Mark Twain said history doesn’t repeat, but added that it rhymes.
Nevertheless, we all fall back on experience or look for historical parallels when we try to figure out where precious metals are heading.
Quite naturally as someone who lived through the 1979 rocket ride higher and the 1980 collapse, I tend to look over my shoulder to try to figure out what might be ready to ambush the market.
Anyone who didn’t live through that time, thinks that current conditions are different enough that there might be nothing to be learned from it.
Certainly there are differences.
One thing that is remarkable is how much progress has been made in persuading people to buy physical coins or bars and take possession of them. This achievement has helped create a more educated and sophisticated investor precious metal group by itself.
Back in 1980, it seemed that so-called investors did everything they could to not take this very sensible advice.
They used their investable funds to bid up the price of top mining stocks to impossibly high levels. They also bid up dodgy stocks few people ever heard of.
Had this money gone into physical bullion, the market might have been much more sustainable.
One thing about stocks, sound or unsound: they are far easier to sell than physical metal. Ease of selling is not always a good thing. You can do it without thinking through the consequences.
Delivering up physical metal at least gives investors the time to think through what they want to do and why.
That’s a good thing and it is something that is genuinely different from 1980. The difference is so striking that it is affecting others.
This mind set is so influential that Wall Street has changed its primary precious metal fire power from focus on mining stocks to Exchange Traded Funds. These ETFs are supposed to buy and actually hold the metal.
Changing Wall Street is quite an accomplishment, but it would not have happened had there not been such a focus on taking delivery of precious metals.
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