02 December 2010
Silver, Gold, and The Hunt Brothers
My first wife (wisely) left me in 1976. When she left she took almost all our community property, my dog included. Most of what she left behind required a monthly payment... mainly the house, which was at a location where neither of us wanted to live.
I moved out and was fortunate to immediately find good renters to move in.
When I finally made the decision to sell the home in 1978 the renters bought it. I found myself with $10,000 cash in my hand and the need to put that money to work.
I had been investing in Mutual Funds for years with some success and thought about adding this money to one of my funds. But the very week the 10k fell into my hands I got a tip from a friend...
"Gold is gonna explode!"
I had a trusted friend in my ARMY Reserve unit that made his living as a stock broker...
"Hey Jim, whatd'ya think about investing this money in gold?"
At the time, gold was trading in the area of $240/oz. He responded, "Gold is at near-record highs. I'd be frightened to tell you to put that money there."
Cautioned, I invested the money in CD's, which at the time were paying about 8%. I then sat back and watched as gold climbed steadily to just over $825/oz., and wished I had listened more carefully to what my gut was telling me.
Now we're sorta in a similar situation. Every other commercial on TV exhorts us to "BUY GOLD!" Watching what's happening in this economy my gut is telling me once again that is good advice, and this time I'm acting on my hunch. Gold is now at record dollar highs, but would have to reach $2300+ to reach an inflation-adjusted record high.
Some think that silver, with all its industrial uses, is actually a better play in the precious metals market. For a while today it was selling at a near-term high of $29.00/oz., but has a long way to go before it reaches an inflation adjusted high equal to its $50+ per ounce cost when Nelson and Bunker Hunt, with the help of a few Arab investors, tried to monopolize the world's silver market.
Remember when you read my words that I'm just a financial nobody, and the precious metals markets are volatile under the best of circumstances. But the price of silver is up 50% in just 13 months and most believe that price is likely to coninue going upward so long as our treasury is continuing its present course of printing greenbacks...
And they're printing a BUNCH of greenbacks right now!