Gold and Silver Uber-Bull Run Is Upon Us / Commodities / Gold & Silver 2019
GLD (SPDR Gold Shares NYSE) is the world's largest gold-centricExchange Traded Fund (ETF). On Friday June 21, 2019 – one day after The Gold and Silver Volcano is Readyto Erupt was posted on this site – a record single day's inflow(gold buying) of over $1.5 billion took place.
This stampede, led by hedge funds and "algos"(automated computer buy/sell programs based upon volume flows and trigger pricepoints) involved dollar amounts substantially eclipsing the record set duringthe 2008 global panic.
The price of gold rose to a 6-year high, left a series of gapson the way up, and smashed through all sorts of technical"resistance" points on traders' charts around the globe.
At the same time, silver –almost unnoticed because its rise was relatively muted – broke out on thestrongest volume since 2011, printing its second highest Up Volume ever!
So what is going on? When a major market movement like wewitnessed in late June takes place, everybody looks for an answer. And everyonehas an opinion.
But the only opinion which really matters – that of the Market –usually takes a while to reveal itself. David Morgan with a trackrecord in resource sector prognostication as good as any in the business, neverfails to remind his readers who the real guru is: Mr. Market him/herself. Davidwrote,
I certainly have my opinions, based upon decades of trading,research, and experience. But no matter how strongly I feel about a givensituation, I never hesitate to step back and see if price action supports whatI think is taking place.
Whether you're an individual investor, a giant brokerage firm,even a sovereign wealth fund, or a central bank, it helps to keep in mind thefact that - sooner or later - the market always has the final say.
In a Money Metals interview archivedhere Steve Forbes recently commented:
Gold is like a measuring rod, a ruler. It just measures value.It's not using gold coins to buystuff at Walmart. It's like 12 inches in a foot or 60 minutes in an hour. Andit's worked for 4,000 years when people have done it and done it right...
Gold keeps its intrinsic value better than anything else. Whenyou see the nominal price change, that's not the value of gold changing, that'sthe value of the dollar or whatever currency you're talking about, changing invalue. Gold is the constant, like the North Star.
On a number of occasions, Porter Stansberry has posted in thepublic domain for readers (of which I am one) via his Stansberry Digest,lengthy, no-holds-barred essays focusing on systemic risk – and the potentialfor ensuring against or profiting from it.
Recently, he wrote just such an essay. The title, "TheMost Important Digest Porter Has Ever Written?" is not anexaggeration.
Part of his premise is that as "the expected real return(after inflation)" by 10-year bond holders drops below 2%, the systembecomes unstable.
If it falls below zero – as now seems likely, interest rates"invert" – with rates on short term fixed-income securities (e.g.bonds) issued by the U.S Treasury exceeding long term rates.
This harbinger of recession causes the Fed to respond by"printing" more money.
The extra currency creates financial bubbles and massively moredebt before the bubbles themselves inevitably collapse. It alsogenerates enormous global demand for gold.
If Porter is even close to being correct (and I believe he is),reflecting upon the implications could help you remain "above thefray" as the house of cards our supposed financial wizards have puttogether around the globe – and at home – starts collapsing around our ears.
It's been 8 long years since gold, which was making annual highsfor the prior decade, tipped over into what would become an almostuninterrupted decline, 2016 notwithstanding.
The lower highs, lower lows process took it from $1,900 theounce in 2011, down to around $1,050 in 2015. Along the way, most of the bestgold and silver miners dropped 80% in value.
Many investors and "stackers" who had been at itthrough thick and thin for decades, couldn't take it anymore and called itquits. I have remarked at investment conferences that the years 2013 to early2019 were more difficult for me psychologically (and financially) than the 22year bear market following the 1980 metals' top.
As you read this, a fair number of people are actually sellingback their physical gold and silver at"breakeven" prices, never to return. I hope you are not one of them.
Going against Market Sentiment Is Never Easy
Looking at Stewart Thomson's chart below, which he first postedover 8 months ago, ask yourself what you feel when you look at it.
Even as the right shoulder builds out for a strong up move, it'sdifficult not to keep looking in the rear-view mirror. But listen to someonewho has time and again gone against his own emotions in building highlyprofitable long-term positions. Stewart remarks:
We are all cowards on price weakness. Those who admit it, thosewho bet against it make money. Those who hide it and lie about it, lose money.End of story.
There are no guarantees in this world. Of course, he could bewrong. But what if he's right?
Head andShoulders Gold Mega-Monster
The wisdom of holding physical gold and silver as insurance –stored securely and discretely – has proven itself time and again in everyhistoric timeframe.
Yes, the gold price may yet decline for awhile, evendown to 1250, as it "backs and fills"- preparatory to a highlyprobable resumption of the uptrend. Or the decline might be quite shallow.There's just no way to know for sure. As with so much else in life, it's a lotabout probabilities.
But don't wait for Mr. Market to spell out reasons for thesea-change we're seeing right now in the price of gold – and eventually silver.
Make absolutely certain that you have at least an amount thatfits your personal needs and expectations. As this epic tale continues tounfold, you'll be glad you did.
David Smith isSenior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com aswell as the LODE Cryptographic Silver Monetary System Project. He hasinvestigated precious metals’ mines and exploration sites in Argentina, Chile,Peru, Mexico, Bolivia, China, Canada and the U.S. He shares resource sectorobservations withr eaders, the media and North American investment conferenceattendees.
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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