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GRINDING
TOWARDS NOVEMBER 3
The problem I had was thinking more and more about the possible disconnect which might happen after the US elections. Now, normally in a democratic country, elections should have long term, not short term ramifications. Countries with real economies can survive bad leadership, or even no leadership at all. (I hesitate to give examples of caretaker governments in the fifties and sixties). But we don't have a healthy economy, we have a finance economy built on debt and promises. Increasingly, who controls the levers of government determines who makes money going forward. Manipulation of markets is real to secure these ends. After the election is over and the need for manipulated markets eases for a few years, are things going to be so bizarre that all the charts and previous analogies become useless? How bad could it get? As I sit here, silver has recovered 20 cents tonight after an intra-day drop of 50 cents the past two days. The US dollar has been all over the place and nickel dropped 14% today. Things are getting crazier and crazier. How crazy will they get? Should we care? Finding value
http://www.allcanadiancompany.com/supertestoilcans.html He never stopped chuckling at how well he had done, buying them for ten cents a piece, and charging a buck a quart at the gas station. Fast forward 20 years. I'm in Toronto, cruising the hip shopping districts popping up up along one of the previously lower middle class areas. At this time, the free trade agreement with the US was getting close to ratification, and a certain "Independent Canada" backlash had developed. Guess what were prominently featured in the windows of one of the nostalgia shops at $30 a pop? You guessed it. Supertest oil cans, some full, some made into decorative lamps and other accessories.
http://www.adclassix.com/ads2/46whiterose.htm As a youngster, I had had some of those party hats. We would put them on and have parades (which I thought was a pretty goofy thing to do, even back then). You could have gotten thousands of them at the stations for nothing, much like baseball cards at the time. I had thrown mine out a long time before. At that time in 1985, they were also going for quite a price (I don't remember exactly how much). It was, as they say, a moment. The point of the two linked anecdotes is to illustrate something I believe in, namely the biggest changes are achieved not by wars, grand summits, or other disasters, but by the subtlest changes in perception. As far as I'm concerned, the Second World War solved nothing between the US and Japan as economic competitors, Japan just changed strategies. Unfortunately, some of the old tensions may reemerge, because attitudes change much more slowly than technologies. Returning to the anecdotes, those oil cans and hats were the same, it's only that the value assigned to them that changed. Scarcity and a new feeling for Canadiana had created a value where none existed before. So, now let's look at finding undiscovered value today, to flog when those things will be discovered tomorrow. And by tomorrow, I mean a few years. Can you wait that long for a 10-20 fold increase in wealth? If not, turn the page! So here's one thing I am doing, with my take on the flip side of its value. 2004: Me. "Yes, I'd like to buy some junk silver coins at spot price, or close to it." Coin dealer: "Certainly, sir. How many pounds do you want?" 2008: Me: "Would you like to buy some rare old coins?" Unspecified youngster bulging with cash: "Got any uncirculated 54 quarters?" Of course, it might not happen, but then again, it might. We play the game of trying to find undervalued gold and other metal mines (which often then float options packages or other nasty forms of dilution. Mr. Market is seldom impressed.). Coins don't dilute or issue pro forma earnings. I offer this as a possibility, and if anyone has any other ideas, well, my e-mail address is in the header. Back to the Markets Both of the articles I didn't publish had the same plot, a one year figure of gold showing the rising support line intersecting the major resistance at $425 on about November 3. THAT hasn't changed, so good luck to us all.
So, I'm 20% (Canadian) cash, 5% physical metal, and 70% promising Canadian junior mines and exploration plays. Make sure you have a broker with connection to Canadian markets. I feel it's where a lot of the action will be in the next few years. And Finally I guess the thing I want to impress on people is to be aware that values will probably change, but we really can't predict which ones or how fast, All you can do is have a plan, take your best shot, and ride out some of the craziness (like today). Also, asset classes go in and out of favor. Which ones may come back into favor? So, I think that it is a wise strategy to do what people have done for 5000 years in times of economic unrest, or even normal times. Have something which has intrinsic value at hand, and that means gold and silver, the real stuff. I leave you with one more story to illustrate my point. My mother-in-law passed away this year and I was assigned the task of taking the contents of the family safety deposit box and getting whatever I could for them. My in-laws had traveled quite extensively and kept (lots of) "traveling money" in their box. The 10+ year old Pesos, Francs and Zlotnys etcetera were all worth about the same. Nothing. The bank would have charged me more in fees to do the conversion than I could get for them. My niece is at the "Princess" stage, so I gave her the bills as "Fairy Tale money". One day, I'll explain to her why the fairy tale of fiat money is so scary. The 70-100 year old silver coins in the box, however, paid for a lovely wake dinner for the whole extended family. No coins of numismatic interest, but silver dollars converted at spot. Need I hammer the point any more?
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My
ex brother-in-law would do anything for a buck. Back in the sixties,
there were actually a couple of independent Canadian oil companies.
Eventually, they got squeezed out by the majors. My brother-in-law ran a
gas station for a while and bought a few hundred cases of oil at auction
made by one of the companies. He stored them in the basement of his
house, which doubled as a guest room, and I remember waking up to rows
and rows of Supertest Oil cans.
Right
next to the cans were some kids' promotional materials (party hats) from
another of the doomed oil compaines, White Rose, which had a very classy
logo.
