Gold, silver, and mining stocks have been declining very rapidly in the past several weeks and they have now reached (or are even below) our previous target areas for this downswing. Is this a buying opportunity, or should precious metals investors take additional new factors into account? In the following essay we would like to provide you with our thoughts on the current situation in the precious metals stocks: both big senior companies (represented by the HUI Index and the GDX ETF) and the small-cap juniors (represented by the TSX Venture Index)

Let's begin with the HUI chart (charts courtesy of Stockcharts.com) for more details. (Click to enlarge)

Perhaps you may have heard mention recently of the Austrian School of Economics versus the Keynesian branch. Maybe you saw televised interviews with Congressman Ron Paul (R-Texas), the Congressman who has been trying for decades to pass a bill that would give Congress the power to audit the Federal Reserve Bank. What was once a ridiculed, marginal proposal recently passed the House and will soon be considered by the Senate.

Congressman Paul blames the country’s economic woes on a long-dead economist by the name of John Maynard Keynes, whose present-day adherents, he says, are the ones bringing the country’s economy to the cliff’s edge.

If electric cars are adopted by the market in the US and abroad, there will be a shift in the relative demand growth rate for certain basic materials.

While global population growth and average global standard of living increases will raise overall materials demand across the board, a move toward electric cars, particularly plug-in electric cars, will change the composition of basic materials demand growth.