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I know what your first concerns and question are when you think about investing in precious metals, that the trend will reverse and you will lose principal. That fact kept me personally from making money as gold continued rising. Meanwhile I did all right with stocks but that is tough. From paper investments while your balance grows it doesn't seem like you make any real large progress with some big returns. This could be what you have been like me searching years for, some answers and something that is working performance wise and is like having insurance for your wealth, just like your house or car. Obviously that is a lot of information all at once but most of it is very simple to understand.

By the way that fear of being "too late to the party" and ignorance of the real long-term trends that are the root causes behind this powerful move in gold. Just look at how recently when world stock markets tumbled 15% during the panicky events in late July -August 2011, gold rose in price by 13% outperforming stocks by 28%. These same fears about being so late to the trend, investing in a new asset class, more importantly something new and so unconventional to all of my other investments in my twenty year investing career. That had helped keep me personally out from entering precious metals until late last year December 2010. Now though my initial research is complete, the conclusions are clear and I'm profiting from this trend instead of getting run over by it. Trust me the pleasure of the gains is so much nice and you will be selling your stocks and low yielding bonds and buying more gold and silver, the markets will almost force you to.

To begin to understand why we personally choose to and why we strongly suggest you both look into and consider investing a significant percentage of your assets in gold and silver, we wrote this article to share our conclusions with others willing to listen. When I say a high percentage, I mean more like 50-80% of your total investable liquid assets and in some cases even 100%. Not the 5-10% that most financial advisors and brokers recommend. I strongly suggest due to the length of and the amount of information contained within this article that you print out the article and read it when you have the time to sit down, read and absorb it. I hope it sparks in you what my research and my conclusions reached have done for me. Below is your free article about why you should consider owning both gold and silver now:

1. The primary and overarching reason you should have a significant percentage of your investable assets and wealth in precious metals is very, very simple: to protect your real purchasing power!
   
   In this age of government's abusing their privilege of excessive printing currency, on a magnitude and scale not seen for decades, the only investment that both protects your wealth and even prospers from the inevitable destruction of purchasing powers in all major currencies of the US dollar, the Euro and other major developed economies.
   
   
2. The US Dollar has lost 31% of its purchasing power just since 2000 and 72% since 1990. Since the US was taken off the gold standard in 1971, the dollar has a staggering 82% of its value. Since the Federal Reserve was created in 1913, the US dollar has lost 95.6% of its purchasing power. When you compare the historical appreciation and more importantly the retention of its purchasing power of precious metals versus the dollar in those same time frames, those facts alone should convince you that significant exposure in precious metals to protect your wealth.
   
   
3. In 1980, gold prices reached $850 per troy ounce which in today's inflation adjusted US dollars equal approximately $2325. We think it will exceed that prior level and continue to rise. This is based on the vast expansion of money in credit in all the years since 1980. In 1980 silver prices briefly traded above $50. That in today's equivalent inflation adjusted US dollars would be at least $135.
   
   
4. Gold and Silver are such unique elements with so many unique properties. Therefore the chance of a gold or silver substitute being Developed is almost impossible. It hasn't happened in thousands of years and it probably never will.
   
   That is what makes them unique to the worldwide monetary system; they can be printed or manufactured. They can't print gold or silver. This is what checked and balanced the government and the economy. Less boom and bust, less government spending, no big federal deficits and made you run a positive trade balance.
   
   
5. For decades central banks of the world had been until just recently selling large quantities of Gold. Most have sold literally all of their silver reserves to meet excess demand which had helped keep prices artificially low from 1981-2001. That had made mining so marginally profitable for so long, that there is a shortage of new mining capacity developing over the next few years. When you have combine that fact on the supply side with the exploding demand from more investors all over the globe at the same time you have the recipe for s strong and sustained bull market in precious metals.
   
   
6. The largest gold mines, almost all of the major gold mining companies in the world currently responsible for a very large percentage of world production each year are all starting to get less gold per ton of ore mined. The mining industry is literally on a treadmill that keeps speeding up but they don't have the potential to keep up with the increasing speed.
   
   The mining companies have little ability to more rapidly expand their production because todays production is the result of decisions made years and multi-billions dollars of investment ago. This makes it to where they have to work harder and harder devoting much more capital, time and effort in order to just continuing to maintain existing production levels and have total industry output up maybe 3-4% per year. This is one of the reasons that gold mining stocks have underperformed the physical bullion itself. The thing you have to remember about mining stocks is they are still stocks and as you saw recently when all stocks are being sold, they get sold too. They can go lower even when higher gold prices and moderating costs should be increasing their stock price.
   
   If the Golden Mean process is occurring now, eventually mining stocks will eventually soar in value. However in the end they are stocks and will act more like a stock than the metal itself. We personally currently own no miners but do have a model portfolio of them to give you some ideas of our favored companies in the sector if you choose to have some exposure to them. Our favorites in the mining sector are not the companies that most investors in the group favor. The mining sector is difficult to evaluate because it trades at 3-7 times current annual revenue so valuation is the sector is difficult to analyze the potential reward to risk. Then you combine the specific company and mine operational risk and it is even more of an investment minefield. There are various primary silver miners that still offer value and growth. Silver stocks because they are still mid cap (vs. large cap gold miners) and still have production growth can reward shareholders with capital gains. However you have to research these companies and pick the top performers relative to their risk.
   
   
7. You need to understand that gold and silver are longer-term investments, not short-term trading vehicles. You have to ask yourself" If I really believe gold and silver have the potential to rise 300-500%, do I really need to get greedy and use an individual mining stock or derivative like a leveraged ETF, option, or even futures that are even significantly more leveraged but also simultaneously exposes me to much more risk. When you own derivative instruments that equal gold and silver you have added counter-party risk which is the risk the other party in transaction will have the ability to actually pay you, which defeats the best thing about gold and silver. Unlike an account at a bank which is both an asset and liability to the bank and every other financial instruments man has created in history, has this feature. So the answer is just say no these similar yet exotic investments. Don't get greedy and focus your assets on being exposed exclusively to physical or physically backed gold and silver primarily. You will sleep better, have 90% less stress and do much less work doing research and keeping up to date with your investments. You don't have to be short-term trading and generating taxable transactions that erode the value of your accumulation of big profits.
   
   So stay focused on the prize and the underlying reasons these events are occurring, not the world's various misinterpretations and uninformed panics in reactions to events you will already understand.
   
   
8. The main difference between gold and silver is that silver is usually within one year of being mined consumed in industrial uses. Gold is mainly used only in jewelry and electronics but most is hoarded in order to store wealth. Therefore unlike Gold most silver it is consumed every year instead of hoarded like gold is. Silver is therefore a precious metal with a store of value quality like gold but it is also primarily an industrial metal. That gives it an inherent useful value in growth industries like cell phones, computers, solar power, medicine, production of chemicals.
   
   The only risk in that is silver is then more exposed to severe downturn in the economy than gold. The total silver available in the physical silver market is only about $50 billion versus the total gold market that now exceeds about $8 trillion and that fact alone is why Silver is so much more volatile in its trading. Notice from the numbers just quoted above about the total market size of the silver market is only one sixteen the size of the entire gold market.
   
   
9. The average historical gold to silver ratio is approximately 15 to 1. The current gold to silver ratio is around 45 to 1. In other words, it takes the value of 45 ounces of silver to equal the value of one ounce of gold. We think the gold to silver ratio will eventually return to approximately 25 to 1 which is a very conservative relative estimate of others who expect that ratio to fall to 10-15. That reversion to a mean which would just by itself, make silver worth approximately $70 at today's gold price of $1750. That is also why since we think gold will eventually reach $5000 per troy ounce, our target for silver is then $200 ($5000) divided by 25). This could take 3-4 years to occur but could occur in the next two years.
   
   
10. Since World War II, the US government has sold over five billion ounces of silver and currently has no reported stores. They probably have one for the military but they won't release that information and it wouldn't be that significant anyway. The US government had billions in ounces because we used to literally have silver dollars that were made of silver but removed from circulation. Now that vast stockpile is gone and the supply demand equation has changed dramatically.
    
    
11. The Gold and Silver Exchange Traded Funds (mainly GLD, IAU, SLV SGOL AGOL PHYS, GTU, CEF) and more recently in new ETF's and even bank savings accounts denominated in gold in Asian countries like China have democratized precious metals investing to the average investor like never before because they didn't exist. There are a new staggering number of potential new investors in precious metals worldwide. This includes worldwide now China, India, Brazil and Russia. Combining those facts with how much easier these investment vehicles have made it purchase, own and sell own precious metals with much more reasonable expenses for commissions and storage fees. Now for the first time when the golden mean process is occurring and unfolds, small investors worldwide can purchase exposure to precious metals quickly, cheaply and don't have to worry about delivery, storage and a higher annual expense for storage.
    
    Most importantly this has made it much, much easier for retirement and tax deferred accounts to purchase and precious metals much more easily. Basically for the first time you don't have to use a precious metals dealer or futures broker. Anyone with a regular brokerage or IRA account can easily and cheaply get exposure to gold and silver. This increase in demand from new investors is removing almost 40% of new current production in silver and probably 20% of all new gold mined. Today the physically backed silver ETF's hold over 50% of the deliverable bars of silver off the market. That is a positive as long as investors continue adding to their holdings.
    
    
12. The exchange traded funds more importantly have opened investing in gold and silver to traditional stock, bond, and pension fund institutional investors to acquire significant positions in gold and silver over time without going through the futures markets. These are the real players who move financial markets and probably control a hundred trillion dollar equivalent of buying power worldwide. If institutions that only have 1.5% of assets increased that exposure to just 5%, prices would have to soar higher by 300% higher. If they switched more other assets and increased precious metals exposure to just 8% of total worldwide investable assets under management into gold and silver, the prices could potentially go up 500%. This is because the total gold and silver held worldwide is only about $8.5 trillion and worldwide investable assets in other investments like stocks, bonds and commodities is a staggering $225 trillion so even a move of a small percentage of those assets into the existing precious metals markets.
    
    The last phase of this market is actually somewhat predictable. In the first years of the 1970-81 bull market, gold and silver rose over four hundred percent. More importantly then in the just the last two years of 1979-80 bull phase, it shot up another 900%. This move by institutions and individual investors very late into the bull market, worldwide will produce powerful gains in prices! So ask yourself if this is an opportunity that only can occur every twenty to thirty years I better no miss it! It could be a very long time before the next time it occurs, so we're not waiting and missing this one to wait for the next one!
    
    

Mark Thomas
Higher Gold Prices.com
www.highergoldprices.com

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