Gold has crashed. So has silver. So have senior and junior miners. All just as I had forecast.
Gold getting down – so far – to as low as $1,243. Silver to as low as $17.11 (both basis December futures contracts). The typical senior miner has shed more than 30% since early August, as measured by the AMEX Gold Bugs Index.
And all this despite …
Just about every analyst on the planet calling for a new bull market.
The possible failure of Deutsche Bank, one of the largest, riskiest banks in the world, leveraged 40 to 1 with derivatives.
The craziest, most destructive and rebellious elections in the U.S., probably ever.
Russia’s Putin making new aggressive moves in Eastern Europe and new threats against the U.S.
And this morning, Germany warning the world of the danger of a hot war between the U.S. and Russia
So the two main questions on most investors’ minds are …
1. “Why is gold falling?” and
2. “Has gold bottomed?”
I’ll answer those two questions now:
A. Gold is falling because investors are hoarding cash, not gold. As I’ve said all along, gold is not portable, it’s illiquid and it’s not going to help any large institutions survive what’s coming.
So instead, the opposite is happening … large hedge funds, pension funds and more are liquidating gold and silver and hoarding cash instead.
B. Has gold bottomed? It’s actually too soon to say. There’s a very good chance $1,243 was that secondary bottom I’ve been telling you about. My target – and I showed you the forecast charts – was $1,250 by October 5 to 7 – and we got a near perfect bull’s-eye on that forecast.
But it’s really a tad too soon to say if the bottom is in. The selling torrent in the precious metals and miners that was unleashed last week may need some more time to probe and form a bottom. There may even be one more stab at a new low. Ditto for silver and miners.
So what should you be doing now?
FIRST, hold all positions. I am watching the markets like a hawk and will alert you when to make your moves.
SECOND, do be ready to go long the metals – even if they are falling at the time I issue my recommendation. I never like trying to pick bottoms or tops, and it’s not a good policy to even try, but in this case, the rewards could be substantial.
Best wishes, as always …
Larry
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