Silver and Gold Fear: How Scared Do They Want You to Be?
G. Joel Chury

COMMENTARY - - It's unclear as to what gold and silver bugs have to complain about recently. The market has given them two, count'em, TWO big discounts with which to start buying in with both hands this year, and yet the recent kaboom in silver prices from a couple weeks ago has many heading for the hills and sinking their chances with the bonds and dollars. Sure, the headlines haven't been friendly to gold and silver lately, especially when all one sees is one of the biggest drops in ten years. But, what these headlines should be reading is "SILVER AND GOLD, NOW ON SALE (for a limited time only)!" What's to complain about?

It's becoming more acceptable these days for financial advisors to suggest bulking up your portfolio to contain at least 5%-10% in silver. If you're not at that percentage, now wouldn't be a bad time to reconsider and inflate your position. In times of turmoil, it's a nice hedge. In the unlikely event that the economy turns itself around and faith returns to the markets, then the remaining 90% of your portfolio will be your top performer... so win-win. As Dr. David Eifrig of DailyWealth states, "Just like I wear my seat belt while driving, I own silver and gold - just in case."

But, if you're a believer in precious metals already, then this advice isn't new to you. What may be worth noting is how much trouble you might be having convincing those that you care about to take such precautionary measures. It can be difficult to prove your stance on gold and silver when the short-term snapshot looks so unappealing. Perhaps you're being ignored for your contrarian streak, or because the world hasn't fallen into total chaos as you've warned. Alas, we cannot forget the rise from the drubbing silver took in April to its $42 high in August. Like when Rocky wouldn't listen to his trainer Mickey Goldmill, silver just won't stay down!

On the other side, is gold, which was also savagely roughed up by the fleeing hoards, two Fridays ago, but yet it continues to have its upside. From here on out through December, gold demand will be aided by the traditional Indian wedding season. Perhaps the parents who are still looked upon to provide a modern day equivalent of a dowry are a little more thankful than most North American gold bugs at the latest price shock. What gold holders in the Western Hemisphere need to do is to see the glass a little more full, and utilize the buying opportunity while they can.

Instead, we're being inundated with messages of doom and gloom preying upon what holders of silver and gold fear the most. So, contrarians beware, because the media won't be letting up any time soon. If it's not your stocks you should be worried about, now it's your gold! In a now much-circulated internet video of a misinformed CTV News Reporter in Calgary, the message that somehow gold is unstable because "some investors are worried about what gold is backed by, and whether it's backed by anything at all," circulated. All laughing aside, we need to be wary of these types of messages that can slip through. Funny how today's rebound for gold hasn't been covered as widely.

So, going forward, gold and silver holders will be tested, and it will be up to them to see what kind of resolve they really have. If they feel that gold and silver aren't battling inflation hard enough, they can try their temporary luck on some of the ultra-short ETFs like ProShares UltraShort Financials [SKF - NYSE] that tend to make large gains when everyone else is depressed. It's the kind of hedge that trader Alessio Rastani of BBC infamy perhaps is talking about when he speaks of dreaming about recessions. The fact of the matter is that Rastani did us all a service by making us scared, if we weren't already. Now that mainstream insiders are pushing the panic button for us, now may be the time to get back to convincing your friends and loved ones to do something about protecting their wealth... and buying discounted gold and silver isn't a bad place to start.

G. Joel Chury

Disclaimer: The author of this article does not hold shares of any of the ETFs mentioned in this article.

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