Summary:
- Kinross (KGC) Chart that illustrates the Bull Market lift-off in precious metals
- Precious Metal and Industrial Mining ETF’s as a way to participate in Bull Run
- Government Policy that is creating the move towards physical assets
We are using the individual chart of Kinross as representative of two starting points of the rally in precious metals. October of 2023 was the beginning of the breakout rally in Physical Gold. At that time, Physical Gold broke above resistance at roughly the 2040 dollar level. The event surprisingly did not attract much attention. By March 2024 physical gold was breaking out and Precious Metal mining companies followed. Miners and physical metals might be close to a correction or pause, but the probability is that this trend, now started, will last for a while.
The risk to physical gold and silver in a trust vs self-custody is government confiscation. Spreading assets around to different jurisdictions is a good idea. We agree that government confiscation is a low risk but why not spread the assets around to different jurisdictions? Sprott is a trusted name in the commodity world and our preferred vender.
Physical Silver in a trust or ETF
- PSLV – Sprott Physical Silver Trust – Canadan Vault
- SLV – iShares Silver Trust – London & New York Vault – SLV is a Blackrock product. Interestingly, Blackrock bought 5% of PSLV, the Sprott Physical Silver Trust around May 21, 2023. This indicates to me, that Blackrock was unable to buy the quantity of physical silver in the open market that they wanted, therefore they invested with a competitor.
- SIVR – Aberdeen Silver Trust – London Vault
Physical Gold In a trust or ETF
- PHYS – Sprott Physical Gold Trust – Canada
Miners:
- SILJ – Amplify Junior Silver Miners – Small Company
- SIL – Global X Silver miners ETF – Large Company
- SGDJ – ALPS ETF Sprott Junior Gold Miners as the name says – small Cap companies
- SGDM – Sprott Gold Miners Large Cap
- GDX – Large Cap Gold VanEck Miners – selects holding by market cap size
RE: Mining ETFs – Sprott looks at each company they own which is real investing, in my book. Many companies like VanEck and iShares select the mining companies based on size of the company. Biggest get the most ownership.
Copper and Industrial Miner ETFs:
COPP – Sprott Large Cap Copper Miner ETF
COPJ – Sprott Junior Copper Miner ETF
PICK – iShares MSCI Global Metals & Mining Producers ETF
Why is money flowing to Precious Metals? One factor might be potential for Civil War in the USA:
A recent article in Fortune Magazine featured Ray Dalio, the Founder of the largest hedge fund in the world, Bridgewater, suggesting moving some money out of the United States. His reasoning is the odds of a civil war happening in the USA is about 30%. Excerpt from of a recent Yahoo Finance article summary of the Fortune article:
Billionaire investor Ray Dalio believes the chances of a second American Civil War stand better than one out of three and is urging investors to move part of their assets out of the country.
Dalio suggests American’s stay invested only in what the hedge funder called “the best parts of the United States” where innovation and capitalism still thrive and move the rest of your money out of the country to jurisdictions that are more stable and attractive.
“Countries that earn more than they spend and have great balance sheets, have internal order and are neutral in the geopolitical conflicts…look attractive,” said Dalio, suggesting India, Singapore, Indonesia, Malaysia, Vietnam and some Gulf states as possible destinations.
One of those heeding a similar call is Warren Buffett, who just revealed he took a $7 billion stake in Chubb, an American insurance company that relocated its operations from the U.S. to Switzerland in 2008.
Concerning Civil War – LOTM is of the opinion that before the government administration would allow a USA civil war to happen, an alternative strategy would be to increase the current series of global conflicts through a direct attack on Iran. If this were done prior to the National elections in November, the administration could suspend the election by declaring a national emergency. Though farfetched by many, including this writer, it is no more farfetched than the twilight zone reality experience, we endured through covid, censorship, 54 pronouns and not being able to define what a woman is or rather was. The Russian collusion prosecution of a sitting President that lasted three years and cost tax payers roughly $35 million dollars and ended as a big nothing burger. In point of fact, evidence was shown to be made-up and financed by members of the opposing political party. This is demonstrated fact that has been under reported by main stream media. So why couldn’t the USA political twilight-zone reality experience continue? The uncontrollable spending of government and resulting debt build-up is easily part of the reason money is exiting to more tangible assets.
An additional reason includes government policy, rules and regulations that have restricted the same supplies of minerals that have been legislated and funded by policies that require the use of said minerals. No easier way to make money than buying minerals where supply has been restricted while at the same time government policy has demanded and subsidized actions requiring these same minerals. I am speaking of energy, silver, copper and battery metals to rebuild the grid, shift to alternative sources of energy and become an all-electric economy. How is that not a Twilight zone experience? At the very least these are actions of leadership with no critical thinking skills. At worst, they are deliberate actions to bankrupt the quality of life in America.
Peace to all and the hope for better thinking skills from our leadership. We have to consider all possibilities. The reality is we’ll probably muddle through but are uncertain as to how messy it will be.
LOTM Research & Consulting Service
* An account related to LOTM holds a position in this security.
Neither LOTM nor Tom Linzmeier is a Registered Investment Advisor.
Please refer to our web site for full disclosure at www.LivingOffTheMarket.com ZTA Capital Group, Inc.
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