Gold and silver - the bottom may be in

[ThePythonicCow]

From various sources over the last few weeks, including my subscription to Jim Willie's Hat Trick Letter (http://www.goldenjackass.com), I am learning that the long standing short positions in gold and silver held by the major bullion banks such as JP Morgan have been reversed, and that these banks are now going long gold and silver. This suggests to me that the bottom may be in, give or take, to the two year decline in the prices of gold and silver.

Gold has declined from above $1900/ounce in August 2011 to below $1300/ounce last month, June 2013. Silver has declined from above $45/ounce in April 2011 to below $20/ounce most of this last month, July 2013.

Typically the big bullion banks are on the "right" side of this market (perhaps because they can control it, or at least monitor it, to their advantage) and the "specs" (specialty investors) are on the "wrong" side. The specs have gone heavily short gold and silver now.

The recent low prices for gold and silver are forcing some mining operations to suspend mining, because they can no longer make a profit. The failure (or delay) for legal reasons of Barrick's Pascua Lama project on the Argentine border of Chile, the collapse of Rio Tinto’s massive Kennecott mine in Utah, and some other mine collapses have also taken 10 or 20 percent of the gold mine production off line.

Meanwhile demand for physical gold, especially in countries such as the BRICS nations, is very strong, and gold supply from Western banks getting scarce.

I predict that the next major price move in the price (in Western currencies) of gold and silver will be very strongly upward, for an extended period of time.

[Ioneo]

I noticed the banks going long last week and have the same feeling as you, Paul.
Then again, Goldman Sachs predicted $1000 gold by the end of the year a few weeks ago.
Go figure ...

[ThePythonicCow]

Goldman Sachs predicted $1000 gold
Aha - another indicator that gold is going up :).

[newfc12]

Whatever about gold, don't buy silver again until its under 10$ per ounce. Once the central banks ease off on the money printing all asset classes should drop heavily in tandem.
There will then be a window of opportunity (before the money printing starts again in earnest) to invest in silver and other commodities. You will have to buy when it seems like the craziest thing in the world to do.

One word of warning though, profits or bust, I don't think anyone will come out the other end of the next crash smiling, as the financial system as we know it will be in its death throes.
But on the bright side its something that really has to happen in order to enable mankind to start moving forward again.

[ThePythonicCow]

Whatever about gold, don't buy silver again until its under 10$ per ounce. Once the central banks ease off on the money printing all asset classes should drop heavily in tandem.
There will then be a window of opportunity (before the money printing starts again in earnest) to invest in silver and other commodities. You will have to buy when it seems like the craziest thing in the world to do.
Perhaps ... or perhaps the price of paper silver (such as futures contracts and SLV) will crash, even as the divide between paper silver and physical, in hand, silver breaks wide open, and physical silver becomes almost impossible to find.

I'd sooner hold on to my silver coin, than sell it now and depend on being able to repurchase it at the "real bottom."


One word of warning though, profits or bust, I don't think anyone will come out the other end of the next crash smiling, as the financial system as we know it will be in its death throes.
But on the bright side its something that really has to happen in order to enable mankind to start moving forward again.
Yes, good chance.

A transformation of the magnitude that the US and other Western nations is facing will be big and traumatic, and will take a few years to accomplish, at best.

[gripreaper]

Well, if we are talking about PM's as indexed against fiat currency, such as silver is at 20 dollars and ounce and should be at 45 or more, we need to keep in mind that the proxy we are using is the issue. What I mean is, if the fiat debt instruments continue to be diluted and removed from circulation, this puts pressure on ALL asset classes.

So, the question no longer is: where do I find asset appreciation is this market, or where do I put my assets to protect them from depreciation...or even, how do I protect my assets from a major economic collapse...because these contexts are irrelevant in a system of engineered fiat debt instrument collapse.

The question is: How do I hunker down and weather the greatest ****storm in the history of planet earth?

[ThePythonicCow]

The question is: How do I hunker down and weather the greatest ****storm in the history of planet earth?

I suspect some lizards alive 250 million years ago, at the time of the Permian-Triassic extinction or "the Great Dying" (http://science.nasa.gov/science-news/science-at-nasa/2002/28jan_extinction/) might beg to differ :).

Some 70% to 90% of all species on earth at that time became extinct.

[newfc12]

I agree, paper etfs currently distort the commodity markets, but, cash will be king for a short while (yes even fiat cash).
This should allow a window of opportunity for buying physical. Paper will become worthless, so only physical silver should be sought.

Personally, I think silver is the better option. Just imagine trying to buy a loaf of bread with a gold coin.

[andrewgreen]

Even if it is possible to predict the changing gold prices, earning a profit of gold doesn't seem possible with the tax you have to pay on it, at least in the UK. It seems the only people benefiting are the gold dealers and the governments!!!???

[AutumnW]

Whatever about gold, don't buy silver again until its under 10$ per ounce. Once the central banks ease off on the money printing all asset classes should drop heavily in tandem.
There will then be a window of opportunity (before the money printing starts again in earnest) to invest in silver and other commodities. You will have to buy when it seems like the craziest thing in the world to do.

One word of warning though, profits or bust, I don't think anyone will come out the other end of the next crash smiling, as the financial system as we know it will be in its death throes.
But on the bright side its something that really has to happen in order to enable mankind to start moving forward again.

Hi Newfc12,

What interests me is the timing here. It seems to me that whether tapering commences or not depends very much on how the sequester debate goes. If the debt ceiling is not lifted, tapering is unlikely to take place. I think one is contingent upon the other.

No government would risk a deflationary collapse following on the heals of a nascent recovery, by cutting costs and cutting back on mortgage backed security purchases. Governments are famous for making mistakes that have horrid long term consequences, but they rarely make mistakes that are profoundly stupid in the short run...because that affects them and their buddies on Wall Street.

On the other hand, I don't ignore arguments that include black swan events that might force central banks to tighten and govts to withdraw stimulus.

We are in uncharted terrain. And the old maps included illustrations and warnings...."there be dragons!" Nobody can state with a large degree of certainty how the economy will perform (or not) in the future and where gold and silver will be.

[GlassSteagallfan]

Catherine Austin Fitts, Assistant Secretary of Housing and Federal Housing Commissioner at the United States Department of Housing and Urban Development in the first Bush Administration, has a different view of the US collapse in this 45 minute interview with Greg Hunter of USA Watchdog:


http://www.youtube.com/watch?v=0EiMUPdtFXI&feature=player_embedded

Full article at: http://www.silverdoctors.com/catherine-austin-fitts-big-question-is-not-are-bail-ins-coming-its-how-violent-will-things-get/#more-29939

You may also want to see the latest Kaiser Report starting at 13:15: http://www.youtube.com/watch?feature=player_embedded&v=j615aokEA_Y

[Tesseract]

Moment of truth in 50 minutes time... I think metals will fall, but this is all so dependent on BB's choice of words... I was shorting gold until a few days ago - will wait for Fed decision before re-entering the fray. Possible big fall in the DOW coming up as well, I'm short a couple of stoks. SPY sitting around time highs right now, pretty extreme situation.

[ThePythonicCow]

Moment of truth in 50 minutes time... I think metals will fall, but this is all so dependent on BB's choice of words... I was shorting gold until a few days ago - will wait for Fed decision before re-entering the fray. Possible big fall in the DOW coming up as well, I'm short a couple of stoks. SPY sitting around time highs right now, pretty extreme situation.

I'm glad you were not shorting it :).

Gold was at $1310/ounce when you posted at 12:20 (CDT), then 52 minutes later, it was 10 cents short of $1350/ounce, up about $40/ounce :).

[TargeT]

silver jumped $1.50ish as well... crazy jump.

21.27 - 22.82

[Tesseract]

Yes, if I had have been short, which I do using put options, I would have lost 60 % on that trade. I like to think that gold will break below $1000, but it's not going to happen until BB turns the tap off.

[Rocky_Shorz]

watch gold prices now...


Stunning – China To Accumulate Another 5,000 Tons Of Gold (http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/2_Stunning_-_China_To_Accumulate_Another_5,000_Tons_Of_Gold.html)

[ThePythonicCow]

watch gold prices now...


Stunning – China To Accumulate Another 5,000 Tons Of Gold (http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/2_Stunning_-_China_To_Accumulate_Another_5,000_Tons_Of_Gold.html)

I took the liberty of changing the URL in the above post, from:


http://stateofglobe.com/2013/10/03/stunning-china-to-accumulate-another-5000-tons-of-gold/to


a link to kingworldnews.com.
Kingworldnews was the original source. Stateofglobe was just a link to Kingworldnews, and Stateofglobe had a rather annoying redirect to www.mediapass.com if one had Javascript disabled.

[ThePythonicCow]

watch gold prices now...


Stunning – China To Accumulate Another 5,000 Tons Of Gold (http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/2_Stunning_-_China_To_Accumulate_Another_5,000_Tons_Of_Gold.html)
Actually, this might continue to keep gold prices suppressed.

As best as I can tell, China has the US by the balls, and is requiring that the US continue to suppress gold prices so long as there remains gold in US vaults that can be shipped to China. US Treasuries would incur strong selling pressure otherwise, from China's vast hoard of such paper.