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Gold, Silver Investments Will Keep You From Getting Burned

July 20, 2011 by  

Gold, Silver Investments Will Keep You From Getting Burned

Like many others, we keep watching — and feeling the effects of — the jittery European economic scene with a mixture of anxiety and fascination. From Greece and Ireland to Spain, Portugal and, most recently, Italy, the specter of sovereign debt default and its potentially horrific consequences continues to haunt Europe and the wider world beyond.

As we’ve observed before, the factors of psychology and confidence are playing an enormous part in this scenario. Indeed, there has actually been no significant deterioration in Italy’s financial situation thus far, so the recent surge in bets against Italy’s debt appears to be largely psychologically driven.

The challenge for EU leaders, in conjunction with the International Monetary Fund, which is expected to play an important role in achieving a solution, is to finalize an agreement with the banks that effectively backs up the weaker countries without further delay. Delays are toxic and debilitating when it comes to the essential tasks of regaining market confidence and supporting the euro.

Until the Euro Zone gets its act together and more clarity emerges from the situation (and even more so if it doesn’t), we look to gold and silver, as usual, for safety and value.

And the problem doesn’t come only from Europe and doesn’t involve only the euro. Our own U.S. dollar is under siege, too. At this very moment, 16 nations are uniting to bury the U.S. dollar.

The U.S. government seems to be intent on helping them, as it continues to spend — and print — our currency into oblivion.

Again, to dodge the coming damage in what’s likely to be very uncertain and turbulent times ahead, we recommend safety in gold and silver.

Our specific gold-related picks in this category are: NovaGold Resources (NG), which is our current favorite; Goldcorp (GG); Barrick Gold Corporation (ABX); and the SPDR Gold Trust ETF (GLD). We also like Gabriel Resources Ltd. (GBRRF); although, at this time, it is clearly a more speculative play. (See below for more about Gabriel Resources.)

As for silver investments, we favor First Majestic Silver Corp. (AG), Tahoe Resources Inc. (THO, THOEF), and the iShares Silver Trust ETF (SLV).

Solar Energy And Silver

Despite the recent funk in the solar market, reflecting the fall-off in sales in Europe (the world’s largest solar market, with nearly 75 percent of global installed capacity), we have our eyes fixed on the long-term. The Chinese do as well. They have achieved dominance in the industry in only a few years, and they are actively moving forward to solidify their dominance even further.

In that light, we are convinced that the best way to play solar’s future development is via silver stocks. Silver paste is in most crystalline silicon photovoltaic cells, which is the most common type of solar cell, and also in the mirrors used in concentrated solar collectors.

Out of more than 1 billion ounces of silver produced annually, demand from solar manufacturing now comprises approximately 10 percent. But shortages may occur sooner rather than later, not only because mining output gains are likely to be limited for the time being, but also because the U.S. Geological Survey estimates that at current consumption rates the world’s economically minable silver reserves will be exhausted in a little more than 20 years.

Rising silver prices has manufacturers scrambling to come up with effective ways to use less of the metal (note: there are no viable substitutes). Even if they are successful, the increased demand for solar cells will keep silver prices on a rising trajectory.

Add to this situation the investment demand for silver. As gold hovers around $1,600 an ounce (and it’s likely to go even higher in the long run), silver, aka “the poor man’s gold,” is going to be in ever greater demand from buyers eager to protect their savings but not ready, willing or able to pay the cost of gold.

Our view for the short term: From a purely technical perspective, if silver can remain above $38.50 per ounce for a few consecutive days, it could open the door for a run at the previous highs around $50. If that happens, as we witnessed during the last rally in April, such a move will result in gains of 15 to 20 percent in the shares of our favorite silver mining plays noted above.

Romanian Gold Mining Developments

Recently, we noted a jump in the shares of Gabriel Resources Ltd. (GBRRF), following the announcement that an independent panel had completed a six-month investigation and issued an archaeological discharge certificate for the Carnic open pit at its Rosia Montana gold and silver project in Romania.

Gabriel still needs a number of approvals from the government of Romania before it will be permitted to fully commence operations at the mine. But the stock’s favorable reaction to the news provides a preview of what we could see in coming months if Gabriel moves closer to actual start-up. There will be a progress report on this question issued with the company’s quarterly results in the first week of August.

We received more news about Romania gold and silver mining: Barrick Gold Corporation (ABX) is taking a 9 percent stake in Carpathian Gold Inc. (CPN:CN) for $20 million. Carpathian Gold representatives said they will use the cash to fund development on its Rovina Valley Project in Romania, and the company will otherwise benefit from access to Barrick’s technical expertise.

Does this development indicate that there’s more than meets the eye when it comes to Romanian gold exploration? We’ll be watching this closely.

–Stephen Leeb

Stephen Leeb

has analyzed and identified macro-economic trends for more than three decades. He is a recognized authority on the stock market and commodities, especially oil and precious metals. He is often credited as the first to foresee market-changing events, and predicted the spiraling costs of oil well before others. Dr. Leeb has authored seven books, including the New York Times Bestselling Business Books, The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel (2006), Game Over: How You Can Prosper in a Shattered Economy (2009), and the forthcoming Red Alert: How China's Growing Prosperity Threatens the American Way of Life (2011). He is also a frequent contributor to 'Fox Business News,' Bloomberg, ABC, and CNN. He serves as Head of the Advisory Board for Leor Exploration & Production, LLC, as an Advisory Board member of Electrum USA Ltd., one of the world's largest privately held gold exploration companies, and in the same capacity for Sunshine Silver Mines Corp., a privately held silver exploration company. Dr. Leeb received his bachelor's degree in Economics from the University of Pennsylvania's Wharton School of Business. He then earned his master's degree in Mathematics and Ph.D. in Psychology from the University of Illinois in just three years, an academic record that still stands.

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  • s c

    People around the world are buying gold, silver, platinum and whatever else seems reasonable to them. They’re doing it because the world’s central bankers can’t be trusted. Central bankers destroy the wealth of nations because they can.
    Technically, they serve no functional purpose in any society in any country in the world. What can America think about the present Fed head, who has promised to ‘throw money out of helicopters’ if it becomes “necessary.”
    I thought Greenspannnn was strange. Ben the Boob is even stranger. Just like bad government, you get whatcha pay for, eh? Ben the Boob does make minimum wage, doesn’t he?

  • TIME

    $1600.00 Per OZ for gold, thats up from what was it just two years ago, $650.00 per OZ or less?

    {Look at all the outside factors} if your still sleeping, these factors give you {all the intel} you need to figure out whats really going on.

    If as per what Barry’s team of pro BS artist tell you we are doing just fine, then gold would be far less than $600.00 per OZ more around the $200.00 and or below range.
    So again even if your sleeping when gold is at $1600.00 per OZ in (less than two years) you should have a clear picture that Barry’s plans to break the back of this nation are working quite well and everyone in the world seems to get it, well that is but you who are sleeping and eating the lame stream medias BS.

    So why are you sleeping?
    Do you really think the bad dream will be over when you open your eyes?
    Guess what, thats not going to work!

    Peace & Love

  • C130 Gunship

    I personally believe that investing in gold and silver for most of us, the goals are wealth preservation and the chance for spectacular gains. There are easy, safe, and low-cost ways to accomplish those goals. But there are numerous scams that are ‘out there’ and you should be aware of them. What I would not personally invest in now are the following:

    Gold ETFs / Silver ETFs
    Numismatics (I bought gold krugerrands back in 1982)
    Leverage Accounts
    Pools & Certificates
    Futures & Options

    What I would buy and either take personal possession (never keep in a US bank) or keep in an overseas account (preferred) is gold bullion and silver bullion. If you research the pros and cons of what I listed above, you should be able to come to the same conclusion as I have.

    Good luck

    • Al Sieber

      I second that, I would stick with physical gold and silver (Bullion), not on paper, ETFs, futures etc. what would you rather have a can of beans or a picture of one?

      • Sirian

        That is one of the best analogies I’ve ever seen when it comes to ETF’s and such. So many are buying up as many of these as they can via their 401-K’s. Perhaps this analogy will open their eyes and mind more so.

    • coal miner
  • Indigo

    Metals are a great investment but my concern is confiscation.Confiscation is the ultimate BURN.And a gov’t that allows a usurper in the white house,repeatedly ignores the constitution,gropes children will have no problem taking your gold.For the good of all ,of course.
    Editor: There is a plan to use the IMF (AKA US Treasury and Wall Street) to be the front man for the new world order and one currency.We also got disturbing news yesterday from an impeccable source that when gold touches $2,000 it’s confiscated in the USAfor about $200. Then its to be reissued by the Treasury for $10,000 per ounce to back the new IMF world currency using SDRS in 2011.Large physical gold is being moved to Canada.

    • Al Sieber

      Well Indigo, we shouldn’t worry about that, we should stand up to them.

  • Overstreet

    I think buying gold and silver is a great idea over the long term, as long as you are prepared for some pretty cold downdrafts in the near term.

    If you enjoyed what happened to silver this spring, you might love what gold might be about to do.

  • RKC

    A big boo goes to Bob Livingston. Where did you dredge this guy up from? Stephen Leeb doesn’t know UP from DOWN! And if he’s recommending gold & silver, I’m selling every bit of precious metals I have tomorrow!!!

    C’mon Bob

    • Al Sieber

      RKC, I’ll buy all you got with fiat dollars, at least you can wipe your a$$ with them.

      • RKC

        Clueless, absolutely clueless

        • Al Sieber

          RKC, I’m trying to tell you paper money never worked through out history, it has no substance.

  • Cashpockets

    I call it owning Survival Silver and Gold.
    They will be much needed when TSHTF.
    That is to say owning it physically and not on paper.

    I feel it is not a matter of if, but instead a matter of when will the Paper Dollar manage to collapse.
    In all of History, Fiat Money has always managed to collapse.
    Those who have not prepared for the inevitable will have much sorrow.

  • chad

    Gold Confiscation will be sold to the general public as a necessary step to stabilizing the dollar and a return to the gold standard

    • C130 Gunship

      chad…..They can’t confiscate what they can’t possess, foreign bank accounts or buried somewhere unbeknown to them……

  • professor

    Obamacare, has a provision that allows the government to confiscate gold from citizen owners!

    This “health-care” plan, has little to do with actually caring for people’s health. It has more to do with giving the total control of citizens, over to the government..

    • Al Sieber

      You got that right.

  • Vicki

    There are 3 metals that all patriots should be collecting and storing in a safe place. Confiscation will be attempted. Patriots MUST resist.

    The metals are
    gold. In recognized assay marked units.
    silver. In silver coins where the US Mint marks provide
    a very recognizable assay marked unit.
    Lead. In those cute little brass containers.

    There are other metals of course but the 3 above are all encouraged/protected by the US Constitution and have a looooong
    history of importance in commerce.

    • Al Sieber

      Good one Vicki, I have all 3 metals, mostly lead.

  • Another Voice

    So what is everybody going to do when there is no more food? No clean water and no clean air? All the gold in the world will be useless. Gold investors will die right along with the rest of us.

    • Al Sieber

      Well if I was you I’d kiss my a$$ goodbye, read history.


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