Riders on the Gold and Silver storm

Those of us who are buyers and believers in the long term continuing secular rise in resource equities are going through a time of testing. The marketplace will present participants with years such as 2011.

We reiterate our guiding principles at precisely these times that tests our basic mission statement. First and foremost is the avoidance of margin. Mining stocks are characteristically volatile and subject to turbulent corrections.

Being able to buy and hold in such maelstroms rewards the brave with eventually impressive profits. The commodity arena has never promised us a rose garden. In order to reap the rewards of speculation one must know the territory through which one is passing. This year we have crossed a lonesome valley of mining investments.

The challenges are immense. The rewards are even greater or else why do we endure the slings and arrows of outrageous fortunes if not to enjoy substantial profits.

To be right in the market, the consensus has to believe that you are wrong. Everything is down across the board in the junior mining (GDXJ) sector, yet we begin to detect what we forecasted a few months ago. Bernanke and the European Central Bank has arrows in their quivers, but in 2011 they have certainly chosen questionable ones.

The markets have voted to criticize their choices as being inadequate. Now we have seen the investors vote a resounding “No!” to both Obama, TheFederal Reserve and TheEuropean Central Bank.
What is needed is debt reduction, entitlement reform and a coherent approach to taxation that does not punish the entrepreneur and the middle class in order to correct the market malaise. Until the leaders adopt rational policies instead of making empty speeches and blaming one another, such ambivalence will be regarded as just what it is, bromides and banalities. All the rest is commentary.
Plain talk and common sense are required here. Beware of making decisions based on panic and fear. There are monsters aplenty to frighten and confuse us off of our course. Precisely now we reiterate our basic motif.

1)Margin is to be avoided at all costs. We can not repeat this enough.

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Posted by Silver Guru on Dec 24 2011. Filed under Silver Analysis. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry