Early this year we suggested a 50% rise in Gold to $1860 – $1,920 into mid-year. Now, we see the Gold tsunami realizing an approximate 100% rise that will crest at $3,000+ into the middle of 2012, drowning any doubters in its wake. Below are a number of factors that support that view. Words: 1250

Those are the views of Goldrunner (www.GoldrunnerFractalAnalysis.com) as conveyed in his original article* which was edited by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!). Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Goldrunner goes on to say: The Gold Tsunami analogy continues, and it goes like this…….. 

“The Dollar Inflation psychology pulled back out into the sea, taking the price of Gold with it.  Those of a deflation bent ran amok on the naked sea bed for a bit, acting like the Dollar Inflation and Gold Price run was over. 

Suddenly, the new wave of paper currency inflation popped up on the horizon last week, and many Dow Stock ‘Crashers’ were mowed down with the early start of the tidal wave of Dollar Inflation and rise in Gold. 

Many ran back to the shore and looked back to watch as the waters approach the shore, but the tidal wave of paper currency inflation is just starting its acceleration that might wellpropel Gold much higher into the middle of 2012 than practically anyone thinks. 

Everybody can see the symmetrical triangle forming on the Gold chart, but few really believe the size of the move in Gold that is possible on this door step of the ‘Fractal Gold Cycle’ as seen in the late 70’s.”

The story of the developing gold tsunami will be remembered as the Paper Currency inflation gains speed and volume driving the price of Gold into the next more parabolic leg on the chart as the dollar devaluation accelerates in an attempt to deflate away the massive debts world-wide.

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Early this year we suggested a 50% rise in Gold to $1860 – $1,920 into mid-year (see here). Now, we see the Gold tsunami will realizing an approximate 100% rise that will crest at $3,000+ into the middle of 2012, drowning any doubters in its wake. Below are a number of factors that support that view:

1)    Last week we saw a sudden sharp change in market psychology as a group of Central Banks announced that they would provide liquidity to Europe.  The Fed announced that it would provide hundreds of billions of Dollars to the EU Central Bank in terms of low interest loans so the EU Central Bank could make loans to the European Banks.  This really amounts to the Fed printing new Dollars – a huge new round of US Dollar Inflation is starting. 

2)    This follows on the footsteps of the European Banks bundling up crappy assets into securitized bundles to present to the EU Central Bank as collateral for loans – sort of a “European Begging Bowl” move that smacks of what the Fed did back in the 2008 deflation scare for the US Banks.  That Fed “Begging Bowl” ruse led to massive US Dollar Inflation as the Fed printed somewhere up to 7 trillion Dollars over time.

3)    Interestingly enough, one source claimed that the European Banks need about $7 trillion this time – approximately the same amount as the US Banks back in 2008.  If so, the current reflation via paper currency inflation might well match what we saw back in late 2008/ early 2009.  Any new program by the Fed would be additive, and it would dwarf that figure. This would be huge for Gold, for Silver, and for the PM Stocks; especially with Gold and the PM Stock Indices sitting at a high level with little chart resistance above.

4)    Gold appears to be deep in a triangle correction where we’d expect to see a break-out to the upside as a continuation of trend.  The Dow made a sharp move higher last week as we saw what paper currency inflation can do to the markets in this environment.  Many see this last week as the Fed precursor to the next round of aggressive, world-wide debt monetization.

5)    The US Banks wrote the credit default swaps for the European Debt, and thus are the counterparty should the Europeans default on those loans.  In no way will that be allowed to happen.

6)    All of the above comes at a point in the cycle where Gold started a sharp momentum run higher in the late 70’s.  The HUI and other PM Stock Indices have been tracing out a huge expanding triangle for some time.  This reminds me of the inverse of the Real Estate Market just before it made a huge move down in 2007 because everybody knows that the PM Stock Indices are going to break higher, but Mr. Market is sometimes slow with the timing.  When the expanding triangle for the PM Stock indices busts to the upside, it will do so via aggressive 3^rd wave dynamics.

7)    Copper appears to be bottoming consistently with a similar point in the late 70’s Fractal Cycle.   Back then, Copper soon started a rally that eventually broke to new highs with Copper eventually doubling in price from the last top before its Bull run was over. Since many PM Stocks produce copper as a by-product, such a move in copper would support a big move up in earnings for most PM Company producers over the next couple of years as well as add huge value in terms of resource valuations for most PM Explorers.

THE GOLD CHARTS

The first Gold chart is an arithmetic chart of Gold from Netdnia.com.  The triangle on this chart can be drawn a few different ways, but this is one viable representation.  As of Friday, 12-02-11, Gold hit the top of the triangle and started to reverse with what appears to only be 2 to 3 weeks left in the triangle.  We have already laid out our expectations for the Gold triangle to break to the upside based on the similar fractal triangle in the late 70’s.  The only question I have is this: if this triangle termination is so obvious to the many, what will be the ‘hook?’ (The 70’s charts are reserved for our subscribers.)

The next chart is Gold in Rand (the currency of South Africa, a major gold producer) which currently exhibits many of the characteristics as it did just before the start of the huge run upward in the HUI Index and the SA Gold producers in the fractal period in 2002. 

It looks like it is going to be déjà vu, all over, again.

We are moving well into seasonal strength for Gold and for Silver.  We are well into the part of the cycle where global competitive currency devaluations are in full swing so the Dollar Index tainted “pricing index” is reduced to an oscillator.

The final chart shows Log Gold in the main chart:

The chart above suggests that:

1)    The HUI, shown in green, is mired in its expanding triangle over the ‘cup formation.’

2)    Gold in Rand, shown in blue, is tracking the Silver chart ascending triangle breakout and run, but trailing by about 6 months.

3) Gold will break to the upside out of the current triangle formation to initially find resistance around $2,000 to $2,040 at the angled black line, then move up to $2,250 to $2,350 at the blue top channel. After those resistance levels are penetrated, we’d expect Gold to be off to the tsunami races.

*http://www.munknee.com/2011/12/gold-tsunami-on-the-cusp-of-3000/ (Goldrunner maintains a subscription (go here for information) at www.GoldrunnerFractalAnalysis.com where he has posted this article on the public part of the site.)

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The key point to understand about gold is that it is neither a risk nor a safe haven asset because it doesn’t move with or against risk appetite. Instead, it rises with fear about the value of paper currency, regardless of overall risk appetite – and that fear can occur in both bull and bear markets. Here’s the proof. Words: 481

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com, provides below further reformatted and edited excerpts from Cliff Wachtel’s (www.avafx.com) original article* for the sake of clarity and brevity to ensure a fast and easy read. Wachtel goes on to say:

Throughout the entire risk asset rally of March – December 2009, gold rose right along with the S&P 500. Why? Because of fear of inflation. The US dollar was selling off on fears of impending hyperinflation from the Fed’s massive stimulus program. The global economy was widely believed to be recovering, and it was feared that this growth would soon unleash inflation from the supposed large increase in the money supply – albeit an oversimplification because this reasoning fails to consider whether the money was actually circulating in the economy.

During the period from mid-April to mid-May 2010 the S&P 500, our risk appetite barometer, fell hard as the EU debt crisis metastasized into the global market-crasher it remains yet gold rose sharply during the same period, just like a safe-haven asset such as the USD. Why? Because of fear that the euro would lose value, either via disintegration of the EU or devaluation via money printing needed to bail out Greece and other troubled nations (or more correctly, the big European banks holding their bonds).

In sum:
Gold rises when:
markets think paper currency is more likely to lose value, be it due to:
a) inflation from growth during good times when too much money chases too few goods, or
b) financial system or currency collapse

Gold prices drop when:
a) there is no concern about the loss of value of paper currency
b) its value is rising in deflationary periods regardless of whether overall risk asset markets are rising or falling.

Why is this especially important to know [right] now? Because for the coming months, deflation is the bigger concern than inflation as China and the EU both experience slowing growth, and the inflation figures remain tame in both the US and Japan – [and that means we are likely to see a DROP in gold prices.]

*http://seekingalpha.com/article/206487-the-must-know-truth-about-gold?source=article_sb_popular (www.avafx is a leading online trading site for global currency,commodity, and stock index trading.)

Editor’s Note:
- The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
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“If you’re holding paper currency, you have to have some kind of trust that the country that issued it is not just going to print its way out of its problems. That’s a real concern right now. Gold, on the other hand, has real intrinsic value, unlike a paper currency which can be debased by its government.” – Sacha Tihanyi, currency strategist, Scotia Capital; Words: 2233

In further edited excerpts from the original article* Nick Barisheff (www.bmgbullion.com) goes on to say:

Currency versus Money
Most investors confuse money and currency, but they are not the same thing.

a) Money is defined as a medium of exchange, a unit of account and a store of value. For centuries, money referred to coins made of rare metals (gold and silver) with intrinsic value, and to notes backed by precious metals.

b) Currency, while it is a medium of exchange, is not a store of value. It only derives its value by arbitrary fiat government decree and hence the term “fiat currency”. Paper banknotes represent money but they are not money. They are simply promissory notes whose long-term “value” or purchasing power depends entirely on the fiscal and monetary discipline of the government that issued them.

Therein lies the problem. In an era of massive fiat currency expansion by profligate governments across the globe, today’s currencies are depreciating in value faster than yesterday’s news. Fortunately for precious metals investors, gold and precious metals have risen in value, and will continue to rise in value against all currencies because they have once again resumed their historical role as stores of value: money.

“When the price of gold moves, gold’s price isn’t moving; rather it is the value of the currencies in which it’s priced that is changing.” – John Tamny, economist, H.C. Wainwright Economics

The Decline of the World’s Currencies
Currency debasement isn’t a recent phenomenon. For decades, governments around the world, through their central banks, have been creating money out of thin air to cover their excessive spending and mounting debt. Investors have for the most part accepted this subtle form of taxation, because it seemed to have little personal impact. However, appearances are deceiving. Investors are discovering that the value of their dollar-denominated assets has actually declined a staggering 82 percent since 1971!

The Wrong Measuring Stick
Every day, the media (via currency traders) informs Canadian investors about the latest price of the Canadian dollar in US dollar terms, while US investors compare the US dollar to a basket of the world’s major currencies [the U.S. Dollar Index]. This information, however, gives investors surprisingly little insight into the true value of their portfolios. If we started measuring the world’s currencies against money (i.e., gold), investors would be horrified at the stark decline in the value of all currencies. Most investors’ portfolios are heavily weighted towards currency-denominated financial assets (stocks and bonds), but few realize that the true value or purchasing power of their portfolios is declining every single year because of currency depreciation.

The Rate of Currency Decline is Accelerating
Since 1913 (the year the US Federal Reserve was established), the US dollar has lost over 95 percent of its value of which 82 percent of its value has been just since since 1971 so the rate of currency decline is accelerating.

In the past ten years alone, the US dollar, the Canadian dollar, the UK pound and the euro have collectively fallen 70 percent in value if measured in real (currency-debased) terms. In other words, when they are priced in terms of gold.

The (Fiat Currency) Money Supply
Not too long ago, all the world’s major currencies were backed by gold because it was a universally recognized store of value. The gold standard imposed fiscal and monetary discipline, since each country had to hold enough gold to equal the amount of money in circulation however that is not the case any longer. Government spending around the world is exploding, and (fiat currency) money supply, along with government debt in the world’s major economies, is exploding along with it. Nowhere in the world has spending become more out of control than the US where the monetary response to last year’s financial crisis is creating yet another bubble, and this time it will be the bubble to end all bubbles.

Countries are Increasingly at Risk of Sovereign Debt Default
“In the process of saving a few ‘too big to fail’ corporations and their bond holders, policymakers are greatly increasing the risk of sovereign defaults.” – Puru Saxena, editor/publisher, Money Matters

The risk of massive and widespread sovereign debt default has never been higher. “Official” US government debt has soared to 90 percent of GDP, while multi-trillion-dollar budget deficits for the next several years will send that number soaring. Japan, the world’s second-largest economy, was recently put on credit watch. Its debt is twice total GDP, yet its newly elected government has announced much higher spending for 2010. The UK’s 2009 budget deficit will be over 14 percent of GDP, adding to a net debt that will reach 56 percent of GDP this year, 65 percent in 2010 and 78 percent by 2015.

Spain, Italy and Portugal are facing major fiscal deficits, as is Eastern Europe. Dubai is billions in debt and its prize jewel, Dubai World, is bankrupt. Greece’s credit rating has been slashed, and its debt is forecast to reach 130 percent of GDP. Then there is Iceland, whose debt had exploded to seven times GDP before the global meltdown. The country’s banking system has now collapsed, its currency is deeply devalued, its real estate market has imploded and the country is in a full-blown economic depression.

The Incredible Shrinking Dollar
As the world’s reserve currency, the US dollar is a proxy for the rest of the world’s currencies. The dollar’s decline is a direct reflection of America’s deepening financial troubles, exacerbated by a ravaged banking system that, by 2010, may see over one thousand banks insolvent. In 2009, the US incurred a budget deficit of $1.4 trillion, and its debt rose by $1.9 trillion due to off-budget expenditures. These off-budget expenditures alone were more than the 2008 budget deficit. At the end of 2009, America’s total debt was over 100 percent of GDP.

In their attempt to reflate the bubble-driven economy, President Barack Obama, Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner have decided to add to this financial house of cards. Instead of raising taxes or cutting expenditures, they have decided to borrow their way out of the problem and have the Fed create money out of thin air, which will almost certainly create another bubble. This bubble will make the others pale by comparison and will help destroy the US dollar. The dollar may be the world’s reserve currency, but China and other countries are not only questioning its status, but also actively campaigning for greater use of alternative currencies.

Gold Bullion Holding Strong
Where are most investors putting their cash? It should no longer be in stocks. Key stock indices like the Dow Jones Industrial Average have been flat to negative in nominal terms since the end of the last century but if the Dow is priced in gold (in other words, money) as opposed to depreciating dollars (in other words, fiat currency), its decline is far more dramatic. The Dow:Gold Ratio is not only in a downtrend, the downtrend is steepening which is a continuing indicator to move from equities to bullion.

Global creditors who currently hold trillions of dollars’ worth of dollar-denominated financial assets are dumping them to preserve their wealth. That is why gold bullion, along with its precious metals cousins, silver and platinum bullion, have been consistently keeping their value against financial assets.

Central Banks are Buying Gold Bullion
“We have a market-friendly Fed injecting a lot of liquidity in the system which will set us up for another bubble economy. Excessive monetary accommodation just takes us from bubble to bubble to bubble.” – Stephen Roach, chief economist, Morgan Stanley

India recently bought 200 metric tonnes of gold bullion from the International Monetary Fund for $6.7 billion. Russia has recently added 120 tonnes of bullion to its reserves, while China has steadily (and surreptitiously) increased its gold bullion reserves from 600 tonnes in 2003 to 1,054 tonnes today. China is even urging its people to put five percent of their savings into gold and silver because it is so worried about the dollar. Because trillions of dollars of its reserves remain in US dollar-denominated assets, China’s central bank will be diversifying into gold for many years to come.

The world’s central banks know that gold is primarily a monetary asset, not a commodity. That’s why a growing number of them are quietly diversifying out of US dollars and adding to their 29,000 tonnes of gold reserves.

In its 2010 Precious Metals Outlook, Scotiabank noted that “seeing the value of the dollar steadily erode must be a nightmare for large US creditors such as China, Japan, South Korea, Russia, the oil producing countries and Sovereign Wealth Funds (SWF)…

Major Investors are Diversifying into Gold
“Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that.” – Lou Jiwei, Chairman, China Investment Corporation

It is not just governments that are dumping dollars for bullion:
- A rapidly growing number of sovereign wealth funds (including China Investment Corporation) are participating, as are major institutional investors.
- Hedge fund manager John Paulson, who made $3 billion in 2008 by shorting subprime mortgages, recently took a multi-billion-dollar position in gold as a hedge against inflation.
- Northwestern Mutual Life Co.’s CEO Edward Zore said his company purchased $400 million in gold (the first time in its 152-year history) because “the downside risk is limited, but the upside is large. We have stocks in our portfolio that lost 95 percent. Gold is not going down to $90.”
- Hedge fund manager David Einhorn, through his Greenlight Capital fund, has sold gold ETFs in order to invest in longer-term and lower-risk gold bullion because of current US economic policy.
- Lone Pine Capital significantly increased its stake in gold this year.

Perhaps of even greater interest to the unwary investor is a survey of US hedge fund managers by London-based Moonraker Fund Management: 90 percent (20 of the 22) of the hedge fund managers surveyed admitted they had bought physical gold for personal investment. These sophisticated investors know something that the average investor doesn’t: that the global policy response to the financial crisis will not only devalue the world’s major currencies, it will decimate the US dollar.

Many Investors Still View Gold as a Commodity
Individual investors are not so farsighted – yet. Because most of them have only experienced one kind of market – a 25-year bull market in stocks – many still think gold is just a commodity like copper, zinc or pork bellies. Gold is far more than that, however. It has a 3,000 year history as money. For much of that time, it was the universal medium of exchange because of its divisibility, portability, rarity, beauty, malleability and indestructibility. Despite today’s negative sentiment, gold is not a speculation or a barbaric relic. Gold is money. Gold retains its purchasing power year after year.

Forty years ago it took 66 ounces of gold to buy a compact car. Today it takes only 14 ounces. If you had put your money in gold instead of dollars, the same car would actually be 79 percent cheaper, because gold keeps its value. Houses, stocks and virtually every other asset on earth would also be cheaper if bought with physical gold.

The more investors learn about bullion, the better for their portfolios If you are already a bullion investor, now is the time to add to your portfolio. If you are new to investing in bullion, now is the time to start dollar-cost-averaging into bullion. I encourage investors to learn as much as they can about bullion and about the markets in general. A good place to begin is the Learning Centre section of our website (www.bmgbullion.com). It offers a comprehensive look at the economy, money, markets and bullion investing, and provides a variety of thought-provoking articles written by experts in the field of gold and precious metals.

Gold is Money
Gold is money because it cannot be created out of thin air by government decree. Unlike bonds, gold does not represent someone else’s liability and, unlike stocks, gold does not rely on someone else’s promise of performance. Gold is money because, unlike currencies, impatient monetary policymakers cannot change its value. The rising gold prices we have experienced for the last eight years do not signal a bull market in precious metals, but rather a vote of decreasing confidence in the future value of paper currencies.

Currency-denominated financial assets are a disaster waiting to happen. The current economic rebound is a mirage, being entirely dependent on something artificial and unsustainable: massive government spending. A new crisis is building out of unprecedented fiscal and monetary mismanagement. Fortunately, smart investors can protect their wealth from the coming storm. The true level of risk has not been priced into the markets.

The time to shelter your wealth from the storm is now. There is no safer investment on earth than bullion, because bullion is and always will be money.

*http://www.bullionbullscanada.com/index.php?option=com_myblog&show=gold-is-money-unlike-the-world-s-currencies-gold-retains-its-value.html&Itemid=116

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Many new, novice “gold-bugs” – and even larger numbers of the “gold-curious” – have come on the scene because they are shocked and worried by bleak economic conditions and the global monetary crisis. They are now looking at investing in gold (and silver), possibly for the first time – but are unclear as to why precious metals investments are becoming so popular. Words: 1506

In further edited excerpts from the original article* Jeff Nielson (www.bullionbullscanada.com) goes on to say:

Most novices to this sector have been programmed to view gold and silver as simply two commodities. However, it is impossible to understand and appreciate the tremendous appeal of precious metals today without understanding that gold and silver are also currencies.

What is Money?
This seemingly simple question is a necessary starting-point in understanding precious metals, precisely because very few people have ever been given a precise and comprehensive definition of “money”. Real “money” must possess the following four, central properties:

1. it must be a “store of value”
2. it must be “precious” or scarce
3. it must be “uniform”
4. it must be evenly divisible

Money Must be a ‘Store of Value’
The criterion of money as a “store of value” is self-explanatory: real “money” must be able to retain its value over the long term. This is precisely why no paper currency currently in existence qualifies as “money”.

This can be demonstrated simply by looking at the world’s current “reserve currency”: the U.S. dollar. Since the time the U.S.’s “central bank” was created, less than century ago (the Federal Reserve), the world’s “reserve currency” has lost 97% of its value!!

Thus, based on analysis of only one of the properties of money, we discover that none of the scraps of paper which people carry in their wallets is actually “money”. So what are these currencies, then? They are nothing more than government I.O.U.’s.

This truth is of huge significance for two reasons:

a) many governments (including many of the so-called “wealthiest” nations) are of questionable solvency. In the case of the United States, there is no “question”. The U.S. is hopelessly insolvent. As is common knowledge to many, the U.S. is currently being crushed by a mountain of public and private debt. For those holding U.S. dollars, or assets priced in U.S. dollars, how comfortable should you be in holding the I.O.U.’s of an insolvent entity?

b) gold and silver, on the other hand, clearly qualify as “stores of value”. A commonly used example is that an ounce of gold should be able to buy a man’s suit, of good quality. This remains as true today as it was a century ago. Compare that to the disintegration of the U.S. dollar.

Money Must be ‘Precious’ or Scarce
We could not use chips of plastic, or coins of wood or iron (or scraps of paper) as “money”, because the supply could be increased so rapidly (in virtually infinite quantities) that the world would quickly be “flooded” with such currency (not to mention counterfeiting) – diluting its value. Thus, “money” must be precious/scarce or it will eventually/inevitably fail to meet the first criterion of a “store of value”.

Gold and silver pass this “test” precisely because they are relatively scarce in comparison to other commodities and elements. There are many commodities that qualify as scarce, however, so to further distinguish gold and silver we must move on to the final two qualities.

Money Must be ‘Uniform’
Gold and silver are “uniform” meaning that if you held a handful of gold and silver coins, each coin would be identical. Diamonds and other gemstones are clearly “scarce” and “precious” and have been used in a similar manner to gold and silver at times during history but they never acquired wide popularity as “money” because of the wide variation in quality/value of different specimens.

Money Must be Easily ‘Divisible’
Being “soft” metals, gold and silver are easily divisible. It is this property which allowed ancient human societies to begin to use gold and silver as money as far back as five thousand years.

We can now see that not only are gold and silver “real money”, but they are the best forms of money to have ever been devised by our species. For those many people who have been frightened into liquidating their assets in order to feel the security of holding “money” I wonder how “secure” they feel holding scraps of paper in comparison to the security they would feel through holding gold and/or silver?

Why Buy Bullion?
There are an enormous number of reasons why gold and silver become more attractive (and necessary) in times of economic turbulence. To keep this commentary simple, and relatively brief, I will restrict this analysis to an explanation of why gold and silver have unequaled qualities in either an inflationary or deflationary crisis.

In Inflationary Times
The appeal of gold and silver during inflationary periods is simple and obvious. Recalling the previous discussion of gold and silver as “stores of value”, it is during times of high inflation that gold and silver are most superior to other assets in holding their value. This is true regardless of whether we consider precious metals as commodities or currencies. Indeed, it is the fact that gold and silver are commodities and currencies which is why they have always been preferred assets in times of high inflation.

In Deflationary Times
The appeal of gold and silver in a deflationary crisis is only slightly more complex. As we have seen, many people have regressed to holding cash as a response to the deflation currently taking place in the United States. Why have they done this? Because this deflation has been caused by a plunge in asset prices and been severely aggravated by mounting defaults in a broad range of asset categories.

Conversely, gold and silver have zero “counterparty risk”. In other words, as assets, gold and silver can never “default”. More importantly, we now see that even the world’s (supposedly) wealthiest nation is now on a clear path to default and bankruptcy – due to a massive accumulation of debt which could never, possibly be repaid. If you think U.S. dollars have been losing their value rapidly over the last century, consider how much more quickly they will lose their value as the U.S. moves closer and closer to outright bankruptcy.

Do NOT Purchase Bullion ETF’s!
When first unveiled to the market, bullion-ETF’s (such as GLD and SLV) seemed to be the perfect investment vehicle for small investors wishing to “hold” gold and silver, in a form which could be easily sold, and did not impose any storage costs on buyers.

However, as the (supposed) holdings of these bullion-ETF’s have soared, their obvious flaws are now apparent. While the United States has the largest reserves of gold in the world (supposedly over 8,000 tons) and a battalion of its army is permanently assigned to guard Fort Knox and established dealers have been forced to pay record premiums for the purchases of gold and silver bullion bullion-ETF’s claim they can purchase gold and silver with no premium, and in infinite amounts – and then store these vasts hoards of gold and silver at zero cost. How can this be possible?

With only a few, rare exceptions, no “bullion-ETF’s” hold any gold or silver. Instead, all they hold are “paper promises” to deliver gold. The reality is that most bullion-ETF’s are just another Wall Street scam with the exception of the small number of reputable bullion-ETF’s, whose prospectus clearly states that they buy and hold real gold and silver. Naturally, these entities do charge premiums – to pay for their purchasing and storage costs.

Don’t Forget about Silver!
Even many hard-core “gold bugs” are now openly predicting that, based on current prices, it is silver which has a brighter future than even gold. There are two central reasons for this belief.

1. For most of history, the gold/silver ratio has averaged roughly 15:1. However, currently, this price ratio has swung to an extreme level in excess of 60:1. This alone should make silver an automatic first choice among investors.

2. The case for silver becomes much more compelling when we consider how most silver is used. Many people currently refer to silver as an “industrial” metal, despite its obvious status as both a precious metal and a currency. The reason for this is that silver is also a superior input of countless goods and products, which are increasing “consumption” every day. Not only is this a large component of demand which does not exist with gold, but because most applications use silver in small quantities (per unit), most silver used “industrially” is permanently “consumed”.

At the same time that the gold/silver price ratio has swung to an extreme, favoring gold, the actual supply of silver (compared to gold) has never been lower in 5,000 years.

*http://seekingalpha.com/article/139415-a-novice-s-guide-to-precious-metals-part-i

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