A life event recently tested how strong my convictions are on the question of where silver and gold prices are headed in the next 12 or so months.
What happened is I received notice from a tenant of mine informing me he is not renewing his lease when it expires at the end of May.
As a landlord, I now have to decide if I want to try recruit another rental tenant or go ahead and put the house on the market and hopefully sell it.
Finding a buyer might take months and would also require me taking out a small loan to repair a wood rot issue.
But if I sold the house (which I inherited from my parents a few years ago), I would suddenly have a nice influx of cash. With these proceeds I could invest in more physical silver and buy more shares of mining companies.
Or I could rent the house for another 12 months and continue using the rental income to supplement the monthly family budget. I could put the house on the market next May or June (2015) and hopefully have it sold by next August or December.
The question of what I should do was in fact answered by where I think silver prices will be 14 to 18 months in the future.
If in the middle or latter part of 2015 PM prices are still roughly the same as they are today, I could still buy just as many ounces and shares as I could today (maybe more).
I would profit from 12 additional months of rent and forego the costly home repairs and other miscellaneous expenses incurred when you try to sell a house.
But there is also a potentially big risk I’d be taking by continuing to rent the property.
The risk of renting to another tenant (and not selling the property as fast as I can) is that the price of precious metals will surge dramatically in coming months.
If I sold the house in, say, three months and bought a a couple of safety deposit boxes full of silver (and/or thousands of shares of a PM stock at today’s low prices), and PM prices in fact soared after my purchases, I would significantly improve my net worth.
As readers no doubt are aware many PM analysts are calling for gold to reach $2,000 and silver to reach $30 by the end of this calendar year (nine months from now).
If this occurred after I’d invested my home windfall into precious metals this might qualify as a life-changing event for yours truly.
For example, such a development might allow me to pay off the mortgage of the home I’m living in. Private school tuition for our 3-year-old daughter, now out of reach, would suddenly be a real possibility.
Under this scenario, the fact that my tenant decided to not renew his lease might end up being an economic godsend as it could be the prompt that finally convince me to sell the house (and invest the proceeds in “real money”).
All of this background to make the point that this is no small decision.
So what, you might ask, did I decide to do and how does this relate to precious metals?
Last week - after much thought - I decided to keep the house and move forthwith to find another tenant who will sign a 12-month lease.
Keeping sentiment dead is a full-time job
Why did I reach this decision? Because I concluded that in all likelihood the price of gold and silver are going to be little changed when the next tenant’s rent expires.
That is, I concluded that 14 or 18 months from now I would still be able to acquire silver (and mining stocks) at today’s bargain prices, perhaps even at lower prices. And that I’m NOT likely to miss the rocket on any PM price lift-off.
What I’m actually doing is acting on what I’ve preached in some of my prior writings on precious metals.
In one of my last columns (written at the end of 2013), I opined that the price of silver almost certainly isn’t going to make any major and sustained move in the “short to medium” term, which I defined as a few months to a year or two.
As the above-described decision revealed to me, I still feel this way.
Recent events where The Powers That Be, the Gold Cartel or “The Bad Guys” once again dramatically attacked the price of gold and silver only reinforces the idea that I’m making the right call.
As everyone reading this no doubt knows, the price of gold was NOT allowed to rise above $1400 and the price of silver was not allowed to rise above $22. Both prices have, in fact, been pushed down (to $1300 and $19.85 as of this writing).
This price plunge occurred while the fluid and scary situation in the Ukraine was/is unfolding.
The recent price plunge also occurred in the absence of any (credible) encouraging economic news. In fact, plenty of negative economic events have been identified in recent months (these of course don’t tend to make the MSM story lists).
Despite these events, PM prices are about right where they were a couple of months ago.
This price activity, reeking of suppression, confirms my working theory that TPTB are NOT going to let PM “sentiment” progress even from “Atrocious” to “Terrible .... but a Little Better.”
As I wrote previously, the people who are manipulating the price of precious metals did so for reasons that, in their minds, are of supreme importance.
They took bold, audacious actions to kill PM positive sentiment and drive prices down (to protect the dollar as the reserve currency, keep interest rates lower to allow government deficits to be more easily financed, etc.).
And this was no one-time dive off a cliff. The program they unveiled a few years ago required CONSISTENT actions to keep prices under control (giving no potential investor any reason to bid up prices).
We’ve seen this program at work again in the last two weeks. When gold and silver began to gain a little positive buzz and started to approach key price levels, The Suppression Team instigated aggressive paper buying, selling, leasing - all the usual arrows in their quiver were employed.
After all the exertion that was required to slay “sentiment” the last thing the fixers want is for sentiment to be resuscitated.
Some argue that this or that “game-changing event” is imminent. This of course could be the case. The question then becomes how many months or years away is “imminent?”
On this question each of us has to make our own judgement, I guess, which is exactly what I’ve just done by refraining from going “all in” on precious metals by selling a house and using the proceeds to make a big bet that prices are getting ready to lift off.
In my final analysis, the best “known knowable is that the most powerful people and organizations in the world are going to keep the lid on PM prices as long as they can.
These people might not be able to control X, Y or Z variable, but they know they can control the price of gold and silver. Thus, they will.
They also know that nobody (that matters anyway) can, will or is interested in doing anything that might change the status quo arrangement that allows them to, in effect, determine the price of gold and silver.
In recent months, there have been some signs that a few international regulators might finally be asking some serious questions about “manipulation,” a topic that is getting a tad more attention in the mainstream media. One thought was such attention (and potential scrutiny) might force TPTB to alter their playbook or dial back their price-moving activities.
In my mind, this theory/hope has been shot down in emphatic fashion with the recent orchestrated move to again knock down PM prices.
I also think that when economic news begins to pile up that could be threatening to the dollar, the importance of attacking the dollar’s nemesis (gold and silver) becomes even more paramount.
So instead of bad economic news enhancing the “safe haven” appeal of precious metals, the opposite counter-intuitively occurs. That is, The Bad Guys recognize this possibility and act pro-actively to nip it in the bud.
Add it all up and I still believe my call that the prices of silver and gold will not be allowed to “break containment,” at least in the short and medium term, was the correct one.
Prices might be allowed to move up a little but won’t be allowed to break through key resistance levels. Then, for profit-taking reasons and wash-rinse-repeat reasons, they will be knocked back down again.
This “Groundhog Day” pattern will end at some point. The number of people on food stamps is going to keep rising, just as will the number of people on Social Security, Medicare, Medicaid, Disability, those who receive unemployment benefits, etc. And, oh yeah, Obama Care is just kicking in. If we think we are printing a lot of money now, wait 18 months.
Also, at some point, even CBS News, The WSJ and Reuters will acknowledge, “Hey, prices sure are rising a lot for us to be battling the scourge of deflation.”
That famous road where the can is being kicked will suddenly hit a world-changing dead end. My guess is that this giant thud will occur somewhere between now and the end of Obama’s second term.
Until then, we’ve all been given an extension on the Great Precious Metals Sale.
Even though I’m not going to sell my rental house right now and back up the truck, I should still be able to manage a coin purchase every now and then.
In fact, at the Rice house we’ve recently started a strict family budget - Bill’s micro-response to the macro-inflation that allegedly doesn’t exist. With some of my savings, I’ll still be able to add to my little stack.
And, for now, I’m keeping the house rent. Heck, we need it to make ends meet.
I hope I sell it next year. If I do, that will mean my gut is telling me that PM prices (sans suppression) are finally getting ready to lift off.
But for now the Suppressors are still clearly in control, doing what they do. Having murdered sentiment, Job One these days is to make sure it stays dead. And - witness the last two weeks - they are still clearly on the job.
Which is why I’m not overly concerned I’m going to miss out on some impending price surge. And why I’ve decided I don’t need to sell my house, at least right now.
One day I’m going to bet that house on silver. Just not today.
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Bill Rice, Jr. is managing editor of The Montgomery (AL) Independent. He can be reached by email at: bill@montgomeryindependent.com
Bill Rice, Jr.
Managing Editor
The Montgomery Independent
334.265.7323 (office)
334.315.2583 (cell)
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