Current Thoughts for 7/05/2016

From the Trading Desk

Despite the US being absent from the market yesterday for the July Fourth holiday, there was still plenty of movement in the precious metals.  In thin trading conditions during the Asian time zone, silver ran all the way up to touch $21.22 on the active September Comex silver contract.   The move was short lived though as silver almost immediately retreated, making a low of $19.55, only to recover back above $20 in choppy trading conditions.  The price action today for the precious metals was much more subdued even though other markets were fairly chaotic.  US equities sold off, the GBP made fresh 31 year lows, and crude oil shed 5%.  Gold traded higher for the fifth day in a row and closed today right under $1,360, the level it reached the day the Brexit result was announced.  If it breaks above here, the next target to the upside is psychological resistance at $1,400.

Gold pushed a bit higher today on it’s march to the $1.400 level I have been expecting it to get to. Silver didn’t break the overnight highs from Asia but finished up at a respectable $20.02. I still think one should be selling, locking in profit as we get closer to the $1,400 level. This does not mean to short gold because there can still be a blow-off top to squeeze out the last shorts from this current run.

I came across someone today who wasn’t happy with my past calls for gold to fall below $1,000. I have tried to call the micro view on gold here in my Current Thoughts and I want investors to know that I have been consistent with my dollar cost average into a position with gold. I did explain this position to the guy who made his first comment on Seeking Alpha and it was negative towards me, but it is clear he didn’t follow my advice either. Below is my reply.

Gold did get to $1,050 so I was $50 off and yes, the jury is still out. Remember all the bulls in 2009 before it fell 30%? I have said since 2011 though to dollar cost average into a position as I was bullish the dollar. I was right up until this last topping at 100. I also wrote in April, the date of my last article here Enjoy the Gold Bull While You Can http://seekingalpha.co… about my micro view where you might notice in capital letters, it says I was “BULLISH SILVER” when it was in the $16 range and showed gold could go to the $1,300-$1,400 range when it was in the $1,200 range. Before that I ran a leveraged ETF Service where the reviews were quite good. http://bit.ly/1NHjwXy and I also write about gold and silver in my Current Thoughts 5 days a week calling micro moves.

But let’s analyze the article I wrote April 3rd, 2015, shall we? The title may give you the impression I was “certain” gold would fall. I have said many times that market makers would like to break the psychological back of gold bulls by taking it under $1,000. They still might.

 Here is the title; “Don’t Buy Gold Now, Wait Until It’s Under $1,000”

But in the article I said many things that were bullish gold too. I try to give readers all sides when I tell them to dollar cost average into a position. I mean I do sell gold, right? Should I just be like Peter Schiff and yell dollar crash every year, and sell more gold? Here is what I said;

 10 reasons why gold will rise (and pointed out that I didn’t agree with all of them).

 1. A dollar crash imminent
2. The weak economy
3. Inflation
4. Geopolitical uncertainty (ISIS)
5. Russia/Ukraine
6. Iran (Nukes)
7. Peak gold
8. China and India demand
9. Mints running out of coins
10. It can’t go any lower

 “While we wait for the price of gold to bottom, the best advice I can provide at present is to take from what has moved higher and allocate it to what is being clobbered. Over time, an asset allocation model to investing will help buoy your portfolio.”

 “The best way to do this is to dollar-cost average into an allocation in gold for your portfolio. This doesn’t mean sell all your stocks and buy gold and silver. The stock market can go to 20,000 if it wants to. But gold will, at some point, see some fear back in the market and will shine again.”

 “Buying individual mining stocks will be a play soon enough, but not just yet.”

 Gold was $1,200 and is up 13.25% since that article but it also fell to the $1,050 level where one may have bought or may not have from a dollar cost average approach.

 You don’t have to touch my book, but maybe reading it might keep you from believing everything you read on Seeking Alpha and relying on it as gospel when you sometimes have to think for yourself. I see this is your first comment here so there must be something you are upset about. I try to be clear but maybe I wasn’t enough for you. You could have reached out to me and asked why I think the way I do rather than your comment after the fact playing Monday morning quarterback on my calls. My phone number is listed and I use my real name too. You do get what you pay for on Seeking Alpha when it comes to advice though.

Now that I have defended what I have said, one thing that didn’t occur that I thought would drive gold higher was fear. It didn’t come. The VIX is at record lows and keeps going lower. My next book talks about a deflationary credit contraction occurring and the data points to it. Why is money velocity still declining? Why does the data from many other countries show contraction? What’s happening with the banks in Europe? Why are U.S. treasuries so strong? There is much more as the book is over 400 pages.

If I have missed out on gold bottoming, I’ll be the first to admit it. The fact gold is moving up has been more a dollar phenomenon as anything else and I have consistently told readers to follow the dollar for clues. The last week or so we have had gold and the dollar move up and gold may still hit the $1,400 target or a bit higher (based on the charts), but the usual drivers of gold aren’t there and a repeat of 2009 I feel is around the corner. Rather than apologize, if we get to lower lows, or come on here and say “I would not touch your book,” took you this long to come on here and make a comment. Meanwhile, dollar cost averaging into a position might have done you quite well. Also, my latest Current Thoughts has me telling buyers to start selling as we approach $1,400 in gold. My trading service will be up and running soon enough and I have a 2 week trial for it again too. Then you can see how money can be made while we wait out the gold story. Personally, I tell anyone who calls and have said it repeatedly in articles and my Current Thoughts; “buying gold today is like buying the DOW in 2009 when it was 8,500. Yes, it did fall to 7,500 and someone bought it lower, but with it sitting around 18,000, does either buyer matter? You won’t find a bigger bull on gold than me, except the guys trying to sell you numismatic coins which my company doesn’t sell. If I wanted to be rich I would sell that crap and not be here on Seeking Alpha. Through my first book and this coming book I am simply trying to bring awareness to investors so they can make their own mind up on what to do, and giving the best advice I can on how to do it with gold; dollar cost average into a position.

Reference to articles where I continued to give dollar cost averaging advice;

2010 http://bit.ly/29wJnHY
2011 http://bit.ly/29lIBih
2011 http://bit.ly/29wJ9ka
2013 http://bit.ly/17Ucsne
2013 http://bit.ly/29wJuTK
2014 http://bit.ly/29lIkfl
2015 http://seekingalpha.co…
2016 http://bit.ly/1PAJZdq
2016 http://seekingalpha.co…

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