price soar nearly three decades ago. Using this Carter-era calculator, it takes over $6,300 today to match $850 of January 1980 purchasing power.] – western economies were being squeezed simultaneously by the second oil crisis and record post-war inflation.

Fast-forward to March 2008, when it broke through $1,000 for the first time on safe-haven buying [Yes, gold is a safe haven, and people buy it because it does not have counterparty risk, among other reasons.] as Bear Stearns teetered. It approached the same level a few months later when bank worries had eased temporarily but commodity-fever was peaking, and again in mid-September when Lehman’s collapse created so much demand that smelters worked overtime to churn out bullion. [Yes, but not as fast as central banks were working overtime to print currency to bailout the banks and other failed institutions that had political clout.]

The thread connecting these episodes was fear. [Fear was the result, not the cause. The cause was the failure of bank regulation by central banks as well as their gross mismanagement that allowed the credit bubble to appear in the first place.] But for those who rushed to buy near the top, peace of mind was costly. [It has only been costly if you held stocks. Gold is above $1000, but the Dow Jones Industrial Average, for example, is still -15.7% below its level the day before Lehman collapsed and -47.5% below its all-time high.]

It would be tempting to dismiss the latest surge above $1,000 an ounce as more of the same were it not for concerns about the currency in which its price is denominated. [Here is a palpable attempt to marginalize gold, saying that it is solely US dollar denominated and that it is rising only because of problems with the US dollar, which of course is completely wrongheaded. Gold’s price, or more accurately because it is money, gold’s rate of exchange, can be measured against any currency. Importantly, because gold is rising against all of the world’s currencies, it is obviously not just the US dollar that has people worried.]The trade-weighted average of the US dollar against six world currencies has neared a multi-year low of about 77, down from 121 eight years ago, as foreign creditors fear an endless stream of red ink from Washington. [At last, some meaningful and useful analysis. But again, this tidbit disinforms as much as it provides useful information because it focuses only on the dollar. It thereby diverts attention away from other currencies, all of which are being mismanaged by central banks to some degree as evidenced by gold’s ongoing appreciation in those currencies.]

Stories of those who preserved their wealth or escaped hunger in decades past by hoarding precious metals when their governments set the printing-presses loose provide gold bugs with a compelling historical narrative. [Yes, and one that is very relevant today given what governments and central banks around the world are doing to national currencies by again setting the printing presses loose. But the US is not Weimar Germany [Not yet, but wait a few months.] and, in spite of interest rates that make gold ownership cheap, [Which is only one of gold’s many advantages at the moment] the opportunity cost of owning it is still unattractive in the long-run. [Complete rubbish. Gold has appreciated at double-digit rates on average this decade against all of the world’s currencies, and achieved that without counterparty risk. Gold is doing what money is supposed to do – preserve purchasing power.] Smarter ways to anticipate inflation include bricks and mortar, [The FT is obviously grasping for straws. Think about it. It is bricks and mortar – not gold – that have the burdensome carrying costs with maintenance, various property related taxes, etc., not to even mention that real estate prices have been falling] mineral rights [Owning gold has completely different risk/return criteria than owning any right to mine it.] or even equities, [Only if you choose the right ones, and this decade at least, it would have been very difficult to choose equities that have appreciated at rates better than gold.] all with vastly superior historical returns. [Stocks are investments, and gold is money. They are different things, with different uses, so they cannot logically be compared. Stocks do generate returns over time, whereas sound money does not. Gold’s appreciation during periods of monetary turmoil, like the present one, is simply the loss of purchasing power of the national currency in which gold’s price is measured.] Financial panaceas, such as medical ones, should always come with a health warning [And so should articles about gold in the FT].

Over the weekend Al Korelin of the Korelin Economics Report interviewed GoldMoney founder and GATA consultant James Turk about last week’s wild market conditions, the growing disparity between the futures and physical gold markets, and the gold cartel’s continuing efforts to suppress the metal’s price. You can listen to it here:   James Turk talks to Al Korelin
GoldMoney founder James Turk, editor of the Freemarket Gold & Money Report and consultant to GATA, comments on the retail market’s shortage of gold and silver in his new essay, “A Fabrication Bottleneck or Something More?” Turk writes that GoldMoney had a record week for purchases last week but has not yet seen a shortage of the large LBMA-standard bars in which it typically does business.
But Turk speculates that central bank gold vaults could be cleaned out if gold does not return to $900 soon. You can find Turk’s essay in the “Founder’s Commentary” section of the GoldMoney home page HERE

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