Jim Sinclair put a short piece out over the weekend titled “Use logic, not your emotions” and admonished the Gold community for selling into the weakness this past week. He is absolutely correct and a great rule of thumb is to always do the opposite of what your stomach tells you to do. So yes, 2012 has been a very choppy year for Gold and it hasn’t “felt good” but it is still up some 10+% for the year and Silver a little better. But why is everyone so nervous about the “next raid?” It appears that people are soooo nervous that Jim worked all weekend long and still couldn’t answer all of his e-mails from those terrified. …I don’t get it but maybe it’s because they are not looking at the big picture correctly.
In my opinion, investors are not and have not in our lifetimes “looked at it” correctly. It has gone like this from 1999 or 2001 (whichever you use to call bottom), Gold “goes up” a little and takes some time to move even 5%… and then the “smash” comes and it loses 3-4% in a day or two and the sentiment turns black and blue. This has been script all the way along, breakouts are nullified, 4 week rallies erased over 1-3 days, CNBC screams “top” or “bubble” several times per year and the attack on “sentiment” has been and is job 1 even while the metals have outperformed everything. So… how should you view this to maybe clear your vision and perk up your OWN sentiments?
Look at the Gold and Silver markets in a “mirror” so to speak so that everything is backwards because that is the way it REALLY is, we have been taught (and very well I might add) to think in terms of Dollars… this is completely wrong. Let me explain. Most people know that the Dollar must be massively printed so they have made the decision to purchase Gold as an escape hatch. But Gold has “gone up,” it has “gone up” substantially. If you were were smart enough or lucky enough to purchase Gold under $300 or Silver close to $4, you have a “home run” …in Dollars. DON’T LOOK AT IT THIS WAY! You still have the same amount of ounces that you had (unless you have added to your positions) as last year or years ago. You don’t have anything MORE than you had 10 years ago; nothing more!
Oh yes, now you have “a million Dollars worth” or whatever Dollar amount but they are still the same ounces that you had before. The way you should look at the volatility that is being “created” AND “used” against your emotions is in absolute reverse of the way you’re perceiving it now. Think of it this way for a moment before going any further… do you honestly believe that inflation is going to go away? Do you believe that medical care, food, electricity, insurance, taxes or anything else that is a daily expense will cost “less Dollars” in the future than what it costs today? Keep thinking… why is this? Because Dollars absolutely MUST be created in ever greater quantities. They are not backed by anything, they have no real or intrinsic value and we know for a fact that their “creators” (The Fed) absolutely MUST exponentially flood the market or the entire financial system will collapse which means that if you hold Gold…? This is all about the Dollar losing its value over time.
When you see a day or a week or a month where “Gold goes down,” this is in fact not true. The Gold is still the same Gold, it is the value of the Dollar that changes VERSUS Gold, not the reverse. Do you really believe that Dollars have any possibility, any scenario at all where over time they can be mass produced with an exponential creation rate yet increase in value? This is not possible other than over very very short periods of time because of sentiment and/or market rigging using… yes, more paper, long term it is simply impossible.
You can either look at Gold and say, “Oh my gosh Gold is up 6 fold, surely there must be something to these ‘smart people’ calling it a bubble.” OR… you can look at it the way it really is. The Dollar has devalued itself versus everything (except other fraudulent paper currencies) for years, 100 to be exact. The Dollar has lost more than 80% vs Gold and nearly 90% vs Silver over the last 11 years. What exactly do you think can be done to make them more “valuable?” What exactly is going to turn the “downtrend” of the Dollar? Is the Treasury all of a sudden going to become a “good credit?” Will the Fed risk “tightening” and taking Dollar credits out of the system? Not even possible in a sci-fi movie!
Unless you can conjure up in your mind ANY scenario where the U.S. can right itself financially and the Fed can magically become a responsible central bank, then how can you let them SCARE YOU out of your metal??? Gold is a bubble? Where oh where will you put your capital if you make the error of selling any Gold? No, really, think about this question. WHERE could you possibly put your capital? Is there a better, more solid, more liquid form of money than Gold? Or Silver? Please, just close your eyes and know for a fact that you have done the logic and done it correctly. The logic: that what has been money for over 5,000 years will still be money, the best money and maybe the ONLY money when the current fraudulent Ponzi scheme and sovereign bond bubble blows up in the faces of everyone. The less fiat that you own… the less powder burns you will receive when it blows!