Conclusions

I recently had opportunity to have a short discussion with an investor in Uranium and Silver. He said that everything he invests in seems to go down. He didn't understand the nature of the bear market. For certain we're in a bear market for equities, especially those in the mining sector.

Theory goes that inflation will float all boats, which is clearly proven wrong, and flies in the face of the facts. Assets don't multiply, only liens on those assets, which are derivatives. The more liquidity that you pump into the banking sector, the more derivatives you get, but you might not get price advances in assets such as mining shares. And, by any measure of inflation, asset prices have not advanced AT ALL since the financial crisis.

The great exception is gold. Gold prices have advanced in the meantime, according to its own mystery. Gold had been depreciated so much as an asset at one time, that it is still considered inadequate in price for providing a return in the mining sector. The gold mining subsector had gone out of its way in the meantime to destroy the investment case. And I mean quite literally kill the goose that laid the golden egg.

I simply don't believe the crowd of pundits who pound the table on the advance in gold prices and this is a harbinger of argmageddon. Its just a higher gold price, after all. You can see the foundations of an extreme mania being laid. Nothing else is good enough, just gold. Sheer madness. But if this results in a standard weight of gold becoming the benchmark in the financial sector, then so be it.

But the mining companies are not stepping up to the plate and providing a return to investors. The liquidity bubble in gold mining shares has burst for now. Share prices are likely to become limited to a trading range, given that derivatives are now the heart of the financial sector, the dividends you provide will be the key variable in determining value.

-F6