The Gold Economy

When it comes to investing in gold and silver, depending on which advertisement you respond to, the sales person will typically push investors towards the product they can make the most money. This tactic is true no matter what industry is involved. Whether it is an insurance salesmen pushing high commission annuities or the financial adivsor pushing illiquid REITs that pay a hefty 6% commission, there is an incentive for the sales person to try and make as much money as possible.

Of course this isn’t always the case, but one should be aware of what an advisor makes

This is a follow-up to a list we generated a few days ago (Top 15 Most Undervalued Gold Stocks by Analyst Target Price).

In that list we identified gold stocks that are deeply undervalued, when comparing the current price to the average analyst target price (used as a proxy for fair value).

We wanted to dig deeper, and collected profitability data on that universe of stocks. We’ve managed to find two stocks from the original list that have been more profitable than their competitors over the last five years, when comparing gross and net profit margins.

Additionally, both

There are some bizarre things going on in the silver market at the moment, reminiscent of the supply shortages and high premiums witnessed in 2008. For starters, silver is currently in both short-term and long-term backwardation, suggesting there is higher demand for silver now than in the future. This is backed up by the U.S. mint reporting all-time record sales for silver eagles during the month of January, with three days still left to go. Sales are on pace to breach 5 million coins sold, shattering the November 2010 record of 4.6 million. It is worth noting that all