Dear friends of gold and silver,
Staring at short term charts can drive you mad these days. As we are now in the second phase of the gold and silver bull markets the volatility is mind boggling.
Personally, I’ve been following these markets for years and listening closely to experts far more experienced than I am and all of them - all of them - have been warning about these days for years. Gold is now correcting and has fallen more than 20% from its high in the 1900 area. Silver being the more volatile of the two has fallen from 42 or so down to 26 as of this morning before going back up again. That is a correction of about 40%. However, this is nothing new in these two bull markets. In terms of USD gold fell 30% in 2008 from about 1000 to 700 or so. Silver corrected even more from above 20 to just below 10 USD per oz, or 50%. Clearly we are now in a similar situation as we where in 2008 during the Lehman crash, only now the falls are sharper, as are the climbs. That’s volatility for ya!
To remain sane, you have to take a step back, look at the big picture, and ask yourself what is different today compared to 2008? The truth is we are now in a far worse situation than back then. The printing presses have been working around the clock at speeds that would make you more bullish on ink than the metals. The debt crisis has worsened. The balance sheets of the major financials are ridiculous. The politicians of the world try to solve the problem with too much debt by adding more debt. The toxic derivatives are bigger now than in 2008. The IMF needs more cash. Who will bail them out?
Another Lehman type moment is here now. Only gold and silver can protect you. If you thought of buying more gold at 1900 when gold seemed to move ahead to 2000, or silver at 42 being close to a run on 50, embrace this buying opportunity and thank your lucky star for another chance of buying the metals at bargain prices. Gold will hit new nominal all time highs sooner than most people think. Seasonal strength in gold is usually during the forth quarter when strong buying from Asia kicks in. That is still ahead of us. Greece is about to default and European leaders will have a hard time getting support from the voters. That is still ahead of us. QE3 is not yet announced. That is still ahead of us.
I still believe we can see gold above 2000 this year and I still believe silver will surpass the 50 dollar level. I’m too young to have experienced the volatility during the last bull market in the metals in the late 70s, I can only read about it. I did experience the dotcom craziness though but I was too young to participate. This bull market will be more extreme than those two examples. Both to the upside and the downside. Remember the big picture. Step back and look at the longer term charts and don’t let the tickers scare you. The older guys with more wisdom behind their years are not scared, so why should we be. The long term trend is your friend. Sit tight and be right. For those who have fiat cash on hand, buy more physical now before shortages arrive and premiums go through the roof. In the year 2020 we will have forgotten how we felt today, but we’ll be very happy we had the mental strength to hold on-, and add to, positions.
