Mr. Dines: The Best Way to Buy Gold and Silver

Written by James Dines
Posted May 16, 2020

Publisher's Note: Today we're bringing you an excerpt from The Dines Letter.

Mr. James Dines has been an unparalleled source of research and analysis for decades and it's never been a better time to hear from "The Original Gold Bug" as the price of bullion and stocks soars.

Read on to learn from Mr. Dines about the best way to buy gold and silver, along with trends that are coming into play during the pandemic.

Call it like you see it,

Nick Hodge Signature

Nick Hodge


The Dines Letter’s (TDL) recent short-term “Buy” signal was near the stock market’s lows, in our 6 Apr 20 Interim Warning Bulletin (IWB). What’s next? This virus has been a Mass Psychologically traumatic event and, naturally, it will have repercussions. For one thing, the lockdown was a glimpse of a society without corporations or airlines. Also it exposed how reliant America is on our drug industry, much of it produced in China, unbeknownst to many Americans, as it were.

And then there’s gold. A big change is that many overoptimistic investors, looking for a fair profit investing, have become aware of “safe havens” for when the stock market gets volatile again. Instead of staying overoptimistic and buying whatever is popular, that smidgeon of Mass Fear will be retained as a residual aftereffect. Also these days more investors are aware that gold is the leading haven — that’s big, as demand for gold will be amplified in the future by those investors adding gold to their portfolios — as a hedge. Silver has not yet publicly surfaced in the mass media, so the gold rise is likely not over.

Another impact ahead will be a school of thought asserting that “gold is no longer a good investment because the virus is past.” Not so fast. TDL’s original justification for holding gold was as a hedge against a hyperinflation. Nobody else is even using the word hyperinflation, but that’s the next risk we perceive on the horizon. 

When the price of crude oil plunged below zero per barrel for the first time in history, the largest ETF that tracks the price of crude was forced to unload some of the futures contracts it had held, exposing ETF holders to the prospect of seeing the value of their investments plunge to zero. This scenario by that ETF is one of the reasons TDL has advised caution when buying ETFs. We prefer to choose our own stocks, which takes more effort than buying an ETF.

We are not aware of any other prominent forecaster strongly bullish on silver. That’s usually what silver bottoms look like. Silver mining stocks have a different Mass Psychology from silver bullion, as noted in our Mass Psychology book. That is proved by silver bullion having remained flat in the mid-teens this year, even while some silver-mining stocks are moving up.

WHAT IS THE BEST WAY TO BUY GOLD AND SILVER?

New subscribers often inquire how to learn the basics of investing in gold and silver. Let’s start with the late-March major rise by both the precious metals and stocks. Studying the sequence of new bull moves, gold bullion as usual was the first to rise, ahead of silver. But now gold and silver mining stocks have been moving up even more quickly than gold bullion.

It’s too late to get in at gold’s rock-bottom price, but there still might be time for worthwhile gains. For those who have kept postponing buying, please don’t ask us near the Top, “Is it too late?” The answer will be “yes.”

Gold stock’s full-blown bull markets will ignite when gold has its Upside Breakout to a new all-time high, which we predict will burst into the world’s financial headlines — believe the unbelievable or not. 

There is also usually a split between the higher-quality gold content of the larger mines, and those in smaller/speculatives. Another split, bullion versus ingots or coins, might already have begun. We expect the gap in the Gold/Silver Ratio to be narrowed; probably with silver’s catch-up rise. 

Follow their charts. TDL is ostensibly alone in the importance of Mass Psychology and Personal Development in investing, so incorporate that in your conclusions. 

DEMAND FOR GOLD AND SILVER COINS SOARS

During the pandemic’s stock market panic selling, investors sought gold, the classic haven. Gold provided liquidity available from no other asset class. In mid-April, gold coin sales increased despite premiums at 5% to 10% over spot gold (premiums are typically 1%), plus some gold-mining stocks reached all-time highs. 

The U.S. Mint temporarily halted production at its West Point facility. Gold, silver, platinum, and palladium coins are also made at that facility. The shutdown will affect production of coins, such as the American Eagle gold, silver, and platinum coins, and American Buffalo gold coins, among others. In March 2020, the U.S. Mint sold out of its American Eagle silver coins, and gold ones were purchased at the fastest pace in over three years, further increasing difficulties for investors attempting to purchase coins, since the supply is now even tighter. The U.S. Mint has not announced when the West Point facility will resume production.

Personally, these newly-minted coins are merely satisfactory, primarily only worth their melt value. “The Original Goldbug” prefers other coins. See our in-depth coin write-up in our 2020 Annual Forecast Issue (page 3).

NO MORE JUST IN TIME? MASS PSYCHOLOGY’S IMPACT ON BUSINESS

Once upon a time, corporations kept an inventory of essential spare parts that were difficult to obtain quickly. Corporations thus had considerable capital tied up in inventory storage, not “working,” as hungry brokers accuse cash.

Then business people in Japan pioneered the concept of “just-in-time” supply, in the 1960s and 1970s. It worked brilliantly!

If an entity within the chain began to take over one critical part in that supply chain, it would have a stranglehold on the entire gamut by withholding its essential items! The variant entity with deep pockets could keep cutting prices relentlessly, forcing other suppliers for a part in the chain out of business, and gradually dominating it. It’s called “predatory capitalism,” illegal under American laws. China exempted itself by not having agreed to it when it was permitted to join the World Trade Organization in 2001, so what China did was legal. The fault lies with America’s ignorant politicians who allowed that, and who should be shamed, many of them safely dead.

How did TDL figure that out? It took no great intelligence — by luck, we watched it happen right under our very eyes to one of our top recommended stocks, as “The Original Rare Earth Bug.” China’s unlimited funding enabled slashing price-cutting to bankrupt the entire American Rare Earth industry, after which its Communist Party bought the remnants — and crucial patents — for pennies. TDL protested vociferously 11 years ago, but too few heard. Now China’s government owns the Rare Earth industry — legally. As mentioned above.

Finally, in 2020, during the tragic upheaval from the Wuhan virus, when critical medicines for example were desperately needed, the mass media revealed that China’s government had quietly taken control of 40-45% of penicillin, 70% of acetaminophen, 80% of the U.S. supply of antibiotics, and 95% of U.S. imports of ibuprofen. Those facts revealed, the shorn lamb was not spared the cold winds to come. Every cloud really does have a silver lining. Let’s see how Washington redeems itself to the above news by returning drug manufacturing to America. 

Last December 2019 the U.S. Army, through Texas Mineral Resources, opened a pilot processing facility in Wheat Ridge, Colorado, which will purify Rare Earths, lithium, and other critical Rare Earth elements. The plant is expected initially to produce 100kg/year. TDL had been literally begging America to take this initiative 11 years ago.


James Dines is legendary for having made correct forecasts that were in complete contradiction to the rest of the financial community. He is the author of five highly regarded books, including "Goldbug!," in addition to his popular newsletter, The Dines Letter, and videotaped educational series. Dines' highly successful investment strategies have been praised by Barron's, Financial Times, Forbes, Moneyline, and The New York Times, among others.

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