Last week, ABC Bullion was delighted to attend the 7th annual Gold Investment Symposium, which was held at the Sofitel Sydney Wentworth Hotel. As we have for the past few years now, we were proud to sponsor the event alongside our sister company Custodian Vaults, and were delighted to catch up with not only a number of key industry contacts, but also to talk to many of the attendees, including a large number who are clients of ABC Bullion.

Considering the general pessimism and apathy regarding gold as an investment right now, attendance was not as high as it was back in 2011 when gold was threatening to push through the USD $2000oz mark.

From a contrarian perspective, this is of course encouraging news, and whilst no one was denying or attempting to gloss over the pain that the last three years has brought, their was a general perception that maybe, just maybe, the precious metal community has weathered the worst of this corrective storm, and there will be more profitable times ahead.

As always, Kerry Stevenson and her team did a great job getting together a list of great speakers, including James Turk, founder of Goldmoney.com, David Baker, the Managing Director of the Baker Steel Gold Fund, and Brent Johnston, the CEO of Santiago Capital, an ex Wall Street guy who learned what financial markets were really all about years ago and whose been helping his clients protect their wealth with precious metals ever since.

#HeartofGold

Before getting into the updates on the precious metal sector itself, one of the key issues that was discussed at the Gold Symposium was of course the #heartofgold campaign which is currently occurring in Western Australia.

Symposium Managing Director Kerry Stevenson spoke about it during her opening remarks to get the conference underway, and it was a popular topic of discussion amongst both the attendees and the many mining companies who presented over the course of a couple of days.

Indeed Les Davis, Managing Director of Silver Lake Resources, included the following slide during his company presentation, highlighting the key role the gold mining community plays in Western Australia.

As you can see, the gold mining industry provides thousands of decent paying jobs to hard working Aussies, and the importance of these jobs to the many regional communities where gold is literally the economic heart and lifeblood can’t be overstated.

With that in mind, regardless of your views on gold as an investment right now, I’m sure you can all agree that that with the current market correction, the gold mining community is already doing it tough, and the spectre of higher royalties is something the industry could dearly do without.

As such, I’d highly recommend people support the #heartofgold campaign by signing the online petition, which you can do at the following link.

What did we learn at Symposium?

James Turk got proceedings underway, and did much to calm the nerves of a handful of investors worried about the current state of the precious metal markets. Using charts and data that went back over 100 years, it should still be abundantly clear that gold is still in a secular bull market, especially when one looks at the Dow Gold ratio (measuring the values of shares vs. the value of an ounce of gold).

This ratio, which has bottomed out at around about 1, meaning 1 ounce of gold would buy 1 ‘share’ of the Dow, is currently sitting at about 13, highlighting either further weakness in share prices in the coming years, or much higher precious metal prices. My guess is that we could see some combination of both

Keith Goode, of Eagle Research Advisory also shared his thoughts from a recent trip to China, and the clearly voracious appetite for physical gold up there. On that score, it was interesting to see Koos Jansen’s latest article, confirming that the Chairman of the Shanghai Gold Exchange, Xu Luode, stating that physical gold demand in China in 2013 had indeed topped 2,000 tonnes.

With that in mind, couldn’t help but include the following image from Keiths talk (image originally from Merk Investments)

Says it all really.

Brent Johnson, who’d flown in from San Francisco also delivered an excellent talk, combining his background in finance with this knowledge of precious metals and why he started protecting client wealth in gold and silver many years back.

He also reminded the audience why we haven’t seen higher and higher levels of official inflation yet (outside of stock and property markets of course), pointing to still non-existent money velocity and excess reserves parked at the Federal Reserve, which look like they'll nudge $3 Trillion soon. All that QE and so little effect!

Perhaps most importantly, when it comes to why he’s not overly concerned by the recent correction in precious metals, and in fact why he sees it as an opportunity, Brent stated that; “you either believe in math, or your believe in magic”.

Math, common sense and a history tell you that owning and acquiring physical gold and silver is the smart thing to do today.

Finally, one of my favourite speakers for the conference was Tony Locantro, the editor of Locantro’s life and a regular on Your Money Your Call, which is on Sky Business.

Tony has a ‘unique style’, and doesn’t mince his words when behind a microphone, and his talk was full of optimism about the game changing wealth that can still be made in the precious metal sector.

He probably also got the biggest laugh of the whole 2 days when he reminded everyone that the three most expensive words are “I love you”, but the four most expensive words are “This time is Different”.

Truest words ever spoken when it comes to markets.

Summary

The key takeaways from the conference for me individually, and to most attendees I believe are as follows

• The investment case for precious metals is as strong today if not stronger than when the bull market started approximately 14 years ago

• That this corrective period, whilst painful, is typical of any long term secular bull market, and should be seen, if anything, as an opportunity

• The rationale behind buying and owning precious metals is only likely to strengthen in the coming years

• Precious metals remain the best hedge against the unresolved challenges and overpriced financial markets in the Western world

• Holding a decent portion of your wealth in physical gold and silver should be step number one to diversifying and protecting wealth

• In a time of extreme risk (like now), precious metals also offer a quite unique opportunity for outsized gains, and select gold equities will do incredibly well.

With that in mind, I suggest all readers write down the four or five main reasons they invested in precious metals in the first place.

Then, objectively assess whether or not any of those reasons are no longer relevant. If, like me, you’ve done that and come to the conclusion that all the reasons you bought precious metals in the first place are still valid, then its easier to accept the notion that we are still in all likelihood in the middle of a secular bull market that will take prices much higher.

Armed with that knowledge, you can then either sit tight and hold onto your metal exposure, or even better, use this current corrective period as an opportunity to pick up more metal.

After two days at Gold Symposium, I remain convinced that will be one of if not the most profitable strategies one could pursue in the next few years.

Until next week

Disclaimer

This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. Any prices, quotes or statistics included have been obtained from sources deemed to be reliable, but we do not guarantee their accuracy or completeness. This report was produced in conjunction with ABC Bullion NSW.