Trader David R is more optimistic about gold than he has been since last April. He said:
Yes the markets have become more volatile as Dodd Frank is being implemented. The OTC market is going away now so liquidity is drying up now, as all trading has to be on exchange unless you are taking physical delivery. So now cost of business will skyrocket for consumers, producers, and others. The volatility will be more extreme now.
Market wise, I think the Detroit bankruptcy is a game changer for gold! I don’t think people fully understand the economic impact of this yet. The cost of funding is going up for Chicago, New York and other cities, but more importantly large pension funds and other countries that invest in State Bonds may now reconsider other alternatives. Overall this is so bullish for gold, to me, it’s almost like seeing Lehman going under back in 2008!
I think you still continue to buy dips here and watch what happens with Detroit and our government. But the pending government budget fights looming, Obamacare, and Bermonkey stepping down is going to only help gold move higher.
There will be “NO” tapering by the FED; they will increase printing before they decrease it (more QE is more bullish for silver than gold). We all know how this story will end, I’m just not sure yet which chapter we are currently in.
My friend Mark, who lives and dies on the comments (generally very accurate) of, as he puts it, “The Great and Powerful Chartman,” sent me the following below:
The stock market has continued to hold up well and breadth is good. Thus we shouldn’t expect any immediate bear market. Either we get a blow off top like 1987 or a topping process, which now appears more likely. Over several years it’s quite possible for PMs & stocks to diverge and I expect to see that again. Yet the two can be correlated over shorter-term periods.
Here is a thought. Our recovery templates for PMs shows a very good rally into 2014 but basically a six-month consolidation (HUI from 350-400, Gold around $1500) in the first half of 2014. Perhaps that is the period when the stock market will have its biggest decline?
Here we have the views of two successful, professional traders and both are becoming bullish on gold and silver. Trader David R, due to continued QE, political turmoil and a move away from Municipal Bonds by the large funds and foreign investors – and Chartman because of his charts are turning bullish and he is expecting the stock market to falter. All of these factors move liquidity back into gold. For the better part of a year, it has been moving out of precious metals.
I do agree – and expect the PM sector to start moving up this fall (it may be starting right now) and picking up steam after the first of the year.
Larry the Bear (who has been pretty right). Edelson now picks the date that gold and silver will bottom. Mark your calendar – September 26th. He says there will be one more bottom in gold and silver and then, on 9/26 it is up, up and away.
Trader David R and Chartman aren’t on the same page – neither expects another pullback, but it is fine with me if Edelson swings over the bullish view in less than 60 days. I have never tried to “time” my purchases. I am not investing or speculating in gold and silver. Buying near a bottom, or deep into a correction is good enough for me, since I am counting ounces, and with the biggest up-leg in gold and silver still in front of us, a couple of bucks in silver or a hundred or two in gold, is not a game changer. Especially since there is no guarantee that the lower prices will come. We won’t have to wait long to find out. The summer is traditionally the slowest time of the year for the PMs and the NFL training camp is upon us and my wife says, “The leaves are already changing.” This has been a trying 12 months for all of us, but it really looks like things are starting to change.
The 10th Man
In a recent Meet the Press interview, Benjamin Netanyahu discussed the 10th Man Rule. In Israel, he said, all major decisions are put before a panel of 10 men. When the ninth man comes to the same conclusion, it is the duty of the 10th man to disagree. History has taught the Israelis that not considering the unthinkable can be catastrophic. Most Germans and Jews never thought that things like a Holocaust were coming. Most Jews never thought that the Arabs would attack during the High Holidays in 1973. Going with the majority opinion, without carefully considering the alternative is fraught with danger – not just for Israelis, but for all of us.
We are the 10th man. A small group of newsletter writers in the precious metals industry are the voice, the 10th man is speaking up against the MSM reporting that reflect Wall Street, the Federal Reserve and the government’s views on the economy and the dollar. If a “majority consensus” was all that you needed to make proper decisions, life would be very easy. This goes beyond “the contrary investor” principle. I am not suggesting that the “nine voices” are always wrong; indeed they will usually be right, but it is in our best interest to question that majority view because when they are wrong, it is really a big deal.
Who saw Lehman Brothers coming in 2008? Who saw 9/11 coming? For that matter, who saw the huge drop in gold and silver coming? Most game-changers appear out of no-where and only a few people are able to think outside the box and see what is coming.
These days, the “nine” are talking about an improving economy, a stock market that will grow to the sky and how gold is deader than Grogan’s goat. But we are the 10th Man. We say, they are wrong, but you must protect yourself now. It is our duty to disagree, but we are not taking the opposite position just to provide balance or be contrary. That is, unfortunately, exactly how we see things. We use available information. We use past history. We use logic. We are certain that trouble is at the doorstep and gold and silver will resume their move to unimagined new highs. Some of us, including John Williams and Jim Sinclair believe we will start to experience a major drop in the dollar and hyperinflation as soon as next summer. We are the 10th Man.
If you disagree with our conclusions, you should do yourself a favor and try and refute our position. Find flaws in our data. If you are an optimist and don’t want to entertain any views that project big problems ahead, then there is nothing we can do for you. Well, we can always say, “We told you so,” but no one likes to be told that. Better to say, “We are glad (for you) that you listened and took our warnings seriously, while you still had the time.”