I’ve been pounding my fist on the table all year long: Do not buy gold or silver I warned repeatedly. Or even miners. If this is the beginning of their new bull markets, I said, they would be deeply retraced, hold important support levels, and then that would be the time to buy …
Then everyone else jumped in with little or no patience, or were egged on by inexperienced analysts and traders. And now, they’re starting to spill blood like crazy.
Thus far, silver has crashed from a high of $21.22 (September futures) to as low as $18.37 as I pen this column, a whopping 13.45% loss in less than two months. Gold has shed far less, but nearly 5% in roughly the same time period.
The loss in silver, nearly three times more, is due to silver’s industrial uses, and the global economy has not met growth expectations.
|More losses are coming. Perhaps a lot more.|
More losses are coming. Perhaps a lot more.
If gold cracks $1,300 — I wouldn’t be surprised to see the low $1,200s, even mid-$1,100s.
If silver cracks the $16.27 level, I wouldn’t at all be surprised to see the $13 level.
Those are extreme support levels that could be reached, yes. But I think the metals will find longer-term support levels more in the $1,250 level for gold and the $17.50 area for silver.
Either way, I sure hope you hedged any gold and silver holdings you may own with inverse ETFs, such as ProShares UltraShort Gold, symbol GLL, which is already popping nicely higher …
And for silver, ProShares UltraShort Silver, symbol ZSL, a double-leveraged ETF, seeking to deliver twice (2x or 200%) the inverse (or opposite) return of the daily performance of silver bullion in U.S. dollars. Already smoking hot!
Lastly, I repeat my warning of last week: Everything I study, all major markets and all my major indicators, tell me we’re rapidly approaching a major inflection point in the markets.
And it seems that point has indeed arrived. The dollar exploding higher. The euro starting to go over the cliff. Stock markets wobbling. Bond markets shaking.
Remember, for the Dow Industrials and the S&P 500, I would consider ProShares Short Dow30 ETF (DOG) and Direxion Daily S&P 500 Bear 1X Shares (SPDN), both unleveraged to hedge any heavy stock holdings you have.
And keep in mind, the global economic and geopolitical scene is nasty, and getting worse by the day. In addition to ISIS and domestic uprisings in Europe and the U.S. …
First, things are now so bad in Germany that for the first time since the end of the Cold War, the German government plans to tell citizens to stockpile food and water in case of an attack or catastrophe, the Frankfurter Allgemeine Sonntagszeitung newspaper reported last Sunday.
Second, disinflationary forces are still dominant. Throughout most of Europe, investors are mainly concerned with getting to cash and liquidity, and taking on little to no risk.
So stay tuned and stay safe!
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