Don’t Tread On Me 
August 19, 2011
I asked myself this question Wednesday night when I heard the news that Chavez intended to nationalize Venezuelan gold mines .
Over the past decade, several precious metals experts have suggested that there MAY come a time when the price of Mining Stocks would collapse as the price of precious metals soared because there is a certain correlation between the price of precious metals and the risk/probability of mines becoming nationalized. Higher precious metals prices equate to higher/ probability risk of nationalization.
- “There was an expression during the Great Depression – Would you rather have a pretty picture of food or have the meal on your plate? – now relate that to precious metals – Would you rather have a pretty certificate of gold/silver or have the actual metal?” – Richard Maybury
Continuing, these experts have suggested that a single high profile nationalization MIGHT begin a self perpetuating spiral of higher and higher precious metals prices; thereby lower and lower mining share prices because the nationalization would shift the preference of precious metals investors from the mining shares into physical bullion en masse; driving the demand of the physical higher, the physical price higher and the risk of nationalization elsewhere higher. Nationalization also increases the likelihood of near-term cuts in world market production/supply due to increased likelihood of work stoppages and due to increased likelihood of substantial production kept out of the markets and instead stored as a national reserve.
This correlation between gold/silver prices and nationalization risk has also been used to partially explain the recent history of a flat to down market in mining shares since the beginning of 2011.
In any case, only time can flesh and flush out all the consequences of the double “f&ck you” that Chavez hand delivered to the western banking rulers yesterday by both announcing the nationalization of their gold mines and telling the Bank of England to ship their gold back to Venezuela , but it seems to me that the spark has finally been lit to blow the lid off of gold/silver price suppression.
As of the time I’m writing this (4pm ET), the Dow Jones Precious Metals Index is down today by 3.5%; gold is up 2%; and silver is up 1%.
I’m going to keep stacking that real hard s#!t!!!
(Editor’s Note: Thanks voxOnox for covering this very important news. I would not be surprised if Hugo does not end up getting his gold. If he does it certainly means that someone else is going to be left out in the cold. Germany has almost all of its gold reserves sitting in the basement of the New York Fed. It is insanity for any foreign nation to have their gold held by another country. I am warning small investors to make sure that they hold their physical metals and trust nobody. I would not put it past our criminal Elite to confiscate those nations that trust us with their gold. Hugo might have just as well tipped off a gold rush, make sure you have yours before the rest of the world wakes up. -Silver Shield.)