Guest Post: Your Window to Buy Gold Below $1,700 Is Closing

Tyler Durden's picture


Submitted by Jeff Clark of Casey Research,

Even the hardiest investors have been lamenting that gold prices have been stuck in a rut for a long time. Others with less experience have watched the market waiting for something to happen….

And as always, many bailed out of the market entirely, licking their wounds.

But some, including me, have been stocking up.

We're convinced prices won't stay down forever.

In fact, I think there's a good reason to buy gold if you can, and as soon as possible.

Here's why:

Based on the data I chart below, I believe the window of time to buy gold for less than $1,700 an ounce is very limited.

I examined gold's three largest corrections since the bull market began in 2001, including how long it took to recover from those corrections and establish new highs.

The conclusion that emerged is that the current lull in gold prices will almost certainly end soon, if it hasn't already.

Gold set a record on September 5, 2011 at $1,895 an ounce (London PM Fix) and to date has fallen as low as $1,531 (December 29, 2011), a decline of 19.2%. Gold has tested that level several times since but never broke below it.

In order to determine how long it might take to breach $1,895 again, I measured the time it took to mount new highs after big corrections in the past.

The following chart details the three largest corrections since 2001, and calculates how many weeks it took the gold price to a) breach the old high, and b) stay above that level.

(Click on image to enlarge)

In 2006, after a total decline of 22.6%, it took a year and four months for gold to surpass its old high. After the 2008 meltdown, it was a year and six months later before the metal hit a new record. The 16.2% drop in 2003 lasted seven months, and another two months before the price stayed above it.

You can see that our correction has lasted just shy of a year. If we matched the recovery time of 2006, gold would hit a new high on Christmas Eve (Merry Christmas!).

But here's the thing: that's how long it would take gold to breach $1,900 again – it will take a couple months or more for the price to work up to that level, meaning the remaining time to buy gold under $1,700 will likely be measured in days or weeks, not months.

This is bolstered by the fact that the price moved up strongly last week.

And just as importantly, we're on the doorstep of the seasonally strongest month of the year.

This is an educated guess, of course, but what the data make clear is that all corrections eventually end – even the bloodbath in 2008.

The current lag will come to an end too, and we're certainly closer to the end of this corrective period than the beginning.

This has direct investment implications.

First, once gold breaches its old high, you'll probably never be able to buy it at current prices again in this cycle.

That's a rather obvious statement, but let it sink in.

The next few days or weeks will likely be the very last time you can buy gold below $1,700. You'll have to pay a higher price from then on.

And think about this: it's entirely possible that by this time next year you will never again be able to buy gold for less than $2,000 an ounce – unless maybe it's in "new dollars" or some other currency that circulates with fewer zeros on the notes.

Second, the data can help you ignore the noise about gold's bull market being over and other nonsense spewed from mainstream media types.

If gold doesn't hit $1,900 until December, you'll know this is simply normal price behavior and that they're overlooking basic patterns in the data. And when the price nears that level again and they're caught off guard by it, you'll already be positioned.

There are three intelligent ways to buy gold, understanding them means you are there in good time for the turn around.

Regardless of the date, we're confident that a new high in the gold price will come.

The highs will come because many major currencies are unsound, overburdened with debt, and being actively diluted by governments.

Indeed, the ultimate high could be frighteningly higher than current levels.

As such, we suggest taking advantage of prices that won't be available indefinitely. I think we all need some of nature's cure for man's monetary ills.

The window of time to buy gold at current prices is closing. I suggest taking advantage of the sale while you still can.

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 08/31/2012 - 18:49 | 2754058 spinone
spinone's picture

This is not so much a description of the increasing value of gold, but the decreasing standard of living in the US.

Fri, 08/31/2012 - 18:53 | 2754065 Silver Bug
Silver Bug's picture

And closing quickly QE3 is on the way.

Fri, 08/31/2012 - 22:28 | 2754452 Newsboy
Newsboy's picture

Gold closed at $1666.60 on Tuesday.

That looked like a signal to me, but I don't know WHAT.

Fri, 08/31/2012 - 18:58 | 2754072 tenpanhandle
tenpanhandle's picture

I guess I wasn't so dumb after all as I have been hauling in all the gold I could afford through that sub-1700$ window.


Notice the timing of spinone's comment - 1849 - goldrush!

Fri, 08/31/2012 - 19:26 | 2754138 DoChenRollingBearing
DoChenRollingBearing's picture

I too have been buying decent amounts on gold over the past year.  As money has come in, so have I been using part of that to buy gold.  I see no reason to stop, but my pile has been getting bigger over the decades it took to get it there.

The author of the article might be right.  Although gold will certainly go up and down (the latter right after I buy it), it may very well be our last chance, in the coming days, to get gold as cheaply as you can get it now.

If you are one of the 98% or 99% (of Americans) who do NOT own gold, then:

Buy now and beat the rush!


Two guys in July thought a gold breakout was imminent, I took note:

Sat, 09/01/2012 - 11:50 | 2755001 BooMushroom
BooMushroom's picture

Tough to even buy silver when you don't have a job, let alone gold.

Sat, 09/01/2012 - 02:15 | 2754625 Newager23
Newager23's picture

That is solid analysis, and could be right. I think the odds of this rally reaching a new high are very good. In fact, I will be surprised if we don't see a new high within 12 months. However, the bet that we will soon not see $1700 breached has one hole. What happens if the stock market crashes? Do we really think gold will hold? I doubt it, although I think the dip will be short-lived, and a buying opportunity.

The bottom line is that this gold rally is very likely not over -- nowhere close. The key of course is going to be global economic growth. I'm betting that higher energy prices are our future and not economic growth. Thus, gold is the perfect play for that scenario. Soon the bond market is going to figure this out and gold will rocket upwards. Currently gold is perceived as a risk-on trade, but that is going flip. And when it does flip to a risk-off trade and decouples from stocks, look out. At that time the 3% of global investment funds that are in precious metals, will become 4% and then 5%.

We are not even close to having a bubble in gold, but its coming. Right now if you knock on your neighbors door and ask them if they have any gold investments, the odd are at least 95% will say no. And of the 5% who own gold investments, only about 2% have a substantial amount. In other words, no one owns gold or silver yet. But that is about to change.

No one owns gold or silver yet, because of two reasons: 1) They don't think they need it. 2) They think it is a risky investment. That is about to change. - if you like mining stocks.

Sat, 09/01/2012 - 11:56 | 2755010 BooMushroom
BooMushroom's picture

It IS a risky investment if you don't hide it VERY well. Some people brag about their investment portfolio. Doing it when your whole portfolio can be 'undermined' so to speak, with a shovel, is a big risk.

And if you live in a place with rising crime, or high levels of drug use, you'd better be quiet and have good, multi-layered security.

Sat, 09/01/2012 - 15:55 | 2755316 praxis
praxis's picture

You are soooo correct...they will put a brick through your window and take everything. This happened to a guy I know about three weeks ago. Dopers broke into his apartment while he was at work and stole $3500.00 worth of silver coins, bars he'd been buying during this correction. Since the silver was "hot" and no pawn shops would take it the dumb asses started using it as regular currency...Coin shop owner said workers were pulling his silver out of cash registers all week after the theft trying to cash it in...good guy that coin shop owner...he woulnd't buy any silver that week cos he new his friend and customer has been robbed by those cocksuckers...better listen to what B'shroom says people...motherfuckers will take everything...

Sun, 09/23/2012 - 04:53 | 2821626 HyperinflatmyNutts
HyperinflatmyNutts's picture

Say Hello to my Little Friend........

Sat, 09/01/2012 - 11:56 | 2755011 BooMushroom
BooMushroom's picture

It IS a risky investment if you don't hide it VERY well. Some people brag about their investment portfolio. Doing it when your whole portfolio can be 'undermined' so to speak, with a shovel, is a big risk.

And if you live in a place with rising crime, or high levels of drug use, you'd better be quiet and have good, multi-layered security.

Fri, 08/31/2012 - 18:56 | 2754074 HyperinflatmyNutts
HyperinflatmyNutts's picture

Wake me at $3500 gold $125 silver untill then this is all noise!!!!!

Fri, 08/31/2012 - 19:04 | 2754090 tenpanhandle
tenpanhandle's picture

Note to self:  don't klink the coins too loud or I might wake hibernutts.

Fri, 08/31/2012 - 21:17 | 2754359 killallthefiat
killallthefiat's picture

November '04 was not a severe drop, but took a painfully long time to recover.  In hindsight, just noise.  My targets are way higher though than 3500/125.  Ben "Gono" Bernanke has much more time as Fed chair.

Incidentally, the mainstream financial news (ends with BC) has a show on this afternoon about the merits of the gold standard with L Lehrman.  This is in the cards and has been all along.  We are getting acclimated and then it (the gold standard) will be forced on us.  When they acclimate us though, it does not seem like force.

Strong hands will get rich



Fri, 08/31/2012 - 22:08 | 2754425 JohnG
JohnG's picture

Damn I hate trolls.  It's almost not worth reading nights and weekend anymore.  Fucking troll.

Fri, 08/31/2012 - 18:57 | 2754076 fuu
fuu's picture

"But some, including me, have been stocking up. We're convinced prices won't stay down forever. In fact, I think there's a good reason to buy gold if you can".


So you can make money?

Fri, 08/31/2012 - 19:11 | 2754105 kito
kito's picture

well, if golds ascent is to be viewed as the diametric response to a debased dollar, then no you cant make money on at 10,000 would mean there is no purchasing power in the dollar.....people!! im going to be rich and make money on the increase in the price of gold!! gold to 10,000!!!  well, not if an egg costs 10 if it were to come to that, a holder of gold would allow one to preserve purchasing power.....not to "make money".................

Fri, 08/31/2012 - 19:14 | 2754111 devo
devo's picture

You'd gain purchasing power on things deflating, and there are many and will be many more...

You're assuming an egg increases at the same rate as say, a home...

Also, there could be a fear premium at some point.

But in general, yes, it is to preserve purchasing power.

Fri, 08/31/2012 - 19:42 | 2754168 Winston Churchill
Winston Churchill's picture


My grand father made his fortune leveraging  his gold for copper

at rock bottom price in the depression in the UK.

Copper then quintupled in the run up to WW11.

At some point silver will be the new copper.

There will still be winners even in the worst of economic times.

Fri, 08/31/2012 - 22:06 | 2754423 Jendrzejczyk
Jendrzejczyk's picture

Where the hell have I been? We're at World War 11 already?????

Fri, 08/31/2012 - 22:26 | 2754435 GoinFawr
GoinFawr's picture

WW eleven happened years ago when Gold topped 1200 US bitty byties, just like the bears said it would...we're on WW XXX now. 

Sat, 09/01/2012 - 07:49 | 2754760 Winston Churchill
Winston Churchill's picture

Sorry ,my I key was banziied(coffee eruption).Fixed now.

Sat, 09/01/2012 - 14:10 | 2755214 HungrySeagull
HungrySeagull's picture

Ballsy grandfather.

Even the spectre of total war in his time did not shake his resolve to stack.

Sat, 09/01/2012 - 15:59 | 2755320 praxis
praxis's picture

If Bennie prints enough copper will be the new silver...

Fri, 08/31/2012 - 19:46 | 2754174 Muppet Pimp
Muppet Pimp's picture

Great call on the for profit ed shorts Devo

Fri, 08/31/2012 - 19:48 | 2754182 devo
devo's picture

Hey, no problem. I was wondering if anyone else did it...

Sat, 09/01/2012 - 12:29 | 2755058 knowshitsurelock
knowshitsurelock's picture

To preserve "purchasing power" means, when the blood is running in the streets and the fear is high, you can name your price and get whatever you need.

In Weimar Republic, you could buy one acre of land for an ounce of gold, but trying to find a loaf of bread to buy was almost impossible.

Sat, 09/01/2012 - 12:48 | 2755090 DosZap
DosZap's picture

The worst part of this is, in my opinion, that when this happens, we are going to get the confiscation/turn in orders, or else.

Then what will it be worth?.The .goobers are notorious , and do not be surprised if they pay you $42.00 an oz, for something you paid $1,700.00 oz for.

That will not be preservation of wealth. That will be THEFT.

Gold will be included in the new money that is / must come,it HAS to be.

We serfs will get FRANKED one way or the other.

Right now a dollar is worth approx 1/1692.60th of an ounce of gold. Anyone here think TPTB are going to pay us the market rate when it hits 1/10,000th of an ounce?.

Not me..........................totally in a quandry here. Close to time to sell, and go all Silver?.

You tell me..............................

Fri, 08/31/2012 - 19:22 | 2754137 malikai
malikai's picture

But if you ascribe to the theory that all other asset classes are artificially inflated (think housing) while gold is artificially deflated (think preservation of fiat), you can see a scenario in which gold will be more valuable and buy more stuff as the market returns to mean.

Fri, 08/31/2012 - 19:27 | 2754147 Nevermore Peabody
Nevermore Peabody's picture

That's true if you're only looking at one side of the equation. Gold's up 500% in the past 11 years, but I don't think that's soley due to money supply inflation. Over the past four years, investment demand has also gone up a lot as people, central banks, and even countries have started hedging with gold. That's why you see the price of gold going up x5, but purchacing power of the dollar only being cut in half. Gold does have money-making potential (and silver, too, I hope).

Fri, 08/31/2012 - 19:27 | 2754148 fuu
fuu's picture

I like gold and silver as much as the next guy, but this article blows.

"This is an educated guess, of course, but what the data make clear is that all corrections eventually end – even the bloodbath in 2008."

"First, once gold breaches its old high, you'll probably never be able to buy it at current prices again in this cycle."

"Regardless of the date, we're confident that a new high in the gold price will come."

"The window of time to buy gold at current prices is closing."

Fri, 08/31/2012 - 20:33 | 2754278 GlomarHabu
GlomarHabu's picture



Very few things endure for all time .... corrections end, you and I will end ..but in mans history gold has endured as a store of wealth.

Sat, 09/01/2012 - 12:44 | 2755082 HardAssets
HardAssets's picture

In what way does it blow ?   Other than telling you nothing you didnt know before, that is.

Fri, 08/31/2012 - 19:30 | 2754152 DoChenRollingBearing
DoChenRollingBearing's picture


@ kito

With so much going off the tracks re our financial system, gold is likely to go up MORE than the US$ will go down (inflation).  Hey, one man's opinion.

Also, if there are going to be a lot of people who LOSE in an inflation, there will almost certainly be winners.  Who will those winners be (other than the banksters)?

Fri, 08/31/2012 - 20:30 | 2754268 GlomarHabu
GlomarHabu's picture



People who bought and held gold, say at around $800USD/oz.   Those will be the winners.

H.L Menchen liked to say a cynic was "someone who knew the price of everything and the valuse of nothing"

If history teaches us any economic lessons it's that gold in your own vault is a very good thing,very good.

Fri, 08/31/2012 - 23:36 | 2754508 cranky-old-geezer
cranky-old-geezer's picture



Also, if there are going to be a lot of people who LOSE in an inflation, there will almost certainly be winners.  Who will those winners be (other than the banksters)?

Generally those who own commodities, including gold & silver obviously. 

But they're really not winners since they won't gain any real wealth.   They merely retain their purchasing power while eveyone holding currency-based paper "assets" lose purchasing power, just like they've lost 50% of their purchasing power in the past 4 years.

The only real winners in inflation (and hyperinflation) are those receiving huge bailouts.  They receive way more purchasing power than they lose through currency debasement.

For example the federal government is a huge winner and will continue being a huge winner as long as they continue receiving a $1.5 trillion bailout each year at 1% interest (or less).

Yes, that's what it is, an ongoing bailout.  Selling debt paper (treasury bonds) to the Fed for cash, just like TBTF banks sell various kinds of financial paper to the Fed for cash.  

Obviously those banks are big winners too.   Billions of dollars they receive for near-worthless financial paper brings them way more purchasing power than they lose through currency debasement.

It will be pretty difficult to do any sort of forex play to be a winner, since other currencies are debasing more or less the same rate USD is debasing, maintaining their relative values against other currencies.

That's the point.   Everbody is printing and debasing more or less at the same rate, keeping various currencies more or less stable against each other.   Fed does QE3 further debasing the dollar, ECB does something similar further debasing the Euro, Japan does something similar further debasing the Yen, etc.  It's not really a "race to the bottom".   Everybody wants to debase more or less at the same rate.

You might be able to be a winner with commodity options where you can employ leverage.  Commodities are certainly going to rise in price as the currency further debases.  You don't want futures.  You don't wana take delivery.  You wana profit from the rise in price on a leveraged play hopefully.

With this widespread drought, agricultural commodity options should do really well in the coming months.  Harvest will be disappointing this fall, creating shortages, driving prices up over and above the effect of currency debasement.

To be a true winner you can't merely retain your purchasing power as you would holding physical gold or silver or some other commodity where no leverage is working for you.  

To be a true winner you have to increase your purchasing power substaintially, and that usually requires leverage of some sort.

Sat, 09/01/2012 - 02:42 | 2754636 malikai
malikai's picture

Brilliant summary, and I love the connect between the defecit, fed, and government being bailed out. Excellent way to tie it all together.

Sat, 09/01/2012 - 14:20 | 2755224 devo
devo's picture

Leveraging and not taking delivery is a good way to get MF Globaled...

Sat, 09/01/2012 - 16:51 | 2755394 beachdude
beachdude's picture

"To be a true winner you have to increase your purchasing power substaintially, and that usually requires leverage of some sort."

DAG, and maybe DBA and GLD LEAPS.

Fri, 08/31/2012 - 19:54 | 2754198 msmith9962
msmith9962's picture

So does gold preserve wealth or increase it.  What about the stories of people buying a city block in Weimar with an ounce of gold or whatever.  Say 90% of the population has $100,000 in cash and only 3% of the people have $100,000 in gold.  When the cash becomes worthless 10% of the population becomes much wealthier as they market for anything (cars, apartment buildings, food) is now much smaller. 

I dont know, but this is the way it seems, when the music stops and you are one of the few that has a chair, you have not only preserved your wealth but increased it dramatically.

Maybe that is only in the case of hyperinflation.  Any feedback on this from the big brains here would be appreciated.

Fri, 08/31/2012 - 19:56 | 2754205 msmith9962
msmith9962's picture

Sorry, bad math, very tired.  90% with cash, 10% with gold.

Fri, 08/31/2012 - 20:06 | 2754222 devo
devo's picture

See my post above. Some things will deflate rapidly, others slowly, and others will inflate.

Using the gold for things that have deflated most is probably a wise choice, assuming they are desirable things or will be in the future, and you have all your essentials covered.

In your example, the paper currency was worth ~$0. So in that case, there would be an enormous wealth transfer. If the paper can still purchase something, the wealth transfer effect is less. Also, I don't believe gold was taxed at 25% in Weimar, so there's that. I think ZH and all sound money people need to work on banishing that tax. It really does hold gold down, and I fear they'll raise taxes without public outcry to lower it. Something people must keep in mind is that govt will do everything possible to avoid transfering wealth to average guys who are holding gold (most likely via a tax).

There are websitse like where we can setup petitions for this kind of thing.

Fri, 08/31/2012 - 20:29 | 2754264 honestann
honestann's picture

When fiat crashes, nobody will report their exchanges of real, physical goods for other real, physical goods... whether or not those goods are gold and silver.

Fri, 08/31/2012 - 20:33 | 2754277 devo
devo's picture

For things that don't require a title transfer, etc, that is fine, but say you wanted to trade gold for a home. How do you see that happening? The owner takes the gold, and reports that the house is a "gift" to the stranger? Seems that would trigger an audit.

Fri, 08/31/2012 - 20:54 | 2754316 spinone
spinone's picture

Title transfers of property are already bogus because of the separation of the mortgage and the note.  Without a mortgage the note is meaninless, and vice versa.  But thats a technicality.

Whats important to understand is that the rule of law is just a myth.  Laws and regulations have always been a formalized social conventions.  Social conventions apply differently to different strata of society.

Fri, 08/31/2012 - 23:52 | 2754533 Religion Explained
Religion Explained's picture


Fri, 08/31/2012 - 20:55 | 2754317 spinone
spinone's picture

dupe deleted

Fri, 08/31/2012 - 21:03 | 2754332 seek
seek's picture

Ironically, if you look at title transfers today (at least in my state) you'll see a carryover from the conversion to FRN from the gold standard days -- every real estate title transation I've had has listed the price as "For $10 and other valuable consideration."

I don't think I've ever had to report a real estate transaction to the IRS on the buy side, and presumably the seller would only have to if there was a profit or loss claimed, and even that can be managed in the negotiation ($X in FRN for taxes, Y ounces other consideration.) So there's no real "in" for an audit at the federal level.

The key here is this will only work for places with no mortgage, or morgages held by banks that are, er, flexible.

That said, a federal property tax or title transfer system is one of my personal "four horsemen" indicators of imminent collapse or government coup/takeover. My guess is that it won't happen, but it'll be one the the last-minute proposals to save the system that is made just before everything goes boom.


Fri, 08/31/2012 - 22:13 | 2754431 JohnG
JohnG's picture

Sell it for $1.  I've done that for cars to avoid "emmisions" checks.  I like old trucks that I can actually fix.

Sat, 09/01/2012 - 12:26 | 2755055 Abitdodgie
Abitdodgie's picture

All FRN's have a Maratime lien on them so anything you buy with them belongs to the Bankers , always use one OZ of silver plus FRN's to perchase property.

Do NOT follow this link or you will be banned from the site!