Gold Breaks Out, But How Many Benefit?

I've been noticing a strange thing.

I sometimes meet with readers of my letter, the Weber Global Opportunities Report. Occasionally, non-Americans hire me to go over their holdings with them (the only way I can really give good advice is when I know the person and their complete situation). Some I meet at conferences, and even sometimes on trips.

But the strange thing is that with every one of these readers I've come into contact with since the first of the year, they either have very little exposure to the gold and silver area or – in more cases – none at all.

I wonder, they pay to read my opinions and what I am doing, so they must value what they read at least somewhat. In some cases, they actively don't believe gold is going up.

"Why do you really think this?" is how one put it. Or they think it is going to fall before it rises, and maybe then they can buy it cheaper. "Gold will go to $540 before it goes to $740," said another with great confidence. (He'd never bought any.)

But one blamed me. "You don't seem positive enough about it in your letter, always saying that you may be wrong." Well, I don't know how much more positive I can be. I do enter into almost every investment with the view that I could be wrong, and I try to protect myself in case I turn out to be.

But I say "almost" every investment. I may take my principal out on stocks and even currencies, but I have not done so on my physical gold and silver. This alone should tell you that I don't regard them in the same light. I am willing to risk all of my prior profits because I believe we are still in the early phases of a huge bull market in the precious metals.

I suspect this person who blames me that he doesn't have any metals is the type who usually blames others for his mistakes. But he may have a point. I don't jump up and down and dramatically scream that you should do anything.

There was an advisor back in the 1970s during gold's last bull market. He was famous for saying, "Mortgage the home, mortgage the kids, but buy gold and silver." That's dramatic. Well, he was right. But like so many others, he stayed too long at the party and did not get out or get his readers out at anywhere near the peak.

Maybe I'm too superstitious. I approach investments with maybe too much humility, "rendering to the gods what is theirs." I've always found that the less fanfare you announce something, the better the chances are that it will work out. Anyway, it's not my style to scream and say "GET INTO GOLD AND SILVER NOW!!!"

I can only tell you what I have done, and what I think will happen. I've repeatedly said that my target for gold was $3,000 per ounce and $187 for silver.

However, for so many readers not to have any makes me think I am not getting the point across. But then, I think that every bull market takes as few people with it as possible.

The activity gets heavy only just before the bull market makes a temporary high and gets severely overbought. This happened in the weeks leading up to the May 2006 highs. Then, when the market corrects, these latecomers get out in a panic.

But many others never get on until near the very end. This may be what I'm seeing. And with so few people owning gold or silver, it makes me think that we are still very close to the start of the bull market, and not near its end.

Good investing,

Chris Weber