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Silver Has Broken Down

- Dan Dontrose - The Fundamental View

Dom, i regret to hear that you are feeling as depressed as you are and could not agree with you more that the preponderance of views expressed on this site are more of the "same old dribble." Of those articles which actually deal with the precious metals, far too many are by those who have made of gold something more resembling a religion than the asset class that it is. Of those that have not, most all have concentrated their focus on what is happening in America; not seeing the interconectedness of all markets and having no understanding of the importance of capital flows. We hear only of how irresponsible the Fed has been. We never hear that when compared to the Japanese or European central banks, Bernanke's Fed seems down-right conservative. Why do we not hear that since March of '09, stocks have outpreformed gold? Why are we never presented with the view that all forms of money are fiat, but force fed articles proclaiming that only gold is money? Why has there never been so much as a single article demonstrating that of necessity, every single experiment with a commodity based currency has proved a failure?

That being said, let me try to make you feel somewhat better about your situation; though quite admittedly, knowing very little of it. i am going to take it that you are based in America. (If you were from Japan, you would be quite pleased with gold's price action over the last 6 months.) The good news that i have for you is that this is actually a matter of perspective and if your situation is such that you can keep on paying your bills without touching your stash, you are no more under water now than you were above water earlier. You still have the exact same amount of ounces as you did before. Its price is quite immaterial during all the moments between when you buy and when you sell. More good news is that the monetary system is irretrievably broken and so there will come a time when owning this asset class will pay off handsomely; assuming that the collapse of the monetary system does not result in a new Dark Age. If you are not able to hang on without selling, i would suggest that you consider selling only a portion of your stash based upon the following formula. Calculate just how much you require to tide you over until the end of September. Divide that sum by $400 and then sell that number of ounces. If things go as i believe them likely to, gold may be ready to rebound by then and could be down another $400 from where it is now. If that is so, you would then be able to buy back the same number of ounces that you sell. If i am wrong and gold only goes up from here, you would at least still have some of your stash left....Most importantly, you must understand what gold really is. It is for the most part a fairly useless commodity with very few industrial applications and so the available supply only increases. The primary function of gold is as an insurance policy that is good to have lest the monetary system collapse and we are living in a time when its collapse is a clear danger. As the inevitable demise of the system becomes more evident to a greater number of people, that insurance will cost a good deal more to purchase. And when you understand what gold really is, you will be happy that you have an insurance policy to see you through a catastrophe as severe as a currency collapse. And you will be happier still if you never need to make use of the policy.

Commented 4037 days ago

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Beginning of the headline :I’ve written recently about the important levels to watch for in silver and went so far as to state that a “breakout” day was close. It appears as though today is that breakout day but unfortunately for longs it looks like the breakout was to the downside. This could imply that prices are now going to trend downwards to test the old support or, as is often the case with silver, we may see a whipsaw move to reverse. Bottom line, confirmation on the move is needed. As I warned in another of my... Read More

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