Gold is down more than 25% so far this year. The gold bashers are jumping for joy after 11 years of being silenced. Along the way we heard all sorts of slurs from many different angles. At first in the early 2000s we would hear chuckles and laughs or see people roll their eyes. Many who bought gold back at that prescient time wouldn’t even talk about what they had done because they didn’t want people to think that they were “nuts.” “Nuts” as in conspiracy nuts, contrary nuts, or just plain nuts. Then as the internet bubble and equity markets burst, “gold” was called just a flash in the pan and once the stock market got back to “normal” gold would then go back into its bear cage.
As we got into 2003 and ’04 it got a little more serious. I can still remember the debate as to which would reach $500 first, Google or gold? (gold won by a bigger margin than Secretariat could ever have dreamed of). Warren Buffett and other tools like him were trotted out to call gold barbaric and unproductive. Each time that gold reacted and had any pullback at all, TOP was screamed from the 4 corners of the nation and we were assured it was over for gold. We had the big pullback in summer of ’02 and then again in Feb of ’03. We had some doldrums in ’04 and then an extended time in ’05. 2006 started out with a real upside bang, gold reached $730 and peaked on May 15, the following pullback into June 15 was a doozy. Please keep in mind that all along this time period, the media (CNBC) was bearish, brokerages were bearish and you were told that you were “playing with fire.” Maybe you were smart enough to have already ridden the bull this far, “it was a gift” but it was time to end your foolishness.
Then gold cracked the $800, $900 and $1,000 levels going into the Greatest Financial Crisis of 2008. Most people just looked at gold and were amazed. “Amazed” at such a huge bubble and scared. “Scared” to get in because surely at levels over $850…you must be “nuts” (there’s that slur again) to even look at gold. Of course, the only ones who actually called the financial/banking/real estate train wreck of 2007-2009 were those of “Austrian economics.” The Austrians called the crash (some as early as 2005 or ’06), these “nutjobs” as they were called until 2008 were also the ones that were long gold. Long because of inflation, deflation, printing, borrowing, cooking the books, banks and financial institutions defaulting or…because gold is money and when push came to shove “cash” (real money) is where you wanted to be when the house came down.
We sat by and watched gold get monkey hammered down to $696 in Oct. 2008 and we were assured that “deflation” would knock it…and all “commodities” down the drain. Gold was down less than almost ALL “commodities” and I commented at the time that gold was actually holding up better because, well, it’s not a commodity, it is money. Gold was sold off. I am sure as a way to meet margin calls in other areas, this is granted. It was also “managed” on the COMEX but as Roseanne Rosanna Dana Dana says, “Never mind” because the CFTC doesn’t say so. I wrote at the time that the Fed would have to reflate, they would break the Treasury and themselves in the process and that yes, “Gold would be the last man standing.”
Fast forward to 2011 and gold hit $1,900 because of the “AAA” downgrade/fiscal fiasco and then traded between $1,650 and the high $1,800’s until…April of this year. I have written ALL ALONG that you need to be a buyer on any weakness…and it has been weakness we have seen. The bashers have come out in full force saying, “Jim Sinclair, James Turk, Sprott and Embry are all ‘charlatans’ talking their books and ‘ruining’ peoples financial lives.” They are “cads” that have no credibility whatsoever. They are wrong…end of story…just look at the price of gold and particularly silver. They have done nothing but a “disservice” to the bold community and should go hide their heads (me included) in shame for missing this “oh so important top.” Others, who are so much smarter than this group have been correct and did a “service” by “getting people out” in the nick of time. Never mind that these guru’s for the most part have been bearish all the way up and it doesn’t even matter “why” they are/were bearish…they were correct! As I said, just look at the prices of gold and silver. The “top is in”…so it goes. Some say that they are currently long gold and are bullish long term but they “knew” that gold was going down. They say that us “permabulls” have done and are doing a disservice because now no one will listen to us…we were, are wrong and have “discouraged the masses” by screaming BUY to anyone who would listen. “Look what you’ve done!”
Well, where do I start with this one? First, hopefully on the margin, more people have bought on our words rather than sell in “disgust” from them. I am 100% positive that this is the case. More people own gold and silver because of this group who “talks their book” than have ever sold or would be “scared away” now because of a pullback in price. We have seen this type of price action before and we screamed “buy” while they screamed “sell.” Every single time going back to 1999, it was best to have bought.
Until now you say? Well, where are we now? We are now at the end of the road. Governments and central banks are broke and broken. Every single new “acronym plan” has proven to be a bust…just as we’ve said they would be. Nothing has worked and nothing will work until a new and completely overhauled monetary plan is introduced. But, but, but, “Gold is down” you say? Yes it is but it is important to understand “why” or “how” we arrived here. Gold and silver were not sold, they have actually been bought, and it was contracts, futures, paper receipts, “surrogates” that were sold. They were sold when those markets were at “thinnest” of the day. They were sold in amounts that simply dwarf annual production or even amounts that central banks claim to have. The paper surrogates” were sold SPECIFICALLY in a manner to effect price. They were sold in a manner to MAKE price. Physical demand has exploded all over the world and premiums and delivery lags have resulted, real buyers of real metal are buying while sellers of fake, unbacked paper gold were selling in amounts that don’t and cannot exist. “But this cannot be so. It’s illegal!” Yes it is. I will say this, gold and silver prices have been “manufactured,” they are not a product of free market pricing. If they were there they would be multiples of what they are now.
It has also been said that there is no way that a coordinated effort to smash the price of gold could ever happen because it would involve too many people. How many “conspiracy theories” do you need to see turned into conspiracy “facts” before you “get it?” Governments that issue fiat currency have a vested interest in low gold prices as gold (real money) is their direct competitor. Financial institutions also have a vested interest in low gold prices because their pyramid of “paper products” also compete with gold directly. The “media” who trot out expert after expert who bash gold would never give up their “fair and balanced” principles to advance the wishes of government/finance would they? How many dots do you need to be able connect to reality?
So, have we done and are we doing a service or a disservice? We have called bottoms all along the way and have suggested since April and long before to buy any and all weakness. On the other hand there are those who continually try to call “tops.” Granted, there will be one time and many say that “this time” is it that they will be correct. I would tell you this, if you believe that governments will figure out a way to fix their balance sheets, make the banks stable again and in general “right the ship” then believe that the “top” is in for gold and silver and exit this space.
If on the other hand, you don’t believe that those who got us here can get us out…then buy the dips and don’t trade…just accumulate. If we are correct and a revaluation is coming and probably coming very soon, will it make any difference whether you paid $1,200 per ounce or $1,800 per ounce or $500 per ounce years ago? No, it will not. The only important thing at that moment in time is how many ounces you have or even whether you have any ounces or not.
I would like to remind you that this past Monday we woke up to stories of the Chinese banking system in a seizure mode. Was that to have spread into what I have called a “banking holiday.” How would you feel if you had sold your gold at $1,600 and had already re-bought at the then price of $1,380 or so last Friday and your “check was in the mail” to the dealer? Pretty nifty huh? You scalped almost $300 out of the trade…but wait, China happened and your check doesn’t clear and the metal doesn’t arrive…uh oh! Do you see? I don’t know when, Sinclair or any of the gold bulls know when something like this is going to happen but we fully believe that it will. We have made many “whacked out calls” in the past that “could never happen” but are now considered “business as usual”…please don’t ignore this one. We are headed into a currency, debt, banking, stock market and bond market crisis unlike anything ever seen before in history, you can either be prepared and consider this a “service” or disregard it and consider it a disservice.
Opinions are what makes horse races, we have stated ours and they have stated theirs…it is up to you to figure out who’s logic makes the most sense. It is up to you to figure out if the calls for 12 of the past 13 years that were made came from sound logic or were they “pure luck.” Did we “talk our book” or did we genuinely try to help? Have we said one thing yet done another? Have we all put our own skin into the game? In huge oversized percentages? Have we provided a service…or a disservice? You need to figure this out for yourself…it is your future and only yours to protect!