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No Prisoners! Mike Hoy Aug 02, 2004 Oh People; how many times do you have to make the same mistakes before you finally learn? I can tell from all the e-mails I receive that there are so many of you, who are so confused that you are at a complete loss as to what to do. I know you are going through some very complicated times; but you do have answers at your fingertips and in your head. I know the boyz are back at work doing their best to confuse you. I know they need to create value so that you feel you need to pay them for the services they sell. If you sat down and really thought about where the confusion lies, you would realize that the battle exists within yourself. Deep down inside you know what the future holds; • You know that the problems the US and the world face are the most severe they have ever encountered. • You know that all the research and homework that you have spent hours upon hours doing, is telling you the end result is already carved in stone. • You know debt and bankruptcies are going to continue to increase. • You know that the Fed will continue to pump until the day comes when they simply cannot pump anymore. • You know inflation is running rampant and the figures put out by the government are wrong. • You know your bills continue to climb every year. • You know that huge amounts of our country's debt has fallen into the hands of people who hate us and our way of life; you know this debt is going to come back to haunt us at the absolute worst time possible. You know rising interest rates can trigger a derivative debacle. • You know that the dollar will eventually get creamed to reflect its true value. • You know the boyz are running out of time and the dollar is quickly losing favor overseas. • You know the Japanese have said they will no longer support the dollar. Although in their case I think their addiction is kind of like sucking your thumb, it is a little hard to stop. • You know that the demand for oil and gas has gone through the roof while the supplies have peaked creating the potential for a tremendous shortage in the future. • You know that we face a tremendous risk in the near future for a terrorist attack; our government has told us this and this is one of the only things that I believe the Government is being truthful about. • You know that the real estate bubble poses a tremendous risk to the consumer and the financial system. • You know that the refinancing game has come to an end as a result of the rise in interest rates. • You know that rather than let the bubble end our financial institutions are doing everything possible to keep the game going; through adjustable rate mortgages and interest only mortgages. Don't forget that I feel some of this debt lies in money market funds where the investors do not have a clue of the risk in front of them. • You know that people are being allowed to buy homes; people who have no way of being able to make payments as their mortgage rates increase. You know and understand all of this; so what is the problem? The problem is real simple. You have allowed yourself to become confused by people, who we traditionally believe to be more intelligent than ourselves, people who are simply wrong in their assessments of what is truly going on in the markets today. These people know and understand everything that you and I know; but for some reason they feel they must have a major pullback in the price of gold and silver. Maybe they feel they have to justify their own existence by so doing. I fault these people most for the disservice they do to the novice and those who truly do not understand the markets. I fault them because they themselves have no problem at all in telling you that they will be big buyers after they get their pullback. I fault them for believing they truly have your best interest at heart. If they truly had your best interest at heart they would take the totally opposite approach to what they are doing and what they are saying. I fault them for not coming out and saying "we feel the long term will take gold to much higher levels but on the short term we feel that gold is subject to a correction. If we have a correction, add to your positions!" This is a completely different way of letting their readers know that the long term has not changed and investors should take full advantage of weakness in their stocks to add to their positions. These people are making the greatest mistakes of their careers by trying to time the movements in the markets and the price of gold. Traders and technicians are a dime a dozen. They are all playing the same game and eventually they will all end up in the same boat. This is not to say that all traders and technicians are worthless, most are, but a few do very well. The most successful do not need to sell subscriptions to make a living. I wish they were all paid a percentage of the profits for their work. If they were paid in this manner there would only be about 20% still left around. I believe the fundamentals for gold and silver have never been better or more clear. I have never been more excited about the stocks I own than I am today. I see the progress my companies are making and I have nothing but complete faith and confidence in their direction. I can not even begin to imagine being out of my positions. I could care less about what gold does on the short term. I could care less about what the stocks do on the short term. I could care less what the charts are saying, even if I could hear them. Don't you realize that the gold and silver markets are miniscule when compared to the other markets? Don't you realize that the powers that be must do everything in their power to hold gold and silver back? Don't you know that this manipulation can end at any given point in time? Sure it is like a rubber band and there may still be a little stretch left; the longer it takes to snap the higher gold and silver will go. When the time does come for it to end, it will be too late to establish positions at fire sale prices. The next leg of the bull market can begin at any time and the best thing is the fact that all these people, on the sidelines, will be the propelling force behind the move up. There are so many "triggers" out there in the world today that it is impossible for one of them not to be tripped. When this happens the game is over! Without doubt there are many surprises in the future; I can not think of one that would be pleasant. Where will the guru's be then? How will they establish their positions then? The bottom line people; it does not matter what gold and silver do on the short term. Invest in companies for what they will be in the future. Find companies that are well managed with established game plans that are being properly implemented. I own companies I feel will be "Dynamos" in the next 3-5 years. What these companies trade for today is a fraction of what they will be worth in the next five years. My fear, if I took profits and tried to time gold's ups and downs would be the fear of being trapped on the sidelines when the next leg begins. This could guarantee me of being in a position of having to buy my stock back at prices higher than where I sold as well as being faced with a huge tax liability. We paid more in taxes in one account in 2003 than we had contributions into the account. I gained nothing by trading. I believe these people are influenced in their thinking because they are always reacting rather than acting; therefore they had very little profit to begin with. They are only attempting to keep from showing losses as a result of their own poor timing. Once you own a stock where you have doubled or tripled your money you will understand what I am saying. You will sit down, do a little math and realize the stock would have to have a 30% pullback to just make the trade worthwhile after taking taxes and trading profit into consideration, 30% could be on the low side; they never tell you this though. Let's focus on why we own the stocks we own. If you are like me, you own companies that you feel will be huge beneficiaries as they drill up their resources and prove the true value of their resources to the shareholders and financiers. The end result is to achieve production from the assets you own. When I see the results from my favorite stocks I get very excited about what the future holds. I see production and terrific cash flow. I see profits and a much higher stock price in the multiple of at least 5X. I can not even begin to imagine these stocks trading for a price less than where they are right now. BUT, I know the possibility exists for cheaper prices and this, people, excites me more. I am pretty much fully invested but I can and will come up with more money knowing that I am stealing and I am not going to be charged with any crime as a result of taking advantage of the Half Price Sale that is being given by those who are truly lost. The way to make big money in the markets is by taking advantage of situations that occur when one knows the difference. This could possibly be one of those very few times when we get to call our own shots. Buying low has never been cheaper! Buying low on corrections, is always a great way to establish positions with a profit in a short period of time. How many times have we said to ourselves, after a timely purchase of stock:" I wish I would have bought more when the price was cheap?" Corrections are the best time to build stock positions; they allow us to have twenty-twenty hindsight. They give us the ability to take advantage of the knowledge we have. The biggest mistakes we make are the mistakes of acting out of emotion and selling our stock way too early. The way to overcome this is to do the opposite of what our impulse is telling us. An example of this is the hobby of betting on football. Think of how much money you would have made if you would have turned your bets around before you called your bookie. Once you have real profits in your positions you will feel at ease and begin to concentrate on your companies rather than some guy who will never understand long term capital gain. The best way to get started is to step up when no one else wants stock and buy. In a bull market corrections are opportunities not weaknesses If you understand what is going on, in the companies you own or want to buy, this will give you the knowledge to buy when others want to sell. You will be amazed at the nice profits you get when you buy in this manner. E-mail me I can help with companies I own and love. These companies are doing terrific! Remember, your battle is with your conscience. You know through common sense and the hours you have spent on research what the future holds. You know that the fundamentals have never been more obvious, giving you the investment philosophy that you have today. With this as a guideline, do not feel confused because people you once respected have lost their way. It is a sign of intelligence and growth for you to realize that you do not agree with their outlook on the market. It is absolutely OK for you to stand up to these people and tell them they are wrong. Even if they get their pullback, they may never be able to get fills at prices that would have justified their recommendations. I am having trouble getting fills and I am on the buy side in a weak market. They are only kidding themselves if they think that one day they will wake up, turn bullish and get everyone on board at the same time. I believe gold hit its low back in April and May and that we will not see that level again. Who cares! I don't! I only care about my positions and buying them when someone gives me the opportunity to buy them real cheap. If my 3-5 year goal is correct, it does not matter that I owned stocks that appreciated 5X or more. What matters is how many shares I own and where I sell them. I know for fact that if we see gold punch out new highs in the next three years then any gold stock is going to appreciate 5-10X simply because they are in the right industry at the right time. The most ironic point to this whole discussion is the fact that the toughest part is knowing when to sell down the road. If I could just sell within 20% of the highs I would be a real happy man. That is the tough part; not buying at these levels. At these levels it is a no-brainier when looking at where these stocks will be as gold moves up the ladder. Will gold go to $500-$800-$1000-$1500-$2500 who knows at this point in time. I think it is pretty clear that the upside is a whole lot more than the downside. So gold goes back to $325-$350, big deal. See what I mean. The downside is nothing compared to the upside. With this as a guideline; is there any logical reason why we should not be buying with everything we have today? You know the answer to that; now recognize the fact that you do and turn the tables on these people. Do your homework; learn everything you can about the companies you own. Go to their websites and read. As long as the companies you own are doing well, do not let some confused guru talk you out of your position. Take the stand that you know what is going on in your company, or hook up with someone who does know what is going on. When you understand what it is you already know, then you will be much more at ease with your decisions. I get excited just by writing about this subject; I have been in this business a long time and I have to believe the best bull market of all time in any sector may be about to begin again and this is only round 2. I remember the big money that was made in the late 1970's and early 1980's. I wish I had a chance to participate in it back then, but unfortunately brokerage firms just didn't seem to think the precious metals industry had much of a future; sound familiar? This is a lay down in comparison to what went on then, I believe this bull market will easily eclipse the highs of the last bull market. I have tripled our money in the last three years and I believe the next three offer so much more opportunity than the last three. I only hope that the money I make will be worth something when the time comes to cash in. The problems today are so much more serious than those of the 70's and 80's. The overriding question to ask yourself is "do I believe gold will be at a higher price in the future?" If so then play to win! No prisoners! Jul 30, 2004 Mike Hoy Mhoy1954@aol.com 321gold Inc Miami USA