In a word, no. We divide our rationale into three parts: macro, sentiment, and profit margins. Back in 2008, a recession was beginning, the private sector was in intense deleveraging mode and the credit markets foreshadowed what was to come in the equity and commodity markets. Today we are seeing growing credit stress on the sovereign side and not in the private sector as we had in 2008.

Gold and silver equities have led the markets lower and have underperformed the metals significantly this year. For the past month or so gold has firmed and Bonds have moved higher as most asset classes have declined. Unfortunately mining equities have been among the worst performers. However, our work leads us to believe that an important bottom should be in place very soon.

Most mainstream pundits and reporters have assumed that it was speculative buying that caused silver to go parabolic. After all, it's always the dumb money or the public that gets in at the very end. However, in futures markets, parabolic moves are often the result of short squeezes. This is exactly what happened in silver.

Over the past few weeks Gold has traded at or near record highs. It has yet to embark on a sustained breakout but that is not because Gold is a crowded trade.

We obviously have been too cautious on Silver. The metal has been on a tear and has shown no weakness in the past few weeks.

In this missive we reply to the supposed reasons against investing in Gold.

Many analysts focus on the seasonality of Gold and Silver. Why? It plays out most of the time.

Relative Gold is also known as the real price of Gold. Its essentially a comparison of Gold against various asset classes.

Silver has been red hot lately and the silver shares have joined in the fun. Yet, we haven’t seen a corresponding breakout in Gold or in the gold shares (as evidenced by GDXJ and GDX).

With the bull market in precious metals likely to accelerate in the coming years, folks should turn a great of their attention towards finding the growth stocks of the bull market. We are talking about your Ciscos and Microsofts.

The S&P 500 has rebounded about 100% in 100 weeks.

Silver is outperforming Gold as a risk asset. It is not outperforming for monetary reasons.