Monday, November 24, 2014

Gold and Silver Fundamentals Will Take Hold

Crisis-induced asset price weakness puts a terrible strain on the banking system and takes us back to 2008 when people realized they were better off putting money in gold and silver than propping up the banks. As a precious metals investor, my biggest concern is what happened to the banking business during that crisis. The Federal Reserve bailed out the banks, but never fixed the problem. The banks are still overleveraged and negative real interest rates aren't giving account holders a reason to keep their money there. When people come to that realization en masse is when gold and silver prices will return to where they should already be based on the fundamentals.
In this environment, the royalty companies seem to have done the best. They essentially have almost zero cost. All they have is revenue. Now, the revenue goes down because the price of gold and silver goes down, but you're not going to go broke.

However people invest in precious metals I would like to stress what I said in the roundtable: People need to stay the course. I think the returns can be very large if what should happen is allowed to happen in the physical market. I think it will happen very shortly.

- Source, Eric Sprott via Market Oracle