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A lot of investors want to know why I am not screaming from the rooftops, “Buy gold!”
The reason is simple: I am not 100 percent confident that the bottom is in.
Why is that, especially when all is not well with the world?
After all, in addition to the Syrian crisis, which is not over, tensions are rising dramatically between the United States and Russia.
North Korea is reactivating its plutonium reactor. The Fed, even if it tapers its bond buying this week, is still printing oodles of money. The budget ceiling war is about to go into overdrive and heated debate again.
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| It’s not yet time for gold to take off. |
And interest rates are rising, a sure-fire sign that inflation will be coming back.
My answer is simple: It’s not yet time for gold and silver to take off to the upside. Quite the contrary, they have more work to do on the downside.
Look, every market has its time and place in the sun. That’s why timing is so critically important. You can be 100 percent right on the direction of a market, but you will not make money if you don’t get your timing right.
The pause in gold and silver’s long-term
bull markets is not yet over.
In contrast to important tops in any market, important bottoms take time to complete. That’s especially true with the precious metals.
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Gold and silver have backing and filling to do. They have a lot of investors they still need to chew up and spit out. They will not bottom until most investors have turned outright bearish on them.
That’s one of the reasons why gold and silver took a nice nose-dive last week, precisely in accordance with what my cycle work was telling me. You can see the forecasted decline in this chart I’ve shown you previously.
And according to all of my indicators, as I have mentioned before, gold and silver needed a one- to three-year correction from their 2011 highs.
So far, we have a two-year correction in place. And so far, gold, which is my barometer for both metals, has fallen to as low as $1,178.
But importantly, that low did not precisely hit long-term support levels, which stood a bit lower at the $1,150 level.
For a market to bottom, it must hit long-term support at the right time. When price and time converge together, you have an important bottom. And though gold came very close to doing that in June, it was not close enough.
There are two more cyclical time
targets for a bottom in gold.
One is this month, shown by the cyclical chart above. If gold can break the June $1,178 low by October 3, at the latest, I will be screaming from the rooftops that the bottom is in place.
But if gold does not break the $1,178 low by October 3, we’re not likely to see the bottoming process in the precious metals end until January of next year.
That’s the next major cyclical target for a low in the precious metals ― January 2014.
So there are three scenarios ahead for gold (and silver):
Scenario #1: Gold declines to below $1,178 by October 3. If so, the bottom will be in place.
Scenario #2: Gold declines but does not break $1,178 by October 3. Then expect a brief bounce but largely a sideways trading range for the precious metals heading into year end.
And then, a sharp decline into January, with gold finally breaking the $1,178 low and bottoming once and for all.
Scenario #3: Gold somehow miraculously explodes higher and closes above $1,605.50. If gold were to do that — at any time — then we would have confirmation that the June low at $1,178 will hold and was the final bottom.
This third scenario is extremely unlikely. Far more likely is that we will see a major new low in gold either by October 3, or by the end of January.
And then, both gold and silver will be off to the races. No matter what, I do not see gold’s bear market extending beyond January 2014.
This should not surprise you. I have said all along that gold’s pause could take up to three years.
As to mining shares, as long as they hold their August lows, there is a very high possibility that mining shares have already bottomed, way in advance of gold.
So be patient and follow my signals.
For my Real Wealth Report members, those signals are optimized to average down in the precious metals and mining shares, to capitalize on their longer-term bull markets.
For members of my trading services, my signals are designed to capitalize on the short-term moves in gold, silver and mining shares, either up or down.
For members of my Hard Asset Trader, my signals are exclusively long-term in nature, for physical purchases of precious metals, and will largely be using an average-down approach.
Best wishes,
Larry
Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report and Supercycle Trader.
Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.
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I'd rather read what you have to say about the long term outlook for stocks, Larry. Very few investors are gold traders. Please tell me if I should hold my Proctor and Gamble and GE instead.
interesting!
it has already rallied once …. he must be talking becoming a long term bull
What do you think of Detour Gold (DRGDF), a Canadian PM producer that is sitting on some of the highest grade ore the world has to offer? With over 54 M Oz of Gold already pulled from the site, which only became fully operational in the last 18 months, DRGDF looks VERY attractive LT, as it could be the next AEM or GG, and it sits at about 65% off it's 52 week high. Looking further into the future, Columbia has a Super-Mine of a company-Continental Gold (CGOOF), which I'm told is sitting on the the PUREST of PURE ORE left on the planet, commensurate with what (BVN) is able to extract in neighboring Peru. Unfortunately, Continental Gold won't be up and operational until 2016, but is touted as the last GEAT HQ ORE discovery (aside from Africa) that we will ever find in the Western Hemisphere. It costs just $3.50ish/share, and seems like warrants would be a better play. I have tremendous respect for your opinion and I think it's very cool that you followed in your Fathers' footsteps in the realm of finance and employing BOTH technical AND qualitative analysis, just as your legendary father did and I'm sure he's very proud of you. Finally, I noticed you said that much of the buying in Miners may have bottomed out in August… Is that why, (because I did 75% of my buying in August and actually got 45% of it done on that August 6th, when Gold fell to $1282.4. I immediately bought 200 shares of Goldcorp (GG) and 200 shares of Agnico Eagle (AEM), along with 400 shares of I am Gold (IAG), 300 shares of New Gold (NGD), 400 shares of Kinross Gold (KGC), 500 shares of Sandstrom Gold (SAND) as well as some of the heavy hitting Silver Miners[I bought 500 shares of SLW back in July when it was at the obscenely LOW PRICE of $18.90, the Pioneer of streaming and the Franco Nevada of Silver[except FNV would need 5X more reserves to match SLW's 1Billion Plus oz of Physical, which cost them just $4.14/oz] 500 shares of SSRI and 400 shares of PAAS were bought, along with 250 Silvercorp Metals (SVM). The question I have is that I initiated about 45% of my positions on that seemingly perfect day, and ass gold kept climbing, I added more, 100 more shares of GG and AEM, 200 more NGD, 300 more IAG, and 100 more shares of PAAS. Then I grabbed what I didn't own- 400 Yamana (AUY), 500 shares of (BVN), 2000 shares of (GSS), as well as 300 shares of (AG), First Majestic Silver and I know you warned against buying Endeavor Silver, but I grabbed 400 shares of EXK for around $5, since then it's dropped to $4. Do you think it's in my best interest to sell my enormous stake in what I think are great miners if the Gold price level is trending down, as we've seen it has as the DAMN algos raped it's price at 3AM last Thursday night, pulling it below it's 100DMA, and IF it falls below $1275, is it in my best interest to sell then, or b/c I'd only be looking at a $7-8000 loss or just hang on to what I have and ride it out… I think that b/c supply is SO TIGHT, it SHOULD keep Gold from falling below $1250 marker, as China i buying over 100Tons/month, and with prices lower, they will keep buying PHYSICAL, as the wealth of the world is transferring from West to East and augurs a New World Order, one in which worthless paper Monopoly money is dumped all over the globe in as a massive paradigm shift occurs whereby ALL denizens of the world feel the wrath of what we as America exported to the 40 or so other Industrialized and/or Emerging Markets, which have been saturated with funny money and b/c they aren't the Reserve Currency, Inflation is eating them up, case and point India, brazil, Vietnam, etc., and people begin to favor of sound money-Gold and Silver, which can't be printed, as everything printed or created digitally is FREE, and it's this thesis that I expect to play out over the next year. Russia is planning on announcing the backing of its' Rubles with Nat Gas and Gold beginning next year and next spring, China will have it's 5 year anniversary of when they released their TOTAL gold holdings and I think at that point, we'll have 1/2 or better yet 2/3 of global GDP going GOLD, and that CRITICAL MASS is KEY and I believe will have been met, leaving the dollar worth about $.425 cents, based on my model … In 2009, China reported having 1.5 tons, but given their rapacious demand, sources I know say they have at least 4.5Tons today, possibly over 5 Tons TODAY, and maybe they'll have close to 6 T by next spring… Any opinion of yours and response would be GREATLY APPRECIATED…. Keep up the FANTASTIC WORK!! Gratefully, Stephen Lindquist email: link.quist@gmail.com
Hello Acruda! Money and Markets is published by Weiss Research, Inc., which is strictly a research publishing firm and does not provide individual investment advice to its subscribers. Although our editors cannot provide individual investment advice, we urge you to follow our daily articles for more investment insight! To find out more about our services, please visit :
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Dear Stephen! Thank you for your lengthy post! Unfortunately, our editors cannot directly help you. As we already explained, Money and Markets is published by Weiss Research, Inc., which is strictly a research publishing firm and does not provide individual investment advice to its subscribers. Although our editors cannot provide individual investment advice, we urge you to follow our daily articles for more investment insight! To find out more about our services, please visit :
http://www.moneyandmarkets.com/services/trading-services
thanks for sharing!!!
Larry, i've been following you for a couple years now but I think you have overshot the decline in metals and could have missed a premium buying opportunity for your followers prior to the FOMC meeting today. They cannot reduce the asset purchases w/o creating a disturbance in the economy. You have a long-term positive outlook for metals and the $18.50 in silver may never happen again with the FOMC position in printing. "When hunting for elephants, do not go off trail for rabbits"… you're readers may have missed a buying opportunity in metals being greedy over a buck or two in silver.
Several influences can affect these estimates as well such as a military engagement with Syria/Iran, some type of real/manufactured terrorist event, and of course the raising of the debt ceiling and potential Gov. "shutdown", which I gather you considered with your Oct 3 scenario. Nonetheless, great observations, thanks for the info.