Resource World Magazine

A U G U S T / S E P T E M B E R 2 0 1 7 www.resourceworld.com 25 Speculations by Leonard Melman O ne of the benefits of having been around the world of mining and resource development for 40 years or so is that you can easily assume that you have seen everything. However, I must admit that nothing in my experience has quite matched the non-performance of so many markets simultaneously such as we have experienced over the past several months. Examples abound. The Dow Industrials were 21,200 in early March 2017 and they are 21,300 as this is written in early July. Crude oil was US $45 a barrel in August 2016 and it is US $45 in July 2017. Gold was near US $1,200 an ounce in January 2017 and is near US $1,200 in July 2017. Silver was US $15.85 an ounce in December 2016 and it is just below US $15.85 in July 2017. The yield on 30-year US Treasury Bonds as measured by the TYX Index was 2.90% in November 2016 and is presently 2.90% in July 2017. The XAU Gold/Silver mining share index was near 78 in October 2016 and is near 78 in July 2017. While there have been some sharp but short term price movements that have indeed taken place during the past year, for the most part they have been almost immediately followed by sharp moves in precisely the opposite direction. In fact, most market actions over these past few months remind me of the Shakespearian line from Macbeth, "…full of sound and fury, signifying nothing." It is also worth noting that many observers have taken these minor moves as harbingers of future exciting devel- opments, mostly positive, only to be disappointed when a follow-through has been almost entirely lacking. This is not offered as criticism – for several of those market actions not only have had what appeared to be technical significance, but have also taken place during a time of apparent social and financial upheaval. One reality which has confounded many commentators is that during this 'dull period' there have there been numer- ous significant public developments such as incidents of violent terrorism; mas- sive growth in debt; political divisions of a historic nature; currency upheavals in India and elsewhere; plans by several nations to institute guaranteed income laws, monetary inflation and a continual parade of central bank Quantitative Easing (QE) programs which have driven concerns regarding rampant fiat monetary growth. When we look at the past 40 years of precious metals history, virtually all of these circumstances, at one time or another, have resulted in significant gold and silver rallies and yet, during the recent time frame, these developments have, for the most part, been virtually ignored by important markets. It is almost as if equal and opposite forces have been gathered, leading many to believe that some sort of dramatic reso- lution to the various tensions might be forthcoming – but we still appear to be in a waiting mode. This is all reminiscent of one of the most interesting comments I have ever read. It was presented by the late Vern Myers, one of the most prominent newsletter writers during the 1960s to the 1990s when he wrote about Great Britain from September 1939 through early April 1940. As those familiar with that time frame might recall, Hitler's armies had just invaded Poland and that action violated British and French treaties guaranteeing Poland's safety. Britain then demanded that Germany withdraw immediately or else a state of war would exist. Germany did not withdraw, the state of war was declared – and then nothing of conse- quence happened to Britain or France for the next six months. People began to refer to the period as the "Phony War" but Myers explained that dramatic forces had been arrayed against each other and actual combat was inevitable – and that is exactly what took place as Germany invaded France and the Low Countries in spring 1940. Britain immediately sent their expeditionary army to join the growing battles – and the war was no longer phony. I believe we are in a similar situation in this era. Forces supporting international socialism are in direct conflict – which we now see in our streets and universities – with free market and individual liberty advocates. Powerful monetary actions to stimulate economic growth should have but have not yet resulted in rapidly escalating inflation. Social disorders including burn- ing cars, smashing buildings, rioting in the streets and blockading of universities should have but have not yet resulted in a premium for precious metals, and so forth. Like Myers, I believe that forces such as these arrayed against each other will indeed eventually result in dramatic moves in precious metals, but it is now six years since the last bull market ended at US $1,930 gold in 2011. We can only wonder when the next true bull move will begin. n This material is taken from sources believed to be reliable and is provided for information only. Any investment decision should be made only after prior consultation with investment professionals. Leonard Melman is a financial and political writer who focuses on issues relating to the resource sector. Mr. Melman lives in Nanoose Bay, British Columbia, Canada and can be reached at lmelman@ shaw.ca Eerily Static Markets

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