Gold: Sell, Hold, or Double Down?

I'll be brief.  Recent market moves, headlines, and commentary have been unsettling to (say the very least)

for investors in precious metals.  But if we can get beyond "What's happening?" and consider "Why is it happening?" the situation can be viewed much differently.  In a recent post, Gordon Gekko dissected the "Why" issue with incredible detail, and basically threw in the "Who" as a bonus.

Spoiler alert!  The title of his post is "Buy PHYSICAL Gold. NOW: The Discount of a Lifetime: Or Why You Must Abandon the Fake Paper Gold Market

"If someone is selling anything, the rational thing to do would be to get the best price possible, right? Would you get the best price if you sell your lot in one go flooding the market? Would you want to overwhelm all the bids and crush the price? Yes, but only if exactly that was your objective – to crush the price. Nobody sells 400 tons (!) of gold in one go if they are trying to get the best possible price. So this wasn’t a case of varied market participants selling their gold holdings having considered the fundamentals for Gold and arrived at the conclusion their long position didn’t make sense anymore. This was a case of concerted selling by one single entity whose sole intention was to drive down the price. Not only that, nobody sells $20 BILLION worth of Gold in ONE GO without some sort of state/CB backing."

So how is the situation different?  Gold is on sale!  Get some now, or right after you finish Gordon's post.

Gold Crashing: What Does it Mean?

Want to dump your gold and silver this morning?  Before you do, check out this video from one of my favorite YouTube channels. After all, with demand for physical in liftoff and prices crashing, we're experiencing a market (or market illusion) unlike any that the econ textbooks predict.  What does it mean?



In the end, I guess it means something different for each of us.  A highly leveraged trader is in trouble, or perhaps kicked out of his trade already.  A long-term accumulator may be in a very different situation.  "Look!  It's on sale!"  

The real question is, what does it mean to you?

True and False on Gold ETFs

Sometimes the thing we see written in the press are so stunning that they almost defy comprehension.  In this snippet, The Globe and Mail manages to score a perfect 10 in terms of truth, and second perfect 10 in terms of anti-truth in just two sentences.

"Exchange traded funds have transformed the gold market. Since the first fund was launched nearly a decade ago, the products have become so successful in offering a simple way for investors to buy physical gold that they have acquired the nickname “the people’s central bank.”"

First, the truth.  Gold ETFs have changed the gold market.  There is no denying that at a time when billions are invested in what is considered gold by way of these vehicles.  (I wonder, in fact, if ETFs are responsible for the sometimes lackluster performance of gold stocks.)

I'll admit it.  I own a bit of Sprott's PHYS and PSLV--nervously.

But the anti-truth that follows is astonishing in its audacity.  ". . . the products have become so successful in offering a simple way for investors to buy physical gold."  Really?  Physical gold?  Let me assure you, that while I hold some PHYS, Sprott claims it is 100% backed by gold, that ownership is utterly different than a Maple Leaf, Kruggerand, or Gold Eagle in my control.

Never forget that in the worst case situation, gold is favored because there is no counter-party risk.  Gold ETFs may perform in a similar fashion to gold for a day, a month, or a thousand years.  Still, the counter-party risk will remain.

Eric Sprott on the "Recovery" and Gold!

In a few paragraphs, Eric Sprott fillets the notion of a recovery.  U.S. housing?  No.  U.S. employment?  No.  European solvency?  Not even close.

Then he goes on to detail the incredible rising demand for physical gold (Am I the only one that feels silly needing to say 'physical' in connection to gold?) in the rest of the world.  Odd then, that gold prices seem to be an "immovable object" lately.  As I read Sprott, we may soon see an "irresistible force."

"We have written at length about the disconnect between the paper gold price and the physical gold market. If the demand changes stated above applied to any other market, the investing public would lose their minds. "

And when they lose their minds, gold can be expected to go parabolic.  THAT is when we reach bubble territory, and when it's time to consider liquidating your precious metals and converting them to. . .

Got Gold?

I hope so, as this video offers lots of compelling reasons you might want to.

Dollar destruction on the horizon?

This video from the NIA is long, but also compelling.  Highlights for me were the illustrations of just how bad off we are in terms of national income and expenses and our incredibly excessive military commitments around the globe.



Suddenly I'm not worried about paying $1,200 for gold or $18 for silver.

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Shadowstats John Williams--Buy Gold

If you've never visited Shadowstats.com, don't wait another minute.  John Williams does a great job of showing us "what's behind the curtain."  For just a taste of his thinking, though, check out the following.  In the first paragraph he makes it crystal clear that inflation is the only way out for our government.

"Now to put that into perspective, if the government wanted to balance its deficit on a GAAP basis for a year, and it seized all personal income and corporate profits, taxing everything 100%, it would still be in deficit. It can't raise taxes enough to contain this. On the other side, if it cut all government spending except for Social Security and Medicare, it still would be in deficit. With no political will to contain the spending, eventually the government meets its obligations by revving up the currency printing press."

If that paragraph doesn't make you a little queasy, please read it again.  Of course he did leave out the option of default, but which will Washington prefer, an outright admission of failure, or a thinly veiled swindle?  Later in the article he points out how tranparent and politically inspired are everything we hear out of D.C.  Remember when we had to have the bailout or unemployment could top 8%?  Now that we sprung for that, all we hear is nonsense along the lines of "green shoots."

"You are getting happy news from governments, central banks, financial markets, Wall Street analysts and the popular media, which does tend to cater to Wall Street."

Finally, he gives his thoughts on wealth preservation (that's preservation, not getting rich!)

"In terms of preserving the purchasing power of your assets, the best thing I can think of is physical gold."

Please check out the entire article on Mineweb.com if you have time, and again, be sure to check out Shadowstats.com.


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