Gold traded back up to $1,400 on Friday, this is an eyelash away from a 20% rise off of the papered lows of late June. This level also puts us $250 or so away from being positive for the year which would make the 13th straight. Will this happen? I firmly believe it will and I don’t think it will be a “year end squeaker” either. As for silver, it has now moved 30% off of its lows; can it cross $32 before year end? Maybe easier than gold going positive for the year in my opinion. Yes I know, just my opinion and “talking my book” again right?
I wanted to write a follow up piece to “Service or Disservice” which I wrote on June 26th (sent the 27th) because that was the exact low AND the height of “bashers” coming out of the woodwork. On that day Larry Edelson, Martin Armstrong and Harry Dent were “guru’s” who were “right.” “Right” for the right reasons, wrong reasons or just lucky? We have since then seen massive drawdowns of metal inventories and shortages hand in hand with big premiums for gold and silver all over the world. To believe now, and after the fact that real gold and silver were sold to create the waterfall in prices (April-June) is to believe that the Easter Bunny will lead Santa’s sled this coming Christmas! The “operation” clearly backfired and it is now only a matter of time before we see the failure of one (or all) paper exchanges for metal. As Jim Sinclair has said, gold will become a 100% cash market with real and full settlement.
So, where are they now? Larry Edelson says that we are “getting close” to the all-clear signal but we could still trade to new lows on gold. Armstrong, as I understand talked about 3 or 4 days up in early July and then down to test $1,000 or below and Harry Dent is talking about $750 gold or less. Still…a “scary” market and one that should be avoided. Are they correct? Time will tell but I personally believe that they are wrong now and they were “lucky” to have “timed” the sale of tons upon tons of paper contracts that “made” price action.
The fact is, since the all-time highs back in 2011 there is now more debt outstanding, more money supply outstanding, more derivatives and less equity. Put simply, the system is far riskier today to a complete and total crack up than where we were then and the reasons to own gold and silver are stronger today than they were then. “Fundamentally,” gold and silver are more valuable and more “necessary” to own now then…than EVER! We in the United States have a Treasury and a central bank that is insolvent. Argue that they are not if you wish, you are only fooling yourself. And “yourself” is what is important here because no one is going to protect you other than “yourself.”
THIS is what I tried to impress upon people at the time, the “emotional fortitude” to get back in would be hard, very hard. If you did sell, where would you get back in? Could you pull the trigger to rebuy during free fall? Could you make yourself buy after a 20% or 30% run up? After taxes, has the drop in price even paid your capital gain tax bill? If you were “smart enough” to have sold was it worth not having the insurance? Have you repurchased yet or are you still waiting for better prices? How long will you wait? I am not smart enough to know when “the day” will arrive that the global Ponzi charade will come down…I am however smart enough to know that it is all a Ponzi, it is all a charade and it is not “if” at this point…it is only “when.” Each day that you “wait” brings us closer and closer to the day that we go “no offer.”
I have said for many years now “do not trade” because if the music stops and you do not have your position…you will be out of position for the remainder of your life with no chance of repair. That said it is important to understand that us “permabulls” will one day and ONLY one day issue a sell recommendation. This will only come AFTER new currencies are introduced. You cannot (you can but it doesn’t make sense to) sit an entire lifetime on top of a pot of gold. After the “reset” you will want to have your capital in “productive” assets whether that means real estate, stocks or whatever. Dollar cost average and keep on stacking because those who arrive in the coming “reset” with wealth intact will be few and far between.
Trying to call a top ANY time before this system resets itself is in my opinion reckless, foolish and can only be dangerous because you have to be correct twice. You have to be correct that a reaction is in fact going to happen AND you must get back in. If you are wrong on either of these…you lose…and in real life there are no “do over’s” or mulligans.