Big Picture Thinkers And Silver
Recently I did a radio interview with longtime friend Al Korelin and blurted out that anyone who actively followed the gold/silver markets and did not appreciate how manipulated they are, was a moron. Not sure how that went over with Al’s listening audience, but I would like to parlay that comment here to deal with its significance.
You truly have to be mentally challenged if you follow the gold/silver market action and cannot appreciate something is very amiss, as per the confused Mitsui gold people, as brought to your attention the other day. There is NOTHING to be confused about. The more bullish the news for gold, the more reasons for the price to soar and the more The Gold Cartel deviants go into action to suppress both the gold and silver prices. How many times does the GATA camp have to point this out before the dingbats at Mitsui, and the rest of the mainstream gold world, will go there? The answer is infinity. These mainstream establishment gold pundits will NEVER tell their people the truth about what the gold market is all about. Hara-kiri
would be their first choice before telling the truth.
Most people naturally think the Mayans got it wrong about the world ending on December 21. Of course it is that way at first glance, but if what takes place in the economic/financial market arenas in the years ahead that I see coming, it might prove them correct in a way not commonly thought of (just a few years off and in a different articulation). Whatever is done with our fiscal cliff issue, it represents how incapable our politicians are of dealing with our mounting fiscal deficits and debt in America. It will not signify the end of the world, but could very well come to represent a moment when it becomes CLEAR our standard of living is going to significantly deteriorate … and an end to a standard of living as we Americans have known it ... the end of that world. If the Mayans are correct in that regard, which I believe to be the case, the standard of living of most Americans, and others around the world, is going to change dramatically for the worse.
As this all kicks in, the realization of how broke the US is, along with many other nations, will take center stage. The understanding of the US money printing game will command the same attention on that stage. The dollar will begin its tapioca swan dive. Gold and silver will begin launches to doubling their prices for starters. The Gold Cartel will have to go into a retreat mode like we have not seen yet.
The Gold Cartel knows what is coming as presented above, which is why they have bombed gold and silver the past month+ when the fundamentals registered the most bullish factoids imaginable. PRICE ACTION MAKES MARKET COMMENTARY. The clueless (or disingenuous) out there in the mainstream gold world refuse to explain why the price of gold has behaved so counterintuitively …, but the GATA camp will, and does, all the time.
Now, this is what I really want to get to … in what I truly believe could be of meaningful support during this time of the investing public RUNNING AWAY FROM THE GOLD/SILVER/SHARE MARKETS, just when the focus should be on them the most! The bullish sentiment is really that bad.
To get right to the point, and to try and be of assistance, this is what I have done well at in the past … getting into a major market move when few investors are paying attention to incredibly bullish fundamentals. That said, I am among THE WORLD’S WORST at dealing with market tops and taking profits. But, since we are dealing with major corrections in gold and silver, accompanied by dreadful bullish sentiment, that should not be of most concern at the moment.
SO, it is my opinion the prices of gold and silver are going to go into an EPIC move up stage, especially silver, next year. Silver will make all-time highs and be streaking for $100 an ounce. If there ever was a time to skew your investment portfolio towards silver, and pay extra attention, it is right now!
It is just human nature to NOT get it at market bottoms, or after significant corrections like we have just had, and to think out of the box. I was fortunate to have learned about all of this from three truly legendary financial market figures, and now there is a fourth. All of them understood true supply/demand numbers which were not appreciated by the investment world at the time. Each could spot a big picture trade and act on their knowledge way ahead of the pack. They were the smart ones, not me. I knew they knew what they were talking about with successful investment backgrounds to prove it. I listened to everything they had to say and learned from them what to spot and why, and then go with them.
I realize many veteran Café members know some of this and of those whom I am referring to, but it is worth repeating, right now, and focusing on just where we are after the recent Gold Cartel waterfall attacks. Each of these big picture thinkers could spot markets out of sync and knew how to take advantage of them and play for big money. They have been my mentors and are extraordinary individuals (what I cumulatively learned from them all those years I am hoping is indirectly passed on your way) ….
*Daniel L. Ritchie
Chairman, Denver Center for the Performing Arts and Chancellor Emeritus, University of Denver
Daniel L. Ritchie became chairman and CEO of the Denver Center for the Performing Arts, one of the nation’s largest cultural complexes, in January 2007. He is the immediate past chairman of the Daniels Fund board, and is president of the Temple Hoyne Buell Foundation, which focuses on early childhood education and development.
Dan was chairman of the board of the University of Denver from 2005 to 2007, where he served as the university's sixteenth chancellor from 1989 until 2005. During his tenure, the DU pioneered the teaching of ethics at both the graduate and undergraduate levels. Chancellor Ritchie collaborated with Bill Daniels to incorporate ethics, values, and social responsibility throughout the business school curriculum. The business school was renamed Daniels College of Business in 1994 in honor of Bill Daniels.
In June 1994, Dan announced a personal gift to the university of $15 million, achieved through sale of some 19,600 acres of his Colorado ranch. Since then, he has given the university the remainder of the ranch, and its sale has netted more than $50 million for various projects…
I met Dan at the New York Athletic Club in the mid 1970’s. We were in the gym lifting weights and he asked me about a pork belly quote, like in the Daily News, which was not there. What a nice man, I thought, and after taking a futures market class at the Cornell School of Hotel Administration, I thought why not go after what this seemingly bright man told me. I called my Merrill Lynch broker and bought a pork belly contract with a $500 margin requirement at the time. The first day after my broker put on my trade, I lost half my money. What a mistake I thought. Pork bellies went LIMIT UP the next nine out of ten days! I was hooked to go into the commodity futures industry. I asked Dan what I should do after a $4500 gain on a $500 investment in two weeks. I will never forget what he said, "Bill, you have done pretty well for your first trade, take those profits," which I did in a nanosecond. If I only had done that for the rest of my investment career!
Dan was very tied into the astute Refco operation out of Memphis, and made a fortune trading the cattle, hog and pork belly markets, with some great soybean trades thrown in there too.
I will never forget talking to Dan over a dinner when he was pondering whether to resign from Westinghouse Broadcasting, after being the number two guy under Lew Wasserman at MCA pictures, to run D.K. Ludvig’s empire. Ludvig was the richest man in the world at the time. And I will never forget that we flipped a coin to determine who would pay for dinner that night.
- $10 B As of September 2012
- Founder & Co-Chief Investment Officer, Bridgewater Associates
- Age: 63
- Source of Wealth: hedge funds, self-made
- Residence: Greenwich, CT
- Country of Citizenship: United States
- Education: Master of Business Administration, Harvard University; Bachelor of Arts / Science, Long Island University
- Marital Status: Married
- Children: 4
Ray is obviously a genius. Now famed CEO Sandy Weill didn’t think so when he fired Ray from his hedging director position at Shearson Hayden Stone in the mid 1970’s. Mr. Weill did not appreciate that, to make a hedging point, Ray brought in a girl with a fur coat on during a presentation of his in San Francisco. Her naked body was all that was left when Ray asked her to take off the coat.
So Ray started Bridgewater Associates. I had just joined Shearson and he needed someone to do a lot of grunt work for him. Many a night I took the subway from downtown Manhattan to midtown around 11:00. Ray got me going financially back then with his buy corn and feeder cattle futures and sell cattle futures when their margins were too fat. We did the reverse when they were too unprofitable. Made 100% on my money in days to weeks every time.
I know a number of you have seen this picture of Ray and me in Rio way back when, but it is too much fun to pass up here.
I was recruited to join the ill-fated Drexel Burnham on Park Avenue in 1980. That is where I met Frank as he was interested in buying bond futures when the interest rates were running up to 20%. He was early and took some hits, but then sold THE HIGH TICK after their first mega rally. I know, I did the trade. He made a killing.
Frank was known as a Wall Street Whiz Kid back then who was making money every year during the DOW dog days. He was then a consultant to a number of governments. One of my favorite financial stories ever is this one:
The Stock Market Recollections of the Greatest Market Bubble Ever…
The Stock Market
Recollections of the Greatest Market Bubble Ever…
Memories of the Souk al Manakh
Memories of the Souk al Manakh
How large can a bubble grow before it bursts? Farther than you think. And there need not be a fatal pinprick that makes it burst. And when it bursts, the crash that ensues can be deeper and more discontinuous than you could ever imagine…
Frank was commissioned by the World Bank to do a study on the copper market in 1986. Copper was nowhere back then, the price depressed to around 46 cents a pound. Frank was stunned to learn how bullish the fundamentals were because of the obvious demand which would be surfacing from Asia. FEW realized what was about to transpire, preferring to concentrate on the increasing importance of fiber optics. We muddled with the copper futures trade for a year. Then in May of 1987 there were no deliveries on the May contract. That was it I thought, the KEY to getting the trade right. I bought thousands of out of the money copper options. Copper went to $1.46 per pound by the end of the year, surviving the 1987 stock market crash in October of that year. I made $27 million on the trade and then found a way to blow a good deal of it. But, being Jackie Onassis’
neighbor in Bernardsville, N.J. for a couple of years is still a fond memory.
All of that brings me to where we are today and the reason I would like to make a commotion out of this commentary…
Eric, who is one of GATA’s most ardent supporters, is one of the nicest guys you will ever meet and a true genius. As my good friend John Embry (brilliant in his own right) has told me for years, Eric is the best student of supply/demand dynamics he has ever come across. His presentation at the Dos Passos Table is just one example of what John is referring to.
Eric has been jumping up and down about the price of silver’s potential for many years now and was very visible at certain conferences not that long ago when the price was $14/16 an ounce. He has been all over the place this year talking to investors about what he thinks the price of silver is going to do and why. Eric has publicly stated silver is going to $100 per ounce and higher. He is my anchor when I pound the table about silver … that same anchor of formidable insight I learned so long ago from the likes of Dan Ritchie, Ray Dalio, and Frank Veneroso. It is not me you need to pay attention to, but Eric!
I don’t need to be able to break down the supply/demand numbers like Eric has done; and like Dan, Ray and Frank have done for so many years. I know they know what they are talking about. What I can bring to the table is an appreciation of just how much gold and silver have been manipulated, and orchestrated down to artificially low prices, which will not stand in the years ahead. JP Morgan, and others suppressing the price, has to be close to being forced into backing off. Their use of derivatives to suppress the price in the face of an extremely tight physical market ought to be very close to having run its course. Knowing what we know in the GATA camp about what JP Morgan has done will prove to be invaluable in the months and years ahead. No one knows that more than Eric.
The investment opportunity of a lifetime is staring us in the face and not that many investors out there get it. Eric does and he has backed it up publicly with his investments: his ETF (PHYS) is an example. Fortunes will be made in silver over the years ahead for those willing to do their homework and take a plunge … and that will be most true in the silver shares whose firms have the goods in the ground.
Investing in many of the junior/exploration stocks in the gold/silver sector has been a horror show these last years. While I have been so right about gold and silver for the past 12 years, my second biggest investment mistake ever was not to take profits around 2008 with my share selections when the legendary Bob Bishop told the attendees at GATA Goes To Washington conference in April of 2008 that the move up in the gold/silver shares was over for the time being. As you may know, Bob is going to let his latest thoughts known at GATA’s fundraiser in Vancouver on January 21 at the Pan Pacific Hotel following the Cambridge House conference.
BUT, as bad as the junior/exploration sector has been in recent years, it will be that good by double or triple, or much more, in the years ahead. Think NEWTON’S LAW!
Silver is on its way next year to $100 per ounce. You want to bet against Eric Sprott? And that is the reason for this special commentary. Ritchie, Dalio, and Veneroso are true legends in the futures trading arena, and in the making big money in the markets arena. So is Eric. Keep that in mind and spread the word.
While the standard of living in America and other places is likely to deteriorate significantly in the years ahead, those who have stayed with various gold/silver investments ought to be happy campers. Should that Mayan prediction be all about a drastic change in our standard of living as we have known it (the end of that world), owning silver and the silver shares in the years ahead will be a counter to some darker times on the horizon.