Gold hit an 8 month low today while silver was a little more buoyed closing right where it bottomed in 2013. As such, gold is now rated -100 (it will stay here as long as the price keeps falling, and it not indicative of a time to go long). Silver stayed at -90 for the day. GDX fell from -60 to -70. As I mentioned before, the 2013 lows are still acting like a magnet, but silver showed some resilience at this level. Will gold too?
As may long time readers know, I have been in the deflation camp overall as we still are experiencing the credit contraction of the boom years up culminating in the 2008 financial crisis. I wrote that we would continue down the deflation path in spite of the bounce we have had in commodities from the end of December to earlier this year. But if you look at copper, oil, gold, silver, as well as the strength in the dollar, you can see that deflation is still in the picture. This despite the growth in M2 (money supply). My next article will go over this scenario in more detail, but I did explain the current and future situation in my book written in 2010 via Chapter 4.
Despite all of the issues going on in the world, which many would think might cause a little more fear which we are seeing appear in the VIX which hit a 3 week high. I expect the VIX to come down from here and the stock market to resume its uptrend. The 10 year is hovering around 2.60%, and as it approaches 3% the Fed may just want to do something about it. I don’t think for a second they believe this is a real recovery, but perhaps they can talk the talk next week like Draghi did for a few years and get what they want from the economy/markets. Remember, people still “perceive” relevance.
Lastly, the dollar, which I wrote an article about recently, was flat today. Perhaps this move up is due for a breather and a bounce in the metals will come. Either way, with the Fed meeting next week, expect a lot of volatility.
GLD Chart
SLV Chart
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
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