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Before one every buys a single troy ounce
of gold and silver, one should ensure first and foremost that one understands
that gold and silver are volatile in price every single year. Many people
commit the same mistake in buying gold and silver that they commit when
buying into the stock market – they don’t buy assets when asset
prices are low, and only buy them after prices have soared and news of a
steep short-term climb in price has been reported by the mainstream media
news. However, an even bigger mistake gold and silver purchasers make is not
having enough patience to benefit from the long-term trends higher. So to sum
up the mistakes people make when buying gold and silver they are:
(1) Not understanding that volatility in
gold and silver markets does not equal risk when one knows how to interpret
the volatility in these specialized assets correctly; and
(2) Not having enough patience.
These two concepts go hand in hand for the
following reasons.
As the fraud of
the global fractional reserve banking system is now beginning to be
understood by more and more people for the first time in a century, the
volatility of gold and silver prices will increase due to the war that is
going on between (1) the people that wish to protect themselves against the
ongoing fraud of the global financial system and (2) the banking cartel, for
the simple reason that these two segments reside on the opposite sides of the
price spectrum for gold and silver. The people wish to purchase physical gold
and silver as a means of protecting their purchasing power, while the banking
cartel wishes to suppress gold and silver prices as rising gold and silver
prices expose the fraud of their fractional reserve banking system. Thus,
bankers periodically manufacture steep declines in the prices of gold and
silver through their naked short positions in the gold and silver paper
derivatives market that include futures and very likely the GLD and SLV ETFs
as well. This constant tug of war between good and evil causes massive
volatility in the prices of gold and silver as these two precious metals are
the kryptonite of the global banking cartel, and low prices in gold and
silver are essential to the perpetuation of banking fraud.
Though there has been lots of volatility
every year during the current 11-year bull market in gold and silver, lots of
people every year never wait for low-risk, high-reward entry points and
always get on board the gold and silver bulls, not during the quiet periods,
such as the one that has existed for the past few months, but only after they
have already generated lots of momentum. And when this happens, we witness
lots of retail clients buying gold and silver at or near the annual peaks
every year, behaviors that make them ripe for the plucking by the banking
cartel. Since 2006, at SmartKnowledgeU we’ve been advocating our
clients to heavily overweight their portfolios with gold and silver when
silver was still $9.00 an oz and gold was in the $560 to $580 an ounce range.
Obviously our clients that have been stacking physical gold and silver since
2006 have stupendous average prices for their gold and silver today. Still,
we haven’t been perfect on calling the bottoms and tops of gold and
silver every year for seven straight years as such a feat is literally
impossible except for the banking cartel members that artificially
manufacture the massive (and increasing) volatility in gold and silver every
year. And this is where the patience factor again becomes paramount in
building wealth with gold and silver.
For example, on April 25, 2011, as silver
was soaring, I distributed a private bulletin to SmartKnowledgeU clients and
stated: “One thing I
can guarantee you is this: the bankers [are] looking to take down gold/silver
this week…I’m 100% sure that the bankers will immediately try to
take down gold and silver prices at NY open.” That very
day, April 25, 2011, silver actually broke the $50 an ounce barrier in Asia, and
even on the COMEX, silver reached its high price of the year, $49.82 a troy
ounce. However, that same day, the banking cartel hit the silver price just
as I predicted before market open that day in New York, and mercilessly
hammered the silver price 8.7% lower before finally recovering a little bit
into the market close and closing 5.7% lower from the same day highs in Asia.
As silver continued to fall over the next few weeks, I sent another private
bulletin to my clients on May 12, 2011 that stated, “my original call was for silver
to bottom at $34 to $37, [but] if this level does not hold then look for
silver to fall to the $30 level before possibly rebounding.” Though
silver did fall even lower to the $30 level after breaking $34, it headed
even lower to the $26 level for the briefest of moments before rebounding to
the $37 level once again. However, after that, silver re-tested the $26 level
again this year.
Thus, for anyone that started stacking
silver since our call to do so at $9 an oz in 2006, and every year since
then, purchasing silver at $26, $30 and $35 an oz is hardly a concern when
considering one’s average cost of silver. However, for new silver
buyers that elected to purchase silver between $34 to $37 an oz and $30 an oz
in 2011 and again this year when silver hit $26 an ounce (my call for the
silver low for 2012), one may have accrued silver at about an average of $30
to $31 an oz. Thus, if one timed all the lows of silver over the past
14-months more accurately, perhaps one could have purchased silver between
$26 and $28 an ounce. As I’ve stated before, I believe that such a task
is impossible and some years, we are right on mark at calling nearly the
exact lows and highs of silver and gold, while in other years, our calls have
been very decent but have left room for some improvement. Still, consider if
one has built, after 14 months, a silver position at about an average price
of $30 to $31 a troy ounce and one has still not seen silver turn a profit as
silver is still hovering at around $26 to $27 an ounce today for an
approximate 12% loss on one’s average cost of physical silver. Here is
how possession of the quality of patience can still yield enormous profits.
On May 16, 2012, I published a bulletin (this one was available not only to my clients but also to the public)
in which I stated that there were signs back then “that a major bottom [was] imminent rather than
sign[s] that the gold and silver bull [was] finished.”
Notice that I stated on May 16, 2012 that a major bottom was “imminent” and
NOT that a major rally
was “imminent”.
These are two different statements with two vastly different meanings. Just
because a major bottom is imminent does not mean a major rally is imminent.
This is another key point that many gold and silver buyers fail to
distinguish. However, if one believes that a major bottom is imminent, then
that does mean from that point forward, the low-risk, high-reward paradigm,
does apply and that buying assets close to a major bottom should provide
ample reward at some point in the future (though not necessarily the
“imminent” future). Since I published my thoughts about an
imminent major gold and silver bottom on May 16, 2012, gold and silver and
gold/silver mining stocks have all moved strongly higher and then strongly
lower again. To see how my statement has held up over time thus far, let us
take note of where the recent lows in gold, silver and the HUI gold bugs
index have been. On May 15, 2012, gold hit a low of $1526.70 an oz, silver
hit a low of $26.73 an oz, and the HUI hit a low of 372.24. To this date, only
silver has headed lower since May 16, 2012, and ever so slightly lower to an
interim low of $26.11 an oz., a mere 2.3% lower than its May 16th low. Thus,
one can easily state that my May 16th statement that gold/silver and
gold/silver mining stocks were all very close to major lows back then has
been very accurate.
And even if gold and silver prices are
violated to the downside before the major new leg higher in gold and silver
begin, if they are only violated for a very short period (meaning 72-hours or
less), May 16, 2012 will stand as a very good entry point for anyone that
chose to go long in gold and silver assets that day despite the intermittent
volatility since then. The frustrating aspect, I’m sure, since May 16,
2012, has been the first factor of volatility that I discussed above. Since
May 16, 2012, gold and silver assets have produced big gains, big losses, AND
lots of frustration among those that do not understand gold and silver
markets from the churning in price up and down and the lack of big breakout
thus far. And this is when understanding to be patient in purchasing
gold/silver becomes paramount. Since new lows have not been established in
gold and silver since May 16, 2012, there is no reason to panic sell out of
gold and silver just because of the large amounts of volatility. Even for the
newest buyers of silver and gold that don’t have the benefit of buying
large initial tranches of silver at $9, $11, and $13 an oz and gold at $560,
$600, and $680 an oz and may be sitting on losses in physical gold and
physical silver as of this current time, being patient will very likely
enable you to turn small losses now into huge gains in the future. If waiting
14-months seems like a long time for a pay-off, one must put this waiting
period in the proper framework within our current 11-year gold and silver
bull that is far from finished.
 
Consider the following hypothetical
scenario. Suppose that in November 2007, one had purchased physical gold (at
$850 an ounce) for the first time ever, then watched it happily as it moved
over $1,000 an oz by March of 2008, and then sadly as it pulled back to $850
again by May of that year. However, believing that a 15%+ correction was a
sufficient enough annual correction to merit further purchases of gold, you
added to your current stash by doubling down on your physical gold at $850.
Only then, gold moved to an intra-day low of $681 on the Comex by the end of
October, 2011, and from listening to constant media chatter that the gold
bubble had burst when its price had hit $1,000 an ounce, you concluded that
you missed the opportunity of a lifetime by not selling at the top of the
gold bull when gold reached $1,000 an ounce. Furthermore, since you had held
gold for what seemed like a long time now and the value of your gold had now
dropped nearly 20%, you figured that 11-months of waiting was a long enough
waiting period despite 2008 being the eighth year of the gold-bull, and you
decided to sell everything at a 20% loss at $681 an ounce. Well, the only way
this hypothetical scenario could have played out in real life is if you had
never done any homework about the gold and silver market and had zero to very
little understanding of it.
Had you just been patient enough to
understand that gold and silver volatility was artificially induced by the
banking cartel with the precise reason to convince you to sell gold and
silver at major lows, and had you held on for just a few more months, you
would be sitting on an 86% gain today instead of dooming yourself to a 20%
loss. Furthermore, from that intra-day low in 2008, had you just held on to
your position for another two months, you would have regained all of your
losses and had been sitting on a profit in relatively short time. There are
far more instances of such occurrences whereby people sell out of gold and
silver at 20% to 25% losses than those occurrences when gold and silver
buyers have the patience to sit through volatility and reap the benefits of
massive legs higher that inevitably follow long periods of flat, declining,
or churning prices. As any SmartKnowledgeU client knows, this truly is not a
case of us Monday morning quarterbacking and fitting our analysis to fit the
hindsight of what has happened in the past but rather a re-telling of stories
in which we told our clients to remain patient for big gains ahead during
periods of great negative gold and silver sentiment due to the pieces of the
puzzle that indicated the very strong likelihood of much greater gold and
silver prices ahead. Again, one must remember that the gold and silver bull
is now into its twelfth year and that the largest percentage gains of this
bull, in my opinion, are still ahead. Thus, we have demonstrated that
patience is not only a necessary trait BEFORE buying into gold and silver
assets to ensure a decent price foundation from which to build, but also a
very necessary trait to possess even AFTER buying into gold and silver assets
at a low-risk, high reward price point. Of course, some of our clients have
been lucky enough in the past seven years to buy into gold and silver assets
at such a low-risk, high-reward point that they were sitting on 30% profits
within two months, but this is an extremely fortuitous scenario that would be
unreasonable for everyone to expect.
Patience when buying gold and silver
involves understanding the markets into which you are buying, and not enough
people that buy gold and silver bother to take the time not only to
understand the concept of volatility but to understand how this concept
relates to the gold and silver markets specifically and that volatility in
gold and silver does not have to translate into risk. Thus, when the banking
cartel engineers rapid gold and silver price spikes to the downside in the
face of no important news affecting supply and demand and sometimes even in
the face of bullish supply and demand news, it is with ease, that they are
able to flush many new gold and silver investors out of the market. If they
are able to repeatedly flush the same gold and silver investors out of the
market year after year, then shame on these new gold and silver investors for
not doing their homework prior to buying and for being fooled so easily.
Thus, even though we feel that the prices for gold and silver (including
gold/silver mining stocks) as of May 16, 2012 would have provided good
long-term prices that will eventually become very profitable, we know that
many buyers will never reap the long-term profits that are coming due to a
simple lack of patience.
Thus, the number one critical lesson to
embrace is one of patience when buying gold and silver as a means to preserve
and build wealth. Patience, in my humble opinion, should be the characteristic
at the very top of any list of qualities that are necessary to build wealth
when buying gold and silver. Unfortunately, from my experience, patience is
also likely the characteristic that the fewest buyers of gold and silver
possess. In my experience, 100% of people that understand the gold and silver
market possess patience. Even if they do become frustrated at times they
still remain patient and never panic sell into major gold and silver bottoms
and permanently leave the gold and silver markets. However, the problem lies
in the fact that a low percentage of gold and silver buyers understand the
gold and silver markets so they buy into it without understanding the
patience that is needed to reap the benefits. Thus, if one desires to build
wealth buying gold and silver, I would state that having patience, or if you
don’t have it, a crash course in learning patience, should be a
prerequisite to buying gold and silver.
Despite a good deal of hard factual
evidence of Central Bank documents obtained from FOIA requests that proves
banking cartel price suppression of gold and silver, and despite a mountain
of circumstantial evidence that suggest the same conclusion, it is baffling
that there are still many talking heads out there that refuse to acknowledge
gold/silver price suppression schemes. Even most of these people in the past
have also ridiculed any suggestion that stock markets were rigged by HFT
trading programs and that interest rates were rigged and now that both of
these “conspiracy” theories have been proven to be a fact beyond
a shadow of a doubt, there are those that steadfastly maintain that gold and
silver operate in free and fair markets. In fact, there are enough of us that have
tweeted exact times and dates that gold would suffer significant drops in
price just hours before it happened as if on cue. Our ability
to do so has nothing to do with ingenuity but merely is due to the very
simple realization of certain rigging patterns the cartel employs, a fact
that should be impossible if the gold and silver markets were indeed free. I
don’t want to waste any more time and energy on the bankers’
rigging of gold/silver prices lower other than to say that only the most
naïve of naïve people can honestly believe that the same banks that
would willingly collude to control LIBOR rates in an inappropriate manner
would never collude to rig gold and silver prices (lower) in their favor as
well. Maybe the tooth fairy and Santa Claus still does exist after all and I
just am ignorant of this fact too.
In conclusion, should gold and silver
exhibit volatility this week, and the likelihood is that intra-day at some
point this week, we will see
some marked volatility to the downside again, always recall that
patience is the go to mantra during times of negative sentiment such as
these, unless or until key support levels are violated. Although we are gold
and silver bulls and still remain fervently so, this does not mean that there
have not been times during the past 8 years that we have been very negative
regarding the short-term prospects of gold and silver. These times have been
plentiful and we have closely informed our clients of these times when great
caution and patience is merited. Due to the recent great volatility of gold
and silver, being patient remains recognizing that the short-term trends for
gold and silver can be very negative at times. However, being patient does
not mean avoiding great entry points for gold and silver assets at low prices
despite short-term volatility in prices either. Until then, all the up and
down volatility is meaningless and only merits patience until the massive
break out to the upside that is inevitable occurs. If key support levels are
broken, then it will be time to change the patience mantra. Until then, all
remains on track for a large move higher in gold and silver.
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