The past year has tested the worldview, and sometimes the sanity, of precious metals investors. But it has also given us another chance to load up at what might turn out to be dirt-cheap prices, says Carsten Ringler, managing director of German financial firm TASS Wertpapierhandelsbank GmbH.Here's an excerpt from a long conversation we had this week, in which he laid out the reasons for optimism about precious metals in general and the junior silver miners in particular.
DollarCollapse: Good afternoon Carsten, it's great to finally speak with you. Let's begin with your general take on the major asset classes.
Carsten Ringler: It is nonsense to be in long-term government bonds at the moment. A 1% - 2% rise in interest rates would kill you in 10-year Treasuries. Gold and silver on the other hand are money, and as long as the [paper] money supply is increasing at today's rate, precious metals are the place to be. There might be another leg down, but it will be short and mild. I am confident that within in the next 2-3 years we'll see a breakout in precious meals that leads to a mania similar to the past few bubbles.
One way to understand how cheap precious metals are in paper money terms is to go to the Minneapolis Fed's website and use their inflation basket calculator. You can put in the price of a good on a date in the past, and the machine calculates the inflation-adjusted price from then to now. For gold, starting in 1980 when it was $850, today's inflation-adjusted price is $2,400. So when anyone says gold is too expensive because it has risen the past ten years, you can respond that according to the Minneapolis Fed $2,413 is where it would be if it had just kept up with inflation. For silver, start with the 1980 $49.45 high and you get an inflation-adjusted price of $139. ...