Will the metals still work?

With all that is bad in the world today the goal of any investor should be;

1. To preserve existing wealth

2. To grow and build new wealth

This is a daunting task to say the least. I could go into a long diatribe here describing historic methods of preserving wealth but the fact is they all lead to one. Precious Metals.Gold and silver have and will continue to serve as the best wealth protection vehicle. Then why have they gone down so much lately in the face of this extreme financial crisis?Well the fact is they haven’t!Paper or futures prices have been the sacrificial lamb of late. But dealers are selling physical bullion for much higher prices. The highest price I have seen is over $1,400 for an American 1oz. gold eagle and $35 for a 1 oz. silver eagle.This strange and wide deviation will soon come to an end. I believe the December Comex futures month will command so much delivery of the physical metal that shorts will have to default in what is termed “force majeure”.

Long contract holders will not get the physical gold, they will be paid in paper dollars whose value will become worth less and less over time. This annuls the objective of hedging a weak currency with a gold futures contract. Players will then rush to buy physical gold and silver in droves and will be shocked to find there is hardly any available and what is available has normally a two month wait period for delivery if you are lucky. The price will be then set by physical buying, which is already far above all time highs.Investors looking for protection against inflation and financial turmoil will be up the creek without any options except for one.Small bullion purchases will be available on eBay and select bullion dealers but for any size there will be no go.The only other option is to buy the shares.

The large cap equities offer tremendous value right now and will be accumulated heavily in the very near future. The prices will be driven two or three fold in fairly short order. Investors will not want to buy at such lofty levels so they will begin to look to the very hard to analyse junior and exploration companies. The good companies in this realm will easily see returns of 1000% and is some quality cases the sky is literally the limit.Many of the companies are trading below cash but more importantly they are virtually trading no bid. One company I hold which has a real project of fantastic quality and has provided great drill results lately with over 200m solid mineralization traded zero shares the other day. The volatility is unprecedented and these equities may in all likelihood come down further but to buy them in any size at all will drive the price up sharply. Just wait until people are actually interested in these.Please sign up for my free weekly newsletter where I don’t give company names but I do provide technical analysis and fundamental analysis for the precious metals sector. This is the sector to be in for the foreseeable future.

Now is the time to get into precious metals before the default, which will force so many others to jump on board.

Have a great day and most of all protect what you have.

Sincerely,

Warren Bevan

www.preciousmetalstockreview.com