Unlike most gold dealers, I don’t spend all my time writing articles that call for a dollar crash or that hyperinflation is around the corner. I could do that and probably get more people to buy, but I would rather present the data as I see it and call the markets better from a short term perspective as well. The long term will take care of itself as gold and silver prices will move higher.
I call the markets like I see them. Below you will find a recap of my 2013 calls on precious metals to get a better understanding of my grasp of what’s going on with gold and silver and hopefully understand why I make the recommendations I do. As of today I am still advising investors to dollar cost average into a precious metals position and I have not yet called a bottom. Despite the current run up in prices I don’t think we have bottomed yet and but I will be writing my all-in article this year as I do think we finally will hit the final lows before gold and silver start their 3rd stage where Dow Theory Letter writer Richard Russell says gold will go to “undreamed of heights.”
Here are my articles in reverse chronological order:
“You can see from this longer term chart that we are still in a Dollar short term uptrend since April of 2011 and the price of gold has fallen since about that time. The question a buyer of gold has to ask, is will the dollar break down from here or continue higher? I am in the camp that it will break higher. This isn’t what a gold bull wants to hear, but for me to say this, it simply means that I am more negative on the Yen and Euro which make up 70% of the Dollar Index. If those go down in value, the Dollar, by default, benefits.”
Why Gold and Silver Will Break to New Lows and Tax Moves to Capitalize Upon
“We are close to breaking the 52 week closing low in gold at $1,192 and do think we break the 52 week lows in both gold and silver and push toward $1,000 now in gold. It is even possible that Market Makers will push gold below the $1,000 mark into the $900′s, on one or two panic sell days. When we do get the final smack down which I have been patiently waiting for, I will be writing my all-in article. For now, I see an up month in gold for January. The one’s doing the selling for tax reasons today will reestablish their positions in the metals in January to take advantage of the coming break to higher highs. But I do expect that one more smack down.”
I called the $10 Billion token taper. “Is there a chance the Fed may do a token taper to make the market think they still have control of the situation? Sure. Especially if the stock market is out of control and interest rates are low enough. But it won’t be much at all. Probably like the $10 billion that the market thought the Fed would do last time they met.”
“Investing in physical gold and silver is not a profit driven investment. It is a mindset. It gives investors the same type of peace of mind that protects their wealth they receive by insuring their home, auto or health…just in case something happens where they need it. What other type of insurance gives a return that is guaranteed not to be zero and has a 4,000 plus year history of purchasing power stability? What other currency can claim such a track record? Is it the Federal Reserve Notes you carry in your wallet that have 42 short years of existence without a relationship to gold? If gold was so invaluable, why do all Central Banks own it? Why do we have any gold at Fort Knox? Why are Germany and other countries asking to take possession of their gold?”
I called the Fed Taper bluff. “I believe the Fed will come out Sept. 17th and 18th next week and say the economy is doing well, but we still need to keep an eye on things. They can’t possibly rattle the markets with any tapering action.”
When gold was $1,420 I called for weaker gold prices till year end. “Lastly, I will lay out the reasoning why gold could fall into the end of the year and why January may just be a stellar month and 2014 and beyond, stellar years. But we have to let this deflationary credit contractions play out a little longer.”
I called the pullback about perfectly. “Since we have had a nice run up in price off the under $1,150 lows for gold, and have now broken through $1,300, expect another test of the lows here at some point. Same goes with silver which has had an even better rebound off the lows.”
When gold was $1,223.40 and silver was $18.36, I said there is an 80% probability of prices moving higher. They did! “What gives me even more confidence that a bottom is in or close to being in, comes from the fact that 8 out of the last 10 summers, including the last 4 years straight, have been positive for gold (See Table Below). If you are conservative, this would be a safer play than silver right now, but personally I like the risk vs. reward for silver. The gold/silver ratio is almost 66 right now and I see that ratio returning to the mid 30′s range again.”
I called the Dead Cat bounce reversal perfectly and gold fell $100. “After this recent run up in price to the present level of $1,470an ounce for gold, I wouldn’t be chasing it. Silver has been a bit of a laggard compared to gold recently, and is showing greater signs of weakness, despite the more than $1 plus run up in price yesterday as it breaches $24.00 an ounce. $1,500 and $25 would be the round figures I see as resistance and the potential for the last and possibly final leg down for precious metals.”
I said that I fully expect over the next few months the Market Makers to test and break the 200 day moving averages lower on both gold and silver. They did! “I fully expect over the next few months the Market Makers to test and break the 200 day moving averages lower on both gold and silver. ”
“So what’s next for gold? A bounce followed by a further pullback in gold breaking to fresh lows is on the horizon. Market Makers like to make investors scream UNCLE, if they can. They will move the price higher over the short term with the goal of getting new investors to think the bottom for gold prices is in (especially those who buy on margin), and then pull the rug out from under them, slamming the price lower. I have seen this pattern 100 times. Eventually, a bottom will be put in, and I will attempt to call it.”
Following are excerpts from 2012 articles:
“We will bottom out in gold and silver. Are we there now? I just don’t know. In 2008 when our economy headed south, gold and silver fell with it. It all depends on what comes from Bernanke’s mouth and the last think I think he wants is for gold and silver to go to the moon quickly. It would reveal just how weak the Fed is. While I believe the Fed is weak, it is still relevant in the minds of investors…..for now.”
“Something’s got to give and the U.S. dollar, being the lesser of two evils and with better data at present, should benefit from this, possibly putting some pressure on gold and silver prices.”
“I feel we will be somewhat status quo with gold and silver for the time being, and I think we need to look for that one burst down for the final opportunity to catch the bottom. My advice is still to dollar cost average into a position and this will give you a better overall price.”
“Gold is still in its second and longest phase. The professionals will still try and buck you off the gold and silver bull. The dips will come.”
“I have been saying that while the U.S. dollar gains strength, primarily against the Euro, it could have some pressure on gold and silver.”
When the HUI (Gold Bug Index of stocks) was $512.56 I made a call to sell gold mining stocks and buy gold. Gold was $1,314.10 then. Gold today is $1,242 about an 6% loss. HUI is $209.90 today, about a 57% decline.
I’m Calling a Top On Gold and Silver Trades
We’ll see what 2014 brings….and I’ll be there to analyze it for you. If you have not signed up for my Newsletter, please do so by filling out the form to the right of this article.
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
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