Political Metals

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With gold and silver gradually heading south since leap day, many PMs investors are beginning to get cold feet.  Then we have, over the weekend Charlie Munger, Berkshire Hathaway’s No.2 commenting that “civilized people don’t buy gold”. Not surprising - why would anyone bother since “gold is a barbaric relic” anyway.  And with Bill Gates saying he’s in the same camp with Buffett & Munger, are we missing something?

Today, GATA posted an “encouragement from Embry and Sinclair”, while Jim Sinclair wrote in his “Answering The Cries For Help” email despatch:

Today has been interesting in a perverse way. I have heard from every gold short who knows my name. I have heard from every weak gold holder that knows my name yelling for help. This time I cannot answer all the incoming communications. Nobody could.

A month ago I got over 3500 incoming emails in less than three hours. The shorts exulting by email really cannot expect an answer. Even the weak gold and frustrated gold share holders cannot expect me to assuage their pain one at a time. ..

It sure does look or sound scary out there. If I were a PMs investor, I’d probably be among the first to heed Sinclair’s advise “If you cannot stand the heat you must get out of the kitchen”.

But if you’re not investing in gold or silver, merely holding them as a form of currency, there’s really no need to panic. Take a minute to study the chart below. It puts things into perspective. And while you’re at it, try to see if you can spot a bubble or two!

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Perspective: The BIG Picture
Mouse over each bar for details. Click on bars for data source.

Sources:

• Bank of International Settlements: Amounts outstanding of OTC derivatives
• Wikipedia: List of countries by GDP
• Bank of International Settlements: Domestic Debt Securities
• The World Bank: Market capitalization of listed companies
• Bank of International Settlements: International debt securities - all issuers
• U.S. National Debt Clock
• Wikipedia: Economy of the United States
• World Gold Council: Investment
• Wikipedia: Economy of the People’s Republic of China
• Wikipedia: List of countries by oil production
• Wikipedia: 2011 United States federal budget
• Gold-Eagle.com: Silver Revisited
• Yahoo! Finance: AAPL
• U.S. Department of Treasury: Current Report: April 30, 2012
• World Gold Council: Gold Demand Trends 2011, Pages 22
• World Gold Council: Gold Demand Trends 2011, Pages 21
• The Silver Institute: Supply & Demand, Silver Production
• Kitco News: Thomson Reuters GFMS
• Jason Hommel’s Silver Stock Report