This is the bottom line: No one can tell you how low the price of gold and silver will go, or when the bottom will be reached, by using Fibonacci points, ACB Elliott Wave patterns, moving averages or anything “technical.” There is only one thing that will determine when the bottom is in and when the bull market will resume and that is the moment that there is insufficient gold (and silver) to meet the demands coming from Asia. The low prices, derived from COMEX, are causing a huge demand and it has been met, to date, by liquidations of physicals from COMEX and GLD. That day is nearing an end. The only way to slow down the demand to the point that it meets available supply is to allow the price to rise. That will happen, and it’s not far off, but using TA to pick the bottom or the timing is not going to work.
The people who rely on this sell “advice” or mining shares. We stress a bigger picture, the reasons to own physicals, the threat to keeping all your wealth in dollars, and the guaranteed huge price increases in the (artificially suppressed) physical gold and silver market. You will win, and whether you buy at the absolute low or not is something you will only find out after the fact, but you can be certain that gold and silver at these price levels are a steal!
The thing is, this could turn on a dime, and when the price starts to be determined by supply/demand, it will rise fast and to a much higher level (high enough to dramatically slow down the demand from China, Russia, India and the Middle East).
So far, JPMorgan has been able (I’m as certain as I can be using logic and available data) to cap the price of gold and silver, and it would be hard to logically deny that the Fed and the Treasury are not willing partners in this or at least in favor of the policy. Here is what Ted Butler has to say about it, and it makes perfect sense to me…
I would have thought it would be crystal clear by now to the majority of precious metals observers (and not just subscribers) that gold and silver prices are rigged and artificially set on the Comex. The game is simple – big speculators that we call commercials (and are lead by JPMorgan) trick other speculators (mostly technical funds) into buying or selling futures contracts, by rigging short term prices through the means of computer algorithms (HFT). The commercials rig prices lower to induce the tech funds into selling so that the commercials can then buy and then reverse the process to the upside. That’s it; that’s the price rig.
Proving Comex price rigging is the mechanical process of artificial pricing is easy; all you have to do is look at the government-published trading data in the COT and Bank Participation Reports. On big price declines, the technical funds are always the sellers and the commercials are always the buyers. On price jumps, the technical funds are always the buyers and the commercials are always the sellers. Because the commercials are always buying on sell-offs and selling on rallies, they appear to many to be operating legitimately. But when you glimpse slightly beneath the surface and see that the commercials control short term pricing, it should be clear that the commercials are nothing more than puppet masters; controlling how the technical funds will dance.
–Ted Butler, Butler Research, November 9, 2013
As you will see in the following commentary from our friend Jeff Clark below, the sentiment for gold is as bad as it gets. That, dear readers, is usually when markets turn upward! Rothschild had a comment for moments like this – “Buy when there is blood on the streets.”
When you look back at the investments that have made the most money over the past few decades, they’ve always been assets that had reached an extreme—an extreme low or an extreme high. Buying gold at $250 per ounce in 2001… buying tech stocks in the early ’90s or Apple Computer at $8 per share in 2003… shorting real estate in 2007 or the stock market in 2008… the list goes on.
Each of those speculations led to massive returns only because the price of the respective asset was either dramatically undervalued and poised to take off or, in the case of the short sales, a bubble ready to pop.
Fact is, most people run from assets that are at an all-time low… and happily buy into stocks that are reaching their peak. As legendary resource investor Rick Rule likes to say, “You’re either a contrarian or you’re a victim.”
– Jeff Clark, Casey Research, November 11, 2013
Below is an interesting article from King World News:
All gold and silver investors remember the incredible trading action that culminated on June 27th of this year, with gold hitting a low of $1,179.50, and silver plunging to the $18.60 area….
But what is even more remarkable is what investor sentiment is showing today. Sentiment in the silver market has now collapsed to levels, which match the June 27th low. This historic collapse in investor sentiment has taken place even as the price of silver is still roughly 17% higher than it was on that memorable low from June 27th. The number of bulls in the silver market has now plunged a staggering 69% from the peak set in 2011.
Turning to gold, the number of bulls in the gold market has tumbled to only 2% above the low set on June 27th of this year. This historically low sentiment in the gold market is happening even as the price of gold is still $110 higher than the lows set on June 27th. The gold bulls are now a stunning 61% lower than the peak set in 2011.
It will be fascinating to see how this extreme pessimism in both the gold and silver markets affects trading in the weeks to come. It will also be very interesting to see if the gold and silver bears can push prices much lower with such extreme pessimism, particularly with the physical markets remaining at such robust levels.
–Eric King, King World News, November 9, 2013
Bill Holter is working diligently on an article on offshore investing, and he will not be publishing his usual commentary today. I have therefore expanded our Featured Articles section to replace his content, and it is full of good reads today.