Overall, we are bullish on the American economy, because consumers drive two-thirds of economic activity and we are seeing positive trends in both jobs and confidence.
Although things are going well, the non-stop printing of money with the Quantitative Easing programs will have dire consequences down the road. This is still the elephant in the living room.
Accommodating our low interest rates over this longest period in decades will at some point see a “hangover” that will make the Great Recession seem like a party in the park.
For this reason we continue to advocate hedging the market by taking a large position – as much as 10% of your entire portfolio – in precious metals. We are more bullish on silver and would suggest the following weighting: 60 percent silver, 20 percent gold, 10 percent fancy colored diamonds, 10 percent numismatic coins.
|Silver||Gold||Fancy Colored Diamonds||Numismatic Coins|
This may seem like an unusual mix and we don’t suggest investors buy numismatic coins or colored diamonds without experience and expert guidance, otherwise the results will likely be grim. However, if an investor is still looking for a hedge, we can suggest 80 percent silver and 20 percent gold.
We are particularly bullish on silver with annual total supply of little more than one billion ounces. Seventy percent of this silver is used for industrial purposes as it is the best conductor of electricity, a biocide effective in killing germs, as well as an important element in solar panels and numerous medical applications.
Also, there are few silver mines in the world. Most silver mines cannot extract an ounce of silver from the ground for less than $25 per ounce while current prices hover between $16 and $17 per ounce. It is well-documented that silver prices have been subjected to price suppression schemes for twenty years. Thus, current prices do not come close to reflecting the facts that above ground inventory has virtual disappeared and it is increasingly difficult to acquire physical silver.