Matthew Ung asked,
“What effect will the rise of oil have on gold and silver prices?”

On October 28th, 2009, I attended a Mastermind meeting at the Gold & Silver, Inc headquarters. Michael Maloney went over today’s precious metals market, tomorrow’s economic downturn, the transfer of wealth that we are about to embark upon in the ensuing years and what to do NOW to prepare for it. This was an exclusive group brainstorming on how to educate the world and the best means for communication.

I happened to pull Michael aside to see if he would answer some questions asked by those who submitted from the previous post. He kindly agreed and decided he wanted to answer them through a video. Here’s his answer from the first question:

“Typically they are somewhat connected, something called the gold/oil ratio and they tend to track each other. But there’s another aspect of this…mining costs are very heavily dependent on energy (60% of your mining costs is the cost of energy).

So, as the price of oil goes up, the floor underneath your investment (especially if you’re investing in silver) rises. Silver is currently below mining costs for most mining companies…there are a few that can make a profit at this price, but very, very few. On the average, most silver mining companies lose money currently.

And so, we’re talking about $17 bucks an ounce right now, and they can’t make money. If oil triples, then the floor under your investment goes up by that much also.

So, over the long period of time, silver has to rise then. The world is sort of running out of silver…there’s very little of it. It’s more rare than gold currently as far as the amount investors can buy…what’s on the exchange…what’s available to industry right now.

You can’t have a situation where the world is running out of something and it’s below production costs. That won’t last permenantly…so it means that your “safety net” is going to rise.

Thank you for the question, Matthew.”

-Michael Maloney of www.GoldSilver.com

To Your Success,

Larry Corbi

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