India & Precious Metals Investments Specialist
Investing in gold is good. Investing in gold mines is better.
Buying gold as an investment is one of the few ways an investor can protect themselves from instability in the financial markets these days. Why? Historically during credit contractions, gold bullion and gold mining equities rise. Gold rises because it is the only form of money that is not simultaneously someone else’s liability and in a world where credit risk is unknown, gold becomes the premier form of money. Gold mining equities rise because the real price of gold (the price of gold relative to all other commodities) increases thereby expanding industry profit margins and making the business a handsomely profitable endeavor.
Buying gold is defensive and a way to preserve your capital; not grow it. For growth, the opportunity is investing in gold mines.
The signs of credit contraction
We are in the midst of a major credit contraction; the kind that follows all great credit manias. Pre-2008 consumer confidence was high, credit plentiful and as, we’ve come to learn, financial fraud rampant – all signs of a great credit expansion. Now credit is tight or unavailable and the international monetary system stressed with countries all over the world struggling under mountains of debt. These are all signs of a credit contraction.
When financial markets throw you lemons, make lemonade
Since credit contractions typically last around 20 years, investors should use the present circumstances to their advantage. If investors look at the markets with the same lens they’ve used for the last 20 years, they will miss out on returns and opportunities.
Investing in gold mining is the opportunity
Great change can mean great opportunity for the savvy few who understand the new paradigm. While gold serves as protection during a credit contraction, it is gold mining stocks that provide the upside. The business of gold mining transforms from a marginal one to the world’s best performing industry because:
- Operating costs fall, relative to gold, thereby driving increased earnings, while earnings for most sectors remain under pressure from falling prices
- Rise in real price increases valuation of deposits and makes marginal projects economically viable
- Relative relationships cannot be altered by government policy
The miners are making money even when few other industries are. Digging for gold has truly become a good business.
Atyant Capital = Foresight + Experience
Investing in gold and gold stocks presents a certain measure of volatility (see Rule 1 of our Top 10.25 Rules for the Gold Market), but the large, 20%+ market swings commonplace in the precious metals complex present an opportunity to amplify returns. Therefore, the modus operandi is to embrace volatility and manage risk, not avoid it. Atyant Capital is uniquely positioned to help qualified investors (as defined by the SEC) to harness the new opportunities present in the precious metals complex and to manage the risk head on.