first majestic silver

Got Gold? Might Be A Pretty Good Time To Diversity!

January 20, 2015

I have been in this business for close to forty years.  I am in awe that the outlook for gold has never been more obvious while those with separate agendas continue to pursue a path to confuse and misdirect the public into believing that gold is not money and deficit spending is absolutely nothing to be concerned with! 

In fact, concern has no bearing on the mind of our leader as he openly brags and takes imaginary credit in the delusional belief that he is decreasing deficit spending.  All this at a time our country’s debt has risen from $10+ trillion to greater than $18 trillion in the six years he has been President.  But then again, why should he concern himself with a trivial figure like $18 trillion when he should be directing his attention to the massive $100-$200 trillion necessary to fund future entitlement obligations.

Maybe he and past Presidents have put a little too much faith in the taxable earning power of the world to retire this debt with anything other than the creation of more worthless paper which the privately owned Fed is more than willing to supply.  I find it very interesting that a private entity now owns in excess of $4 trillion in US Government Bonds, which supposedly is a liability of the US Taxpayer, paid for with paper created out of thin air.


To possess indirect control of the “World’s Piggy Bank” is an awesome responsibility.  The appropriations made over the last century in conjunction with the interest rate manipulations are largely responsible if not directly responsible for the mess the world finds itself in today.  Those on the ultimate receiving end of the $trillions which have been quietly doled out to those on “The Favored List” have fared exceptionally well.  Those on the “not so favored list” have been the recipients of just enough “monopoly money” to feed their addiction forcing them to stay in line being good little addicts assuring access to a future fix.

In the end, those on the “not so favored list” have two choices; die or break the addiction!  This is where I believe the future of gold comes into play!


The desperate and fraudulent gold trading practices in the paper futures markets over the last several years, in my opinion, is the final desperate attempt by those who recognize their century long control of the world’s printing presses is coming to an end.

On the other side of the equation, which historically has been those on the “less favored list,” you have entities quietly accumulating large quantities of physical precious metals funded with the ever expanding growth of fiat paper cash flow from consuming nations.  They too have an agenda of their own.  I believe the time is close at hand where their agenda will be brought to light turning the world’s existing financial structure upside down. 

If my thinking is correct a new World’s Reserve Currency is about to be born which, through the use of man’s creative genius, will be backed by gold establishing a medium of exchange that cannot be created out of thin air by and for the benefit of a very private and select group simply by pressing “enter” on a computer keyboard.   

This is a game-changing event which will have repercussions the vast majority of the Western World’s population cannot even begin to comprehend until it hits home bursting the “entitlement denial bubble!”   Many will suffer as a result of Countries being forced to rein in their out of control deficit Government spending. 

The scenario individuals must face deals directly with the fact that this deficit spending has created a very valuable source of cash flow and income to the corporate world.  An income bought and paid for by funding both sides of an election where the winners graciously award these corporations every desire they have at the expense of the health and welfare of the taxpaying citizens. 

Losing the ability to fund corporate balance sheets by simply being on the ultimate receiving end of this fiat paper takes what was once considered a very valuable asset and turns it into an unfunded liability where the once iron clad guarantee of “The Full Faith and Credit of The U S Government” just doesn’t carry the “swagger” it once had anymore!  Where does that leave those whose lives and families come face to face with the stark reality that they were misled into believing that a “helping hand” and “entitlement” are the exact same thing!

Those who for years have accepted payment in Dollars for their goods, services and depleting natural resources have come to the point where they realize that paper backed with the four word guarantee of “because I say so” is no longer an acceptable median of exchange.  You might say that this is the inevitable outcome when a nation outsources the production of the goods and services directly responsible for that nation having risen to becoming a world power in the first place.


As each day passes I become more engrained in my belief that a default in physical gold deliveries to countries and individuals is the trigger which will set in motion the eminent demise of both the Dollar and The Fed where Governments will be forced to live within their means just like the subjects they govern. 

As Countries like Germany are denied access to repatriate partial quantities of gold, supposedly kept in the US for safekeeping, one is forced to question whether “Their” physical gold, or for that matter, any gold at all is still in the vaults.  The answers to these questions, and many more, can only be found as a result of reputable third party audits or outright physical delivery defaults.

In the end, there can only be three options associated with the presence of physical gold in the vaults with a fourth scenario attached to the third option which could multiply the severity of the issue many times over.

  • All physical quantities of gold are present and accounted for safety tucked away in the vaults where it is supposed to be;
  • Partial quantities of gold remain in vaults;
  • No gold in the vaults;
  • Multiple paper claims exist on every ounce of gold which supposedly is or most likely “was” safely stored in the vaults;

No matter how you add it up the only piece of good news to be found exists in option one.  That is of course if you classify gold that is guaranteed to be safely stored in the vaults good news when it is finally proven to actually exist in the vaults.

There is a fifth option but who would believe there are greater quantities of gold in the vaults than what is stated to be there?


Many investors with a knowledgeable understanding of the impending train wreck which awaits those who have overindulged in the “Kool-Aid” have been short the stock markets for all the right reasons while being wrong with their timing.

As long as the Dollar reigns supreme backed by the Fed’s ability to indiscriminately print trillions in worthless paper, which they gift to those who are on their preferred bailout list, shorts are fighting an uphill battle where they must have impeccable short term timing in which to profit.

As long as physical quantities of gold exist to be purchased and delivered in the open market it is important to understand that the game will go on as it has been played for decades by both sides. 

As we approach the long-term end to the “game” one side will pound paper gold prices every chance they get to “prolong the façade” which has enabled their families to amass unprecedented wealth and power for decades.  The other side is also aiding and abetting in the weakness as this manipulation allows them a simple game plan in which to acquire the remaining quantities of gold in circulation as the weak hands throw in the towel giving their gold to those who want it at prices they cannot even begin to comprehend! 

The pathetic irony to this strategy is the fact that the other side can accomplish their ultimate goal, of acquiring all available physical quantities of gold in the open market, where the profits from being short the paper market are used to fund their physical purchases.  

When the day arrives where the gold window is closed and there are no additional quantities of gold available for delivery the game will be over and there will be a new sheriff in town with a new set of rules.  The “Kool-Aid” will be gone and the harsh reality that all is not as one has been led to believe begins to set in and “The Crazy Conspiracy Theorists” are proven to have a point! 

Those who supply goods and services to others will be paid in a currency backed by an unprintable asset of wealth versus an IOU guaranteed by a Government or Governments who have no possible solution to redeem this paper with anything other than more worthless paper and empty promises.

Gold will no longer be manipulated in a gambling casino by those whose fraudulent trading practices should leave the manipulating participants with plenty of spare time to atone for their deeds.

If my thinking is correct, those who have the gold will have great flexibility in selecting a conversion price in which they choose to back their currency.

Would you prefer to accept as payment for your goods and services, IOU’s from a government creating fiat paper out of thin air or a currency you can exchange for gold at let’s say the equivalent of $10,000/ounce? 

Does it really matter whether gold is priced at $1,200/oz or $10,000/oz?  All one must do to understand that gold will rise dramatically is to reflect upon history.  As Germany, Mexico, Russia and Argentina were forced to face their financial issues, which were miniscule in relation to the debt issues of today; gold prices and inflation exploded. 

A wheelbarrow of German Marks to buy a loaf of bread is a good example of how none of these Countries had any input as to the price of gold in the aftermath of the collapse of their currencies.  If it took a wheelbarrow of German Marks to buy a loaf of bread; how many wheelbarrows would it have taken to buy an ounce of gold? 

In the end, the cycle begins again with a whole new table of players and a brand new deck of cards where History proves a long term predictable outcome is destined to repeat itself all over again generations down the road!


Kind of makes one wonder why Obama and the Republican Congress were forced into giving the gambling addicted banks further access to taxpayer and depositor capital without giving depositors so much as a simple explanation.  Seems to me the answer may be found in the strong probability the losses are already on the books and our elected officials are quite concerned fearing a repeat of the events in September of 2008!  It is obvious that our elected officials learned nothing about the events which led to the debacle in 2008 and it is very clear as to where their loyalties “lie.”  Is this the “beginning of the end?”  Do you think the long term paper games played with gold and silver have anything to do with the most recent embarrassment from Congress?


The derivative positions surrounding gold, silver, oil and interest rates in the paper futures markets have rendered each commodity completely out of balance with the physical markets and what should be “the real world.”  I believe this latest desperate act from Congress is a signal that all is about to change and massive losses will result from the forced unwinding of these positions.  This can only lead me to believe that our banking system is trapped on the wrong side of the trade where they demand to be bailed out again by those they have been robbing for decades!  This is the same strategy employed by certain other people as the threat and follow through of “give me what I want or I’ll shut everything down and make you the scapegoat” works every time as the other side folds like a “cheap suit!”


With the stock markets near all-time highs I know it is very difficult to separate rationality from exuberance.  History has a habit of repeating itself while doing so in extremes.  Not only do stocks and commodities rise and fall but who would ever have guessed that oil would plummet to below $50/barrel again? 

Who would have guessed interest rates would fall and remain very close to zero where individuals continue to loan and keep their money in banks after being sold out by a Republican Congress giving the casinos a green light to add insult to injury again. 

You must fully understand that your hard earned money deposited into the banking system, for safekeeping, earning you virtually no return, does not belong to you as it now belongs to the banks.  It is theirs to highly leverage and gamble away; if successful, they keep all the profit while making the depositors and a bankrupt FDIC responsible for the losses!  Remember Cyprus? 


With the Dow near all-time highs is it possible the Dow still has a leg left to the upside?  Absolutely!  In fact, as stated above, as long as the Fed remains in control they are calling the shots where the Media is falling all over itself to spread their propaganda.  

I believe the possibility exists the traditional stock market is setting itself up for a final blast to the upside.  I am not a big believer in technical analysis but an upside explosion will create one of the worst possible technical patterns the Dow could deliver, “a rhinoceros horn,” bringing about what most likely would be a completion and the inevitable end to the bull market which began in August of 1983.

Is it possible the naysayers who preach that gold will retreat back to $700/oz in the paper market will be correct?  Absolutely!  Do you think the demand for purchases of physical gold will diminish at those levels?  Not hardly, in fact falling paper prices continues to increase the demand to buy and own physical gold giving credibility to everything written above while constituting a direct contradiction to events and circumstances which traditionally surround falling markets where demand should disintegrate. 

On a worst case basis, gold trading at $700/oz would shut down many a producing mine which would then add further pressure on the delivery side of the equation guaranteeing higher prices down the road. 

If my thinking is correct, I believe the next two years is the timeframe which will bring about an end to the paper manipulation of gold.  The closing of “one door” being the purchase and delivery of physical gold will create opportunity as “another door opens” which will be an explosion in the demand to own precious metal equities. 

Even though there is obvious risk in owning securities in Street Name, I believe there will be a “window of opportunity” in which to make and cash in serious profit from owning gold stocks before this door quite possibly closes as well.  With mining stocks trading at all-time lows investor’s greatest risk may not be in the ownership of precious metal stocks but knowing where to take a profit.

Likewise, I also believe the traditional stock market, trading near all-time high levels, presents investors an opportunity to begin taking profits.  Whether an unexpected event arises causing the market to collapse from these levels or the events stated above must happen first to bring about an end to the bull market is irrelevant.  Taking profits from a sector that could have much in common with Humpty Dumpty is a strategy I would much prefer to deploy with a choice at these levels versus a decision made in panic in the event all is not as it seems.

This might be the classic time to sell high and buy low!


“Nothing stirs the emotions and desires to own or possess anything as much as the act of being denied the right to do so.  When the day comes that this applies to physical gold, investors will panic to own it more than ever…and willing to pay whatever price is necessary to satisfy their new obsession!”


As always, my views on the subjects covered in this article are my own personal thoughts and opinions.  It is up to each of you to do your own homework as in the end your opinions may vary from mine.

For those of you who wish to know more about my thinking and the strategies I am employing to protect my family, including investments we own, I invite you to join my Free E-Mail List where I share this knowledge.  To sign up just reply to the e-mail address below and ask to be added.  All information always has and will continue to be confidential.

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Mike Hoy is a graduate of the University of Nebraska with a business degree and a minor in economics.  Upon graduation in 1978 he was employed as a broker with a series 7 brokerage license.  Today, Mike is an investor who occasionally writes an e-mail update where he shares his favorite stocks and his opinions.  Occasionally Mike will take on companies as a public relations consultant.  

The purity of gold is measured in carat weight.
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