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We settled in rather quickly in Aventura. We learned the ropes last year and this time it was a snap. I am back on board with the newsletter and am glad to see gold back up just below the $1750 level and silver flirting once again with $33.

So far, gold is holding the line above $1740, the number pointed out by Trader David R on Monday.

My friend Mark G. says $1734 gold and $32.50 silver as the numbers that have to hold. Since they did, he now says, we now go up to around $1845 and then pullback. Mark does a lot of trading and has a couple of pretty shrewd contacts that advise him. He is big on trading gold and silver ETFs, but not his core of physicals.

I know, most of you are nervous that gold and silver have pulled back since attempting to top $1,800 and $35. But here is a bit of “perspective” for you – When I fired up my iMac yesterday, the last newsletter I wrote from Florida was on August 14th, just two months ago. I bet you don’t have any idea what the price of gold, silver and platinum were then.

Well, gold was $1,572.30; Silver was $26.90 and platinum was $1,431. This “two steps forward, one step back” dance of the metals is working out very well for you. Relax, you have nothing to worry about!

I guess you just have to get used to it – all of the financial markets, especially gold and silver (which are also “political”) ebb and flow like the tides. Unless you are truly able to accept corrections, pullbacks and maulings along the way, you will have sleepless nights.

The best antidote for your anxiety is to ask yourself one simple question – “What’s changed?” I’m not talking about yesterday’s headline report on inflation or the jobs report, which are so heavily manipulated as to be worthless information. I’m not talking about the latest hype from the head of the IMF, the European Central Bank or the Fed. I mean what has fundamentally changed. A few examples would be if Obama were not re-elected, if Israel bombs the Iranian nuclear sites, Greece leaves the EU or a major bank or brokerage goes under.

It seems to me that virtually anything that will happen between now and the end of the year will either be fundamentally neutral or bullish for the metals. Of course that does not mean that the price of gold and silver will only move sideways or up. That’s because the short-term, the daily price swings are all based on “paper” trades by the large hedge funds and bullion banks. They are focused on making a little profit on a lot of trades. I am focused on making a lot of money on a few trades. So are you, if you have been following our newsletter over the years.

These are fundamentally opposite strategies. Either you are a “trader,” or you are an “investor.” Trading is not a bad thing, but it is not smart to trade your physical metals. Trade your heart out, just don’t do it with your gold and silver (unless they are paper investments like ETFs or stocks). Your core, your physicals, should be set aside until you need them for an emergency, when you retire and need the cash, or for your heirs. That’s one of the most important reasons that I am against owning gold and silver via the ETFs – because they are TOO EASY and convenient as a trading vehicle.

With your physicals, you face a steep 28% long-term capital gains penalty and you have to go through a bit of extra work to box them up and ship them off to us or another dealer to sell back. Plus there is a bid/ask spread, both when you buy and when you sell, so moving in and out is NOT advisable. Sell them only when it makes sense, but not just to avoid another pullback, if you plan to re-purchase them again in a few weeks or a few months. Ride the dips down and add to them, but do not use them to dump and then repurchase. Since the bull market is still in charge and gold has a double or more in its future, the dips don’t mean anything other than a good time to add to your positions.

I have just come across one very interesting article today that I want to call to your attention. It was published over at the 5 Min. Forecast.

Metals Miscellany – 5 Min Forecast

October 16, 2012

Silver is starting the day at $32.84. But a mysterious group of traders billing themselves as “Wynter Benton” is promising to move it big during the next six trading days… on the way to $50 before year-end.

“The Leader wishes to inform our followers that the group will be demonstrating our ability to move the price of silver between Oct. 16 to Oct. 23, 2012,” according to a post on a Yahoo! Finance message board. “We will be updating our moves in real-time during this period.”

Yes, we’re getting deep into the conspiratorial weeds here. But in the midst of contemplating the crimes of politicians and central bankers, to say nothing of “The War on You”, we need an amusing diversion now and then.

“Wynter Benton” purports to be a group of former J.P. Morgan Chase commodities traders who say that JPM engineered the meltdown of MF Global a year ago because the traders were trying to take delivery on a huge amount of physical silver. (How that was supposed to work, we’re not sure, but it’s fun to play along…)

The traders — or the lone fantasist posting in his underwear, depending — made several prescient calls in the silver market in early 2011, but disappeared from view after the MF Global episode.

Wynter Benton reappeared a month ago, promising silver will trade above $50 before Dec. 31, 2012. And last week, he/they promised the demonstration of his/their ability to move the silver price, starting today.

In all likelihood, nothing will come of it. But in case it does, we have it on the record. Heh…

Meanwhile, hedge funds and other big players have upped their gold positions to the highest levels in more than a year.

The weekly Commitments of Traders Report issued by the Commodity Futures Trading Commission showed that holdings of gold-backed ETFs grew by 282,000 ounces last week. That’s the 11th-straight week of inflows.

“Many new positions in both exchange-traded funds and futures have been established in recent weeks,” says Saxo Bank vice president Ole Hansen, “especially short-term leveraged investors who are not married to their positions in the same sense as long-term ETF investors.”

That short-term leverage likely goes far to explain gold’s tumble since Friday. This morning, the price is starting to recover a bit at $1,742.

Continue reading on Agora’s 5 Min. Forecast

I asked my friend David R. what he thought about this article. He replied:

Yahoo finance chat board??? That’s good!  There are no former JPM metal guys out there.  All the same traders are still there!  I think market will remain in range until elections. I am still looking for $30 silver and $1700 gold before the election. The government is manipulating the economic data so more people will do risk off!

That’s what makes this industry so interesting – everyone’s got an opinion. That’s why I try and present both sides of an issue. I want YOU to sit back, digest everything, and make your own decisions. Let’s see who is credible here, the 5 Min. Forecast article or Trader David R?