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Guest Post: Telegraphing The Turnaround In Gold

Tyler Durden's picture




 

Submitted by Jeff Clark via Casey Research,

As of last Friday, gold has now fallen as much 35.4% (based on London PM fix prices) over 96 weeks. But if you're like us, you still recognize that the core reasons for investing in gold haven't changed. People who sold their gold recently made a shortsighted decision. Before too long precious metals will rebound - and probably in a big way.

But when? Does history have any clues about how long we'll have to wait for that rebound?

Perhaps the most constructive way to forecast a turnaround in gold is to look at how its price behaved in prior big corrections.

Here's an updated view of gold's three largest corrections since 2001, along with the time it took the price to return to the old high and stay above that level.

It has taken a significant amount time for gold to return to old highs after each big selloff this cycle. And the bigger the correction, the longer it has taken—with each correction lasting longer than the last.

However, I think our current correction more closely resembles what occurred in 1974-1976 than any of the dips so far this cycle. Here's an updated overlay of the gold price then and now.

As you can see, during the big correction of the 1970s, gold declined 47% and took 187 weeks to recapture old highs. This fits in with the pattern discussed above: the bigger the correction, the lengthier the recovery. Another interesting pattern: the time to reach new highs always equals or exceeds the duration of the decline.

While the current correction hasn't been as deep as that of the mid-'70s, the decline is already longer, and it's the most prolonged of the current cycle. It is thus reasonable to expect gold to take two years or more to regain the $1,900 level and continue beyond. Barring a black swan event, gold will likely log its first annual loss since 2000 this year. These are not predictions, just possibilities, and a reminder that if gold is slow to recover, it's simply adhering to past patterns.

However, it's not all bad news, as the chart shows: gold nearly doubled in the two years from its '76 low to its '78 return to former highs. The message here is obvious: add to your inventory at depressed levels. And don't worry about missing the bottom; investors who waited to buy until gold had retraced 30% of its decline still netted about a 70% gain once it returned to prior highs.

The same patterns hold true with stocks. You can see the high-to-low-to-prior-high time frame was longer, but the gains were bigger once the dust settled.

Investors who bucked the conventional wisdom of the day and bought a basket of gold and silver producers in the autumn of 1976—after they had dropped by almost 70%—more than tripled their investment. We're now approaching the degree of selloff that was seen then, setting up a similar opportunity to profit.

Don't let the long recovery times shown in the charts deter you. Stay focused on the pattern; once the declines reversed, the general trend was up. Contrarians and forward-thinking investors need to prepare for that reality, rather than take umbrage with how long it might take to beat old highs. By the time mainstream analysts—who know little about gold in the first place—declare it has entered a "new" bull market, the lows will be long behind us, along with the best buying opportunities.

Selloffs Can Be Profitable Setups

Once gold bottomed at $103.50 on August 25, 1976, the trend reversed and the metal rose a whopping 721% to peak at $850 on January 21, 1980.

Silver's climb was even more dramatic. From its 1976 low of $4.08, it soared 1,101%. This is the 10-bagger grail of investing, where investors had the chance to add a zero to their initial investments.

But remember: the process was multiyear and began after a dismal two-year decline that was punctuated with sharp selloffs, similar to gold's behavior since its 2011 high. While that's a stupendous return within a short time frame, the biggest gains were seen in the final five months. The patience of some investors would certainly have been tested in those first three years.

Here's a look at the gains for the metals from their respective lows.

Both gold and silver logged double-digit returns every year after the bottom (except silver the first year). Once the momentum had shifted, buying and holding while the fundamental forces played out led to huge profits. No "trading" was necessary; just buy after a big correction and hold on for the ride.

No need to attempt to time the bottom, either; those who bought a year after the lows still reaped gains of 490% for gold and 996% for silver. The largest chunk of profits came in the second year and beyond.

Also of note is that the second leg up in precious metals was bigger than the first. There's no reason to think we won't experience the same thing this time around.

The messages from history are self-evident:

  • Be patient. Odds favor gold emerging from a period of price consolidation and volatility. This process will take time.
  • Be prepared. Big gains follow big selloffs. We can't be certain if the final bottom is in yet, but buying at these levels will ultimately net big profits if you're buying the most solid of the major producers and potentially life-changing gains if you're buying the best juniors.
 

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Tue, 07/09/2013 - 12:49 | 3734327 bigdumbnugly
bigdumbnugly's picture

the turnaround comes the day after kwn throws in the towel.

Tue, 07/09/2013 - 12:59 | 3734369 DoChenRollingBearing
DoChenRollingBearing's picture

"Review of American Hard Assets -- Issue No. 4"

http://tinyurl.com/krozhv7

Tue, 07/09/2013 - 13:20 | 3734412 James_Cole
James_Cole's picture

No need to attempt to time the bottom, either; those who bought a year after the lows still reaped gains of 490% for gold and 996% for silver. The largest chunk of profits came in the second year and beyond.

Buy buy buy!! Always a good time to buy!

Interestingly - and I don't meant to be critical of course - there seems to be a hole in the space time continuum of this meticulously researched Casey article (as all their articles, very very top notch). I notice a dearth of charts from the 80s and 90s. 

What beautiful correction / recovery patterns of gold greatness are you hiding from us Jeff? Don't be such a tease, let us drool at the resilience of pms during those two decades!

life-changing gains if you're buying the best juniors.

Yes, particularly life-changing after they post their financials! 

And potentially life-ending if you happen to buy the worst juniors. 

Pop quiz: what's the difference between the best juniors and the worst juniors?

Answer: A few months!

 

Tue, 07/09/2013 - 13:24 | 3734471 disabledvet
disabledvet's picture

not an expert of course but i wouldn't go crazy either. QE is in my view causing/caused the price of gold and silver to get absolutely crushed contrary to the popular (made for television ad) view. in other words "we have to ditch the whole money printing meme to discover the value of gold and silver" as the argument has been as big a disaster (if not bigger) than the price action. one big reason to buy gold and silver...and other monetary assets...(that does not include any other metal in my view) is because there is so much "idle cash" lying around. what does a huge bank or corporation do with all that cabbage lying around doing nothing? one thing is to buy a gold mine. "it only needs to make a dollar" right? then it's off to "ye olde price manipulation game on the high side" the way Wall Street really plays the game (just look at oil and the price of gasoline, right!) just some idle thoughts of course. i'd be "revving it up" but it costs too much right now.

Tue, 07/09/2013 - 13:30 | 3734506 RockyRacoon
RockyRacoon's picture

I always want to know what Parick Heller thinks.  Yeah, he's in the business, but always seems to have a level-headed commentary.   When he sees manipulation you can rest assured there is likely manipulation.

Where’s The Gold?

 

Tue, 07/09/2013 - 14:10 | 3734662 DoChenRollingBearing
DoChenRollingBearing's picture

Good article!  It would cost peanuts to do an audit of Ft. Knox.

Tue, 07/09/2013 - 15:15 | 3734917 Silveramada
Silveramada's picture

LOL, AND THE INVENTORY will take about 1 hr...lol

 

http://zysites.com/silververitas/

Tue, 07/09/2013 - 17:16 | 3735316 KnightTakesKing
KnightTakesKing's picture

Aaaand, it's gone!

Tue, 07/09/2013 - 13:59 | 3734614 SAT 800
SAT 800's picture

What's wrong with a mining stock? it's a stock; that's what's wrong with it. Buying metal and buying stock are two entirely different things. The rationale for buying mining stocks is that it's a play on metals prices; this is completely crazy. it adds another layer, or several layers, of risk on to the fundamental bet on metals prices. If you want to bet on metals prices, buy metals; not stocks. "A mine is a hole in the ground with a liar standing next to it". Mark Twain.

Tue, 07/09/2013 - 14:22 | 3734702 James_Cole
James_Cole's picture

The rationale for buying mining stocks is that it's a play on metals prices; this is completely crazy.

Correct, particularly the type of 'juniors' a lot of these online hucksters pimp. They're not even a liar with a hole in the ground frequently they're a liar with only a bag of rocks. 

A year ago projects with nothing but grab samples were being pushed to ordinary investors on the pitch of absurd valuations. 

http://www.mining.com/klondike-gold-jumps-after-positive-grab-samples-84...

Fucking insanity. 

As far as actual juniors go, remember they're always owned by BANKS and are totally at the mercy of financial markets. Consider investments accordingly...

Tue, 07/09/2013 - 16:12 | 3735087 Panafrican Funk...
Panafrican Funktron Robot's picture

Casey is now working with Jim Fucking Cramer at TheStreet to pimp gold paper promises, including miners.  More muppets to slay.  Casey has less than zero credibility on gold.  The people that are non-fucking idiots buy phys as insurance/wealth preservation in the event of an adverse fiat currency event, such as, say, the loss of USD hedgemony, or the breakup of the EUR, or the collapse of the JPY, or [insert problem in your local area currency; I'm sure those in Argentina with phys are very much not sad about having it right now].  If you are buying for any other reason (including speculation), you are Kermit the Fucking Frog.

Tue, 07/09/2013 - 16:14 | 3735101 Panafrican Funk...
Panafrican Funktron Robot's picture

I would also really enjoy Eric Sprott telling his retail investors in PHYS just how much they actually have to own in order to redeem for physical gold.  Hint:  If you're less than $450K invested, your shares are cash redeemable only.  Sprott is a fellow Cramer pimp, and can kindly fuck off.

Tue, 07/09/2013 - 16:43 | 3735216 Praetorian Guard
Praetorian Guard's picture

Speaking of Argentine, from some one who lives there:

"Remember those debates about gold being a currency or not? Well, that debate is settled for the Argentine government: Yes, it is a currency. No, you cannot buy it unless you travel to a country that uses it. You may be wondering “But no country uses gold as currency….” Ok, so you cant buy it then. Genius. This is how they explain the new ban, given that after the USD ban people ran to gold to protect themselves, the sale of gold going up 400%. Little by little, they have closed all loopholes and windows."

Ownership and use is also banned...

 

Tue, 07/09/2013 - 13:11 | 3734399 oddjob
oddjob's picture

the turnaround comes when big banks are properly positioned on the long side.

Tue, 07/09/2013 - 14:09 | 3734659 Kirk2NCC1701
Kirk2NCC1701's picture

This will happen when they repo the bankrupt gold mines, who will default on their bank loans.

How ironic that mines owe fiat for fiat borrowed. Here, fiat is money, and gold is a metal. Amazing.

Tue, 07/09/2013 - 13:22 | 3734463 Quinvarius
Quinvarius's picture

The number of up votes that comment got indicates the turn around has probably already started. 

Tue, 07/09/2013 - 12:51 | 3734339 jomama
jomama's picture

on a long enough timeline...

Tue, 07/09/2013 - 12:51 | 3734340 Joebloinvestor
Joebloinvestor's picture

Hope it happens in my lifetime and I have enough time left to enjoy it.

Tue, 07/09/2013 - 12:52 | 3734346 101 years and c...
101 years and counting's picture

what a ridiculous post.  finding 1 analog and saying gold will rise because it did then.  gold is in a bubble, has been and will be until about $800-900.  when bubbles pop, they fully deflate.

Tue, 07/09/2013 - 12:57 | 3734367 JailBank
JailBank's picture

I ask this question of people that throw out numbers like $800-900 calls on gold. What makes you say that is the bottom? Is that a number you heard? A number you made up? A number you researched? Just asking, because if you think $800 is the bottom why not $600? What makes you think we haven't seen the bottom already?

Tue, 07/09/2013 - 15:08 | 3734897 akak
akak's picture

I assume that the rationale for his (shallow, unsupported, specious) price prediction for gold is the same as Jon Nadler's in his constant denigrations of gold (and "Radical Goldbug Extremists") in his recently terminated role as bankster mouthpiece, er, official spokesman for Kitco: no matter what the price of gold is today, or how much the price of gold may have recently fallen, its long-term future price is always going to be $300 or $500 lower than the current price.

Tue, 07/09/2013 - 13:02 | 3734386 Vooter
Vooter's picture

Bubbles require PARTICIPATION. How many people do you know who own gold or silver bullion? I can count the number I know on NO HANDS. Nice "bubble." Maybe you should try to think a little before you just pull random thoughts out of your ass...

Tue, 07/09/2013 - 13:35 | 3734515 RockyRacoon
RockyRacoon's picture

Missing element:  Blow-off top.   Ain't seen anything like that yet.  Ask some random folks you stop at the mall what they think about gold.  Your response would be, "Gold what?".  Their mental image is that of gold lamé, not gold coins.

Tue, 07/09/2013 - 13:53 | 3734584 SAT 800
SAT 800's picture

Absolutely. There has never been a market that just "went to sleep"; they go out with a bang.

Tue, 07/09/2013 - 13:07 | 3734404 Al Huxley
Al Huxley's picture

Yeah, mister bubbles, tell me, why was gold a bubble but not this?

 

http://research.stlouisfed.org/fred2/series/BASE

 

And if the above is a bubble, then why has gold suddenly stopped tracking it?  You think the correlation was just coincidental?  Or the money supply's going to suddenly contract by 1.2 Trillion, and gold's just anticipating that?

Tue, 07/09/2013 - 13:15 | 3734432 LawsofPhysics
LawsofPhysics's picture

Well, according to two CEO/owners of successful venture capital firms, "gold is irrelevant in modern finance".

The hubris/arrogance among these ivy league folks is simply unbelievable, you really have to experience it to believe it...

 

Tue, 07/09/2013 - 14:34 | 3734764 ATM
ATM's picture

But it is irrelevant to modern finance which is entirely built upon hope, counterparty risk and creation of currency from the vacuum of space.

However, gold is not irrelevant to modern safekeeping of wealth, or the ancient safekeeping of wealth or any safekeeping of wealth. It is a timeless safekeeper of wealth. It doesn't rely on hope, counterparty solvency, a printing press or full faith and credit of anyone or anything.

 

Tue, 07/09/2013 - 15:23 | 3734934 Praetorian Guard
Praetorian Guard's picture

Most ancient forms of "wealth" were the necessities of life, i.e. FOOD... the world as we know it is completely different than a juxtapose of the past 5000 years +, the key to continued life TODAY is energy, the world is an energy world which translates to food, etc. Never before has the population been at these levels. If we are talking about a collapse in the full faith and credit of fiat, from a global perspective, many people do not understand the importance of JiT, which translates to FOOD and commods that keep lif as we know it and enjoy rolling from day to day. Unfortunately, if things do not pan out, everyone will be in the same boat. "Wealth" become unrealistic, and non essential. The examples of Weimar and Zimbabwe would not correlate to a GLOBAL event. Much like comparing apples and oranges...

Tue, 07/09/2013 - 13:15 | 3734433 The Thunder Child
The Thunder Child's picture

Yes because massive money printing causes bubbles in commodities.....

Tue, 07/09/2013 - 13:31 | 3734508 oddjob
oddjob's picture

How much grain does the Federal reserve keep in the basement?

Tue, 07/09/2013 - 14:35 | 3734767 ATM
ATM's picture

Eventually.

Tue, 07/09/2013 - 13:17 | 3734446 resurger
resurger's picture

maybe you should go back and read gold lease rates goes negative, or maybe you dont know what that means you nub fuck troll.

Tue, 07/09/2013 - 13:29 | 3734493 Quinvarius
Quinvarius's picture

Because oil and iron ore are both up 10x since 1999, you think gold up 50% in 40 years is a bubble? 

LOL.  Dude.  Turn off the TV.  There is no metric by which gold is in a bubble.  Especially not here.  This price is the result of CB dumping.

Tue, 07/09/2013 - 13:52 | 3734580 SAT 800
SAT 800's picture

GLD sold off 5.2 Tonnes last month. Hedge funds and Sheeple are dumping; basically. Central Banks are large and unwieldy creatures; and there's no reported sales; and they do get reported.

Tue, 07/09/2013 - 13:58 | 3734612 Quinvarius
Quinvarius's picture

CB's lease their gold to others to sell.  They rarely report a sale.  But they lose a lot of gold into the market via leases. 

Tue, 07/09/2013 - 14:03 | 3734626 Al Huxley
Al Huxley's picture

GLD sold 14 tons YESTERDAY (according to their dubious inventory reporting, anyway).  Even as of June 18 they had 1001 tons.  Now down to 946.  At the current rate they'll be out by this time next year, if not sooner.

Tue, 07/09/2013 - 15:41 | 3734986 Temporalist
Temporalist's picture

Well Al we are all doing our part and trying to alleviate them of their nasty barbarous relics before they run out.

Tue, 07/09/2013 - 14:12 | 3734669 silverserfer
silverserfer's picture

Gas prices are a bubble too. Dont buy gas untill its $under $2 a gallon.

Tue, 07/09/2013 - 12:54 | 3734354 gjp
gjp's picture

at this point it's not going to turn around until the banksters really lose control ... a lot of other shit may be going down at the same time

Tue, 07/09/2013 - 12:55 | 3734357 Scro
Scro's picture

Charts and analysis are pretty but do they take into account psychotic behavior?

Tue, 07/09/2013 - 13:38 | 3734528 RockyRacoon
RockyRacoon's picture

Which brings the modern media to mind.  If gold is such a relic, why is the "price" even reported -- anywhere by anyone?  Why does it roll up at the top of the CNBC screen a hundred times an hour? They can't have it both ways.

Tue, 07/09/2013 - 13:48 | 3734567 Tinky
Tinky's picture

Simpler yet, why is it obviously so important for Central Banks to accumulate and own it?

Tue, 07/09/2013 - 14:33 | 3734758 viahj
viahj's picture

because we are still pricing gold in $, but will not be doing so forever.

Tue, 07/09/2013 - 14:37 | 3734777 ATM
ATM's picture

Doesn't matter what you price it in. 

Tue, 07/09/2013 - 17:23 | 3735335 KnightTakesKing
KnightTakesKing's picture

Tradition.

/s

Tue, 07/09/2013 - 20:43 | 3735795 RockyRacoon
RockyRacoon's picture

Oh.  Yeah.  I forgot.  Ben's famous (last) words.

Tue, 07/09/2013 - 12:59 | 3734370 Quaderratic Probing
Quaderratic Probing's picture

Straight line from bottoms at 22,29 and 35 tells me if we get another naked short soon and the Central banks want to break Gold...don't get in the way of it

Tue, 07/09/2013 - 15:12 | 3734907 akak
akak's picture

Despite their pretensions of omnipotence, central banksters are not God (although they do remarkably resemble the other guy who lives 'down below').

Tue, 07/09/2013 - 12:59 | 3734373 dr.charlemagne
dr.charlemagne's picture

JUST KEEP STACKING. I AM LOVING THIS

Tue, 07/09/2013 - 13:11 | 3734418 machineh
machineh's picture

Me too.

Just jumped off the Golden Gate Bridge ... love the sensation of flying!

sent from my iPhone

Tue, 07/09/2013 - 12:59 | 3734377 IridiumRebel
IridiumRebel's picture

Yes, but where is the chart that covers the complete and total manipulation by big banks and hedgies that make all charts worth shit when they do whatever they can to kill sentiment on these fraud exposing, money since the dawn of history, commodities called PMs?

Tue, 07/09/2013 - 15:01 | 3734873 Raynja
Raynja's picture

what do you think happened in the 70s?

Tue, 07/09/2013 - 13:03 | 3734391 Al Huxley
Al Huxley's picture

I wonder if Shanghai took control of the gold price last night.  Comex and GLD inventories disappearing, and for the first time I can remember, price went up ~20 in the Asian market and DIDN'T get sold right back down at either London or New York open, and has been indecisive all day.

Tue, 07/09/2013 - 13:07 | 3734403 Bastiat
Bastiat's picture

Good point.

Tue, 07/09/2013 - 13:30 | 3734505 fonzannoon
fonzannoon's picture

Al it seems like gold is just deflating slowly throughout the day, pretty normal, no?

Tue, 07/09/2013 - 13:51 | 3734579 Al Huxley
Al Huxley's picture

Usually I've noticed that if Asia bids it up, then New York will bring it down to the previous day's close first thing in the morning, and then move the market from there.  The sideways drift is pretty normal but the lack of that big initial break seems different.  If it repeats tonight it might be significant. 

Tue, 07/09/2013 - 13:49 | 3734572 SAT 800
SAT 800's picture

That's the way to make use of the 24hr. charts. Good for you. It looks to me like Hong Kong is leading again; and it's basically an un-answerable force as far as New Yawk is concerned.

Tue, 07/09/2013 - 13:04 | 3734393 JustObserving
JustObserving's picture

Tomorrow Bernanke will speak.  So gold and silver will be attacked.  It is more regular than the finest Chronograph.  At least, our crooks are predictable.

Tue, 07/09/2013 - 13:50 | 3734578 eddiebe
eddiebe's picture

Just, 

Unless of course he decides to do a switcheroo in policy, or decides to throw a smoke screen and tells his buddies to jack the price up by $50. or so, just so they can fry the longs later. 

Tue, 07/09/2013 - 13:08 | 3734411 greatbeard
greatbeard's picture

If you want to correlate what is happing/will happen now with what happened in the past you need to find another time the Fed decided to crush gold to conver their tracks/save their cronies/pay back Germany.  Charts, technicals, fundamentals, graphs, hype, don't mean nothing.  Gold will turn around when the folks who control it decide to turn it around. 

Tue, 07/09/2013 - 13:10 | 3734416 StandardDeviant
StandardDeviant's picture

I've heard of this Casey Research group before, via John Mauldin's mailing list.  Right now, among other things they're pushing a newsletter which claims to pick promising junior mining stocks, particularly in PMs.

The links in the ZH article point to a page with the usual bold text and bold numbers.  But is it any good?  Has anyone here subscribed to CR's stuff? Made any money?

Tue, 07/09/2013 - 13:41 | 3734541 Spitzer
Spitzer's picture

I made 70% in 2010 to 2011. Realized.  

But this is the worst per forming sector in the world at the moment. That's the way it goes. Some of their picks get good drill results but the market doesn't care.

 

Who needs gold stocks when we have Groupon and home builders?  

Tue, 07/09/2013 - 15:47 | 3735005 Temporalist
Temporalist's picture

Hmmm...maybe that's a trillion fiat idea...Groupon for stocks...Stockon...Groupstock...Menageastock

Tue, 07/09/2013 - 13:46 | 3734545 RockyRacoon
RockyRacoon's picture

I subscribed to one of their letters about 10 years ago.  Performance was about average.  That was then, this is now, so that's no judgement call on my part.  My take-away from the experience was why pay for info that's free from dozens of sources.   If you want somebody to do your thinking for you they are fine.  Sometimes, some people need a culprit for their wrong decisions, but paying for that privilege is not my idea of a good expenditure.  They do have some compelling and informed writers so subscribing to their free online newsletter(s) is recommended.  Ed Steer is one of my faves.

Tue, 07/09/2013 - 13:11 | 3734417 Vooter
Vooter's picture

Physical gold and silver should serve as a hedge against the vomit that rises in your throat when you see a photo of a smirking, neatly coiffed little cunt like Ben Bernanke or Jamie Dimon. Forget the price--the rise in your bullion stacks should simply match the rise in your hatred for these people...

Tue, 07/09/2013 - 13:32 | 3734513 GubbermintWorker
GubbermintWorker's picture

I like the fact that my physical gold and silver is "off the books". They ain't gonna tax or seize what I don't have ;)

Tue, 07/09/2013 - 13:54 | 3734587 Al Huxley
Al Huxley's picture

Well, it was 'off the books' until 20 minutes ago....  You may want to take up boating now.

Tue, 07/09/2013 - 14:20 | 3734690 Deo vindice
Deo vindice's picture

You can probably buy a leaky canoe pretty cheap. Probably scores of PM holders have one for sale. Who knows, they may even give one away as they are likely upset by their poor watercraft purchasing and boating skills.

Tue, 07/09/2013 - 13:14 | 3734427 NipponMarketBlog
NipponMarketBlog's picture

 

 

Spurious correlations are spurious....

Tue, 07/09/2013 - 13:15 | 3734435 Iriestx
Iriestx's picture

Last chance to buy the physical gold dip in this lifetime.  Load up, bitches.

Tue, 07/09/2013 - 13:15 | 3734436 JJ McApe
JJ McApe's picture

i will buy gold gladly when it is above 1600 again. until then i do not trust this thing.

yepp it may all be manipulated BUT the trend seems to be bearish. how ironic, but there is a saying: never catch a falling knive.

all charts and numbers are null anc void in this manipulated toxic environment. the fed is running the show. free markets died a long time ago.

Tue, 07/09/2013 - 13:39 | 3734535 tmosley
tmosley's picture

Buy high?

Does that mean you will sell low, too?

Momo-chasers always get slaughtered in the end.  You had best do your own research, and understand WHY gold has moved like it has, and then use that understanding to chart your course.

Tue, 07/09/2013 - 13:44 | 3734554 Spitzer
Spitzer's picture

Why not buy when the market has settled down? It's not what I am doing but I wouldn't argue with it. 

I buy every month no matter what 

Tue, 07/09/2013 - 14:23 | 3734711 Kirk2NCC1701
Kirk2NCC1701's picture

Let the falling knife bounce a few times before you pick it up. Be patient and principled, not emotional or overly greedy (that clouds judgement).

Don't over-allocate, relative to other assets/investments.

Tue, 07/09/2013 - 14:24 | 3734688 TWSceptic
TWSceptic's picture

Buy high, genius.

It's better to look at fundamentals than TA. Why do you assume gold will never rise again unless it goes to $1600 first? Look at the world, does it look like everything is ok again?

Tue, 07/09/2013 - 13:21 | 3734460 Never One Roach
Never One Roach's picture

Gold up and housing own....it's the first day in weeks I have not seen MSM/Yahoo bashing gold and \or pumping the housing market. They are very responsive to their sponsors...mutual funds and the NAR.

Tue, 07/09/2013 - 13:22 | 3734467 FunkyOldGeezer
FunkyOldGeezer's picture

Gold is going down, until it goes up. There, that's just about as good as this article and saved you a whole heep of wasted time, compared to the above piece.

Tue, 07/09/2013 - 13:46 | 3734560 SAT 800
SAT 800's picture

Yes. that's very true. It's called journalism; you try to get the ignorant masses that make up the readership whipped up to generate page views.

Tue, 07/09/2013 - 13:24 | 3734475 toadold
toadold's picture

DOH! I never thought about dollar cost averaging silver back in the 1980's because silver didn't pay didiends that could be re-invested.

I don't have heart to do a chart of what the results would be if I'd been doing a sliver DGA since 1982.

Tue, 07/09/2013 - 13:27 | 3734492 el Gallinazo
el Gallinazo's picture

The price of gold and silver is still basically the paper price.  Physical does fetch a premium but its percentage over the paper price is still quite small.  The huge drop in the PM's over the last couple of months is obviously due to the Fed placing huge naked shorts against them in the futures market.  And some of it might be due to the big players trying to unload their paper gold before the price falls to zero.

IMO, the real question is when will all the future contract exchanges renege on spot delivery and only permit payment in ferns or turning the contracts over?  When will this "moment of truth" happen?  Who is willing to invest in the futures anyway after Jonny and Jaime stole a couple of billion?  Is all the physical gold now being bought coming from just the bullion bank inventories or is it also coming secretly from USSA and EU treasuries or their CB's?  Has Fort Knox and 33 Liberty cornered the world market in tungsten?  When the future exchanges all renege on delivery of physical, they will lose their power to control the prices, like the tie rods in your front suspension breaking.

Tue, 07/09/2013 - 13:28 | 3734498 debtor of last ...
debtor of last resort's picture

Long before the last dollar comes home, a lot of paper bugs will be stuck with both hands between the closing doors of the LCS.

Tue, 07/09/2013 - 13:32 | 3734517 Michelle
Michelle's picture

Hmmm, cherry picking as usual....where's the freaking chart from 1980-2001????

Sure, show the sheeple only what you want them to see, don't show them the chart that shows gold being in the tank for 21 years.

Tue, 07/09/2013 - 13:39 | 3734533 Caracalla
Caracalla's picture

1980-2001 isn't relevant here because for most of that time we had a low/declining inflation, economic growth scenario in the world economy.  Now, like the 70s, we have an inflationary, low growth or negative growth scenario.  It makes sense to compare apples to apples rather than apples to oranges, which is what comparing today and the 70s to the 1980-2001 period would be.

Tue, 07/09/2013 - 13:43 | 3734547 SAT 800
SAT 800's picture

This can't be repeated too often; 1980 is no more relevant than 1880.

Tue, 07/09/2013 - 14:27 | 3734729 Michelle
Michelle's picture

Sure, this time is different ,that's what they always say....tell ya what, I'll sell you all my gold today at today's prices, but unfortunately I already sold it in 2011, same with silver, AT THE TOP.

Suckers.

Tue, 07/09/2013 - 14:41 | 3734798 Caracalla
Caracalla's picture

LOL, sure you did, Michelle!

Tue, 07/09/2013 - 16:14 | 3735100 Black Swan 9
Black Swan 9's picture

And your cashed-out price in 2011 is sitting in what form of paper now?

Good luck with that.

Please always remember your "Suckers" comment. I guarantee it will come back to haunt you, maybe sooner rather than later.

Tue, 07/09/2013 - 13:32 | 3734520 Caracalla
Caracalla's picture

But Goldman-Sachs and most of the other banks are telling us that the Great Rotation is underway now and that we should sell gold and bonds and buy stocks.

Tue, 07/09/2013 - 13:41 | 3734540 SAT 800
SAT 800's picture

History doesn't provide any information whatsoever as to the timing and shape of the ongoing precious metals market price charts. This should be obvious to anyone who can think straight. History is history. The future market prices will respond to the futures perceived realities. What you can get from history; and what is desperately needed; is time-line perspective. In 2000 Silver sold for 4.35$/oz.; in 2001 it sold for 4.35$/oz. again. A year with nothing to show for it. What happened next? a 1,000% rally. Nothing shorter than a one year chart has any predictive value whatsoever. The modern substitution for thinking and learning is finding people who have the same opinion you do happen to have seized on; for no good reason, and then "joining a club"; which will "validate" your "guess". The recently published wipe out in the rates for the Gold Forward Contracts was definitive; there will be a major rally; you don't really need to know any more than that.

Tue, 07/09/2013 - 13:47 | 3734558 devo
devo's picture

If we have two more years to buy (exchange) low that would be great. I don't think it will happen though because all the other variables are much worse than the 1970s. Our national debt was 450 billion.

Tue, 07/09/2013 - 14:20 | 3734689 silverserfer
silverserfer's picture

one has to look at the US as a net Importer of Gold and silver to understand why the have created a paper game to keep the price as low as possible. To buy on the cheap! 

Tue, 07/09/2013 - 14:33 | 3734755 Kirk2NCC1701
Kirk2NCC1701's picture

I can't help but wonder how much some contrarian financial advisors (stock bears, gold bulls) must be hurting, with ppl wanting to cash in, or who are 'totally pissed' at their gold losses (realized or not) and could've made nice profits in stocks.

And THAT is why you MUST allocate your assets/portfolio, by using proven, timeless principles, and not listen to the trendy advice of shills and brokers.

Live by the sword, die by the sword.

Tue, 07/09/2013 - 15:45 | 3734999 BlackVoid
BlackVoid's picture

If this is as the sole argument for buying gold now, then this is not convincing at all.

Pattern recognition based on 1 pattern fails.

Tue, 07/09/2013 - 18:36 | 3735518 tyler
tyler's picture

To assume the chart is accurate is to assume golds bottomed at -35%

 

What happens at -48.3% to the chart and it numbers

 

When will these wise men wise up?

 

Ahh who you all fooling?  If gold and silver are going to the moon, no price is high enough and lawyers will be busy allocating metals from cold dead hands and handing out the bars to next of kin who will say, "wtf is that?"

Tue, 07/09/2013 - 20:33 | 3735754 Treeplanter
Treeplanter's picture

When the paper market is kaput, inflation spooks the Fed and bonds dive, you want to be loaded up on metal and North American miners.  Expect cartel trouble and nationalizations in Latin America, etc.  Be strapped in for momshots, sell shares on spikes, buy on dips, increase your metal.

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