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Why I’m still buying gold (and silver) after a 10-year bull run

ViaMat Offshore Gold Storage

September 21, 2011
Auckland, New Zealand

We’ve written before here at Sovereign Man that as long as the public is not in precious metals in a big way, it’s hard to see that the market has begun topping out.

Yes, gold has been in a bull market for more than 10 years. This is virgin territory as far as bull markets go. And yes, gold is up about 6-fold, from under $300 to hovering around $1,800 an ounce.

But, in every corner of the world it seems the public at large are SELLING, not buying gold.  Between the two of us, in our travels over the past 12 months, I think Simon Black and I have pretty much covered the entire globe.

Everywhere we go, we see pawnshops, jewelers and new specialist gold-buying companies, set up to buy scrap gold from the public, doing just that.

I’ve seen it in the Philippines. I’ve seen it in Australia. And just today I saw it here in Auckland, New Zealand.

The New Zealand version even came with a typical Kiwi marketing pitch; the message on the side of the gold-buying booth at the local shopping center I visited in suburban Auckland this morning declared that by selling old scrap gold to them, “You’ll be helping reduce the environmental impact caused by mining raw gold.”

I firmly believe we’re still in that that phase of the gold bull market where the early gains have been made, but the smart money is still buying.  And they’re buying it from the public, who are selling their old gold jewelry and scrap gold to companies such as the one operating this booth in Auckland.

These companies sell the gold on to the big gold refineries. The refiners melt the gold down, and turn it into bullion bars and coins for investors. It’s ironic that the same guy who sold Grandma’s jewels today will buy them back in a few years in the form of a bar or coin, albeit at a much higher price.

Something similar is happening in the silver market. Recently, I bought some physical silver bars in Hong Kong from my usual dealer (www.swiss-investors.com). This may surprise long time readers as I called the short-term top in silver a few months ago, literally to the day.

A short-term top, however, is simply that. I still expect prices to rise in the long-term, and that’s why I buy physical.

Ultimately, until all the booths in the suburban shopping centers of Auckland, Sydney and Columbus, Ohio are SELLING gold and silver to the public, I don’t think the top will be in for this precious metals bull market.

To all those, including many of my closest friends and family, who HAVEN’T yet bought gold or silver, thinking they’ve missed the bull market, I say, “It’s not too late to buy.”

Yes, you should expect a great deal of volatility. Greece’s imminent default, for instance, may spark a deleveraging process and compel institutions to liquidate whatever they can to cover margin calls and redemptions.

Over the long-term, however, $50 here and there, or even a few hundred dollars, will seem trivial when compared against the potentially thousands of dollars in gains that gold could see in the coming years.

With the mess the world is in, and all the major fiat currencies in a race to the bottom, there are no good currency alternatives… and precious metals remain one of the few places to seek shelter.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

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About the author: Born to a Danish father and British mother, in Dar Es Salaam, Tanzania, Tim Staermose has led an international life since the day he was born. Growing up, he also lived in Egypt, Denmark, and Singapore, before eventually settling in Australia, where he completed his education and took out citizenship. Since then he has also lived and worked in Hong Kong, and Manila, Philippines, in the field of equity research — both for a bulge-bracket Wall Street investment bank, and for an independent investment research firm. Today, when not traveling the globe looking for investment and business opportunities for the Sovereign Man community and catching up with his diverse, multinational group of friends, he divides his time between Hong Kong, and the Philippines.

Comments on this entry are closed.

  • http://www.facebook.com/internetliving Marco De Veglia

    Tim, the precious metal dealer you recommend is quite expensive. My US based online precious metal dealer (www.providentmetals.com) is quite cheaper and even expensive ones based in the US are cheaper. 
    Why do you recommend them?

  • http://www.facebook.com/internetliving Marco De Veglia

    Tim, the precious metal dealer you recommend is quite expensive, compared to the US based one I am using and even compared to more expensive ones I have used (still US based). Why are you recommending this dealer?
    Excellent article, however. Until barbers and taxi driver aren’t speaking about buying gold and silver we can still buy.

    • Staermo

      I am not “recommending” any dealer.  I simply mentioned where I bought bars recently.  Yes, their premiums are higher than some on silver bars.  However, the bars are brand new and shipped directly from the refineries in Europe (Umicore, or Herreaus) and you can cross check the serial numbers on the bars you buy with the refinery’s despatch list, and make sure of the bars’ provenance.  Second-hand silver bars from any old dealer are not something I would buy.  I have seen them filled with lead / tungsten before.  Why take that risk.

  • Striptees

    You’re saying there are no longer any safe currencies. But what about the Singapore dollar? The country shows as being fiscally sound by Weiss Ratings and has received high marks nearly everywhere. Might this be a temporary safe haven for one’s fiat?

  • Carlosjackalvsjasonbourne

    Hi there, Simon. i’ve been reading your columns the past 2 years but it is only now that i was able to log in using my Yahoo email address.  I enjoyed your past article about Daet, Camarines Sur in the Bicol region.

    By the way, if you wish to have assistance for you transactions in Northern Luzon, or in my native Eastern Mindanao in the Southern Philippines, you can pay me a visit in Manila.

    I will soon be having my own financial investment research and portfolio recommendation business here next year.  Your works have been a great inspiration.

    MITCH, City of Marikina
    aka Jason Bourne of Manila

  • MarkET

    Tim, I recently approached a kiosk similar to the one pictured, only in SE England. I wanted an indicative buy price on a 1 ounce Krugerrand. I was somewhat taken aback to be offered £700 per coin with gold at £950 spot! Also, he was only interested in bulk, ie 20 oz minimum!-at a 30% spread!. Once he realised I had some knowledge, his attitude did improve-tho not his offer! He stated his main interest was in low quality, bulk gold jewellery items, for melt…meanwhile, I lol’ed myself all the way to my usual Dealer-with 4% spreads!
    …neither monetary metal is cheap any longer, but theres still time for them to get *a lot* more expensive!

  • Sgraham

    Since you’re in NZ, I wonder if you know anything about the NZ mint. Is it trustworthy? Do you see any advantage in buying physical gold/silver from them as opposed to the big ones like goldmoney, for example? Also, one thing I don’t quite understand. Are coins such as the kiwi gold coin less valuable than krugerrands, kangaroos or American eagles? Thanks. 

  • Donald

    I recently returned from a trip to Kauai (for work, gotta love it) and I grabbed a local paper.  Skimming through it at home, there it is…
    We Buy Gold
    Robert’s Jewelry
    They want it, everywhere.

  • Asdfasdf


    I’m in Auckland too, I live here for some time. I’ve become a sovereign man like you Tim. If you’d like to meet within a few days, I can promise an interesting conversation.

    Please reply to this message if you’re interested, we can get a cup of coffee in Queens or something.

  • Suckle

    I was just in HK buying more gold coins. I walked in the Bank of China, plopped 50G down on the counter and said I want to buy some coins. They had Maple Leafs and Pandas. Try that one in the US! LOL!

  • http://pulse.yahoo.com/_Q5Z627ECFCCR2YDH72DGRWB7VI chester pugh

    I think that the dollar
    will be rising for the next several months.  The biggest problem is that at the
    same time, gold and silver may tank, causing many to abandon their holdings only
    to wake up one morning to find out that the government has devalued the dollar
    50% (or more). At that point, it would be too late to go back into precious
    metals since the largest move would have already been made

     Of course the government and those
    in debt would benefit from such a move, but those in cash unhedged by gold would

     P.S.Quite honestly, I would not be
    surprised if the above scenario is being orchestrated by the powers that be to
    steal the wealth from the masses. Just as they did in the 1930’s when they
    confiscated gold at one price and thereafter raised it to affect a dollar
    devaluation. They won’t need to confiscate it this

  • http://www.facebook.com/people/John-Opoku/100000248811219 John Opoku

    I am pleased to make this offer of our product under the penalty of
    perjury and with full co-operate and legal responsibility to the
    following terms and conditions.I have some kilograms of alluvial Gold in
    a dory form which I have decided to sale to a prospective foreign
    buyer. The specification of the Gold is 22+karat at minimum purity of

    In the event you are not interested in the purchase of the
    alluvial Gold, please be kind enough to forward our contact email to a
    Gold dealer or refiner. As our Agent we are ready to give you 10%
    commission of the total purchase if you can connect us to a prospective
    gold buyer.

    I am expecting your prompt response, so that we can discuss about the sales and purchase under a secured and workable terms.

  • Drocketman2000

     What an idiot he is!!  You buy REAL money, gold and silver, with the fiat currency with the knowledge that one very ugly day, the fiat currency system will collapse, and then you will be left with something of value to trade with others for the things that you need to survive with.  Things like food, weapons, ammo, clothing, shoes, seeds to grow your own food, etc.
      Anybody who has read my paper What is Money? from way back in 1996 or so and understood it, will agree with me completely. 


    • Randysux

      Oh randy
      You fool…

  • David & Katsue Lukasiak

    In Japan here. Gold seekers come to the door during the week asking to buy gold earrings-necklace-rings at least a different person comes once a week.  Furthermore, looking for diamonds too.

  • Sheridzma

    You can buy your gold at this website http://www.mibd-gold.com/en-us/ at least in there the gold is being bought tax-free since HongKong is a freeport country.  Plus, if you intend to sell those bars again for profit, you can simply let the gold stay in the company even for years with no storage fee whatsoever, and then sell it back to the company.  The bars are secured and insured.  

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