Today was a great day for all the precious metals. Big deal! This is just the daily “noise” we are currently living with. One day up, one day down, drifting around the $1,300 number (for now) in gold and $20 in silver. These are the dog days of summer (no offense to my wonderful little Shuggie) but in less than two months, the market generally takes off. Will it this year? I’ll tell you by Thanksgiving. I’ve lived through it all the way down and up and down and am biding my time for the next up.
When I started in this industry in late 1983, it was not the best time to be in the business, but you gotta start somewhere. Gold drifted lower and lower for nearly 20 years, but I never gave up. In late 2000, I listened to Richard Russell’s warnings about the stock market crash that was on the horizon, and I started informing our large client base, and then composed primarily of Swiss annuity holders, that the bull market in gold was here. It was time for them to get serious about gold and silver. “Sell your Swiss francs,” I said, “and move into gold and silver.” I made a lot of long-time friends with that call and personally was all-in with my own money by 2001. I made a lot of money the next 11 years.
I didn’t see the smack down coming when gold hit $1,900 and silver topped $46. How could I? It wasn’t warranted. Nothing had changed, nothing important at least. QE was in full force; deficits were topping a trillion a year; America had become one giant welfare state; Bernanke was living up to his name of “Helicopter Ben;” The Chinese were starting to buy huge amounts of gold. How did I miss this large set back? Easy – it made no sense – and it was 100% orchestrated.
Many of you are sick and tired of hearing about market manipulation. I’m just the reporter. It is what it is. But beyond that, it is very important that you understand that manipulation was the cause because that means THE BULL MARKET IS NOT OVER! Had gold and silver actually topped out, and started the inevitable correction that all manias experience, that would be one thing. But this one did not fit the profile. Interest rates did not rise hugely to cause the fall, as happened in the late 70s. The Fed didn’t stop printing money. The derivative monster didn’t go away, it just went underground – and a portion of it left the big banks balance sheets and moved over into the Fed’s balance sheet. All that really happened was the Fed and their buddies at JPMorgan and a few other bullion banks pressured gold down. But this is just setting the gold and silver market up for an explosion to the upside.
Think I’m reading this wrong? This much I can tell you – one of the early lessons I learned from Jim Sinclair was that “The banks that are short now (in the early 2000s) will be the banks that are long when gold finally takes off.” Guess what – JPMorgan has quietly moved from massively short gold (and they always seem to come out on top) to almost totally long. This never happens, but it has happened now. My friend Jim Cook told me over dinner on Thursday night that JPMorgan stands to make $6 billion in profit when the market takes off. I don’t recall if he was talking only in silver or in silver and gold, but you get the drift. They have positioned themselves to make the biggest killing of all. The chumps taking the other side of the trade are the hedge funds, and they are using other people’s money with little if any skin of their own in the game.
Frankly, I have little use for either group, but there will be a winner and a loser and the winner as usual will be JPMorgan and they are LONG. So am I wrong when I tell you the bull market isn’t over, not even close to being over? I don’t think so. Sleep tight; to those of you who own gold and silver, are in good shape and the greedy fund managers are soon to face, as Sinclair so aptly puts it, “A religious experience.”
Oh, one last thing – how could I forget this? Goldman Sachs says gold is going lower, much lower. Since when have they ever given the public good advice? Their history is to say one thing and bet their own money against their recommendation. They must have learned banking form the Rothschilds.
Three different views, left, center and right…No wonder so many people are confused. The truth is – it is what it is and it will change when it changes. To try timing the markets or predicting a price is a fool’s game. Even I fall as a victim to this type of thinking, but there is nothing like a strong correction, manipulated or not, to build humility.
That said, and it is more than most will admit to, I have not lost my faith in gold and silver and continue to accumulate as much as possible because only the price has changed; not the big picture nor the fundamentals.
Below is a video from Kitco News:
This is your typical mainstream response. No mention of JPMorgan’s naked short selling to hold back price. No mention of central banks selling to hold back price. No separation between high demand for physicals and Comex paper on the short end. One has to believe that all economic problems, all derivative issues will go away. Not hard to find bulls everywhere you look out there. Writer thinks QE liquidity went into commodities. I say it went into the stock market. Writer denies $1,200/oz break even cost to mine gold is not relevant. My suggestion is don’t waste your times listening to this kind of commentary. Even Edelson would question this viewpoint.
Van Eck (gold fund) says Gold to hit $1,500 by Fall.
There is no shortage of opinions here. Joe Foster says the big drag on gold is redemption from GLD. He also discusses the huge flow of gold to China. The Chinese consumers AND central bank are big buyers. They are bullish on gold over the next year, as are we.
Van Eck looks at average cost to produce gold is $1,030 and many mines have higher costs. Production will fall at these prices and supply will not dictate the $1,000 price. Companies are already cutting back on spending with gold at $1,300. This will support the gold price.
Even Dennis Gartman is back to liking gold
Of course he repeated that he is NOT A GOLD BUG several times. He is a buyer once again, after a long time out of the market. He acknowledges the egregious reporting of gold on the radio and TV commentary. He believes the bottom is in. I like that but still, I rarely pay any attention to what he has to say – about gold.
He also said that the Fed has no intention of reducing its balance sheet for the next two years. They may reduce the accommodation, but will not stop. This is supportive of the gold price. A lot of central banks, especially emerging banks are under-invested in gold. That will change. Also the Indian government has tried everything to discourage gold buying, but have not succeeded. Gold will continue to go up until it stops. I have no idea where it is going. I am buying gold. I am a believer in momentum. I will continue to buy as long as the market tells me I’m right.
Before handing off to Bill Holter, I thought some of my old timers would get a kick out of this. Susan and I had dinner on Thursday night with Backwoods Jack (formerly Cactus Jack) to celebrate his better half’s birthday. They took us to a very dignified old-money restaurant. It’s lovely, but I can’t wear my Calvin Klein jeans and expensive sport coat there. I always feel out of place at the “exclusive” country clubs and men’s clubs that still refuse to join the 21st century and allow a well-dressed man in jeans through the door. I bet not one in 50 people there own a lick of gold. They are too busy reliving the past, the really old past. They will all decide to buy gold around the time they decide to go out to dinner in a pair of jeans. Now wouldn’t that be something!