Mike Burnick: Hello, everyone, and welcome to this special online strategy briefing for Gold and Silver Trader. I am Mike Burnick and in just a moment I will be joined by Larry Edelson for the session.
Now, without further ado, let me introduce Larry Edelson, editor of Gold and Silver Trader. Larry, it is great to speak with you again.
Larry Edelson: Yes, you too, Mike. Thank you very much for hosting today and good morning and welcome, members. This is a very important session today. I have actually moved it up ahead of schedule because there are some very important things happening in the markets, specifically in gold and silver.
So today we are going to look at two charts, one on gold and one on silver and then I am going to open the floor to questions. I want to devote most of the session to your questions and my answers.
Mike: Okay.
Larry: Go ahead, Mike.
Mike: With that, let’s get started on your first chart here on gold.
Larry: Now as everybody knows over the last few issues I have been talking about the possibility that gold and silver may have already bottomed back in December of 2013. I originally thought that was not the case. The models called for a new low in January. We did not get that new low in January. Instead we got a rally. I was suspicious because the December low that you see on the chart here was almost a double bottom with the June 2012 low. They were very close together in terms of price and that made me very suspicious that the final lows were in. In addition, as I just noted, the cyclicals called for a January low, and instead we started to get a rally in January.
Now, I went back to the drawing boards and I went back to the timing models and it appears now, with hindsight, and sometimes that is all we have is hindsight, that what we saw in January is what is called a cycle inversion. That is where a low was called for, we actually got a high and you can see that clearly labeled as #1 on the chart. That was the January high, and that inverted the cycles.
We then got a February low, and if you recall I said earlier in the year that if we did not get a final low in January, we would see the next opportunity for a low in March. Well, lo and behold, the cycle inversion continued to carry forward into March and we got a high in March and then the pullback into April.
Now, this is significant because when there are cycle inversions it typically happens right after a major turn in the market has occurred and it typically happens because there is some larger force at work that is distorting the shorter-term, more normal cyclical behavior in that particular market, in this case gold.
So I racked my brain. What could it be that is altering the shorter-term cycles? What longer-term cycle is kicking in that could be altering the short-term cycles and could it mean that we already have a bottom in place? Well, to be honest with you, it did not take me long to figure it out. It is the cycles of war that I have been talking about for over a year now. Those cycles, especially with the situation we just had in Ukraine, are picking up with intense velocity and momentum and, as I have said all along, the next phase of gold’s bull market will not be driven by hyperinflation. It will be driven by geopolitical turmoil.
So what is happening here is the war cycles are kicking in more aggressively than I had expected, and that is what caused, in my opinion, the cycle inversion that we saw in January, where we got a high instead of a low. We got a premature low in December, actually on the last day of the year, very close to the January target. But the bottom line is that we saw a rally in January, a slight pullback, and another rally into March which should have been a low. That said, I strongly believe, and all the evidence tells me, that the cycles of war are overpowering these markets now.
So the next question that must be addressed is if we have a final bottom in place in gold back at December and June of last year, we need to see gold and silver continue to rally but also pull back and hold critical support levels. In early April, late March, early April we pulled back to the $1282 level in the nearest futures contract, and actually the line in the sand is really about $1276.50 in cash gold. We held that level and as you know over the last couple of weeks, we started to rally anew. We are up to almost $1310 in gold, and this is extremely important evidence that a bottom may have been made back in December, a final bottom. Although that December was just slightly higher than the low that we saw in June 2012.
When a market tests support, holds it, and starts to rally again, that is a bullish sign. So right now I am very, very excited about these developments that are unfolding in gold. We could be on the verge of the next giant bull leg higher, which will take gold to over $5,000 over the next couple of years, and it will be largely motivated or driven by the rising geopolitical tension that we are seeing around the world.
Now, having said that, gold is not yet completely out of the woods. It is showing some very, very good action. I am monitoring it very closely. We have taken some recent long positions. Those positions are starting to rack up some open gains, nothing major yet. But if gold continues to stair-step higher and hold support levels, the next rally we see should bring us back to the top, around $1377 to $1390, back off from that level, and then punch through up to $1450, and then pull back again and then start to rally again. This is looking very, very favorable. So far, so good.
And let’s take a look now at silver which has a similar but slightly different overall shape to it.
Silver, you can see here, looks a little bit different from gold. It has a series of somewhat overlapping waves. This is called in technical parlance a leading diagonal. It is a bullish formation. We are just beginning wave 3 to the upside, that green dashed arrow on the right side of the chart which should take silver up to the $22 to $22.60 level before we get any kind of decent pullback.
The line in the sand for silver is somewhat further below current market levels than it is for gold, where the line in the sand for silver is really about $18.80 now. But overall the same thing happened to silver that I just described to you for gold. That is, instead of getting a low in January, we got a high, a pullback, then we got a rally into February, we got a pullback into March, a little rally in the middle of March, and then a pullback into the latter part of March.
This is all, again, due to the cycles shifting. They are inverting. Now bear in mind, cycles never go away. They can shift from a normal rhythm of high to low to high to low to low to high to low to high. They can invert, and when that happens, as I just mentioned in gold, it is always because there is a larger cycle at work that is becoming more dominant and, again, I strongly believe that that is the cycles of war.
We all know what has happened in Ukraine. It is not over in Ukraine. There is still a very high chance that Russia will invade and take control of the rest of Ukraine. Russia is amassing troops on the borders of Latvia and Estonia. This is a very important flashpoint for the cycles of war. It is not the only one because tensions are rising between China and Japan, and tensions are rising within Europe. There is a lot happening there as well in terms of confiscation and austerity policies that are going to cause a tremendous amount of civil strife within Europe as time rolls on.
This is all part of the back wall of the financial hurricane. It is not going to be about hyperinflation. It is going to be about geopolitical stress, and we are just in the beginning of this phase of these cycles of war. They ramp higher. They do not peak until 2020, almost a full six years from now.
So I am happy with the progress that we are seeing in gold and silver. I am happy with some of the positions we have on now that are starting to look good. We also have a long position in natural gas. Natural gas has rallied quite sharply over the last few days. We are in the next leg up there. Natural gas is back in a long-term bull market. We have a nice position on in the natural gas-leveraged ETF.
And we are also long the dollar, and the dollar has been rallying of late in sympathy with gold and silver. This is something I warned about. Do not be surprised if you see both the dollar go up and gold and silver go up, because that is exactly what tends to happen when there is a lot of geopolitical stress in the world.
We have one put option on that we had when I thought that gold would break the key support levels. I have kept that position on as a partial hedge in case gold broke down. However, it is looking increasingly favorable for a continued rally in gold and silver, so I will be exiting and salvaging as much value of that put option in the next day or two as I can. I know I have received emails on that, and please be aware that there is a reason I kept it open, and there is a reason I will soon be exiting it.
Having said that, let’s go right to Q&A because I am sure everybody has a lot of questions.
Mike: Yes, absolutely, Larry. We already have a number of questions in the queue. First question up, Larry, from Ron. He asks kind of a technical question, I guess, about how some of your orders work. “When you issue a buy recommendation,” Ron asks, “you always set a stop loss price but not a sell price target on the upside. Why not?”
Larry: Well, the targets remain very fluid in the beginning of a trade. They change frequently. So until I see the progress or lack of progress that is being made in the trade, it is really superfluous to issue a target. Now, just the other day I issued a target for gold and silver for the current ETFs that we have on, and that was because the pattern is shaping up. It is solid. It is projectable into the future. It is forecast-able. You will see more of that as these markets start to iron themselves out and we know exactly what is going on in the market. But when the markets are very fuzzy, it is very hard to put a target on it. And you know what? The target is not the most important thing. The most important thing is the risk.
Mike: Uh-huh.
Larry: Containing your risk and knowing where you are wrong and where you are going to cut your risk and cut your loss, that is far more important than knowing where your profit target is. Most professional traders do not have targets in mind. The only thing they have in mind is: When am I going to get out if I am wrong and how much am I going to risk?
Mike: That is a great point, a great point that every investor needs to understand and take to heart.
Here is the next question from Barbara. She asks, “Larry, is there a correlation that you see between the UGAZ, the natural gas ETF, going up as the Dow goes down?”
Larry: Well, no. There is no set correlation there, and there is no historical correlation there. They each have their own fundamentals. They each have their own cycles. They each have their own set of patterns that are unfolding in the charts and the technical action. So there is really no correlation there. There is perhaps on a very short-term basis at times, but no. They each march to their own drummer.
Mike: We have several questions here along the lines of your views on the market. Here is one from William. He asks about the stock market, the Dow Jones in particular, your views on it bottoming or being in a major bottom in the July/August timeframe. His question is, “Do you still hold that point of view? If so, why or why not?”
Larry: Yes, I do, and we finally do have a confirmed intermediate-term top in the Dow and the S&P 500 with last Friday’s selloff. That has been confirmed. We are stabilizing a little bit today. You should expect a bounce back up in the Dow and the S&P. It could be a sharp bounce. It could be a weak bounce. It is a little too early to say. But there is another leg down coming in the stock market. I will be looking, on a bounce, to get back into an inverse S&P 500 ETF or Dow ETF. There are approximately 2000 points of downside in the Dow. We should get down to around the 14,300 level heading into the May to August period.
Mike: We have several questions as well, Larry, about, kind of, your cycles of war and what you talked about at the outset, which was the fact that gold and silver may have already put in a bottom. Larry asks, “If that is the case, what or how do you intend to take advantage going forward in terms of specific investment ideas?”
Larry: Well, in Gold and Silver Trader we are going to aggressively trade with leveraged ETFs. We are going to jump on the rallies and when there are signs of a sharp pullback, we will do inverse ETFs. I am now also starting to look at the leveraged and unleveraged mining share ETFs and I am even starting to look closely at some of the warrants, the cheap warrants on some of the mining shares, which can be had for 5/100 of a penny for longer-term positions. And we are probably going to look at some options, too.
But it is a little bit early in the game. Keep in mind that we are building a bottom here. We are building the first leg up. That first leg up might take us to $1400 to $1450. It will probably then pull back to $1370. There are going to be a lot of swings and a lot of action. We are not going to go straight up to $5,000 an ounce. That is going to unfold over the next two to two and a half years, so there is going to be a lot of trading opportunities.
The important point is when you come into a major bottom, no matter what market you are talking about, it is very foggy. It is very tricky. It is very hard to trade. When the bottom starts to come into focus, it gets a lot easier to trade. It gets a lot easier to identify your risk. It gets a lot easier to identify your profit targets, and it really comes into focus. And we are in that phase now where the gold and silver markets are coming in to focus. It may take a couple more months before they really, truly come into focus. But on a short-term basis, there are many, many signs that are coming together that indicate we may have already bottomed last year.
Now, I am happy about that because we are still only about $120 away from the low. So if we are bottoming at $1,300, give or take $20, we are going to be in there at very low levels on the way up to 5,000. So this is good news. This is good news. No one can ever catch the exact bottom. I have been lucky enough a few times. In this case, I could not get as close as I would like to, but we are still very close.
Mike: Indeed, it is always very tricky trying to trade the bottom or the top tick of any market, that is for sure.
Kind of a follow on question …
Larry: Yes. Picking a top is actually a heck of a lot easier than picking a bottom.
Mike: Yes, well said.
There is kind of a follow-on question here from Phillip. He notes that, “Larry, when you speak about nice bottoms forming as you have in the past through trade alert issues or today in this webinar, could you specify whether or not you see this as a shorter-term trading rally or a long-term bottom that could produce the next big bull-market move in gold and silver?”
Larry: Well, I can try and clarify it in the editorial issues, and I hope I am clarifying on this webinar. It is a little bit of both, Phillip. In order to have a confirmed longer-term bottom in place, you have to look at the short-term bottoming patterns. I am looking at every tick, every trade that is being conducted in gold and silver, literally every tick. I am not just looking at an hourly bar chart or a four-hour chart or a daily chart. I am looking, actually I have on my screen tick charts, so I am analyzing right now under a microscope every trade, and every trade has significance when you are in this type of formation where something big is about to happen.
So we have both right now. We have signs of short-term bottoming and we have signs of long-term bottoming. We kind of have the bricks being laid in place for a solid foundation, but all we have right now is the footings under that foundation. So it is a little bit of both.
Mike: That was a good answer there.
Larry: Okay.
Mike: We have a couple of questions here, kind of going off the topic of gold and silver, talking about currencies, one from Herman. He notes that he is reading a lot about dollar devaluation and currency reset, sometime between April and June of this year. Your thoughts on that?
Larry: It is total nonsense. I do not know where you are hearing it, but it is total nonsense. There are some analysts and promoters out there that are talking about the dollar falling off a cliff July 1 because of the new Foreign Account Tax Compliance Act, or FATCA, that the IRS has issued. But that is nothing but fearmongering. The fact of the matter is that was announced two years ago. Any foreigner with an account, any American with an account overseas has had to report that account for the last two years to the Internal Revenue Service. What happens July 1 is that the foreign banks have to legally be bound by an agreement to the Internal Revenue Service to report Americans’ accounts overseas, and if they do not, they are subject to fines and penalties and withholding taxes.
That is not going to cause the dollar to fall out of bed because all Americans have had to report for the past two years. I have myself. So some people out there are taking that date and they are saying, okay, that is the end of the world for the dollar. The dollar is going to fall off a cliff. It is nonsense.
The long-term trend for the dollar is bearish. The dollar will be replaced as the world’s reserve currency. It has to be because of the natural evolution of the world. It is no longer the G7. It is the G20. We have a debt-based monetary system that is not working because it is based on a single world reserve currency based on the most indebted country on the planet so it is going to change. It is going to change. It has to change. But is the dollar going to fall out of bed between June and July? No. As a matter of fact, it is going to do the opposite. It is going to rally.
Mike: Rally at the same time as gold, as you said can definitely happen and has in the past, as a matter of fact.
Larry: Yes, it has. Not frequently, but it has happened. The last time it happened was between 1929 and 1931[]. Not because of the stock market crash in 1929, but because in late 1930 and 1931, 17 countries in Europe went bankrupt. As they went bankrupt, money fled to the United States, and it bought the dollar for safety and it bought gold for safety, and both went up, so much so that it caused further deflation in this country which prompted — and he did the right thing — President Roosevelt to devalue the dollar by raising the price of gold. It got so bad they even confiscated gold.
Now, you are not going to see that happen today because the dollar is no longer linked to gold. So they cannot use gold to devalue the dollar and you are not going to see confiscation either because we are well beyond that point. There is not enough gold in the world, even if it were valued at $100,000 an ounce, to cover the debt structure that is out there. It is a dinosaur. That whole idea is ancient history.
But that does not mean that you should not have your own gold standard, which is the great thing about it. Governments do not want gold anymore. They really do not. So anyone who is telling you that governments want to go back to a gold standard does not know what they are talking about. There is not a government on the planet that wants a gold standard. That is great news for you, because you can build your own gold standard.
Mike: That brings up a great question here, Larry, from Steve. He asks, “In your opinion, Larry, how much gold and silver would you recommend having and in physical form versus, say, ETFs or gold miners? Your help is greatly appreciated.”
Larry: Well, thank you, Steve. I recommend up to 25% of everyone’s liquid, investable assets be invested in gold and silver. That is really about the maximum, and I will be addressing that as we go forward with more and more signs that the bottom is confirmed and we start picking up some physical gold and silver as well as some new picks ― longer-term ETFs and some mining shares. If you are already invested in gold, you will get pretty specific instructions from me on how to increase that. If you are a Real Wealth Report member, you will be seeing that in my newsletter as well.
Mike: We have several questions here, Larry, regarding your cycle inversions and your short- and longer-term projections for gold. Tom asks the question, “Is the scenario for cycle inversion now over? What about the May deadline that you originally projected? Has that been affected by the cycle inversion you are talking about?”
Larry: Too early to say but at this point in time, it looks like the May — which the normal rhythm called for a May low — it looks like it may continue to invert and we may get a May high. We probably will get a May high.
Mike: Another follow up question from Barbara. “Where is gold and silver going after the near-term rally, say, to $1370 by May? What would you expect next?”
Larry: Well, we are going to get a pullback. Off the top of my head right now, I cannot make those projections until we get to that point, but the pattern is going to look something like this. We will get a rally up to $1370 to $1400, we will pull back to $1330 to $1350. Then we will rally to $1449 to $1450. $1450 is the real breakout point. Once we get a close, a weekly Friday close above $1449 in spot gold , we are off to the races. We are going to move very, very quickly to new highs. Now, there is some work that has to be done before we get there, but it is all part of the process of building that foundation.
Mike: We have a couple of questions here as well about some of the other commodities. Maybe you can weigh in. Kenneth asks, “Where do you see corn, soybeans, and crude oil going this year?”
Larry: It is a mixed picture on a lot of them, and it is all part of this major turning point that we are coming to in 2014 for all sorts of markets. Corn and soybeans are topping. They are about to enter a pretty sharp downdraft. I am still bearish on oil. Looking for a decline down to the $70 range. Copper is looking bearish. It makes a picture. It is really the metals are bottoming first in this instance, in this particular window, and it is a mixed bag with a lot of other commodities. But in general, by the end of this year I think the entire commodity sector will be back in a bull market.
Mike: We had a couple of questions about silver versus gold. One from Mike, he asks, “With limited funds to purchase physical metals through your Hard Assets Alliance, I am looking to purchase silver only. Do you think that would be an acceptable way to follow the strategy rather than purchasing…”
Larry: Well, I have some good news. You should be hearing about it shortly. You are probably the first to hear about this. You will be receiving a communication from me as well as the Hard Assets Alliance. They will soon be dropping the minimums on gold and silver purchases. There will be no minimums. So that is going to be a fantastic way to purchase smaller amounts of metal. You will be able to purchase fractional amounts, but it would be segregated in your name. And right now they have a $5,000 minimum and that is going to go away. It is going to be a $0 minimum. If you want to be able to buy $10 of silver or $10 of gold, you will be able to do so.
Mike: Sounds great. Lower minimums, easier to buy.
Larry: Yes.
Mike: Could not have come at a better time.
Larry: Yes.
Mike: Here is a good question from Sylvia. She mentions that, “Back in 2013, you thought silver could go potentially as low as $17 an ounce by May of this year. Do you think that is still possible or is that off the table?”
Larry: As long as we hold $18.80, it is off the table.
Mike: Some other follow-up questions to that. We had a couple of them here in the queue asking about the fact that silver is still largely used as an industrial metal. “Do you think that could hold back the ultimate upside performance in silver versus gold?”
Larry: Yes and no. It is going to hold back silver’s performance in the next phase to a degree. Silver will probably lag behind gold and be more volatile than gold. Towards the end when we get into the bubble phase of the next leg, where gold is leapfrogging from $3500 to $4000 to $4500 to $5000, that is when you will see silver go ballistic as well. I would not be surprised until we get to that point to see gold gain over silver. That would not surprise me because gold is a monetary metal. Silver really is not a monetary metal any more. It is more of an industrial metal. It can take on aspects of a monetary metal once these markets really get cooking.
But the gold/silver ratio for example has been widening recently. That is not surprising to me. Savvy money is going for gold rather than silver, and I have been saying that all along, that gold is really a safer bet than silver because it has a lower beta. I mean silver can be a crazy market.
Mike: Indeed.
We have a couple of questions about some of your support and resistance levels here too, Larry. Les asks, “If gold should go back down and break that key level around the $1278 area on a closing basis, will there be additional support levels moderately below that or nothing in terms of support until we reach the old lows from back in December and same for silver?”
Larry: Yes, there is not much under those levels. We break those levels, then we are going to go down very quickly to $1180 and $18.80 in silver and then on to new lows. If I had to rate the odds of that happening at this point in time, I would say it is probably about 65/35 against it. It is looking more and more favorable that we have already bottomed.
Mike: But if we are to break those key levels on a closing basis, on a weekly closing as you said, then that would probably open up the possibility, you would think, of perhaps a triple bottom down there at the $1180 level?
Larry: No. No, we will slice through it like a knife through butter. No. Then we would spike all the way down to $1030 in gold and $15 to $16 in silver very quickly.
Mike: Those are indeed critical support levels then.
Larry: Yes.
Mike: Okay, we have a question here, kind of a long one from Bob regarding some mutual funds. He says he owns a number of funds for several years that are heavily weighted toward gold and precious metals, and his advisor recently has suggested that he move some of his money out of the precious metals mutual funds and reallocate that towards more broad-based funds. He says he is under no pressure to sell and could wait for a rebound, but he would like your advice on whether or not he should continue to wait and hold on for gold to rebound or make the change now. Your view?
Larry: Well, I cannot give personalized advice. That I cannot do on these webinars. I cannot do it in the issues or in my newsletter. I can just say his timing stinks. The time to reallocate was three years ago.
Mike: Right.
Larry: Not now.
Mike: All right, let’s see. We have got another question about gold in China. Phil notes that he has read a lot about the fact that China tends to announce its gold holdings only once every five years or so, the last one being 2009 in April. “So do you think that they will announce in April of this year what their current holdings are and if so, if they have increased dramatically, will that have a positive effect on gold?”
Larry: No, because it is old news. They are buying all the time. They have been buying during the decline. It did not stop the decline, okay? Sure, they are going to announce at some point in the near future increased gold reserves. It is old news. That is why I say you cannot trade off of fundamentals. That is something that happened in the past. Big deal. It did not support the market. I do not know why when they actually announce what they did, it would drive the market higher.
You have got to remember in any market, supply and demand are always in balance, okay? They are always in balance. For every ounce of gold bought, there is an ounce being sold so it is not a question of demand versus supply. You hear this a lot by a lot of the promoters out there. Oh, gold demand is at record highs. Yes, okay, fine, great. It has been moving to record highs year after year for the last three years, while the price of gold has been going down. The market dynamics are the market dynamics. The fact of the matter is the price of gold has been going down because the sellers were more aggressive than the buyers, okay? China was not able to support the market.
When the bull market really gets going it will be the opposite. The buyers will be more aggressive than the sellers. But the important point is to not fall for these stories about oh, there is a ton of supply coming on the market. Price has got to go down. Or there is a ton of demand coming on the market. They are always matched. It is a matter of who is more aggressive, the buyer or the seller, and why.
Mike: Good answer.
Here is a question from James regarding gold mining stocks, Larry. “Do you anticipate a recovery in miners like ABX, American Barrick, or Newmont Mining that depend on the previous highs in the metals market, to see a recovery for these stocks any time soon?”
Larry: Yes. They are starting to bottom very nicely. They are starting to make the same kind of patterns that gold and silver are. Some of the mining companies like Barrick and some others will not participate too much in the next leg up, because a lot of them have made near-fatal mistakes over the last three years and are making mistakes now. Some of them are re-hedging, for example, at the wrong time. So we are going to have to be selective. Barrick is not a company I would touch right now for the precise reason that they took on too much debt during the run up to $1900 in gold. They got beat up pretty badly as gold fell and they are starting to implement some hedging policies now. It will probably turn out to be the bottom. So each miner is different and we are going to have to be very selective there.
Mike: Here is a good question from Stewart. He notes that, “You mention that you think gold will eventually trade up towards $5,000 an ounce over the next few years. Do you have an upside target price in mind for silver?”
Larry: Somewhere between $100 and $150 but we are not going to see that until we get into the bubble phase.
Mike: Here is a question from Jim, more about stocks. “Do you believe the historical yields on Dow stocks will be normal, that is in the 5% to 6% range during the interim bottom that you are predicting happening some time here during the summer period?”
Larry: Well, for the Dow as a whole or the S&P 500 for a whole, I do not think we will get that high, but in terms of dividend yield, but yes, obviously as the Dow and the S&P 500 pull back, we should see a bump up in the overall average dividend yields for the two indices, yes.
Mike: Okay, here is a question from Tom on a different topic. “What do you think will happen to interest rates?”
Larry: They are headed higher. No ifs, ands, or buts about that. They are headed higher for the next 32 years. It is a 64-year cycle that you can set your clock to, and it bottomed in 2012. And we are two years into the next 32-year wave up. We will probably have seen 20 percent interest rates at the next major turning point. But they are not going to go straight up. They are not going to go straight up, spiking up. They are going to creep and crawl higher month after month, year after year.
Mike: Okay, here is a question on high-frequency trading. We have had a number of those here in the queue today after Michael Lewis’s piece that was on 60 Minutes and in his book. “Is high-frequency trading a possible trigger do you believe for a potential stock market collapse?”
Larry: Well, we saw the flash crash a couple of years ago, which was somewhat related to high-frequency trading. I do think that we could see some kind of interruption in the markets due to a technical failure that might be triggered by high-frequency trading. I think that is more likely than the case that is being talked about now, about the market being rigged because of high-frequency trading. Unless I find evidence to the contrary, I do not buy that argument at all. I do not think high-frequency trading rigs the market in any way, shape, or form because there is buying and selling going on at the same time in milliseconds in the same security or related securities. They are not just buying or just selling. They are buying and selling. They are making fractions of a penny in milliseconds. A technical failure, yes, that is probably more probable. But that is not something you need to design your investment strategies around.
Mike: Very true.
Here is a question from Bob. Kind of a technical question about the gold rally. “Is gold trading volume increasing as gold has been rallying? How large a volume is there compared to the normal historical trends?”
Larry: It has been increasing over the last couple of weeks very slightly. It is still not back to levels that we would like to see, back when gold was running up to $1,920. It will build over time, but no, that is a really good question, because volume and liquidity in all markets across the board, whether it is gold, silver, corn, soybeans, stocks, Google, Facebook. we have liquidity and volume going on all over the globe and in my opinion that, again, is related to the war cycles. There is a lot of money that is going to the sidelines, going to alternative assets, going to cash, getting off the grid, savvy big money. And this has been happening since the financial crisis of 2008 and 2009. Really the financial industry has been in contraction. Volume and liquidity in all markets has been declining since 2008. Will it get better? Yes. It will get better. It will improve but right now there is still a lot of contraction going on, and that is another reason why I say you are never going to see hyperinflation in the United States and certainly not in Europe. There is too much scared money out there that is trying to get off the grid.
Mike: Okay, here is a question. We have only got time for a few more because we are approaching the top of the hour again here, Larry.
But Jeanine would like your views on palladium, another precious metal.
Larry: Platinum and palladium are both great metals, they are both starting to form nice initial legs up in their next bull market. Very volatile because they are closely related to the situation in Russia. Platinum and palladium are both major metals produced by Russia and South Africa. They are politically sensitive metals but we are going to certainly be taking a good look at them on the next pullback. I want to see how platinum and palladium react and I will be taking a look. I have no problems going long those metals. Unfortunately the ETFs are very illiquid so perhaps I will be just putting out recommendations on the physical side through Hard Assets Alliance. But one step at a time, let’s see how the next pullback goes.
Mike: Well that is about all the time we have for today, but I do apologize once again for the technical difficulties, and if we were not able to get to any of your questions due to that, please remember that you can always send your questions to us directly. Right on the website for Gold and Silver Trader you will see the editor’s mailbag. You can click on that link and it will open an email account so that you can send your email directly to Larry and myself, and we will either answer those in an upcoming issue or perhaps in our next regularly scheduled Gold and Silver Trader strategy session.
So with that said, I would like to thank you one and all for joining us today and, Larry, as always, thank you for joining us and in working solo through the technical difficulties.
Larry: Again, not a problem. Thanks, Mike, and, members, thank you very much for your loyalty and I am glad that we are starting to turn the corner in the service, and we have got these great markets to lie ahead of us. Thank you, everyone.
Mike: Bye now.
