We are at a major bottom in gold and gold shares - bob moriarty - Mifare Smart Card

The TSX VentureExchange has been experiencing some of its lowest volumes in six tonine months. What do you believe investors should do this summer? Bob Moriarty: Anybody following my website for years will be familiar with mesaying this: You can ignore technical analysis. You can ignoreseasonality. You can ignore fundamentals. The only thing you canever absolutely make money in is being a contrarian.

Some very bignames in the mining industry, including Rick Rule and Eric Sprott,have said, yes we're in the bottom but it'll be several monthsbefore you should invest. Where were they April 25 last year, whenI said we'd reached the top in silver? For months afterward, thevery best place to be was in cash. You have to look at what peoplesay and when they say it. Very few people got it last year, but Iclearly was one of them.

We are at a major bottom in gold and gold shares. The fact thatsome of the biggest names in the business are telling investors tobail out or keep their hands on their wallets if they're tempted tobuy is a buy signal. If you have a hundred people in a room andevery single one of them was a bear, the next trade would be upbecause you would have run out of sellers. The fact that the volumeis so low speaks volumes all by itself. There are no buyers-onlysellers, and we're about to run out of those.

When that happens,the very next trade will be up. It's a chicken-and-egg situation. Which came first? In thissituation, was it the bottom or the news? Everybody hears, "The Dowwent up 200 points today because of xyz." They try to connect newswith action and it's exactly the opposite. When gold and goldshares go up, they'll say it's because of Iran, or Israel, or Osamabin Laden or Ron Paul.

It's nonsense. It will go up because we'rerunning out of sellers. When you have no sellers, you only havebuyers. It's that simple.

Too simple for most people to understand.But those who do will make a lot of money. Dawn follows the darkesthours. TGR: But suppose the government announces quantitative easing (QE) 3,for instance, or some new European debt problems crop up. Wouldn'tsuch news prompt investors to buy junior gold and silver shares? BM: Absolutely not.

What you hear on the radio, read in newspapers andmost of what you see on the web is not news. It's propaganda. Wehave the equivalent of QE3 in Europe, something like $6.7 trillion,and gold, silver and equities have been going down. There's noconnection between news and action. We have been spring-loaded tobelieve that the news is important and it's not.

It's meaningless.Six people control 95% of the news media and you're being told whatthey want you to believe. That doesn't mean it's news. TGR: So you have to divorce yourself from the news if you really wantto be a contrarian in investing in mining stocks? BM: Absolutely. Every time I call a silver or gold top and I'mperfectly correct, a hundred people immediately write to tell mehow stupid I am in calling a top when in fact they're always deadwrong.

They never tell me a month later; they always tell me assoon as I say it. Well, I've called tops and bottoms correctly for10 or 11 years now. To be able to do that, either I have to knowsomething other people don't or I have to be the guy doing themanipulation. And believe me, I'm not the guy doing themanipulation. All markets are manipulated and that makesmanipulation as close to meaningless as you can get.

The mere fact that shares are hard to sell and there's very lowvolume is a buy signal all by itself. If you want to make a fortunein the junior mining segment, buy when nobody wants to buy and sellwhen everybody wants to buy. If that were all you did, you'd make100% a year. Juniors have a 200-400% range every year. Buy whenthings hit a new low, sell when they hit a new high and ignore allthe "gurus." TGR: You talked about calling silver's high last April, and you'veagain been looking at silver and gold assets around the world.

Doyou consider yourself more of a silver bull or a gold bull? Orneither? BM: I'm an agnostic. As for what I look for, I don't look for silveror gold or boron or natural gas. I look for opportunities. TGR: Do you look at certain jurisdictions or provinces that areparticularly good for mining activity and then bet on some of thoseareas? Or is it always company specific in your view? BM: It's actually management-specific. You need to look at a lot offactors, of course, but the most important is management.

Thecountry or province is absolutely important. I'm going to write anarticle shortly and will call it "The Miners' Lament." It's abouthaving a gold or silver or boron project and the price of thecommodity goes up. As soon as the price goes up, governments getgreedy. That's happened in Peru, Bolivia, Ecuador and Australia. Toa certain degree it's happening in Argentina, because thegovernment has started getting greedy and claiming a bigger pieceof the miners' pie.

TGR: On May 4, Argentina's Congress passed a bill to nationalize thebiggest oil company there, expropriating 51% of its shares.Although not entirely unexpected because President CristinaKirchner had announced her decision to nationalize a couple ofweeks earlier, the action-pretty much effective immediately-sentshockwaves through the resource investing community. Do you thinkthis news makes investing in Argentinian juniors more risky? BM: There are a couple of different issues to address here. One is thestupidity of government in Argentina. In 1914, Argentina had thethird-highest GDP in the world. Based on agriculture and metalwealth and the educational level of its people, Argentina stillshould be one of the wealthiest countries in the world.

It's not,and hasn't been for 100 years now. The reason is 100 years ofincredible stupidity in government. The resources are there. The people are there. The climate'swonderful.

The wine's good. Buenos Aires is a lovely city to livein. Yet Argentineans suffer economically. For the government toseize the biggest oil company is especially stupid. The excuse wasit was not making enough money out of it-in much the same way thatthe power company in South Africa wasn't making a profit becausethe government imposed limits on what the power company couldcharge for the power it sold.

Governments believe they're smarter than the economy and they canrepeal or modify the laws of supply and demand. They can't. Thelast 6,293 times governments have tried to show they're smarterthan the economy, they've screwed it up. Governments just get inthe way of people making money. If you go to Switzerland, you don'teven see government.

In Sweden, government's in the background andthat's a welfare state. But, government doesn't figure into everynewspaper article and everything you hear on the radio. In China, Idon't have a clue how the government works; I just know it's anexciting place to make money. So let's go back to whether it's safe to invest in Argentinejuniors. I think it is because the juniors are in the explorationstage and they're bringing money into the country.

It would beespecially stupid for the government to get involved at this point.I don't think it will fool around with the production companiesyet, either, but there's no limit to the stupidity of governments. TGR: Santa Cruz Province in particular seems to be a fantasticjurisdiction for exploration-great roads, nearby power, supportivelocals. I was impressed. BM: I was quite impressed too.

TGR: How do you view Tanzania in terms of jurisdictional risks? BM: The real issue there is the infrastructure. Mining provides mostof the country's export income, so it's as important in Tanzania asit is in Peru. If you want to talk about jurisdictional risk, lookat Peru and think again about "The Miners' Lament." Peru's smart enough. It gets 60% of its export earnings from miningand now has a process in place whereby some of these idiots can bethrown out, and I think the local people in Cajamarca are about tothrow him out. There's so much corruption in Peru.

It's likeEcuador and Bolivia-there's no rule of law. TGR: What about North America, Bob? BM: First, let's talk about the difference between Canada and theUnited States. Canada is a wonderful place to work. I think it'sthe most favorable mining community in the world.

There's someinvisible line you cross when you go from the U.S. into Canada andall of a sudden, you become sane. The people in the U.S. amaze mewith their ignorance of politics, economics and everything that'sgoing on in the world.

They're so insular; they just don't payattention. Canada, on the other hand, is still an international country. Theminers and geologists in Canada travel all over the world, and likeJohnny Appleseed, they're spreading goodwill and knowledge whereverthey go. There is no mining anywhere in the world without anabundance of Canadians, and by the same token, no mining areaanywhere else in the world has an abundance of Americans exceptAmerica. That said, from a geological point of view, there's enormousopportunity in the United States, but the government's still beingespecially stupid.

At some point, somebody will realize you can'tkeep spending more money than you take in. The United States isborrowing $0.41 out of every $1 it spends today. That's insane.Some 88 million Americans are unemployed or underemployed-88million people who aren't working and we have only 64% employmentamong those who should be working. At some point, Americans willhave to produce something besides hamburgers and new regulationsand idiots in politics.

TGR: To have new discoveries cropping up in Nevada is pretty excitingwhen you consider how much exploration has been done there. It'samazing what Nevada is producing in terms of mining opportunity andwealth. BM: I'm extremely familiar with the Carlin Trend and what's been goingon there in the last five years, and it's the juniors who aremaking the bigger discoveries. I don't even bother talking to themajors.

They aren't developing as many ounces as they're producing,and they're all going to be out of business in 10 or 15 years. Youjust can't conduct your business doing it that way. The juniors arecoming up with these multimillion-ounce deposits that nobodydreamed of because they never tried drilling there before. TGR: Obviously, you feel like it's a shopper's paradise in juniorstocks. Are there any other opportunities that you're particularlykeen on that you'd like to talk about? BM: Anything related to energy is an opportunity.

Natural gas is beinggiven away. And, from a contrarian point of view, it's a gimmie.Potash is absolutely a big opportunity and graphite is another one. TGR: So you don't think all the buzz about graphite means it's abubble, a flavor of the month? BM: It absolutely is the flavor of the month. But you get a bubblewhen about 450 companies are in a space, and now there are onlyabout 30. I don't expect all 30 to succeed, but I own about five ofthem.

I'm quite happy to because I think there's a wonderfulopportunity there. When it gets to 450 companies, I'll probablystart selling some of my shares. Every investor should be familiarwith Hobson's Choice. TGR: How so? BM: Hobson was an innkeeper in rural England back in the 1700s. He wasvery lazy.

If someone came to him asking for a trotting horse toride around the village for an hour or two, he'd fetch the firsthorse nearest to the door of the stable. It might be a plow horse.So Hobson's Choice was no choice at all or the best of a bad lot. We live in a financial environment in which every bank in theUnited States has been bankrupt for four years and everybody isstill pretending they're going to survive. In Spain, 52% of theyoung people are unemployed.

We are so close to a globalrevolution, it terrifies me. In that situation, you have to go tosafety. So investors have no choice, really. And believe it or not,I don't see anything safer than juniors-gold or graphite or boronor natural gas or potash. If you are faced with a choice ofinvesting in U.S.

T-Bills or Greek bonds or Spanish bonds orresource juniors, what would you invest in? TGR: People always have to eat and need a way to trade. BM: You've got it. But they must have something of value to trade. Idon't know whether the gold price will be $500/oz or $5,000/oz or$50,000/oz, but I can tell you that in two, three or five years, ifyou have a 10-ounce bar of silver in one hand and a 1-ounce goldcoin in the other, you'll know you're holding something of value.Marc Faber says everybody should buy a $1M T-bill, put it in a niceframe, hang it on the wall and in 10 or 20 years when the grandkidsvisit, they can point to it and say, "See that? That used to bemoney." Paper money is already a relic.

It's not a prediction-it'shere now. [ Faber, who produces a monthly investment newsletter, Gloom Boom & Doom Report, chatted recently with The Gold Report . -Editor. ] TGR: You've given us some good stuff to chew on, Bob. Thanks so muchfor your time.

Convinced that gold and silver were at their bottoms, and wantingto give others a foundation for investing in resource stocks, Bob and Barb Moriarty brought 321gold.com to the Internet 11 years ago, and later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclearenergy. Both sites feature articles, editorial opinions, pricingfigures and updates on the current events affecting both sectors.Before his Internet career, Moriarty was a Marine F-4B pilot andO-1C/G forward air controller with more than 820 missions inVietnam. A captain at age 22, he was the youngest naval aviator inVietnam and one of the war's most highly decorated. He holds 14international aviation records, and once flew an airplane throughthe Eiffel Tower's pillars "just for fun." Article published courtes of the Gold Report SUBSCRIBE to Mineweb.com's free daily newsletter now.

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