Not only did we get the volatility related to the Fed meeting we got the continued down turn in gold and silver I expected today. While gold has still not broken below it’s 2013 double bottom lows in the $1,190 range, silver has closed below the 2013 low. Silver is definitely showing that deflation is still in the air and that will be the subject of my next blog article.
Both metals maintained their strong downtrend with a score of -100 while the mining stocks which have not yet broken their 52 week lows are poised for a further decline. This is what I will be watching closely to see if we get any bounce out of gold or the miners. We are definitely in oversold territory.
It makes no sense to catch a falling knife though, however, dollar cost averaging into an allocation of metals still makes sense. I have used the analogy several times that if investor A bought Apple stock pre-split at $300 a share and investor B bought Apple stock at $400 a share and today Apple was trading at $700 a share, both investor A and investor B would be happy. Yet investor B paid 25% more for their share of Apple stock.
This is how it is with gold and silver today. Prices could fall and if we break last years low for gold, then the precious metals could fall even harder. Some may buy today and others closer to the bottom at whatever price that is. But every investor in gold and silver has to have the confidence as I do that prices will rise in the future.
Remember, gold is still in the 2nd and longest stage and this is the stage where the professionals (market makers) will try and throw you off the precious metals train. I will quote 90 year old Richard Russell on what the 3rd, upcoming stage will bring; “Gold will go to undreamed of heights.” Russell was first referred to me by another 90 year old acquaintance 12 years ago who has since passed away. Russell may not be around to see gold in all its glory, but I thank him for what he has taught me about gold over the years. The best is yet to come for gold and silver. Practice a little patience.
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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