It's time to care again about gold and silver

INDRANIL MUKHERJEE/AFP/Getty Images

It's been a while since I've covered the precious metals in an article. They've been range-bound for much of the past year, with few notable sector developments to report.

But I feel compelled to write about them today for two reasons:

  1. The probability of an upwards re-pricing of the precious metals is rising, and
  2. Both gold & silver are quite over-sold right now, technically-speaking.

With technical and fundamental indicators flashing green simultaneously like this, now is an advantageous time to consider increasing your PM exposure (I did so myself yesterday).

The Human Factor

Before I go into further detail on the current conditions of the PM market, here's a recent personal experience that underscores how few people have any real familiarity with gold & silver as an asset class, let alone own any (beyond, perhaps, a bit of jewelry).

A good friend moved and needed help transporting some bullion from his old town to his new one. Most of it was silver, several thousand ounces worth.

That much silver is pretty friggin' heavy.

So we huffed and strained, hauling that load out of one bank vault, into his car, and from there into the vault at his new bank. While we did our best to be as discrete as possible, our sweaty, grunting 2-man production was hard for the bank staff to ignore.

Managers at both banks figured out what was going on, as it was pretty obvious. And both separately asked us out of genuine curiosity, "Is that real silver?".

My friend briefly handed over a 100-oz bar so they could see for themselves, sparking conversations about the merits of owning physical bullion.

It turns out that neither manager had ever held a bar of silver before. This was pretty shocking to me. Even though they know that the safe deposit boxes in their own vaults very likely store some bullion, neither own it personally, nor even come into contact with it. It's just not a part of their world.

Anyways, later on I mentioned this story to another buddy who shared my surprise. "Man, if the bankers aren't familiar with silver and gold, then who the heck is?", he asked. A very good question, I agreed.

But then he jolted me by asking: "So, one of those 100oz bars -- what's it worth, anyways? $150?"

This is an otherwise intelligent, math-competent person. But like most folks, as well as those bank managers, he doesn't own any precious metals and so his knowledge of them is pretty limited. Limited enough to underestimate the price of silver by over 90%.

This reminded me of Mark Dice's videos, which show just how woefully ignorant the average person is when it comes to the value of bullion. In this one, street passersby decline a free gold coin in favor of a Snicker's bar:

Simply put: gold and silver, in the West at least, are underappreciated assets. As Grant Williams famously put it in his excellent synopsis, when it comes to public and institutional sentiment of the precious metals, "Nobody cares."

Which is a big factor why the prices of PMs have languished for the past seven years. And why the flow of bullion has been uni-directional from West to East over that period.

Time To Care

But there are gathering signs that it's now time to start caring again.

Looking at the just techinical side for a moment, both gold and silver have been in a prolonged downtrend for the past two months. They're now at extreme undersold levels.

Both RSI and MACD indicators are signalling that the recent declines have likely been played out at this point:

Gold price chart

Silver price chart

And both metals have now broken below their Bollinger bands (a sign of extreme oversold conditions). Here's gold:

Gold Bollinger Band chart

While a break below the Bollinger bands could indicate that something fundamental has suddenly changed in the PM market to merit a materially lower repricing, there just don't appear to be any credible candidates for that argument. Yes, the dollar has risen over this period; but there are solid reasons that the USD and gold/silver need not always trade inversely to one another. And as we'll get to in a moment, conditions are actually becoming more PM-favorable.

Technically-speaking, it seems much more likely that the current downtrend is long-in-the-tooth and that, as prices dip down to 18-month lows, a recovery is soon due. In fact, we may be seeing the start of such today, the first material up day for the PMs in a while.

Fundamentally-speaking, world events are providing more and more reasons to own gold and silver -- from stratospheric asset bubbles threatening to burst, to a long-overdue return of market volatility, accelerating de-dollarization, slowing global economic growth, increasing credit market risk in both Asia and Europe -- the list goes on and on.

The full set of PM-positive drivers are covered in our recent excellent interview with Ronald Stoerferle summarizing the insights of his exhaustive 230-page annual report titled In Gold We Trust. If you haven't listened to it yet, carve out 49-minutes to do so soon:

To the many reasons Stoerfele gives in support of his conclusion that gold is "dirt cheap" right now, we can add the multiplying macro data points predicting market turmoil and economic recession later this year, as well as the building uncertainty of further rate hikes by the Federal Reserve -- all potential developments that should lead to higher PM prices.

Whether you're amassing bullion for the long term (which we've long recommended) or speculating in the paper markets for the short term (something we don't encourage for the average investor), you want to buy low and sell high. With precious metals trading near 18-month lows and close to the "all-in" production cost for many miners, prices are unlikely to get much lower than this.

Taking Action

So while prices remain at current lows, we recommend considering the following:

  • Creating your core physical precious metals position if you have none. Many PeakProsperity.com readers already have their core positions in place, should an abrupt crisis occur that suddently sends demand for 'safe haven' assets spiking. But if you haven't built yours yet, don't panic. But also don't delay too long in taking action. A good first step is reading our free guide Buying and Storing Gold & Silver, which details the various forms you can purchase bullion in.
  • Setting up an ongoing purchase program. The easiest and most affordable way to build exposure on top of your core position to set up an automatic purchase program that buys a consistent amount of bullion each month at a volume that fits within your budget. The MetalStream service offered by the Hard Asset Alliance is a good example of such a program, through which you can set up automatic purchases of as little as $100 per month.
  • Nibbling into the miners. The stock prices of precious metal mining companies are much more sensitive to the spot price of gold and silver than the actual metals themselves. They can yield fantastic returns during bull markets, as well as widow-making losses in bear ones. And widow-makers they have been for the past seven years. But, for the above-mentioned reasons, that long winter may be thawing. For investors with the constitution and resources to speculate, it's an opportune time to consider adding or increasing exposure to the miners. That said, when doing so, we *strongly* urge to you work with a profession financial advisor with longtime experience with this asset class *as well as* demonstrated expertise with using hedges to protect these high-risk positions to the downside. If you're having difficulty finding an advisor who meets these conditions, consider scheduling a consultation with the firm we endorse (it's completely free).

Remember, right now, nobody still cares about the precious metals. Which is why it's estimated that only 1-3% of US households own any (jewelry aside).

So even if you only hold a few ounces, that's still more than 97-99% of everyone else -- which may make a tremendous difference to your prospects when the world starts caring again.

We've finally heard some news on the migrant caravan. Some of the migrants have given up and gone back home, but some are still there waiting at the border. A leader representing the group has decided to step forward, and he's made out a list of... demands. Remember when I said back in October that this caravan was originally formed as a Leftist act against the Honduran government by people with ties to Venezuela and Cuba? Well what do you know… wait until you hear who this guy is.

RELATED: BOMBSHELL: Filmmaker Ami Horowitz blows the lid off media's deceit about the migrant caravan

Alfonso Guerrero personally walked into the U.S. Consulate in Tijuana, Mexico with a list of demands from the caravan. Get a load of this. The caravan is demanding that if they're not granted immediate asylum they want the following:

  1. Fifty thousand dollars in cash for every caravan member (which would be a total of tens of millions).
  2. The immediate removal of all U.S. economic and military assets in Honduras.

Failure to comply to these demands will result in the caravan continuing to try and penetrate the U.S. border.

I mean, if you're trying to appear like some grassroots movement for migrants that are just escaping the dangers of their own country, you might want to - oh I don't know - tone down the crazy Leftist freedom fighter schtick. I'm just saying. Demanding millions of dollars AND the removal of the U.S. military from Honduras kinda just screams, "Hey check me out. I'm a Marxist terrorist." It would have been basically the same thing if he just charged up to the embassy wearing a beret and shouted "Viva la Revolution!!" while firing off an RPG.

Well, it turns out this isn't the first time Mr Guerrero has tried to claim asylum. Back in 1987 he claimed asylum in Mexico after being suspected by the Honduran and U.S. government for - wait for it - left wing terrorism… Jeez, you know you really can't make this stuff up. This is INSANE. Here's the story…

This is ridiculous. Can we all now agree that this entire charade is a fraudulent scam?

In 1987 Honduras was ground zero for U.S. and Soviet proxy forces fighting the Cold War. The Contra rebels were actually based there, and leftists terrorists would sometimes carry out operations in the country in response. On August 8th a bomb was thrown into the China Palace restaurant, just a few miles from the U.S. military base in Honduras. Six American soldiers were injured in the blast. Alfonso Guerrero was the primary suspect. He escaped to Mexico and claimed asylum. The Reagan Administration charged the Mexican government for quote "harboring a terrorist" for granting Guerrero protection.

But all the caravan wants is a better life in the United States… oh and millions of dollars AND a list of political demands for their home country. This is ridiculous. Can we all now agree that this entire charade is a fraudulent scam? This is a Leftist political stunt. It has been since the very beginning.

TRANS-INSANITY: Not everyone is bowing down to the PC culture

DOMINIQUE FAGET/AFP/Getty Images

Here's an incident that you won't hear about anywhere else. It doesn't fit the mainstream media's transgender narrative, their fairy tale of infinite genders, where any criticism is viewed as transphobic and taboo and certainly not something that the majority of Americans think or feel.

Last week, in West Point, Virginia, a high school French teacher named Peter Vlaming was fired after a five-and-a-half hour hearing that centered on his refusal to use a transgender student's specific gender pronouns. Vlaming said that doing so violated his religious beliefs.

RELATED: There is no truth anymore

Vlaming's lawyer Shawn Voyles told reporters:

Tolerance is a two-way street. Unfortunately, tolerance on the part of the school division has been noticeably absent. It chose to impose its own orthodoxy on Mr. Vlaming and fired him because he didn't relinquish his rights protected by the First Amendment.

School administrators fired Vlaming "due to this insubordination and repeated refusal to comply with directives made to him by multiple WPPS administrators."

The school justified the firing by pointing to a set of policies aimed at curbing misgendering of transgender students.

Vlaming's lawyer disputed this, saying that the policies include no such mention of transgenderism, adding that:

My client respects the rights of all students, including this student's rights; he simply asked that his rights be respected as well. Unfortunately, the school division refused to consider any solutions that would respect the freedoms of everyone involved.

There is a ray of hope in all of this, though. The students. A group of students from the school immediately staged a walkout in protest of Vlaming's firing.

One student told reporters:

I feel like everyone should have the freedom of speech and the freedom of religion as well.

Students lined up outside the school with signs that said, "Free Vlam." Another included a quote from Ben Shapiro: "Facts don't care about your feelings." Another read "You can't impose delusion onto us."

You can sigh a sigh of relief. There's hope for the future yet.

Whether it's a 'War on Christmas' or just progressivism run amok, the song 'Baby It's Cold Outside' has been firmly in the crosshairs this holiday season. Here are just a few of the headlines making the rounds:

Should radio stations stop playing 'Baby, It's Cold Outside'?

They range from the previous as questioning and then roll right into the following and assume facts not in evidence.

'Baby, It's Cold Outside,' Seen As Sexist, Frozen Out by Radio Stations

It may be seen as sexist but according to one radio stations polling, only about 5% do. Then they go from saying it's sexist to straight up claiming it as a rape song.

Radio Bans 'Baby It's Cold Outside' Over Claims It's A Rape Song, English Teacher Explains Its Real Meaning

And then they just flat out call for its retirement.

Is it time to retire 'Baby, It's Cold Outside'?

The left might think they are woke and on the right side of history in the wake of the #MeToo movement — but how shocked do you think they'd be if they knew Glenn beat them to the punch over a decade ago? Don't believe me? Take a listen to this clip from our audio vault from 2008.

Christmas has arrived early for mainstream media. They have their first sentencing of a major player in President Trump's inner circle. Yesterday, Trump's former lawyer Michael Cohen was sentenced by a federal judge in Manhattan. How did it come to this and how did Cohen explain himself to the judge? We start there next…

President Trump's former attorney, 52-year-old Michael Cohen, is going to jail. Well, it will probably be one of those federal prison camps with a dorm that's more like a college campus. But he's going to be locked up. A federal judge sentenced him to three years in prison for financial crimes, and two months for lying to Congress. He also ordered Cohen to pay $2 million in financial penalties. The judge called Cohen's misdeeds a "veritable smorgasbord of criminal conduct."

RELATED: Michael Cohen's plea deal won't lessen Trump's support. Here's why.

The judge said:

As a lawyer, Mr. Cohen should have known better. While Mr. Cohen is taking steps to mitigate his criminal conduct by pleading guilty and volunteering useful information to prosecutors, that does not wipe the slate clean.

Cohen pled guilty in August to eight criminal charges in two different cases. One brought by special counsel Robert Muller for Cohen's lying to Congress about a potential Trump Tower project in Moscow. The second was for bank-fraud, tax, and campaign finance violations brought by federal prosecutors in New York.

President Trump said recently that Cohen has simply been lying to get a reduced sentence for crimes that have nothing to do with him. Cohen was very emotional as he apologized to the judge, saying:

It was my own weakness and a blind loyalty to this man that led me to choose a path of darkness over light. Time and time again I felt it was my duty to cover up his dirty deeds rather than to listen to my own inner voice and my moral compass.

The left thinks that Cohen's sentencing marks the beginning of the end for Trump's presidency. They may be ultimately disappointed in that regard. But this does intensify the long national nightmare of the Muller investigation that seems to have no end in sight.