By MoneyMorning.com.au
If you believe in the Armageddon scenario, where banks collapse – but they aren’t bailed out – and all faith is lost in paper money, then you’d be bonkers to hold any shares at all.
Even holding gold or silver stocks would be risky… seeing as mining companies live and die not so much by the gold price, but by the ability to raise capital to dig for gold. Gold could go to $10,000 an ounce, but if mining companies can’t raise money to dig for the stuff it will count for nothing.
Think about it, gold mining and production didn’t stop when gold fell to USD$250. That was because financing was readily available for good projects. (We’ll explain why you should buy gold stocks in a moment).
So, if you’re in the Armageddon camp, your best bet is the survivalist approach: gold, silver, tinned hotdogs, water filter, toilet paper… and a stash of weaponry for personal safety.
But what if Armageddon doesn’t arrive?
Well, the alternative is this…
The next 10 or 20 years could play out in the same way as the last 10 or 20 years. Where the population is fooled by governments and bankers into thinking wealth is achieved through credit growth…
Whereas in reality, credit growth actually creates working poverty… where individuals work harder and longer just to maintain a standard of living, let alone improve on it.
What that means for you as an investor is making sure you invest in the right assets. You may not see gold soar from $1,700 to $5,000 in the next 12 months, but as governments continue to keep the truth about money printing from the public, the smart money will know what to do…
Buy inflation-beating assets: gold, silver, a few income paying stocks, and for leverage, a few gold and silver stocks too.
Oh, and don’t forget a bit of cash. Sure, inflation may chew it up, but it’s useful and far less volatile than stocks. Your other inflation-beating assets should more than make up any losses from holding cash.
The point is, while the ultimate result may be the same – the end of paper money – the route there could take either path.
We can’t say for certain which way things will turn out. But we know the uncertainty will continue…
And uncertainty means a volatile market… just as you’ve seen for the past three years. That means more government and central bank intervention, more money-printing… and a steady increase for gold and silver.
It’s in that kind of market that gold and silver stocks should outperform the gold and silver price as investors leverage to the rising gold and silver price. (Investors will buy gold and silver stocks even if they don’t understand why the metals are going up).
But not all gold and silver stocks will succeed. The key will be them getting access to shareholder financing. As we see it, in a tight credit environment only the best and most promising projects will get the cash… those are the gold and silver stocks to invest in.
Cheers.
Kris
PS. My old pal, Diggers & Drillers editor Dr. Alex Cowie has been working on a special report and presentation. He outlines his ideas for helping investors survive and prosper over the next 10 years. It’s a report you won’t want to miss. For an insight of what to expect, keep reading and look out for the report when it hits your inbox today…
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From the Archives…
How to Profit from the Inevitable Return to Sound Money
2011-12-02 – Kris Sayce
Two Reasons the Market Should Have Fallen…
2011-12-01 – Shae Smith
Ditch Your Investor Pride to Avoid an Investing Fall
2011-11-30 – Kris Sayce
How to Play a Volatile Market for Profit
2011-11-29 – Kris Sayce
No Thanks to Central Banks
2011-11-28 – Kris Sayce
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