hi this is mike maloney and i've got jeff clark with me in another what the fact [Laughter] it's hard to say that with a straight face but uh it's it's faq so the frequently asked questions so jeff what do you got for me well it's great to be back with you again mike for a frequently asked question so uh you have revealed recently that you started to buy some mining stocks now this is an area that i love to invest in um of course i have my my gold and silver in place first before i started


buying mining stocks but it's something i really enjoy so this naturally raised a question with some viewers as to how much you're investing in mining stocks versus your gold and silver holdings so mike do you have any guidance there on what allocation uh you personally plan to eventually reach in terms of how much you have invested in mining stocks versus how much you have invested in physical gold and silver uh i'm i don't think i have hit five percent of my portfolio yet um it's possible when you've got a certain


quantity of precious metals um the level of anxiety about the global economy and you know i have a lot of anxiety about the global economy even though i've got the precious metals but the level is reduced greatly if you do own the precious metals when you hit a threshold where you go okay i've got enough right now i can retire live the less rest of my life without having to worry about anything because i know that they can't go to zero and i know that they're not going to drop you know it's possible that we


could see a 90 percent drop in the stock market um it's it's not possible in my opinion that we could see a 90 drop in precious metals and this is if you're using the dollar to measure them uh but you really need to use uh their value and we this this market hasn't peaked at all when you look at the dow gold ratio and the gold real estate ratio and all of this um uh we have a long way to go in this market some big gains to make but once you get over a certain threshold to where you know that um you're sort of


taken care of uh the the anxiety is reduced but like i say you know i read a lot of news and i do get a lot of news that has been filtered and so because it's cameron's news that's posted on the website it's things that dan sends me or other people in the company and so it tends to be uh economic news and it tends to be economic bad news uh but these things are real and it doesn't matter if you're listening to the fairy tale that the the mass media is telling the public or


looking at these things that you can dig deeper and you can go to the fed's website or the ecb or the boj the european central bank bank of japan people's bank and you can read these things and uh they're there or it's some commentator commenting about these things but if you investigate it this stuff is real it's dangerous it's happening right now and you got to be prepared so that raises the level of anxiety but i've got uh i first was just investing in precious metals


then i was you know well i can't say my full history when i first got into the precious metal sector i did accumulate a lot of mining stocks i had 53 different mining stocks back in 2003 i started collecting those and i caught the last big leg up where if you take the hui or the xau the indexes of uh precious metals these used to be the major indexes back then they didn't have the gdx and the gdxj so the hui was the unhedged gold and silver mining companies and you divide that by the price of gold


i caught the last leg up where the miners really out vastly outperformed the precious metals and then i was lucky enough to do uh some research on it and get the barons gold mining index which goes way you know back many many decades uh before we went on to the uh when before we went off of the bretton woods system so it goes uh back and then you know you can paste that onto uh home stake mining and and the things that did really well during the great depression um but when i divided gold the barons gold


mining index by the price of gold i found that over the long run just the physical metals outperform the stocks it's only in these short periods of time either direction where the stocks are outperforming gold but then gold then on the way down they outperform gold but it seems like they give you a leverage of three to one on the way up and four to one on the way down and so if you go from uh 1971 until today on on this uh index the behrens gold mining index divided by the price of gold gold has


had eight times the performance of the stocks if you're taking that whole period of time however i did have one stock where i had a 40 bagger i had i got 40 times my investment but it was on that initial leg up well we're very close you know we came off the bottom of the uh gdx gold ratio the hui gold ratio the stocks versus gold i thought was 2015 the bottom jeff yes december 2015 was the bottom for gold right for the the gdx gold ratio and the bottom uh for gold in this um uh this i call i do not i refer all


to all of this i the bottom for gold for me was 253 dollars in 1999 and we've been in a bull market ever since this cyclical bear market i call it a mid-cycle correction i consider 1970 to 1980 a bull market in gold i don't consider it to be two separate bull markets i don't look at it that way personally because what i look at is the value and not the price of gold and silver and when i see throughout history the value of of gold and silver when you measure its purchasing power against other stuff


it zigzags like this in a range and that's how i can tell when the bull market is over or not trying to split this into two separate bull markets with a bear market in between suggests that it might be easily tradable somehow that we can catch the top you know i could sell in august of 2011 and buy back in you know go short on gold until uh november december of 2015 and be long now i'm just not that smart and most people aren't and any trader that tells you that he was able to do this exactly


is probably lying or he's going to keep his methods very secretive he's not going to publish it or tell anybody about it uh and i don't think there's anybody out there that has any sure-fire method of trading a secular bull and splitting it up into these bull and bear markets you know nailing every pullback so uh we we're in the middle of this uh mid-cycle correction and we did hit that low in 2015 and we're going through a little bit of a pullback now and to me uh that cycle


is something worth gambling on uh it's it's something worth placing a bet on and when you're investing in stocks you're placing a bet because uh your bet is on the management team your bet is on the geology of the find uh your bet is that it's in a good jurisdiction that's not going to nationalize the precious metals mines so uh an epa shutdown a strike any of these things can basically end that company and if it ends that company it goes to zero the precious metals can't go to zero


but we're in a um high risk i'm sorry a low risk high reward uh time in my opinion for these precious metals and when i talked about the barons gold mining index and the metals outperforming um they tend to outperform like you know when you take one of these broad indexes about three to one on the way up but then about four to one on the way down so over a long period of time the stocks are losing value compared to the metals but there are these periods of time if this is the blow off top that we're going into


over the next couple of years here if this is the blow off top and if the echoes of the past continue then yes this is you've got you know until november of 2023 would be the perfect echo uh history repeating and not rhyming but really exactly repeating would be november of 2023 it's not going to happen that way but we're probably getting close to this thing and if this is it there's going to be a period of time where the metals vastly i mean the stocks vastly outperform the metals


and then you can sell those stocks and buy more metals on the way up that's one of the things uh to do is if you have some profits take some of those profits convert it into something that's not going to do as big a pullback now one of the things i discovered on that uh barons dividing the barons gold mining index uh into the price of gold uh was that the peak in that didn't come in january of 1980. it came on the dead cat bounce on gold which was about a year or a year and a half later i think it was


you know gold went up and then it crashed and then it did this dead cat balance uh to like 600 and something dollars 700 and something dollars now so you hit 873 did a crash uh did a dead cat bounce and then continued on its 20-year long bear market uh 19-year long bear market to uh uh i can't remember what month in 1999 but from 873 down to 253. um and but the barons gold mining index when you divide it by the price of gold had a peak and then another big peak and its peak was on that dead cat


bounce so if you have some exposure to some of the mining companies um you may be able to you know i'm trying to use all of these ratios to sell my precious metals in tranches uh around the top because i don't believe anybody can nail the exact top and then um i'll have my uh mining companies which will you know they'll go through a giant pullback because like i said they're each when you on the on the downside they create leverage also and so they'll go through a giant pullback


but there should be a dead cat bounce in the metals like there was in the 1980s and if there is uh what happens is the public is rushing toward that sector for safety and they've seen the leverage that people got on the mining companies and they chased that and that's what hap that's the reason that dead cat bounce goes so high and the actual peak it isn't a dead cat balance on the mining stocks that's the blow off top is the mining the on the mining stocks when you're in the dead cat bounce on


the metals so uh i might get to the point where um 15 20 maybe even 25 of my portfolio might be in in the uh stocks but i will be converting if it if it exceeds those one you know when i'm in profits i'm going to make uh i'm going to turn some of that into metals if it exceeds these ratios i'm going to be turning a lot of it into metals until we get to the proper area when it looks like it's time to start converting precious metals into cash flow real estate or high dividend yield stocks or


something like yeah very good um mike is right he and i both uh just frankly sleep better by making sure we own a very meaningful amount of physical gold and silver fur so i really would encourage anyone who's considering this not to buy mining socks until you have your financial security uh set in place uh but they can be very exciting uh the leverage is uh very real on the way up and it's also very on the way down uh my personal portfolio the the uh allocation is actually greater now in


mining equities simply because of this huge run-up they've had here in 2020 so i had more gold and silver value at the beginning of the year but now i have more in mining stocks simply because of the leverage that we can see from them uh during pullbacks though they do fall more so you have to be able and willing to uh stomach the leverage that comes both ways with a mining stock so yeah you know in closing one of the things that i would like to say is um very often uh people will um buy silver or something and and say you


recommended that i should buy silver and it went down well that when when they say that it means that they sold and they locked in losses uh but um i first of all i never recommend anything i only tell people what i do personally uh and so i didn't lock in those losses secondly i've often stated you've got to have the stomach for the roller coaster silver is gold on steroids when there's a pullback you're going to have two three four times the pullback in silver than you have in gold


so don't get on silver and don't get on the stocks roller coaster unless you've got the stomach for it that's exactly right yes you do have to be willing to handle that emotionally um it can be exciting but can also slap you across the face so make sure you're uh prepared for that so well mike this is a great topic uh i think the bottom line is there are some exciting times ahead uh for those of us who are in the gold silver sector so thanks very much for addressing this topic


and we'll see you on the next one okay thanks jeff