Guest Post: Precious Metal Pullbacks in Perspective

Tyler Durden's picture

Submitted by Jeff Clark of Casey Research

Pullbacks in Perspective

If you're bullish about the long term for gold and silver, it's mouthwatering to watch them undergo a major correction after taking earlier profits that added to your deployable cash. For a little historical perspective on pullbacks, consider the following charts.

The current 15.6% gold decline, while considered a "major" correction, is not out of the ordinary, particularly following the late summer spike. And after each big selloff, there was a price consolidation phase that in every instance led to higher prices. The message: hold on, and buy the big dips.

Not surprisingly, silver's biggest corrections are larger than gold's. This is also true for the rebounds; they've been quite dramatic. If we apply the biggest three-month recovery of 44.3% to the current correction, that would take silver to $40.63… meaning we probably shouldn't expect $60 silver by year-end.

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Pool Shark's picture

 

 

Also looks like a good time to arbitrage the Gold/Platinum ratio...

 Oops, almost forgot:  "Bitchez!"

 

GetZeeGold's picture

 

 

But he didn't forget Bitchez!

trav7777's picture

yes, GET RICH QUICK with SILVER!!!!!111

High Plains Drifter's picture

you are just mad because you missed the bus..........

AldousHuxley's picture

I can't say whether gold is going to rise or fall....but I can say this

 

Chinese may not accept dollars, but they will accept gold.

Crisismode's picture

Just tell me this . . .

 

When does silver hit $50/ounce.?

 

How long until that?

 

Date & Time would be most appreciated . . .

myne's picture

Touche.

For anyone who doesn't know the signifcance, it's the date that many wars are started.

Oh regional Indian's picture

It's the Spring Equinox for heavens sake, literally. Sacrifice, the earth demands sacrifice. Fresh blood, into her so we get food back.

Imagine, they are still playing blood rituals, only it's not High Priests and "Off with his head", it's bombs away!

How would you like your Shekinah?

Shokenah!

Shock n Awe!

ORI

/the-plan/

strannick's picture

Au contraire. We can expect $60 or $100 silver by years end because, the factors that have caused silver's rise to the present exist and are extenuated 100 fold as....

1. Money is dying

2. LBMA and COMEX silver manipulation is dying

bernorange's picture

Alf Field gave a keynote address to the Sydney Gold Symposium where he explained the Elliott Wave pattern mentioned above in the OP:

http://www.jsmineset.com/2011/11/14/keynote-speech-at-sydney-gold-symposium-14-15-november-2011-by-alf-field/

BTFD.

www.pmbug.com

 

tekhneek's picture

Your posts remind me of the guy who wrote the content on the sides of those castille soap bottles you can buy at the grocery store.

Oh regional Indian's picture

Difficult to read but loaded with import?

I'll take that as a compliment! ;-)

ORI

loftgroovv's picture

The date of the next British budget.

americanspirit's picture

24 hours after the Israelis hit Iran

Boop's picture

24 seconds, I think you meant.  Fixed it for you.

ShankyS's picture

Sorry, not buying their shit with good gold. They get fiat and that's it. 

nmewn's picture

lol...that would be an interesting article trav.

An article on, how many have gone bankrupt holding physical paper vs holding physical silver ;-)

Mr Lennon Hendrix's picture

I did.

I sold all of my stocks, bonds, MF, and I put it all on silver and gold a few years ago, and now I am bankrupt, hungry, and lonely, because no one will accept my silver and gold at the bar.

Mr Lennon Hendrix's picture

Sorry, I would rather wait it out.  Someone will eventual take my silver for food.  In the mean time I guess I will just let it appreciate.

Funny how silver is trading 1:1 with equity right now.  It's as if the Algo machines can only make bids when real goods appreciate.  I wonder why....

Maybe the PWG will buy me a drink after all

tmosley's picture

Trav would rather ignore history and immutable laws of economics and go with his "gut", which is to do the exact opposite of whatever I do because I pissed him off.

lulz, good luck with that investment thesis.

trav7777's picture

dude, people like you have cost a lot of people a lot of money with your shameless pumping.  Right at the height of your manic cheerleading, silver crashed almost 50% in price.

The physical did not disconnect from the paper; it is still widely-available, in quantity, for right around the spot price.

Nothing you predicted as imminent came true.  In fact, the opposite happens.  Perhaps you need to accept that you are the equivalent of a chicken little and are actually a MASSIVE FADE.

People who've gotten rich off silver have done so by fading people like you, cliff.

Matt1973's picture

Have to admit that this silver correction has been a religious experience

trav7777's picture

it sort of has been like watching religious whackjobs make predictions that failed and then said whackjobs continued to cling to their religion.

AldousHuxley's picture

that's why all rewards are in afterlife so that you don't come back to tell the truth.

 

http://www.demotivationalposters.org/image/demotivational-poster/0912/di...

Crisismode's picture

Well, Trav777 IS an idiot so . . . .

 

 

Responding to him is like licking Pavlov's Dog!

 

Kinda disgusting.

tmosley's picture

Yeah, because silver ain't dun shit since 2008!

Mr Lennon Hendrix's picture

Trav's bug out bag full of rubles on the other hand....

Mr Lennon Hendrix's picture

To whomever junked me,

wanna fight?

prole's picture

Mr. Travis you're suffering from a mild delusion.

"it sort of has been like watching religious whackjobs make predictions that failed and then said whackjobs continued to cling to their religion."

Predictions that failed? Are you losing contact with reality? Show me the pm holder who got wiped out by holding PMs in the last 2,000 years that you can think of (Hunt excluded he was a paper ponzi speculator too)

Since 1913 the FRN has lost 97?% of its value.

How has a "religious wackjob" PM holder done who held his PM from 1913 until now? 1813? Pick any frikking date?

What prediction failed? You are sounding shrill and nonsensical.

trav7777's picture

oh, gotcha.  I just need to hold silver for 2000 years to get rich like the pumpers promised.  Or do I have to hold for 100 years?

I don't think there's anybody still alive who's been holding PMs since 1813, idiot.  Really, you need to re-read what you type before posting, unless it is your intent to sound stupid.

prole's picture

Well I see you are really good at the insults but you offer no defense of your deluded original post?

I ask again who is the wackjob here?

If you don't want to go back 2000 years or 100 years how about to 1923? 33? 43? 53? 63? 73? 83? 93? (83 and 93 had to ride down a dip here) 2003?

I guess you will just ignore me or insult me more, seeing as how your original (idiotic) post to which I responded is indefensible.

Oh wait---- "get rich like the pumpers promised" I didn't notice that! you're creating a straw man~~ Sorry I didn't notice that I thought we were talking about the sound financial strategy of holding metals. 

Sorry to interrupt that straw-man creation of yours, carry on!

americanspirit's picture

Only if you didn't buy your silver below $10 which, had you been paying attention, you would have.

Hmm...'s picture

I bought gold 2 days ago at $1730+ and also like $66 over spot.

although I believe that Gold may have medium to long term reasons for ownership, I continue to be concerned by the fact that Gold is tracking equities very closely since around Labor Day.

also, it goes without saying that "past performance is no guarantee of future results".   These charts look much like the RE charts did from 2000 to 2007... 

all that said, fundamental analysis would indicate that gold has a good chance of doing well, at least in nominal terms, due to future likely printing by central banks.

it's a big risk, but Gold has a place in a diversified portfolio IMO.

despite that, it sucks that my 20 oz of gold I bought 2 days ago is down like 20 bucks an ounce.  :(

I'm not worried... I just feel like I'm gifted at buying in at tops.

Fukushima Sam's picture

Hold it and forget it until you really need it.  You will know when.

Hmm...'s picture

I know... that's why I bought the stuff in the first place.

Unlike others here, I'm not trying to make a killing.  I'm just trying to tread water and protect some of my assets.

I'm a frugal guy, and I'm a cautious guy.  this type of environment is hell on my nerves.  I've bought gold twice thie year.  Once was over labor day weekend.  once was 2 days ago.  (the other Gold I bought was years ago). Will it pay off or at least be protective going forward, yeah I think so.

but it sucks seeing how hostage I am to the TBTF banks and their machinations.  I just really really wish that gold wasn't tracking equities so closely since September.  I do thinik it'll break ranks at some point... but I'm nervous.

 

Dr Bob's picture

im right there with you.

fellatio is not fattening's picture

Hey Frugal Guy, think outside the box, if your gold is tracking the market (dow or  S&P) and you aren't going to trade the gold, than buy PUTS on the market.  So if both rise your metals rise, if they drop in tandem you will lose on your metals, which you're not selling anyway but will make $$$ on the equity puts to offset the "paper" loss in the other.  Hedge with another asset class.  Hope that helps.

Beam Me Up Scotty's picture

Why is it "hell on your nerves"?  It would be hell on my nerves if I didn't have any.  Couple things to consider.

1. If gold goes down, your stack is still the same size.  Also, other commodities will go down as well.  Gas will go down, and so will food.  So your purchasing power hasnt really changed.  Ya, if you had stayed in cash you could buy more of these items or spend less cash.  But, once again, you still have a stack.

2. If you aren't all "in" in gold, then spend your fiat on day to day activities just like always.  Think of it as a savings account.  You have it.  If the SHTF, will you be able to get your money out of the bank?  Out of your 401K?  Keep some cash at home too.  Why let the banks sit on it and make .001% interest?  Once the SHTF its too late to start stacking or getting your money out of the bank.  Its like waiting until the Hurricane hits before going to the grocery store.  By then its going to be closed.

3.  If and when the SHTF, you won't be able to say, gee, I should really get some gold or silver now.  There won't be any to be found.  Same goes for food.  By the time you realize you need it, the grocery store will be stripped bare.  You need to plan ahead.   That means procuring those things now. 

At least you have a position.  If gold goes down, buy some more.  Im hoping big time for another correction.  Take it down to $1500, ill buy more.  If it goes to $1200 I'll buy more still.

Crisismode's picture

If you think gold is going to $1500.

 

or $1200.

 

you are totally delusional.

 

Best of luck buying at those price points!

Beam Me Up Scotty's picture

Not thinking it will. But if it does, the truck is ready to be backed up.

Raynja's picture

you might want to go look at the first chart in this article again, it is making a strong argument that there will be about a 25% correction as the market tanks. that would put the price of an oz in the 1200-1400$ range.  After that gold will take off in a way that has not been seen in a long time (if ever), but there is a major 'correction' still looming in the near future.

trav7777's picture

I am really expecting more whipsaw consolidation.  After big moves, gold typically does nothing for 6 months to a year.

nmewn's picture

Lemme try my hand at this and see if it will post up...

http://stockcharts.com/h-sc/ui?s=%24GOLD

Nope didn't show.

There is a massive wedge formation with the bottom end of the wedge sitting on top of support at the 50DMA...along with a rising 200. Now, if you follow such things as a trader, even out of curiosity, this can't be good for shorts.

When it happens...it will be massive. But it looks like a spike (in fiat price) is coming just to clear it if nothing else. It (the price) is not just going to languish there.

 

americanspirit's picture

Can you ignore the shills who are paid to panic you? If yes then just sit tight and turn off the TV. And spend more time enjoying life with family and friends. Your gold will take care of itself, and you.

Silver Bully's picture

' I just really really wish that gold wasn't tracking equities so closely since September.  I do thinik it'll break ranks at some point... but I'm nervous.'

Equities and PM's are simply waiting on money printing, at the same point in time. Everyone is banking on Bernanke to print, and he will. But the Fed's last ace is WHEN. Until then, BTFD and be patient. This is my first time too waiting for PM's the pull through a correction ( I wasn't in them back in '08), but I know enough to keep my powder dry. And wait.