The manufacturing index for September was weaker than expected today giving gold and silver a little boost of life. Gold finished $8 off its low of $1,204 and silver finished 34 cents off its low of $16.83, both hitting lower lows. The metals remain with scores of -100 along with the mining sector.
Yesterday’s Prediction Comes True
In yesterday;s Current Thoughts I made the comment “I still think we might get a tradeable bounce off of these levels, especially if we get a lower open tomorrow morning.” We did get a tradeable bounce today and the smart investor would have locked in profits on the second move up during trading hours. At some point here we will be getting a bigger bounce that is not just a one day hold that can set up for some nice profits. But as I have repeatedly said, we are going to breach last years lows in gold, so please don’t go all in yet.
Journalists and Financial Advisors Talking Down Gold
As the price of gold continues to fall you will see more and more journalists and advisors knocking it as an investment. I am beginning to now ramp up my support of precious metals even though I do expect them to hit lower lows. The reasoning is I want investors to understand where gold fits in a properly diversified portfolio.
One example of this is a response to a negative article on gold written on Seeking Alpha today written by Cullen Roach founder of Orcam Financial Group, LLC, a financial services firm based in San Diego, CA.
The article is called Putting The Performance Of Gold In Perspective and can be found by clicking here.
My comments refuting much of his logic can be found below the article or by clicking here. It’s worth a read to see the twisted logic advisors have if you have the time. When gold starts shooting up in price again, what will they be saying? What did they say from 2000 to 2012 when gold moved higher every single year?
Some highlights of my critique are below:
Gold is bottoming out here at some point in its cycle and the stock market is topping in its cycle according to P/E historic valuation analysis.
Gold is not just priced in U.S. dollars. Gold is up the last 12 months priced in Euro’s, Yen, Rand, Aussie dollars, Rubles and Canadian dollars.
Gold is good insurance that maintains its purchasing power over time.
Gold is still in a bull market.
10-01-14 GLD Chart
10-01-14 SLV Chart
10-01-14 GDX Chart
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About Doug EberhardtDoug 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.