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As far as I know, Larry Edelson is still not convinced that the bull market in gold and silver has returned.  In spite of gold’s recent surge, up over $220 in the last 90 days, he wants you to be on the sidelines.

Earlier this year he wrote the following:

To truly break out to the upside, we need to see gold take out the $1,808 and $1,835 levels — preferably on a weekly or monthly closing basis. Until then, gold remains in a very broad trading range that could easily see gold plunge back down.

Silver, as noted previously, needs to take out the $35.85 level on a monthly closing basis. If silver cannot close above that level on Tuesday, February 28, then it is still at risk of a sharp decline.

He thinks, according to his Technical Analysis, that gold likely will fall below back into the $1400s (before it turns up and make another bull run).  It is possible.  He could be right.  I say the odds of him being correct are about the same as you waking up tomorrow morning to the following sight:

Lest you think I am picking on Larry, I want to make it perfectly clear that I wholeheartedly believe that all of the newsletter writers who try and get you to view the market with their particular version of “technical analysis” are doing YOU a dis-service.  They are turning you into “traders,” when you should be in the “buy and hold” camp.  Besides, there are different interpretations and which one is the correct one?  For a long time, Robert Prechter was given rock-star status with his Elliott Wave Technical Analysis.  I haven’t checked recently, but unless he has recently revised his thinking, Robert has been out of gold and silver for the entire duration of this 11-year bull market.  He is still in the deflation, not inflation camp.

There was a time when you could count on Technical Analysis, but that was when we had free markets here in the US.   But everything changed.  We no longer have free markets.  The techniques that used to work are being rendered unreliable.  As long as the Fed constantly muscles their way in – as long as JP Morgan is free to bully gold and silver around in their playpen over at the COMEX – as long as the PPT is active in supporting the stock market and suppressing gold and silver – as long as the mega-hedge funds are in control of the markets, Technical Analysis is at best, a crap shoot.  That’s why I don’t pay too much attention to it.  It seems to work best “after the fact.”   Instead I rely on the Big Picture and the Primary Trends to keep me focused.

Edelson used the numbers $1,808 and $1,835 as the “safe to come back in the water” points.  Others use $1,775.  Jim Sinclair’s “ANGEL” was at $1,764. It should be noted that Sinclair has never advocated that you trade in and out of this bull market.  His “Angles” are not there for trading purposes; they are there to show you where gold’s support levels are to be found – on the way UP to $3,500 and above.

Leave trading to the experts. One of my biggest gripes with the ETFs (GLD, SLV) is that it is too easy for ordinary people to use them as trading vehicles, allowing them to conveniently trade in and out.  If you own physical gold and silver, the chances are you won’t sell them and for most of us, that has been the best way to play this bull market from day one.

Early this summer, I wrote that gold “could” drop as low as $1,520, but from the time it drifted below $1,600 I wrote that this was a buying opportunity and the risk-reward no longer favored sitting on the sidelines.  Larry either kept silent or worse yet, repeated that until his upper resistance numbers were breached, it was best to wait on the sidelines.  And if you followed his advice, that is where you are still sitting.  That was bad advice, on two levels.  First, he has yet to get you back in, even now with gold around $1775.  Second, he gets you thinking like a “trader,” and that is exactly what you DON’T want to do.  Gold is something you buy, set aside and forget about.  Physical gold, of course.

If gold “corrects” back down to $1,650 so be it.  I will buy more!  But the likelihood is strong that it will not correct below $1,700 and that it will continue to rise, above $1,800 with $1,900 a realistic expectation before the year is up.

Larry, what have you to say?  Your readers are still on the sidelines.  Those who took our advice are up $200.  You are a long-term bull but you are trying to time the market.  Man up and tell them to buy now.  Stop trying to bottom-fish.  You influence a lot of people – do right by them!


The dollar was up today and gold was flat, not down as would usually be the case.  Silver bucked the trend and was up, but barely.  So far, the latest upswing in prices is holding but the Cartel’s “line in the sand” still remains at $1,775 and $35.  Ed Steer asks, “What will JP Morgan do now?”  We shall find out in short order.

Look at the last three days as the NY Comex comes to a close.  Three identical lines and identical closes.  Co-incidence?  I think not.  This is the fingerprint of the Cartel in action.

Now, onto last night’s release from Jim Sinclair.  Jim’s discussion of QE is pretty much all you need to know regarding the “why” and the “where” the dollar, gold and silver are headed.  This information is like the warning printed on a box of Marlboros:

Economic Effects Of QE3 Will Soon Enter The Markets