gold news

 the mining index measured in gold. Look at that breathtaking draw down. Now, this is a logarithmic chart. So, this is huge. Your losses were huge if if you were in the mining stocks. Uh and then when the mining stocks recovered, they barely exceeded their previous high. Look at where gold went. When you buy a stock on an exchange, you're buying it from somebody else who already owns it. Your currency does not flow to the company that you're investing in. It flows to another trader and that's a

zero sum game. When you're doing a private placement, they usually give you a discount to whatever the stock is trading at and there they create brand new shares and your investment does go directly to the company and helps the company grow. So, it's a good thing, but it's also a bad thing for anybody that already owns shares. And these mining companies, explorers, uh, um, you know, all of the the whole sector, they are the greatest inflators on earth, even more so than the Federal Reserve.

Hi everyone, it's Mike and Allen once again with the Gold Silver Show. And what we're going to do today is do a little bit of an update on mining stocks versus physical gold and silver. And basically on page uh 153 of my book uh the great gold and silver rush of the 21st century and Allen is the one that made this chart. We're going to be sort of doing an update on this chart. This chart was as of 20 summer of 2022 is when we finished all the charts I believe. It may have been updated just

before the book was released. uh so at the end of 2022 but basically this chart uh is indexed to 100 so it's basically showing a percent change and this is uh gold the price of gold versus the Baron's gold mining index which which is only top tier companies and it's showing gold uh going from this is percent change now so going from 100 to uh 3,933 just below 4,000. Uh so and then the Baron's gold mining index going from 100 to 460. So I'm going to show you that one more time before we get into this. And uh so

that was indexed together August 15th, 1971 when gold became free trading. So Alan, go ahead and start taking us through this um and uh show us your first chart here. >> Yeah, absolutely. So the question we get asked all the time is, well, gold is great, silver is great, but what about miners? Is now a good time to buy miners? Isn't it just like a leveraged play on gold and silver? And basically, we're going to answer that question in an extended form here. And I have a handful of charts to expand upon the one

that we have in the book. And the first one here basically indexes the Baron's gold mining index. So an index of gold miners to the price of gold. So they're both starting at the same point the first day of 1970. So they're starting the race at the same point. And then we see where they end up over time after five and a half decades. You can see that gold is way out in the lead at 4200 and the Baron's gold mining index is only at about 650. So the difference here is that gold has outperformed the

index of miners by a factor of six 6 and a half. So gold is significantly better over the very long term. >> Yes. And I do want to point out that the Baron's gold m Baron's gold mining index is made up of top tier miners. These are, you know, the the best. They're the Rolls-Royce Cadillacs and Lamborghinis of the industry. I shouldn't have said Cadillac. Cadillac used to be like considered a real status symbol in the United States back uh you know when when I was young. Um but if you look here uh

the first leg up when gold was still illegal for Americans to own but they could open own the stocks the Barren gold mining index the top tier miners did outperform gold but from then on uh it it's been a bad bet. Now, I do want to say I've got a lot of friends, Jeff Clark, Dave Morgan, they write excellent newsletters and they're excellent analysts. And if you pick the right stock, which takes a bunch of research, you can outperform gold. So, uh or silver, either one. Uh so I always

recommend if you are going to get into the miners to uh you know Robert Kiasaki used to say investing is a team sport. Well you can make a team simply by subscribing to a few newsletters and seeing what people that actually analyze these mining companies where you don't have the time to do it. Uh you want to make sure that that black line doesn't happen to you. So >> exactly. So, so towards the end of the video here, I'm going to give our viewers a checklist. If you want to invest in miners, a few things need to

be lined up in place. And Mike, you just alluded to one of them, which is expertise. You got to have experts working on your behalf or you have to become an expert yourself. Um, so, so we'll get there in just a second. >> Okay. >> The next version of our chart here looks like this. And the black line is not just the Baron's Gold Mining Index anymore. It's actually that index divided by gold. It's a ratio chart. So, it's kind of like the Dow gold ratio or the gold silver ratio. It's the BGMI

gold ratio. And basically, when the black line is going up, the miners are outperforming gold itself. And of course, so early here, the miners were outperforming. Then when the line's going down, gold is doing better than the miners. So, pretty pretty much a tale of two stories here. The miners were doing better up until the late 1960s and then for the most part gold does better over the long term. >> So the big opportunity in mining stocks occurred in 1960 went until about what 67 or something

>> 66. Yeah that was it >> right? >> That was the big opportunity. Now when they outperforms it does way outperform but if if you had invested in 67 right at the peak um you didn't bother to when you were making this chart look at let me see 1.53 4.5 so this is a linear chart on the uh the >> ratio graph um and do you if it's linear 1.51 so this is at about 0.5 right It drops from 6.5 to 1.5. >> 6.5 down down here at the very end. >> Yeah. I mean, not to one point to.5.

Yeah. 0.5. Yep. >> Okay. So, it drops to 112th. So, what is that like 90 a 93% loss? If you're measuring it in real money, it was a 93% loss. And uh look at where it's been uh from uh two you know the from 2007 before the financial crisis to today. Um just uh the the top tier mining companies measured it doesn't matter if you're up in dollars. You should be measuring things in money not currency. Uh real money that stores value over centuries. Okay. Anything you want to say about

this one? >> Well, exactly. From that point, you were you started at about two and then you're down to 0.5. So, you lost 75% of your value. >> Yeah. Against money. >> Yeah. >> Right. >> Yeah. Horrible. >> So, not too pretty. So, the one thing I'll say is I I I don't want to I don't want to um present the take that you should never own miners ever. That's c that's certainly not the case. There are times when the black line goes up and you can see that they're very narrow.

like they don't take a lot of time just you know half a year a year maybe less than five years that goes up dramatically and so on those you know short sweet moments the miners can outper can and do outperform gold but the long-term trend is downward. >> If you think you're smart enough and talented enough to absolutely nail the bottom and then sell at the top be my guest. >> Exactly. >> My thoughts as well. I think you're gonna get slaughtered is what is what happens unless you've got that

professional help. >> I think so, too. >> So, explain this one now. >> Okay. So, same two lines. Same two lines where the the black line is the ratio again and the gold line is just simply the price of gold. And all we're doing is is kind of spacing it out so we can see um the the trend and we're indexing both of them to the day that the dollar was severed from gold. So August 15th, 1971. >> So that's when these these are both starting. You can see that the price of

gold went from 4280 up to 4200 almost a 100x in the in the dollar based price of gold. >> And in the ratio between them, so how did miners do compared to gold? Well, it started at 3.56. It's down to about 41. So it's down a lot. So on a percentage basis this is oh yeah roughly a 90% drop in miners compared to gold. >> Yeah 85 or something like that. Yeah almost 90. >> Yeah. >> Wow. >> So again just another way of looking at the same data. So yeah not these are the top tier. Now, one of the

things about uh um metals miners, gold, silver, whatever, uh they they are some of the biggest inflators on earth, uh I bought private placements when I when I bought and when they're doing a private placement, they create a new stock issue usually. Uh it's, you know, and and that dilutes everybody that is already holding shares and they're always trying to raise capital. And when they do a private placement, you're not buying the stock. When you buy a stock on an exchange, you're buying it from somebody

else who already owns it. Your currency does not flow to the company that you're investing in. It flows to another trader, and that's a zero sum game. When you're doing a private placement, they usually give you a discount to whatever the stock is trading at and there they create brand new shares and your investment does go directly to the company and helps the company grow. So, it's a good thing, but it's also a bad thing for anybody that already owns shares. And these mining companies,

explorers, uh, um, you know, all of the the whole sector, they are the greatest inflators on earth, even more so than the Federal Reserve. So, >> well, bold statement. >> All right. So, our last chart here uh, is basically the same thing. It almost looks identical except we've indexed it to 100. So, it's easier to measure the price change. Um, so gold, if we started at 100, it goes up to 9855. So, a 98x gain, just shy of 100, like we said. And now it's easier to calculate what

happened in the miners relative to gold since it starts at 100, it's down to 11. So, it's it's losing about 88 and a half% just shy of 90% like we said a moment ago. So, yeah, not good long term. >> Yeah, 88 and a half% right. Wow. >> Okay. >> Yeah. So um you can see uh the drawdowns are uh happen more often than the um than the periods they happen worse than the periods where it is going up. Now that draw down if you compare it uh I'm going to have you actually go back one

chart so that maybe we can see the Okay. Uh just one chart in the m the the next chart over Yeah. Go the same. >> Oh okay. Yeah. Go back to the one you were just Yeah. Okay. So ah uh notice that the uh black area from 2000 to 2007 that part is bigger than the gains in gold. But once gold hit like $1,100 an ounce and it did the pullback to 700 uh um the mining index measured in gold. Look at that breathtaking draw down. Now this is a logarithmic chart. So this is huge. Your losses were huge if if you were in

the mining stocks. Uh and then when the mining stocks recovered, they barely exceeded their previous high. Look at where gold went. So over time, if you're in this, if you're in gold, if it uh gains $3 and loses a dollar and gains $3 and loses a dollar, the stocks are uh gaining uh $6, but they're losing five, and then they gain six and they lose five. You know, they're giving you a leverage to gold, but the leverage seems to be greater on the downside than on the upside. And over time, that's

what's responsible for the divergence. You've got a a greater risk of uh downside drawdowns if you are in the mining companies. So, uh again, uh it's t you know it it's fun if you pick the right stocks and for that you need help. You need to go subscribe to some newsletters. So, >> yeah. So, here here's my checklist. People ask when do you buy the miners? Well, my answer, and Mike, feel free to disagree, but my answer is after you've taken a position in physical and when

five criteria are met. One, you have a pile of gambling currency. Okay, so you're willing to lose it. Two, miners are undervalued compared to physical. Three, you have a short time horizon because the longer you're in it, the longer you're going to be. Four, you have professional help or you are a professional yourself. And five, you have the time, energy, and currency to diversify appropriately. What do you think, Mike? >> I think that it is absolutely true. Well, yeah, the divers diversify, you

know, I caught one of the last legs up on the if you u do HUI, which is the uh unhedged mining companies, uh divided by gold. Uh there was a period in the early 2000s where it was way outperforming gold and I caught the last leg up from 2003 to I believe early 2005 and I did spectacularly well. I didn't really know what I was doing but I took the shotgun approach and I bought 53 different mining companies and one of them I had you know I sold in tanches but I did very well. Uh there were only uh there

were three that uh went out of business. A few of them merged and there was only one I believe that lost uh money other than the ones that went out of business. Um or maybe it was the opposite. Three that lost money, one went out of business. That's it. But, you know, I I know somebody uh who uh I I know somebody I have this friend that invested in a dozen private placements uh and was doing so with with uh uh good information. Uh he was investing in stocks that Eric Sprat was buying. And so that means that the

research had been done on it and you know very thorough research and uh gold gold has more than doubled. silver has almost tripled and my friend is only down 21% on on all of these private placements that were such but uh my friend is uh riding these things and until you know it was gambling money and so I was in this position where all of these things were met and I bought it I my friend bought a dozen of them uh my insiders all learned this information, but I always preface it with it's only gambling money and I was

able to get private placements where it was uh below the uh uh the price was uh significantly below the current trading price. They came with warrants where you can get more at the same price if it if it goes up and so on. So, this was great information. Again, uh if you're going to do this, do it with gambling money and get some professional help. Some >> currency. Gambling currency. >> Gambling currency. Yes. Convert your current gambling currency into shares of companies that dig up money.

>> Exactly. >> I want to thank everybody for watching and thank you Alan for this great presentation. >> Hey, thanks Mike. Thanks everyone. >> Bye.