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Is the Worst Really Over for Gold and Silver?

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September 5, 2013
Ron DeLegge, Editor

Gold prices are down 26% and silver is down 45% over the past two-years and gold experts say the worst is over. Are they right? 

Here’s just a brief summary of their hilarious views and ridiculous behavior:

Gold’s Uptrend is Still Intact: Peter Schiff – Yahoo! Daily Ticker (Dec.6, 2012)
Gold at $5,000 and beyond: Peter Schiff sticks to his call – MarketWatch (Feb.13, 2013)
James Turk ups his $8,000 an ounce peak gold price forecast to $11,000 – Arabian Money (Jan. 6, 2013)
Hedge Fund Billionaire John Paulson Lost $736M In Second Quarter Gold Bloodbath – Forbes (Aug.15, 2013) 

Should it really surprise us that stubborn experts have been so badly wrong about the direction of bullion prices?

The fact is they ignore every important technical and fundamental data point that contradicts their bullish views.

Plus they have a heavily vested interest in being bullish on gold (NYSEARCA:GLD) and silver (NYSEARCA:SLV) because it's good for their businesses. Schiff and Turk both have large marketing enterprises that sell physical bullion to the public. Paulson rakes in hefty fees for making quarterly appearances about why he’s still bullish on gold.

Meanwhile, as their customers continue losing money, gold experts are laughing all the way to the bank. 

LISTEN: How do stock valuations compare today vs. the dot com era?

The uncomfortable truth is that gold prices have been in a bear market since 2011 and gold investment demand has crumbled. Anyone that’s bought and held mining stocks (NYSE:NEM) or physical gold and silver bullion over the past two years probably knows that much.

The Truth About Gold Demand
Is gold demand really up? Actually, it's not. Over the past year, aggregate gold demand is down 23% and is led by a a massive 68% decline in investment demand along with a 62% collapse in buying from central banks. (See table below)


The only two categories that show increasing gold demand is jewelry and bullion bars/coins and both areas are closely tied to consumer behavior, especially in Asia. Is this really bullish?

The fantastic theory that frenzied buying of physical bullion by Chinese and Indian consumers is a bullish signal is laughable. And so are the many colorful conspiracy theories about the manipulation of the gold market.

In case you never got the memo, consumer sentiment is always a contrarian indicator, as the gold experts, once again failed to mention. When besides never would a prudent investor ever make an investment decision based upon what the freakish masses are doing?

WATCH: How Gold Experts Mislead the Public

"Common sense and careful logic show that it is impossible to produce superior investment performance if you buy the same assets at the same time as others are buying," said the great Sir John Templeton.

That means the true sign of any market bottom – gold included – isn’t panic buying, but panic selling. (See Ezekiel 7:19) And by that harsh measure, the gold market has yet to see its capitulation moment.

Profiting from a Gold Shock
Contrary to what the very wrong gold experts have said all along, the ETF Profit Strategy Newsletter alerted its subscribers that the real money in gold and silver would be on the short side.

In our Weekly ETF Pick from Feb.14 we wrote:

“Despite a modestly rising stock market, the Market Vectors Gold Miners (NYSEARCA:GDX) has lagged both the broader U.S. stock market along with the SPDR Gold Shares (GLD) by a very significant margin. At present, GDX trades around $41.50 and is well below both its 50 and 200 day moving average. Buy the Direxion Daily Gold Miners Bear 3x Shares (NYSEARCA:DUST) at these levels. A double digit slide for gold would likely translate into a 20%+ loss in mining stocks. This scenario offers some big upside potential for bears.”

Since then, GDX has slid 31% and we exited our Feb.14 DUST trade with a +29% gain. But that’s just the tip of the iceberg.

In that same report, we told our subscribers to buy JUN 40 GDX put options at $190. In early June, we sold the GDX put options for a +525% gain at $1,200 per contract.

Our GDX trade was a grand slam, but forget about what already happened. What’s coming next in the gold market will shock the world.

Winners are On the Right Side of the Market 
Our examination of the precious metals market points a very high profit opportunity for investors and traders who are 1) on the right side of the market, and 2) who are correctly positioned in the right investments.

The Great Gold Crash of 2013 is one of the biggest investment themes the experts never saw coming.

The ETF Profit Strategy Newsletter and Technical Forecast cut through the daily reams of misinformation by telling subscribers what to buy, what to sell, and when to do it.  Through mid-2013, 78% of our time stamped Weekly ETF Picks have turned a profit. 

P.S. Lightning strikes again: Our 8/1 to 8/6 trade in DUST resulted in a 23.5% one-week gain.

Follow us on Twitter @ ETFguide #GreatGoldCrash2013

CommentsAdd Comment

Gold Seeking said on September 09, 2013
  The biggest story is the big washout of the New York investor-morons of their gold holdings, sending it to the far East and leaving the vaults increasingly sparse.

The fundamentals in gold are incredibly bullish from a currency, monetary standpoint. This is a pause in a great bull market and to harp so negatively on gold right now is very dangerous. Just like those saying to buy gold when it was $2k an ounce.

Long-term holder of gold since the mid to late '90's and buying heavily silver around $20.

Big egos,
Peter
 
 
goldslager said on September 07, 2013
  So in 1994 when gold was $280.00/ oz. that was the price it took to get it out of the ground and process it. Now the question is with the cost of labor/fuel/regulations etc....... what is the new cost of 1 oz of gold. $1000.00 Please chime in
 
 
Ron the Editor said on September 06, 2013
  Ormanda,

1) If Peter Schiff and James Turk are the extreme examples of excessive bullish sentiment towards precious metals, as you seem to acknowledge, why do you quote them on your Twitter account? Don't you think it's more than tacit support of their unrealistic and very wrong opinion(s)?

2) There's no need for me or anyone else to discredit Peter Schiff and James Turk, because they've already done a masterful job of it to themselves.

3) We don't deny the overleveraged nature of global economies. But the consensus view that precious metals are the panacea to all major fiscal global problems is a sophomoric view. Nevertheless, we understand that it's a necessary opinion in order to push so that brainwashed customers will buy even more physical bullion.

4) Goldbugs always quote the best statistics! (That's a compliment.) But why? To support their biases as to why prices should be higher. We say to forget about biases, opinions, and statistics. REMEMBER: Prices are a leading indicator, ignore them to your own peril.

5) One more tip: Invest and trade with your brain, not your heart.

6) You cannot buy gold or any other asset class at whatever price and expect a positive result. The whole mentality of buy gold and silver at any price is an ignorant way to invest.

7) What is ETFguide's agenda? To help our readers be on the right side of the market. And if we're successful enough, they might even pay for our research.

Best of success to you.
 
 
Ormanda International said on September 06, 2013
  Using outliers like Shiff, Turk and Paulson is extreme, and is being used to push an agenda. The author uses a quote from John Templeton that says, “Common sense and careful logic show that it is impossible to produce superior investment performance if you buy the same assets at the same time as others are buying”. We couldn’t agree more. Which is the reason we started buying silver ravenously at $18.00. Sir Templeton was never quoted as saying “to produce superior investment performance, you MUST buy at the absolute bottom”. Even if one ignores the mere principle of buying low, and selling high in favor of “buying cheap assets and selling expensive”, the notion that one should ignore the fact that the asset is undervalued in hopes of predicting the absolute bottom price, and ignoring gaps between an assets worth and its price, is flawed.
The “Buffet, Graham” mantra absolutely stresses to buy assets that are trading at a discount to their “Net Current Asset Value”. So YES, one should acquire assets that were undervalued and hold them until they became fully valued. If one owns silver, and believes it is being undervalued in the current market, then why not “dollar cost average” and get more silver in the vault at discount for future rises? Using ridiculously optimistic valuations like $5000 an ounce to discredit the benefits of precious metal investments at this point in global finance is “silly” to say the least.
In January 2013 when the “price of silver was plummeting”, sales of silver ounces reached an all-time high of 7.498 million, and averaged 3.65 million a month since then as demand heads closer to the annual record of 39.868 million reached in 2011. Is it the authors assertion that these record purchases by individuals in an “open market” is just the result of buyers listening to some sort of silver marketing campaign? Like used car sales? Are we to ignore the very “fundamentals” of supply/ demand economics, for chart “fundamentals” of leveraged economics?
 
 
ZOHAR said on September 05, 2013
  It's curious to me how prominent goldbugs haven't budged on their price forecasts even though prices are substantially down from their previous projections. Very weird.
 
 
grant8 said on September 05, 2013
  Waiting for gold to hit rock bottom before adding more makes sense golddigger. Nobody can foresee the very bottom but if we see more and more goldbugs turn negative, it could become a good time to invest in gold. Paulson bailed on his beloved miners. Who would've thunk it? Now, we probably need a few more big boys & girls to join him.
 
 
golddigger said on September 05, 2013
  I own precious metals and I would like to own even more, but not at current prices. I do happen to agree that bullish opinion toward silver/gold have gotten out of whack and a deeper pullback is required for the mean reversion to go back to normal. I think a break below $1000 for gold, if it happens would be a great oppportunity to add.
 
 
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