Gold keeps crashing. Ditto for silver. So the question is: Are we near a bottom yet?
I can’t tell you precisely what the low will be.
No one can. All I can tell you is that …
1. Timing-wise, we are very close to what could be the final low for precious metals in their two-year long interim bear market.
2. Price-wise, we are also very close. As I’ve told you before, long-term support levels come into play at the $1,170 to $1,200 area in gold.
In silver, the long-term support levels are scaled in from $17.70 down to $16.33. Silver’s now lagging just behind gold, but it’s almost there now too.
|Gold prices should soon bounce higher again.|
So yes, a bottom is almost here.
I say almost, because in any market, extreme movements are often the most difficult to predict. There’s a chance, for instance, that gold could fall to as low as $1,110, or even $1,060. Silver to as low as $14.
I don’t think we’ll see them get that low, but if we do, so much the better.
And if we don’t, that’s fine too. We are so close to a bottom that I can literally taste the final lows, not to mention the huge profit opportunities that lie ahead.
That said, right now, there are several steps I believe you must implement, immediately:
1. If you followed my suggestions to buy inverse ETFs on gold and silver and have not yet taken your profits, bag them now.
2. Don’t start loading up on mining shares. They most likely have not bottomed. Plus, as the stock market pulls back, mining shares will remain under pressure even if gold and silver start to rally again.
3. Build up your cash for buying precious metals for the long-term. Everyone should own some gold as insurance against the upcoming collapse of the global monetary system, which I believe will occur within the next three years. So will the governments of Europe, Japan, and the United States.
You simply must have the insurance that gold can offer you when that happens. The price of gold is bound to soar to over $5,000 an ounce.
4. Be ready to speculate in the precious metals markets with your risk capital. More money could be made in the precious metals markets in the next few years than in the last 11.
Now, some questions I’ve recently received from readers,
and my answers:
Q: Larry, gold and silver have been hit so hard, will they ever be able to get off the mat again?
A: Think of the markets like a trampoline. Not a mat. The higher the energy level and downward force during corrections, the higher the bounce.
Here are two major examples to drive my point home:
First, consider the stock market crashes of 1987 and 2008/2009.
In 1987, the crash in the Dow was the worst ever, yet it hit new highs by the end of 1989. The collapse in 2008/09 gave stocks enough energy to bounce back to the upside and ultimately hit record new highs.
Second, consider gold during its 2008 crash. The same thing happened. Gold crashed from over $1,000 down to roughly $650, and then bounced higher all the way to $1,920.
So don’t worry about the metals getting off the mat. They’re soon going to bounce off the trampoline higher again.
Q: Don’t you think the world should go back to a gold standard?
A: Absolutely not. First, the gold standard is inherently deflationary. Deflation is the worse of two evils, inflation being the other side of the coin.
Second, the gold standard did nothing to prevent boom and bust cycles. Even under the gold standard there were bubbles and imploding bubbles. There were bank failures, recessions and depressions, and periods of high inflation.
So no, I am not in the camp that believes the world needs a gold standard. A new monetary system with much less dependence upon debt as well as some type of single-world currency for trade purposes, yes. But a gold standard, no.
Q: When are the manipulators, the Fed and the big Wall Street banks, going to stop shorting gold and silver?
A: In my opinion, that’s all hogwash. No one can manipulate a market to such an extent as we’ve seen in gold and silver. Gold and silver are simply in an intermediate-term downtrend.
Those who keep conjuring up manipulation stories are those who simply cannot accept the fact that gold and silver were due for a severe correction.
As for those who have been shorting the metals, be thankful for them. They will be the ones providing the fuel to put a bottom in place and send the metals higher again. Why? Because they have to cover their shorts.
Q: Don’t you think the paper gold and silver markets are destroying the physical markets?
A: This is more nonsense spread by those who simply want to sell you gold or silver to earn a fat commission while not giving one hoot about your financial well-being and the right time and price to buy.
If it were true, that the paper market was negatively impacting the physical market, the price of physical gold and silver would not be following the paper market lockstep (or vice versa). With minor variations due to interest rates and volatility, the two markets parallel each other.
Q: Once gold bottoms, what is its next move?
A: We should soon see a strong rally back to the point of the sharp breakdown. Back up to the $1,550 to $1,600 level. Then once that is taken out, we’ll be on solid ground for new record highs in the months and years ahead.
Stay tuned and best wishes,