We are getting a sign of what’s to come this year once again today as the markets sell off, but we’re not quite there yet. What we saw occur was gold rise but the gold mining stocks fall for most of the day. Gold was even up $17 at one point yet the mining ETFs I follow were getting hammered like all other stocks. Then we got a bounce in the miners with the stock market as gold fell $6 in price and as the dollar rose towards the end of the day.
For those who bought gold you are wondering when the bottom is or have we reached it. The answer is, I don’t think we are at the bottom yet. Reason? We are in just the beginning of the deflationary action I have been talking about for so long. As assets move from risk on to risk off they have to find a place somewhere. For many that place is U.S. Treasuries where we have seen strength causing the 10 year to fall below 2%. When people are buying treasuries, you don’t have to pay as high a rate. This should continue. While gold is also known as a safe haven it is much more volatile and less understood by investors. In time you’ll see it will be more understood but for now we have to deal with the volatility and lower prices overall. We did however break the $1,100 mark but that level still seems like a magnet for any moves higher.
Silver took the day off today.
We’ll see what tomorrow brings but the dollar did show some strength today. Take note and watch it for your next move.
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
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.