Silver and Gold Continue To Bleed

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Published : February 21st, 2013
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( 15 votes, 2.8/5 ) , 8 commentaries
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Category : Market Analysis

Carnage is the word on the street when it comes to the precious metals and believe me when I feel badly for anyone left holding the back on silver and gold, especially those that bought at the extreme prices in May of 2011 for Silver and October of that year for Gold, I am filled with anger at the charlatans that continued to tell investors to keep buying any dips and called for extreme price movements because of their manipulation claims.

The reality is as plain as day in the metals markets.

Silver has been in a bear market since its crash of May of 2011. The following chart illustrates this clearly.  Any bounce since that time have merely been countertrend bounces.

24hGold - Silver and Gold Cont...

The same holds for gold after making an all-time top in October of 2011 it has failed to hold steady gains and has continued to be sold off.

24hGold - Silver and Gold Cont...

I made a very controversial post asking my readers to take into consideration the very real fact that we might have been witnessing the start of the end of the bull markets in those precious metals.  I got eaten up, spit out, chewed and called about every name you can imagine on my blog and oh the various sites that used that post.  I won’t even get into the emails that I received.  I’ve kept quiet more so because life has simply gotten very hectic for me at the moment as my family deals with some tragedy and as I concentrate on my business.  However, I have continued to play the markets and continued to wait for an opportunity.  I didn’t play this silver and gold move but I do believe there is room for lower prices despite the fact that we may see an oversold bounce in the upcoming sessions.

Anyone trying to argue that silver and gold are simply correcting need a reality check.  In silver’s case, corrections don’t last 2 years.  With the FED divided, unemployment declining and the price of the metal failing to rise to new highs despite the calls from all those charlatans that I have written about because of endless quantitative easing would send the metals to historic highs you need to really examine those people and ask yourself why they never give the other side of the picture. Folks, be very very careful in the metals markets.  The charts say it all.  My post of two years ago says it clearer when I asked people to take a hard look at whether or not the metals had ended their decade long bull market (in the case of gold at least).

Anyone following these markets over the last 3 years should by now know that the likes of Eric King and most of his guests are full of shit and have kept average investors in these markets far longer than they needed to be.  Not once as he, or his guests given out responsible advice like it might be time to sell and sit on the sidelines.  That is about as irresponsible as it comes.  If you haven't learned that by now, you never will.  Gold has a very real chance of falling to $1475 while silver, short term can test $26.00 again and I maintain my calls made many times on this site that state that we could very well see $22.00.  Remember, the miners breaking down was the omen that foreshadowed all of this …. nothing has changed.  There is value in junior stocks.  I am not talking about those… I am talking about the metals.  What I am angered about the most is that friends of mine continued to hold metal they bought near the highs and never once heeded my advice instead only listened to the bullshit permeating the airwaves about gold ownership.  There is a piece for gold and silver in very portfolio.  To stack away until your heart’s content is not the way to do it.  To listen to the lopsided tin foil hat bullshit spewed by GATA, Eric King, his guests, Zero Hedge and others was perhaps the most irresponsible thing any investor in metals could have done.  Their story never changed.  Mine hasn’t either.  Notwithstanding corrective bounces, my sentiment remains bearish on the metals.  Yes, they will rally… be be weary of my head and shoulder pattern warning made months ago … that is, a major head and shoulders pattern foretelling a massive drop in silver comes into play if the metal takes out it’s $26.15 low.

Please feel free to revisit my post made on December 13, 2011: It Might Be Time To Acknowledge That The Gold Bull Market Has Ended

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Mr Dontrose admits that he never played these moves!!!!!!!!!!!!!!!!
Says it all really.

Be that as it may,I agree that the market has been steadily declining. As I did sell 50% of my silver right at the top, I am just sitting and waiting with that profit to jump in at an appropriate time and buy up.

Also, there has been several occasions to play the paper market up and down during the last 2 years to reap some reward.
Has Dontrose not done that? Or why not simply cover his position, which one must assume he is still holding.

Rate :   3  2Rating :   1
"In silver’s case, corrections don’t last 2 years"
If that is the only argument, one that you do not even back up or explain, saying the bull market is over, then it is all the more clear to me that it is not over.
Rate :   5  1Rating :   4
I agree. Now may not the time to buy, or sell: Ag may drop another $10 or rise suddenly back to $50.

In many areas items we commonly purchase are only 10 to 12x pre 1964 Ag prices -- not everything, but many food items and even automobiles. A new 1964 auto cost on the average $2400 and a can of Campbell's soup 10 cents, and I was buying McDonald's hamburgers for 10 cents back then (a silver mercury dime).

The pressure seems to be building for a major event: either commodities will explode or metals will collapse. In other words I don't see precious metals doing anything significant until commodities adjust dramatically upward.

Disclosure: I have a large Ag coin holding that I will sit on until that event does occur.
Rate :   11  2Rating :   9
"... What I am angered about the most is that friends of mine continued to hold metal they bought near the highs and never once heeded my advice ... "

They bought near the high and now they should what? Sell at the low? You are angered by your friends not doing what you told them to do? Not much of a friend are you? I don't try to rule over my friends or change them.

The market is paper-driven, not physical. The long dreaded disconnect will come soon enough.

I thought your post over and I agree with myself. You gotta see this new hat I made.
Rate :   4  3Rating :   1
Montrose you are without doubt the "Piers Morgan" of PM article writing..........and a total "Piers" at that!!

What is the point of any of your graphs? Or anyone elses for that matter , when we all know the papers futures markets are 100% rigged!!
Your entire thesis is based on a fraudulent paper system and therefore meaningless.

The production price of 1oz of silver is apparently $31 and the bullion available is increasingly dwindling.

Whom are you hoping to persuade out of their bullion position and more pertinantly, why??

PS ...Dont bother replying.
Rate :   10  2Rating :   8
Dontrose it a putz. He says “I got eaten up, spit out, chewed and called about every name you can imagine on my blog and oh the various sites that used that post.” Most people would look at that kind of reaction and see if a realignment isn’t in order but not this guy.

Keep going the way you are Montrose. Your investments, and those of others not wise enough to let history guide your decisions, in other areas helps keep the cost of PM’s down right now so I can keep buying cheap before the systems implodes. When, and there is no if, it happens I’d like to see the look on your face.

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Dontrose has taken a lot of heat for this article and much of it deservedly so. However, had we followed his advice back then and sold, there is no doubt that we would now be able to purchase back more metal with the proceeds than we had before.

As for the history that you speak of--i am taking it that you are making refrence to the great depression of the 30s--it was characterized by deflation, not inflation and so should history not merely rhyme, but repeat, gold will go down in price, not up. Of course that may be of no consequence, for the value of gold can only be properly determined by what goods and services you can exchange it for and the price of potatoes may fall even more drasticly than the price of gold.

i agree with you when you stated that the system will implode. It will. The only problem with that is that there is no real way to know when it will and as J.M. Keynes wryly noted: "The market can remain irrational longer than you can remain solvent."
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Sorry for the delay in responding, I was traveling again with no internet access.

My reference to history lessons are those that seem to be forgotten. My grandparents lived through the mess that was Weimar Germany. The lesson learned was that those who possessed gold and silver were able to buy food, when it was available. Upon their arrival in Canada they immediately squirreled away every silver coin they came across knowing that at some point in the future they would be of far greater value than paper. This saving of gold and silver was passed down and has always been the main reason I've kept only physical metals. I've never seen them as something I would gamble on and wont. Many people here only focus on the investment side of PM's, not how they will come into play once the system implodes. Yes I know when things go bad, there are many other things that will immediately be worth more than PM's but once a system of commerce/exchange is implemented again gold and silver will again take their place as real money and those who possess them will have the advantage. Those that saw PM's as nothing more than investments to be bought and sold to make a profit, especially the paper variety, will surely be the loudest whiners looking for a handout at the soup line.

When I wrote the comment it made sense in light of the above but of course I did not convey this.

End of the day, PM's will retain value as they always have.
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Sorry for the delay in responding, I was traveling again with no internet access. My reference to history lessons are those that seem to be forgotten. My grandparents lived through the mess that was Weimar Germany. The lesson learned was that those who  Read more
Hart - 2/25/2013 at 12:25 AM GMT
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