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Few people believed me when I repeatedly warned that gold was still in a bear market and had not yet bottomed.
They said European Central Bank (ECB) money printing would surely light a fuse under gold and propel it higher.
They said the rising tides of terrorism and war around the world would surely send it higher.
They said inflation would come roaring back, and gold would soar.
They even claimed China was aggressively accumulating massive amounts of gold, cornering the market to make its currency, the yuan, the strongest in the world.
Some even said it will soon be known to all that our own Fort Knox doesn’t really have any gold and that our government got rid of it all years ago.
While others claimed the dollar was going to crash, and hence, gold would shoot the moon.
To each and every one of these and more stories and conspiracy theories I said, “BALONEY.”
They are all merely theories put out there by analysts who either don’t have a clue what they are talking about, or have gross conflicts of interest, pretend analysts who are really gold dealers in disguise.
Instead, I said, the main facts are these …
A. The world is awash in deflation and cash is king. You’ll be hard pressed to find inflation anywhere. And certainly not in the two biggest economies in the world, Europe and the United States.
Moreover, as I have said all along, hair-brained policies enacted by inept politicians in Europe and the United States have sent money largely into hoarding cash, which by default is bullish for the U.S. dollar and deflation, and bearish for most asset prices.
True, some money is going into alternative assets like diamonds, artwork and jewelry — but that’s big savvy money that largely wants to get off the grid.
After all, you can hop on a plane with $10 million worth of jewelry or even a Picasso, but try doing that with gold bars or coins and you’ll likely have it confiscated and possibly even end up in jail.
B. $10 trillion of money printing can’t do anything when global debts are as high as $500 trillion. How can $10 trillion of printed money by the world’s central banks possibly make a dent in the global debt monster of nearly $500 trillion of official and unofficial government debt?!
It can’t. Which is why all the money printing has done absolutely nothing to prevent deflation from taking hold.
C. Terrorism and war will not be immediately bullish for gold. One day — in the not-too-distant future — the majority of investors will wake up and smell the coffee: That Western governments of the world are going broke, and as a distraction, are engaging in policies that provoke both civil and international unrest and even war.
When that time comes, then gold will start to explode higher, with or without inflation. But for now, the majority of investors don’t know what’s going on.
So with almost every bounce in gold, they buy more. And then they get chewed up and spit out as gold plummets still lower.
This is a necessary process in the bottoming of any market, not just gold. The majority of investors cling to the wrong side of the market, almost all the way down.
D. China is not looking to corner the gold market. I’ve said this before and I’ll say it again until I’m blue in the face.
A gold standard, in any currency, is ultimately contractionary and deflationary. It has never once worked, despite what anyone tells you.
It can’t work. Why? Because authorities in charge of setting the official exchange rate between gold and paper money can change it at will. And because it subjects an economy to the nuances of new supplies of gold, or the lack thereof.
If China were to impose a gold standard, its economy would implode. It’s that simple and Beijing knows it.
Moreover, as I have also stated many times before …
1. China has never had a gold standard. Not once in its 5,000 year history.
2. China invented paper money. During the Tang dynasty (618-907). Known as “flying cash” that was backed by copper-based hard money, the paper notes were soon replaced by paper money with bank seals.
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| China’s “flying cash” — first known paper money, developed by the Tang Dynasty (618-907). |
China’s paper money invention traveled westward with the Mongols, and by 1661, Marco Polo brought the paper money concept to Europe.
E. Western central banks have zero interest in gold.They too have no interest in a gold standard. Period.
In addition, as I have also stated before, many Western central banks will end up selling gold. Why? Two simple reasons:
1. Many are flat broke and need the cash. Greece will be among the first to dump gold (or be forced to). Portugal, Spain, even Italy and France will ultimately sell gold. As will other bankrupt European countries.
2. Neither the ECB or our own Federal Reserve want gold to be a part of today’s monetary system. They don’t even want paper money to be a part of it.
Instead, they are actively pursuing electronic currencies — so they can track and tax you and even shut down the banking system at the press of a button.
So what’s next for gold? How low can
it go before it finally bottoms?
Subscribers to my Real Wealth Report and my premium trading services have my more specific targets, as they should.
So all I can tell you right now is …
A. Gold will likely soon bounce higher. That in turn will get many analysts and investors excited, proclaiming the bottom is in. But …
B. Once that bounce is over, gold will cascade lower to well below $1,000 before bottoming.
So don’t be fooled. Gold will go still lower. And so will silver, platinum and palladium.
If you own inverse ETFs on any of the precious metals that I have suggested in the past, hold them. I’ll let you know when precious metals have bottomed so you can grab your profits.
Best wishes, as always …
Larry Edelson
ken August 4, 2015
I have read Larry’s emails for 5 years now and he has been DEAD wrong on Gold. Always playing both sides of the coin and predicting AFTER the fact. He was right in 2009 about the DOW and I made big bucks on his advise.
Ursula July 26, 2015
Hi Larry,
interesting, a few months ago when I was a subscribed to your newsletter you stated very clearly how wrong HS Dent is with his prediction Gold coming down, possibly to $700.- on the long run. You were so certain that it turns north to new heights,…
ECONOMY & MARKETS | 07.25.2015
Your Weekly Wrap Up
By Chris Cimorelli, Managing Editor, Economy & Markets
Harry’s predictions seem to be coming to pass.
My purpose here is not to recap the news. You can get it anywhere you want. But with the week gold and oil just had – following the recent freak-outs with Greece and China – it’s key that several big names are beginning to sound an alarm. And they’re right in line with what Harry’s been saying.
Gold hit a five-year low this week. As of Friday, it appeared to be settling under the $1,100 benchmark.
The movement has sparked some dialogue.
Goldmach Sachs is calling for $1,000 gold.
Morgan Stanley – $800.
And of course, Harry continues to predict gold will hit $700 by early 2017. The latest sell-off looks to be inching in that direction.
Then there’s oil. Crude oil futures fell to $48.45 on Friday. And the Wall Street Journal announced black gold had stepped into a bear market. That to me is huge.
Bloomberg put out a warning that oil could experience the worst crash in 45 years. Harry’s long-term predictions call for $10 to $20 oil by 2020 (2023 at latest). His short-term call is $32, and he believes we’ll hit it within the next year. That will mean the destruction of the fracking industry, resulting in a crisis comparable to the subprime crisis of last decade.
And let’s not forget real estate. America’s housing market is beginning to display its true colors as new home sales dropped 6.8% – the lowest in seven months! Perhaps worse, previous months were revised 40,000 sales lower.
Like Rodney said this week, it almost feels like we have to check the financial news every morning (I feel like it’s every hour) just to make sure something didn’t burst.
In that email – which he sent to you Tuesday – he explained that, despite all the fears in the market, gold has been slipping into a coma. If nothing else, it sure seems to be heading that way.
It’s not because people aren’t concerned about what’s going on in the markets. The fear of financial chaos usually sends people to the precious metal.
http://www.dentresearch.com/
Robert P July 25, 2015
Yes, $1,000 gold, I have heard it predicted to reach $969, but then again, you’re liable to “hear” anything….. Only hindsight will tell the tale.
There’s no way (that I’m aware) to know the “top” or the “bottom” until after the fact….I just hope to get somewhere in the vicinity…..I agree with you though Angus, “you have to be in it to win it.” …so we’re doing this instead of getting our 0.005 interest at the bank…lol.
Angus July 25, 2015
the only people who pick the bottom are those ‘tipsters’ who tell us after the event…..yes well done!!? Most seem to believe gold et al will rise, but won’t say when. Of course if they could predict so accurately why write about it? Just invest and make millions. Anyway seems sensible to me, as a professional gardener, to have a position now and add when you feel it’s right to average down? At some point, and we pray sooner rather than later, the rise will happen. But like a lottery……you have to be in it to win it! I’m in and holding firm. Bonne chance.
Neil July 25, 2015
You want 10% of your portfolio in Gold… and you hope it loses money. Which means the remaining 90% of your portfolio is growing. That’s how I invest in Gold.
Robert P. July 22, 2015
$1,000 Gold, I’m with you…”buy & hold with leverage seems to erode profits and increase losses.” That’s exactly what my broker says, and that’s what I’ve found to be true in my own trading.
Hence all the more reason to turn it around now (buying NUGT) and hope this prophesied “bounce” comes to pass not many days hence. Then the question will be when to go from NUGT back to DUST and JDST…?? …I suspect sometime in Sept. this year…??
$1,000 gold July 23, 2015
i make money and lose money fast in leveraged etfs. not an easy game to play. by far, my best performer is still a buy & hold s&p index fund. something to be said for the “hare vs the tortoise” fable.
$1,000 gold July 22, 2015
least we not forget, gold is just a shiny useless rock, and the dollar is just a worthless piece of paper with green ink on it. only has value because we think it does.
Mark July 23, 2015
The useless rock has been a safe haven asset for thousands of years. Not so for stocks, bonds and currrencies. Larry completely missed silver’s shot up to $49 a few years ago. You could have waited for his signsl all the way up.
$1,000 gold July 23, 2015
stocks have hugely outperformed gold as far back as we can go. gold pays no interest or dividend and likes to sit on the self and collect dust for decades at a time. one of the worst performing asset of all time. so far, no asset class has beaten stocks for the long haul.
$1,000 gold July 23, 2015
but, gold is a universal currency accepted and valued worldwide. no other currency that i know of has outlived gold. good stuff to have around “just in case,” but it’s a poor performer as an investment, except for short periods time during a financial crisis.
Mark July 24, 2015
Over the long haul stocks have had a better return but they are a different animal than gold…part owner in a company vs. a commodity. You can hold gold in your hand and it can be easily bought or sold. Stocks on the other hand are tied to the financial system. If the market’s computer algos have a glitch or they shut down in times of crisis stocks cannot be sold and they are not accessible. Gold is a safe haven asset. As you comment gold is good to have in times of crisis. Unfortunately many never foresee a crisis and are caught empty handed because some financial writer or advisor tells them don’t buy gold or wait for some signal to buy and by then it is too late.
$1,000 gold July 24, 2015
i wouldn’t mind having some physical gold stashed for a crisis, or trade paper gold in during gold bulls, but as far a gold as a long term investment – i’ll pass.
$1,000 gold July 22, 2015
strong s/r level in gold at about $900, but good luck picking a bottom or top in anything, ever.
$1,000 gold July 22, 2015
look at what happened to the coal miners like peabody, ticker BTU. a lack of demand from china put their stock in the toilet. so what will a lack of demand for gold do to the gold miners? the gold short is nearing its end time, but the gold miner’s short may be about to begin, eh?
$1,000 gold July 22, 2015
KUDOS LARRY!!! you got your mojo back. no need to time the market. direction and amount of the move are all we need. it’s the big picture that counts, not the day-to-day trading.
were July 22, 2015
You can wait around for the eventual bottom – but make sure it really is the actual bottom (lol). Meanwhile some of us have been having a grand ol’ time surfing the waves up and down.
$1,000 gold July 23, 2015
that works until the waves break down. then you’re right back where you started. some day traders and swing traders do get lucky, but most just chase there tail and get nowhere in the end.
were July 23, 2015
funny. I’ve proven to you that it can be done. You’ve disparaged me all the time that I’ve been making money and you’ve been waiting around. Good for you.
$1,000 gold July 23, 2015
it’s called swing trading. it’s time consuming. one bad trade will drag your percentage of profit down, and after all that effort. very hard to come out ahead of a simple buy & hold position over the long run, but a great way to learn how the market works, and how you yourself work as well. no one is disparaging you. i apologize if i made you think that. you’re input is insightful and absolutely worth hearing. plus you seem like one of the good guys on this site. the world could use more people like you.
Robert P. July 22, 2015
Edelson’s saying that gold is due for a bounce but that will be only a bump along the way to lower prices, so therefore, we should stay in our contrarian positions…… I don’t know about anyone else, but I’m NEEDING to participate in that bounce, and THEN I’ll turn back around into my DUST and JDST when that’s finished. ….My idea with NUGT is only for a date, not to get married to it……..
$1,000 gold July 22, 2015
i think like you do, bob.
Robert P. July 22, 2015
In all honesty though, it always makes me hesitant when my own think coincides with Larry’s.
…..Nothing against you, Larry, personally, but I have lost a WAD during the last couple of years following your advice!! …Surely we’ll get it right sooner or later, huh??
…or go broke trying………………
irene July 25, 2015
I also lost money on his advice. In addition many lost money on advise gold go to $5,000 oz. Edelson advise is after the fact. Only after gold went down 30% did he say gold will go down.
John July 25, 2015
I’ve lost a fair amount following Larry on mining shares and Asian markets. But I tripled my portfolio on three different occasions (brokerage, IRA, and 401k) following his advice on ZSL and GLD. I love his options recommendations. Since I don’t have a lot to invest I can’t buy 100 shares of GLD or zsl but I’ve made a grip doing those recommendations as options.
Robert P. July 22, 2015
May be another big mistake, but I’ve been very aggressively buying NUGT in the last few days, and deposited a check with my broker today and bought some more!! Time’ll tell………
$1,000 gold July 22, 2015
one thing i’ve learned using a leveraged etf is take profits asap and cut losses asap. then do it again asap. could be my imagination, but buy & hold with leverage seems to erode profits and increase losses.
Favoloso July 23, 2015
All leveraged Etfs degrade over time. Use them as very short term trading tools.
Deborah G August 3, 2015
I bought gold for my grandkids school at $475 an ounce way back. I sold when it hit 1800
Manny July 22, 2015
FYI, and Larry has not pointed this out, the miners are trading at the their lowest level ever in recorded history relative to gold.
The Barrons Gold Miners Index is 21% below the lowest recorded point in the year 1942.
The question is do we jump in now or do we wait for Larry’s signal.
$1,000 gold July 22, 2015
i’d like to hear the answer to manny’s question too.
$1,000 gold July 22, 2015
btw, much better to hear from manny than the same old – so close is can taste it.
john July 22, 2015
The question is to follow Larry, or be a contrarian. If the miners truly are trading below the lowest recorded point in history relative to gold then my gut tells me (buy when everyone else is selling), If you jump now, you may be in to early, but that depends on if your a trader or long term investor. What is a couple of percentage points now to what will be. Wouldn’t Larry say the same thing?
john July 22, 2015
FYI, there are some analysts saying we are close to or at a bottom. All the miners can’t go to zero, if they do there will be no more gold mined and then a crunch on supply, meaning higher gold prices, so hang in there, your guess is as good as Larry’s.
Ray July 25, 2015
We jump in when everyone on this board and their mothers start cursing gold like no tomorrow because they lost their pants/skirts owning it.
Deborah G August 3, 2015
Holding cash is a market like any other trade dollars on the exchange. Gold needs to bottom
Robert P. July 22, 2015
Has anyone noticed the RSI on HUI, GDX and GLD too, for that matter? It’s hitting lows not seen before in the duration of the charts! And the Bollinger Bands are interesting also…
Readers, regardless of what you may think about Edelson’s and/or others’ predictions, surely the miners will bounce soon…may be a “dead cat bounce,” but a bounce nevertheless.
Jon July 22, 2015
Last year Recommends nat gas at 6 saying it should quadruple within few years
$1,000 gold July 22, 2015
endless supply of natgas out there. good luck with that.
Jon July 22, 2015
Iag 62$
Facebook to get sliced in half to 25$
“Miners have bottomed”
Oil support at 92$ feel free to pick up quality oil companies.
I’m right as rain calling it in spades