Your Gold and Silver Questions – Another Gold Record

Welcome and thank you to all the new smart, savvy and contrarian investors to my substack. Most North American investors are missing out on this huge opportunity in gold, please share this for their benefit and consideration.

Thank you for your questions on gold and silver. I surmise by the low response that many of my own readers are still not or under invested in precious metals. I hope this is not true as right now I see the biggest opportunity ever with precious metal stocks. And I have witnessed and invested through three major bull markets.

Some call this current market a gold anomaly and it is certainly different. In the past, North America investors would be participating in this bull market at a much higher level now. Just a recently as 2020 they jumped into that short term bull move. However, it is actually this severe under valuation of gold stocks relative to gold that brings the current huge opportunity. And in silver to a degree as well.

Questions – no particular order and some questions were much the same so I combined a few.

1- Isn't it true that as a person you first have to fully realize the value of money in order to realize what gold actually is? Isn’t that a huge task to fully realize in our modern, busy and complicated society?

A good one to start and I agree that few understand it. The easiest and most obvious observation is gold has a long history of thousands of years being used as money. First coinage was in gold and later silver too. The problem is most find history boring and don't investigate it and learn from it.

The other obvious factor is from Central Banks. They hold money or currency as reserves to back their banking system. They only hold paper fiat currencies and physical gold. They don't own oil, silver, copper or any other commodity. They hold gold because it is money and the best of the bunch. Gold is nobody's liability and cannot be defaulted on or devalued into nothing. Gold has a long history of holding it's value and increasing against fiat currencies that have a history of losing value.

Unfortunately, very few investors know what Central Banks are doing, other than their interest rate announcements.

You always hear talk and advertisements about 'buying' gold. It should say 'saving' gold. I have been saving gold and silver for about 50 years and never once sold or departed with any, other than some as gifts. Giving it as gifts to friend and family might be a good way to get others on board. I save some of it every year and have now started to add some copper coins too.

I believe one of the reasons investors don't get this gold market is because so far it is totally driven by Central Bank accumulation in record amounts. With the Ukraine war, Central Banks saw that paper currency, the US$ can be weaponized. They see all governments around the world with out of control spending and deficits, piling on debt. The only way out of this will be devaluation of fiat currencies and their demise. Central Banks will keep on buying gold because they don't care about the price, only how much and how quickly can they replace their fiat holdings with gold. Under the new Basel III banking accord, gold is now a tier 1 asset, now treated as any other reserve currency.

2- I would like your take on the supposed 7800 tonnes of Gold actually being held in the USA. And the chance of an actual Independent Auditor doing the Audit. Sorry I don't trust Donald having a look to "see that 27 tonnes " (his words).

The U.S. reports the world's largest gold reserves totaling approximately 8,133 metric tons. I am not so sure Trump or Musk understand the gold market well, but they are certainly smart enough to figure it out. I doubt there will be an audit soon, this will be more like a visit and photo op to show yes there is lots of gold at Fort Knox.

I have little doubt that the physical gold is in Fort Knox, NY and Denver, but the real question is how much is lent or leased out. How many entities lay claim to the same tonnes. Is it even U.S. gold or gold held for Germany, France or the U.K. for example.

That said, Trump and Musk are on a rampage to examine audit and stream line all government departments so I expect they will get around to audit the gold. If the U.S. were to mobilize this reserve by revaluing from the current $42 per ounce to market prices, there would have to be an audit. Also Senator's like Rand Paul will have Trump’s ear to do an audit and I expect the odds are high that this happens in the next year or two, However, by then gold could be north of a $5,000 price.

On a negative note, we can see that the establishment is fighting Trump any way they can, so I expect there will be a lot of road blocks for an actual audit.

3 - What do you see as future potential price of silver and gold?

The longer the time frame, the higher prices will be which is the long historic trend. However in this current bull market, I am looking for gold between $5,000 to $10,000 and silver around $200. That said, market dynamics can change and I would than change or revise my expectations.

4- I had a few questions on the silver to gold ratio. The ratio of silver to gold is over 90. Historically it has been 15. Eric spotted at PDAC and do you agree with his thesis of gold silver ratio hitting 7:1 ?

I am not a big believer in the silver to gold ratio. It is just a number, like some use gold to Dow Jones Industrial average ratio. Gold and silver markets are often quite different with their fundamentals in what is driving price action. If gold hits $5,000, a 7 to 1 ratio would mean over $700 silver and I doubt we see that any time soon. Sprott is probably pumping his new silver stock etf.

Silver is mostly driven by industrial use and also by retail investor demand in bull markets. Retail demand is no where in sight yet, but I expect it to arrive in 2025.

The big industrial use is electronics including solar panels and so far there is no good or lucrative way to recycle solar panels so the silver is gone. What many may be surprised about, is silver in Tomahawk Missiles. The U.S. Navy reports that since 1983, over 2,300 Tomahawk missiles have been deployed in combat. And that number is increasing by the day. With the tomahawk missile silver content confirmed as 500 ounces per missile, that is 1.1 million ounces destroyed.

While interesting it means little in the scheme of things because there is about 900 million ounces of silver produced each year. The U.S use to have a strategic silver reserve and if supply gets tight, the U.S. might build up a reserve again that would help bolster prices.

The other big supply factor with silver is recycling and scrap that is around 150 million ounces per year. This number would increase dramatically with higher prices of over $100 and is why I don't see silver going above $200 in this bull market. That said, if investment retail demand really took off, it would be the only thing and major event to drive silver higher, above $200. It is possible, look at Bitcoin

5 - Eric Sprott has taken major positions in numerous silver penny stocks. Do you recommend any silver penny stocks?

I believe it is early in the cycle to buy a lot of penny silver stocks when producers are still such a bargain. I do have Blackrock Silver on my list that is a good buy around current prices. February drill numbers included assays up to 23.47 g/t Au and 2,223 g/t Ag for 4,335 g/t AgEq over 0.31 metres within a 3.05 metre zone grading 225 g/t Ag and 2.41 g/t Au for 442 g/t AgEq.

I added Discovery Silver DSV to our list in 2024 based on their large silver resource at their Codero project. Ironically that stock has more than doubled this year based on buying a gold mine from Newmont.

I plan on adding more junior/penny silver stocks later this year.

6 - What is your favorite silver and gold stock? And Can you list your top 3 silver producer picks and top 3 silver explorer picks to own now before the silver price breaks out?

This changes as prices and fundamentals do. Right now my favorite gold would be B2Gold based on the low stock price and strong production growth this year with increased production at their Fekola mine and the Goose mine coming on stream. I did have Calibre Mining as about the same but they got bought out by Equinox recently.

My favorite silver stock is AYA Silver because it is a pure silver producer and will see about a 3 fold increase in production this year. Next would be First Majestic Silver AG because the stock price has really lagged. For a 3^rd silver producer pick, my other recent ones have moved up a fair bit so I am considering buying Avino Silver ASM again.

Silver explorers would be Blackrock Silver and I am following and like Visla Silver. However, I mentioned it is a little early in the cycle so will probably look at more of these down the road. Right now there are better deals in advanced junior gold explorers and developers.

7 - What about silver ETF? Silver stock ETF's

I have always like Sprott's Physical Gold and Silver etf 'CEF' . Because it is half silver and half gold, it gives a balanced approach and I am confident it is backed by physical.

Sprott just launched a physical silver and silver miners etf, NASDAQ:SLVR. These guys know their stuff and always a good move to go with Sprott. That said, they have about 50 silver stocks in the etf, mostly Canadian ones. I feel I can do better picking the 7, 8 or so better plays.

I also like Sprott's Physical Silver etf TSX:PLSV. I prefer to hold the physical metal but as a pure play silver etf compared to 50/50 'CEF', this would be my pick.

But again, I think a lot more leverage owning the silver miners.

8 - Does anyone fully understand what would force the hand of buyers to want to invest into junior gold? But what must happen for this to happen?

It is a well known historic trend where money simply moves down the food chain. First the large and mid size gold producers move up in price. This is the phase the market is in now. Currently many of the producers are still cheap and undervalued so lots of room for more money to come in here.

As I have noted, very little investment fund money has come in here yet. The last bull market, Buffet bought Barrick Gold, there has been little news of big players buying gold stocks. Recently, Newmont, the largest North American gold miner, trades at roughly 13 times its earnings, while rival Barrick Gold Corp. trades at 8.8 times earnings. Both are well-below the average 25 times for the S&P 500.

Next money comes down and buys small producers, mine developers and juniors with advanced projects, proven gold in the ground. There has been a little movement in some here, but not many ships have risen yet.

Finally as the above two sectors see large gains, money moves down into the junior explorers.

There is no set time frame or speed how and when this happens, but you can observe each phase. So far in this bull market, the stocks have been slow to react. I thought going over $2,500 gold would start to see action, but there was very little. So far the gold rally has been driven by Central Banks and Asian investors. North American investors are still on the sidelines.

This is the popular VanEck Senior Gold Miners etf 'GDX,. You can see these gold stocks in the GDX are struggling to get back to 2020 highs when gold went to $2,000. Also note there has been no increase in volume in the past 5 years either.

I believe the money flow could really start picking up speed with equity markets and Crypto tanking. I expect to see a move into the little junior explorers later in 2025. You can watch the TSX Venture index to know when it is starting. As I have commented, I want to see the index go over 660 as step one.

Today gold is breaking to new highs, pretty well hitting my $3,000 magnet. In another observation, in previous big market sell offs, gold also corrected because investors sold their gold and gold stocks to meet margin calls. This is not happening this go around because North American investors own very little gold or gold stocks to sell.

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