<i>Midas Letter's</i> James West: What's with
$1,500 Gold and $42 Silver?
Source: Sally Lowder of
As gold and silver continue their spectacular rise,
The Gold Report
checked in with
Publisher and Editor James West to get his take on the situation.
James, always strongly opinionated, sees this as the beginning of
a global revolution that could result in long-term opportunities
for gold and silver juniors. In this exclusive interview, James
shares some of his top companies to watch.
The Gold Report:
James, we've been discussing the significance of gold's recent
push through $1,500/oz., and what it means, beyond the obvious.
Do you think this is just an asset class appreciating thanks to
fundamental forces, or is it somehow an important milestone with
new implications for the future of the global economy?
In the last 30 days, gold has risen in price by $83.50/oz. Now
that it's darting furtively above $1,500/oz., with a clear eye
and ambition for the next level-$1,600-a cacophony of know-it-all
voices are going to proclaim the imminent end and catastrophic
destruction of the gold bubble. Ho-hum. . .go back to your
crossword puzzle, armchair economists. This is no bubble. This is
the beginning of a global revolution.
Seriously, the events in the Middle East, the crumbling of
Eurozone economies, the relentless depression entrenching itself
in the United States and the soaring prices of gold and silver
are not unrelated. The byproduct of our now truly connected
species is the ability of the forces of desire and yearning at
the core of all human ambition to impart a physical influence on
markets, commodities and governments.
Myopic mainstream media fail to adopt a holistic, high-level,
eonic time-sense perspective, providing zero valuable information
and thereby only adding to the noise and confusion. Absence of
leadership-real visionary leadership-renders us pinballs rolling
feverishly, yet without intent beyond the immediate obstacle,
careening aimlessly with no collective purpose and goal.
In the rising prices of gold and silver, we see irrefutable
evidence of irresponsible and possibly criminal negligence in the
management of our money. With the United States trapped in a
cycle of fabricating vast electronic sums of debt with the
virtual printing press, the mantle of legitimacy and cloak of
secrecy proffered by the government's favorite off-balance sheet
entity, the U.S. Federal Reserve, guarantees the inability of the
will of the people to manifest itself and break free from this
pattern. The Federal Reserve has become the slave master who
ensures the bondage of humanity to the foul and putrid U.S.
dollar. It is now, more than ever, the enemy of the American
people, and by extension, the rest of humanity.
I'm sorry, James, but that comes across as a bit "anti-America,"
if you don't mind my saying.
I don't mind, Sally. That is an accusation I'm only all too
familiar with. But it's completely misplaced. America was founded
on the principles of free enterprise, and on the concept of no
taxation without representation. The current regime in the United
States, whereby the democratic process has been hijacked by the
financial services industry, is directly and reprehensibly
undermining those twin key American principles. That is
anti-American. By identifying it as such (although I am a
Canadian by birth), I consider myself a patriot to humanity first
and foremost, and to a lesser extent, to national interests.
Okay. . .So, do you see the factors supporting the gold and
silver price at this level mostly as political, or are they
related to demand from jewelry, or in the case of silver,
industrial demand? Or is it all of the above and more?
Definitely all of the above and more. The political factor I've
covered, more or less. I would point out that the people of the
United States, who are fiercely independent, will replace their
own debauched currency with gold and silver with or without the
government's participation. Utah has clearly demonstrated
But in terms of fundamental, market-centric drivers, many
people are under the mistaken impression that the higher gold and
silver prices go, the more negatively demand is impacted. I think
that the higher the monetary metals go, the greater their demand
is in terms of capital preservation strategies. That's because
the higher they go, the stronger the correlation to and proof of
an increasingly unviable dollar, thereby spurring demand.
In terms of industrial demand, silver has unique physical and
chemical properties that make it irreplaceable for certain
applications. The same is true for gold, to a lesser extent. So
yes, there will be a slight deterioration in demand from those
sectors, but that is not going to be significant-especially as
measured against the increasing demand for capital preservation
or speculative strategies. In the case of jewelry, the
desirability is enhanced, while the affordability is diminished,
by rising prices, and so I think those two factors will balance
each other out in that equation.
But most importantly going forward, the demand for gold and
silver by sovereign investors is tantamount. Governments with
U.S. dollar holdings are increasingly embracing the wisdom of
dumping dollars in favor of better value stores, and gold and
silver certainly fit that bill. When the U.S. dollar is finally
decommissioned, which it definitely will be, the replacement
global trade standard must, in some way, be moderated by an
official peg to the prices of gold and silver.
While this arguably constitutes a gold/silver standard, it by
no means implies that the currencies of the world must be
quantitatively relative to a certain amount of gold or silver.
That is the biggest misconception in the public.
But central banks are seen to be accumulating gold and silver
now, and that is because there is a tacit consensus that gold and
silver have a role to play in the globalized monetary future.
That concept not only enhances demand for these metals, but it
legitimizes their value as investments for the general public. I
am personally of the opinion that, contrary to conventional
conspiracy theory suggesting that the United States has no gold,
the government is using a portion of its fabricated ersatz
capital to accumulate gold and silver surreptitiously, fully
cognizant of the fact that the U.S. dollar is doomed.
It's fraudulent, and criminal. Not to harp on and on, but this
government should go to jail. I don't include Obama in that,
because I think he's a good man who has inherited a viper's nest
and lacks the deep economic savvy to forge a solution. That is
evidenced by his appointment of the same incumbent economic
advisors and managers who have overseen the willful destruction
of the American economy.
What are the opportunities for astute investors now? Why have we
not seen recent corollary price appreciation in some of the
senior producers, royalty companies or even near-term producers
with proven precious metals (
The opportunities for astute, and more importantly, swift
investors, are unprecedented. The fact that these valuations are
not yet apparent in derivative asset classes, such as shares in
mining producers and explorers, is exactly such an
The market as a whole is like a timid little abused dog that's
afraid of its own shadow. At the slightest raised hand in the
form of market instability, it cringes and scurries for shelter.
It peers out from its perceived safety under the stoop, and only
ventures out when the coast is clear. So the market hesitates to
commit capital. The never-before-seen confluence of volatile
factors that characterize today's world economy enforces the
impression that the whole thing could collapse again at any
minute. And it will. . .again and again.
Seasoned investors who have weathered the downturns know that
the best time to go shopping for stocks is when the rest of the
market is paralyzed with fear. That is the case now, and so I'm
picking up companies that have the greatest potential for rapid
appreciation when the rest of the herd clues in and understands
that the world isn't going anywhere. Markets will ebb and flow
like the breath of life itself, and the trick is to tune out the
noise, adopt a disciplined strategy, and execute ruthlessly.
Fortune favors the bold, as the old saw goes.
As ever, the various classes of opportunities populate the
scale of risk from conservative to speculative. Owning bullion is
owning the purest form of money. It doesn't spend easily in the
current world, but it trades effortlessly. It's really difficult
to store and secure, so next on the list is bullion funds. Of
course, then your security and storage issues are solved, but
you've adopted a degree of risk in that your holdings are not in
your direct control. Exchange-traded funds (ETF's) backed by
physical gold are, in fact, a perfect replica of the original
money, when a "bill" represented a coincident amount of gold in
Next on the list are gold-producing miners, which are
generally good stores of value and have a bit of upside
opportunity if they can acquire ounces cost-effectively.
Barrick Gold Corporation (TSX:ABX; NYSE:ABX)
Newmont Mining Corp. (
Anglo American Plc. (NASDAQ:AAUK)
Goldcorp Inc. (TSX:G; NYSE:GG)
Agnico-Eagle Mines Ltd. (TSX:AEM; NYSE:AEM)
and a host of others are enjoying record profits, and I think
that's going to continue.
For speculative strategies, I like the junior gold and silver
Colossus Minerals Inc. (TSX:CSI)
Lago Dourado Minerals Ltd. (TSX.V:LDM)
Continental Gold Ltd. (
Waymar Resources Ltd. (TSX.V:WYM)
CuOro Resources (TSX.V:CUA)
Seafield Resources Ltd. (TSX.V:SFF)
Golden Reign Resources Ltd. (TSX.V:GRR)
Corazon Gold Corp. (TSX.V:CGW)
Prodigy Gold Incorporated (TSX.V:PDG)
in Ontario and
Newstrike Capital Inc. (TSX.V:NES)
in Mexico. The latter just announced an incredible 230 meter
intercept at 7+ g/t gold.
The cool thing about the juniors is that the mainstream market
is nowhere near this space right now. Case in point: when
Newstrike came out with that hole, the stock blasted up to $2.30,
which is an 87% increase from where we initiated coverage in
January of this year, and the investment world is out to lunch.
Here we've got a deposit that is shaping up to look like a $1
billion gold deposit, and the mainstream investment community is
so utterly out to lunch, they don't see it.
The last time a company drilled a hole like this was Ventana,
and that stock is now over $13. That was a 1,200% winner for
subscribers, and I'm willing to bet the farm that Newstrike
Capital is going to head in the same direction. If the next set
of holes they release emulates these results, look out.
Usually the summer months are a slower investing season for PM
equities. With all the macro factors in play, including unrest in
the Middle East, and the U.S. without an approved budget and with
an increasing debt load, along with high unemployment and the
threat of hyperinflation, do you see a continued increase in the
price of gold throughout these months?
Gold just put on in 30 days what it normally does in one year.
Considering the macro economic factors in the world right now,
and the steepening appreciation curve in both gold and silver, I
think you're going to see an incremental average increase in the
price of gold throughout the summer, with very high potential for
corrective drops by as much as $100/oz. But gold is heading for
$1,600/oz. this year, and silver is going to be $90/oz. within 24
months at the latest, if not sooner.
Thanks, James, for your timely insights. Much appreciated.
James West, publisher and editor of the
is an independent capital markets entrepreneur and investor.
He has spent more than 20 years working in such capacities as
corporate finance advisor, corporate development officer,
investor relations officer and media relations and business
development officer for companies involved in mining, oil and
gas, alternative fuels, healthcare, Internet technology,
transportation, manufacturing and housing construction.
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1) Sally Lowder of
The Gold Report
conducted this interview. She personally and/or her family own
shares of the following companies mentioned in this interview:
2) The following companies mentioned in the interview are
The Gold Report:
Colossus, Continental, Goldcorp and Prodigy.
3) James West: I personally and/or my family own shares of the
following companies mentioned in this interview: Colossus
Minerals, Lago Dourado Minerals, Continental Gold, Waymar
Resources, CuOro Resources, Seafield Resources, Golden Reign
Resources, Corazon Gold, Prodigy Gold, and Newstrike Capital. I
personally and/or my family am paid by the following companies
mentioned in this interview: None.
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