Resource World Magazine

O C T O B E R / N O V E M B E R 2 0 1 9 www.resourceworld.com 7 Editor's Comments Ellsworth Dickson Ellsworth Dickson, Editor-in-Chief Email: editor@resourceworld.com T: 604 484 3800 | 1 877 484 3800 A pologies to the Lovin' Spoonful musical group for steal- ing their song title but that's the way it looks for gold and silver. The gold price and gold producers have had a great run with prices ramping up from below US $1,420/oz in late July to US $1,545/oz on September 3. On the other hand, silver has risen from a little over US $15/oz on July 11 to US $19.25/oz on September 3. So which is the better investment? While both gold and silver are precious metals, they are quite different. Both silver and gold are considered to be safe havens; however, industrial uses of silver account for about 60% of world production. So silver can do well when equity markets and the economy are strong and also during a precious metals bull market. For the yellow metal, gold is now used to transfer money world- wide and central banks continue to accumulate gold – not silver. In recent weeks, gold bugs were awaiting a typical correc- tion that didn't really happen. August 15 was the start of a mini correction (~US $20); however, gold rose again and then settled back. According to the Gold Monitor newsletter, the most recent gold price increases are attributed to lower interest rates and geo- political volatility such as the US-China trade dispute. Then there is always the ever-present safe haven aspect and the more recent uncertainty on several fronts. In addition, the Gold Monitor stated that "demand for ETF gold continues to be strong…" The Sprott Monthly Report Insights noted that gold prices rose US $110/oz in August to close at US $1,240/oz, a gain of 7.8%. Year-to-date gold is up 18.55% with gold equities rising 46.4% as gauged by the Sprott Gold Miners ETF [SGDM-NYSE]. As often happens, while gold rose 11.6% in August, the broad equity markets dropped 1.8%, reflecting the status of the US-China trade war. The Sprott report also remarked that "gold in every currency has a bullish chart pattern. All have broken above the 2016 highs convincingly and all are spiking higher." So what does the World Gold Council say about reasons to buy gold? "Gold is becoming more mainstream. Since the end of Bretton Woods and the following central banks' gold sales, the share of the private investors in the gold market has increased. The introduction of gold ETFs made gold an even more popular asset class and one easier to invest in. Today, gold is more relevant than ever for investors." The World Gold Council commented that gold is a highly liq- uid yet scarce asset, and it is no one's liability. It is bought as a luxury good as much as an investment. As such, gold can play four fundamental roles in a portfolio: • a source of long-term returns • a diversifier that can mitigate losses in times of market stress • a liquid asset with no credit risk that has outperformed fiat currencies • a means to enhance overall portfolio performance. In a recent Webinar hosted by Peak Prosperity, Co-Founder Dr. Chris Martenson pointed out that "commodities are super-inex- pensive" and at a "generational low." This idea was bolstered by Brien Lundin, publisher of the GoldNewsletter (and producer of the New Orleans Investment Conference) who noted that while some gold equities have had substantial gains, this was because they were so undervalued. He believes that high quality gold equities still have a lot of rocket fuel left and, to use a baseball analogy, we are in the first inning and mining stocks have the potential to "go up in multiples." Lundin also mentioned that as evidence of the emerging precious metal bull market, it is "like a three-legged stool; that is, gold is going up, gold stocks are moving up and now silver is moving up." Not to be left out, platinum and palladium are also participat- ing in the precious metal bull market with platinum up 17.34% and palladium up 21.76% year-to-date. Also, at the Peak Prosperity webinar, fabulously successful mining stock investor Rick Rule, President and CEO of Sprott US Holdings Inc., remarked that gold tends to move first but silver moves further, thus suggesting that both gold and silver invest- ments should be on an investor's radar but expect volatility. He said that investors can lower risk by targeting high quality min- ing companies with "serially successful" management that have outlined significant resources. The trickle-down effect has not impacted many junior explorers as can be seen by the TSX Venture Exchange Index still languishing below 600. Brien Lundin says that "a lot of juniors have yet to move up but they are next. Tremendous opportunities await." I don't think I have seen such truly successful experts be so bullish. Ignore them at your own peril. n Did you ever have to make up your mind?

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