17
May

Understanding Where We Are Now with the Price of Gold and Silver

Many who read what I write know that I sell gold and silver coins and bars for a living. You also know I call the markets like I see them. I try to distinguish short term patterns and help investors buy gold and silver at the right time. I have been dollar bullish for the most part, because of the problems with the Euro and Yen, which I have written about for several years. This has had an effect on the price of gold until recently when we saw the price of gold bounce with a dollar decline.

Dollar Index 5-13

Gold Chart 5-17

Click for larger image

Dennis Gartman’s Bias

One other person who has been negative on the Euro and Yen is Newsletter writer Dennis Gartman. I have to point out something on his micro analysis of late however. He has stuck with his “buy gold in Euro’s” mantra the entire move up in the Euro and the “buy gold in Euro’s” fund (Symbol:GEUR) he operates lost 9% moving from 14.35 to 13.06 from April 10th to May 1st (see chart below). The problem I have with his advice is he is biased towards his own funds. He’s not going to tell you to get out of his fund and buy gold in dollars. Why would he do that?

Gartman fund gold in euros

The Economists Article Bashing Gold

There was an article written in the Economists on gold prices called Buried; Russia is buying gold, but few others are.

I am actually with Dent (who is a deflationist to the extreme) on the deflationary aspect of what’s to come, but what I think Dent doesn’t understand is the fact that the Fed will intervene. They have to intervene. Their model doesn’t work in deflation.

The author then says that alternatives to gold are “bitcoin, property, and contemporary art.” (I am leaving out shares as those should be bought in conjunction with gold in a diversified portfolio and not viewed as “either/or.”)

Of those 3, only bitcoin offers immediate liquidity, but bitcoin has too many issues including problems with the supplier (Mt. Gox/others involved in illegal activities); track record, and volatility (just like gold).

Your average investor is not invested in any of these. Your wealthy investor my be involved in some of these, but they too will buy gold as insurance. These investors also understand asset allocation and take from what is breaking to new highs (stock market), and put it into what has been beaten down (commodities and precious metals).

Understanding Where We Are Now with the Price of Gold and Silver

I think we get declines at some point to lower lows and we get rallies to suck more people in. They are tradeable rallies for those who do trading not hoarding. It is only the buyer of physical gold/silver that wants to try and buy the bottom, but they too need to think about one thing; In 2009, the DOW was at 8,500 and a buyer might have said I am going all in and bought. But the DOW fell to 7,500 and another buyer went all in and got a better price at the low. Today, with the DOW at 18,000+, the buyer who bought the DOW at 8500 doesn’t really care they paid more for their investment sitting on an 111% gain. They of course could have got a 140% gain buying at the low, but seriously, does it matter that much? Wouldn’t to me.

Gold and silver may still have a good few months before we hit those final lows. Whether you buy gold now or wait for this final smack down, just like with the buying the DOW example above, you will be sitting on some of the best returns imaginable in the years ahead. Returns that I think will be much better than the DOW since 2009.

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For those of you who may not know we offer an ETF Research Trading Analysis Service, last week we locked in double digit returns in a few of the leveraged ETFs. We will be offering a Free Trial of the service soon so you can decide how good the service is yourself.

Changes to the Website Coming 

We are also revamping the website and coming out with an online store for the gold and silver coins and bars we offer. I have to laugh because many people come to our website and view us as an information only site and don’t even know we sell gold and silver. I am unique in that unlike most gold dealers who push investors towards high commission coins, I actually provide guidance with my Current Thoughts and Blog Articles in helping investors understand this industry, the economy and how gold and silver fit into a diversified portfolio. This analysis will continue, but we do also offer gold and silver bars and coins at the lowest prices for gold and silverand just need to let investors know we do this and that is why we are changing things up a bit. Please pardon any disruptions that may occur over the next few weeks as we make this transition.

Thank you as always for being a loyal reader and buyer!

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About Doug Eberhardt

Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534

Disclosure:

Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.

All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.