The Yin and Yang of Gold, and Turning Points

Larry Edelson

Over the past couple of weeks, gold has managed a meager rally. Yet, despite the rally — and all the whoopla about it from the public and talking heads — gold has not given me any buy signals.

And it won’t until it closes at least above $1,188.10. Even if that were to happen, gold would still face formidable resistance stretching from the $1,200 level to $1,235.

I doubt that gold can get that high. But even if it were to do so, it would not indicate that a new bull market had begun. Rather, it just might be the final fake-out before gold heads back down, to new lows below $1,000.

Ditto for silver. Its recent rally is also weak at the knees. No buy signals hit. Massive resistance at $16.28 all the way up to $17.

It concerns me. Why? Because I know there are scores and scores of investors who are now buying gold and silver (and mining shares) — which will result in terrible losses.

Look, I agree that long-term gold can be an excellent store of value. And someday, gold will head north of $5,000 an ounce. Silver north of $150.

But if you want to avoid losing money in the precious metals market and instead make the most amount of money you can, you simply must get your timing right.

And just as important, you must have an open mind when investing in gold and silver. You can’t get married to your metal (or any investment for that matter) — as if investing in precious metals was some sort of religion.

You must have an open mind when investing in gold and silver.

For instance, you have to realize that sometimes, gold is money … and sometimes it simply isn’t money. Or even a store of value.

Right now, gold is not money. Just consider what’s happening in Europe. The wicked and aggressive devaluation of the euro is actually starting to set off a massive stampede OUT of gold and into cash and other assets.

Why would Europeans dump gold, especially when their currency is being devalued?

It’s simple. The recent sharp decline in the euro caused the price of gold in euros to spike higher, while the dollar price of gold essentially went nowhere. So savvy European investors are cashing in their profits.

Moreover, European investors want liquidity, with a capital “L” — and holding on to gold is not a liquid situation.

Moving physical gold around isn’t so easy. It takes time and money to move your gold. And even then, you won’t know how safe your gold is, because in the back of your mind there’s always that fear that it could be lost or stolen.

There’s more: Think of all the government debt in the world that’s going bad. We’ve already seen Cyprus sell part of its gold reserves to liquidate debt. Now, Venezuela is rumored to be looking to sell as much as 80 tons of gold to meet debt payments due of $5 billion.

The bottom line: While gold will indeed soar again at some point, there are times when forces that are seemingly bullish for gold are actually bearish. Like unpayable government debt. Like a declining currency, like the euro, which forces the euro price of gold higher, allowing European investors to sell gold and get liquid.

I call it the yin and yang of gold, and for that matter, all markets. There are always two sides to a coin, two sides to a market, two sides to every piece of fundamental news out there.

Knowing which side is prevailing, why and when — are the keys to successful investing. That requires an open mind, no biases, and lots of experience with technical and cyclical analysis.

If this sounds a bit too theoretical or complex in any way, I assure you it’s not.

Mostly, all you have to do is put yourself in the shoes of a European investor right now who owns gold.

You’re seeing your currency be devalued. You’re seeing rising taxes. You’re seeing deflation all around you. You’re seeing European economies teeter on the edge of an abyss. You’re seeing still high unemployment. Civil unrest. And more.

You also know that your European leaders may confiscate money from your bank account, just like they did in Cyprus a couple of years ago.

You’re also frightened that Putin may soon make another aggressive move toward Ukraine, or worse, toward Estonia, Lithuania or even Poland.

And that the Syrian and Middle East refuge crisis is tearing the European continent apart.

So you conclude you need cash, lots of it. Your decision is simple:  Dump your gold, get liquid and get out of Dodge.

Then, either pay off some bills that need to be paid (before the euro becomes worth even less) … or get it out of the euro and into another country with a currency that’s at least losing value less quickly.

Or even better, into an investment that has a decent return, decent profit potential, and in a country and a currency in better shape than Europe’s.

Pretty simple to understand, no?

Later, in the not-too-distant future, the same fears of confiscation of wealth, rising taxes, bank failures and more will hit the United States and the dollar. At that time you’ll need to move your money yet again.

There won’t be many safe-havens left at that point. So you’ll probably want to go back into gold. The new bull market in gold will then begin.

So you see, none of this is all that hard to understand provided you keep an open mind, question the conventional, and do your own independent thinking.

Timing everything, is of course the key. And while no one has a crystal ball …

There are methods I use that often get me very close to ideal turning points in key markets.

All I can tell you right now is that there are several key turning points arriving between now and the end of the year. Turning points that — if you act quickly and without bias — can help you get set up to make a fortune in the months and years ahead.

One of those turning points includes gold and silver.

So stay tuned and best wishes, as always …

Larry

Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report and Supercycle Trader. Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.

Comments 31

paul westerheim October 28, 2015

I have just moved to Chiang Mai and was wondering if you can suggest a reliable dealer I can buy/sell gold bullions? Preferably a place to physically go to in Chiang Mai. Bangkok as a second choice. Thanks, Paul Westerheim

Suresh October 28, 2015

Hi paul westerheim, Any gold shop in chiang mai / bkk do bullion, they have thai standard which is 24 k but 96.5% purity, for swiss gold only the larger players do it, this is 99.9% purity with 24 k gold, alternatively you can trade bullion on the thai tfex .

Bill October 28, 2015

I bought it for the Oct 7, 2015 apocalypse Larry predicted, shame on me

Will October 28, 2015

Remember, God created Analysts to make the Weatherman look good (Old Wall Street Saying).

Travis October 28, 2015

Hello Larry I'm a subscriber to RWR. I always appreciate your metals updates. Given gold's very recent action is there a change to the October issue's forecast for what is expected in November?

Will October 28, 2015

It's called flip flopping. I feel very comfortable with the idea that each bar of gold in the hand is better than two gold bars in the bush. After all no one should be 100% into gold at any time. As for gold stocks, even the best of the best of the gold mining juniors are 80 to 85 percent below where they should now be. If the market capitulates I should expect a shortage of sellers as no one will want to do anything, or the markets could even be shut down. Besides, the most important time to own gold is at a time of chaos. I am not going to lose sleep wondering when to get into gold, or wait until someone tells me when to buy. Gold is like insurance; you need it before the fire sale.

John T October 31, 2015

Totally agree, gold is not an investment, but an insurance policy against fiat (paper money IOU notes, made out of thin air). Gold and gold stocks have been pushed down so much that most will not see that they are a screaming bargain right now. REMEMBER, buy when everyone else is selling, sell when everyone else is buying, buy low-sell high. Chaos is coming, but you seem to know the truth.

Howard October 28, 2015

Hi Larry I am following the pricing of a favourite major overseas mining stock NCM. Research shows their reserves are exceptional. Reason I haven't bought in yet, is there are still far too many bullish punters out there pushing up the price. Maybe I'll get a chance later on.

$1000 gold October 28, 2015

Still blocking.

$1000 gold October 28, 2015

i guess not

$1,000 gold October 30, 2015

you're unblocked, $1000 gold. knock yourself out, buddy.

$1,000 gold October 28, 2015

i see the trolls are back. :-)

UDO October 29, 2015

I don't see them at all !!

$1,000 gold October 30, 2015

there's $1,000 gold and $1000 gold. one has a comma and one doesn't - two different people. many posts under different names. who knows, you may be one yourself, udo?

$1,000 gold October 30, 2015

the trolls are in charge here, udo. no one is allowed to disagree with them. that's what makes this site so much fun. i'd have gotten bored and left a long time ago were not for the bullies.

$1,000 gold October 28, 2015

nice gold report, larry. few people understand gold like you do. gold would be a great currency if it weren't so damn heavy. i'm sure any country would readily accept my gold as easily as my dollars, but i'd need to figure out a way move it. silly stuff, anyway, this shiny, useless rock that's so hard to find in the ground. likewise for a worthless piece of paper with green ink on it we call the dollar. i expect gold to continue the same meltdown channel we've been in for the past couple years. that puts us on course for that 1980 r/s level in another couple years. we're about half way there.

jim October 28, 2015

I was waiting to start accumulating physical silver. I have a couple of local coin and gold dealers to choose from, walk in and walk out with metals. I meet with one a couple of weeks ago he claims they have no junk silver coins, only a few silver eagles. With spot silver at $16ish he was asking $21 per coin. Even shopped ebay and they are selling for $20-21 which is about a 40% premium. It seems the lower prices go the harder it is to find anything even close to spot. If you are correct and silver drops to the $10 range do you expect anyone will have anything for me to buy? If so what kind of premium do you think think they will charge? It seems the lower prices go inventory shrinks and premiums go off the charts.

John S. October 28, 2015

I to believe I read that Gold would bottom in October, back in April?

tommy October 28, 2015

ECM has turned in oct. Gold turned down the last time in 2011 This time..........the gold analyst's say wait till next year Hmm So its not lining up this time............and gold has further to fall I wonder scratch me please............maybe I'll wake up

$1,000 gold October 30, 2015

it will be a long time before gold bottoms. probably a couple more years.

sTUTTGARDE October 28, 2015

LARRY, OK on Gold, BUT PLS HOW ABOUT STOCKS? YOU SAID DOW 13,900 SECOND LEG DOWN, INSTEAD WE HAVE MELTED UP TO 17,600 ALMOST...LARRY PLS THIS IS NOT GOOD. ALL MY SHORTS ARE IN THE RED IN STOCKS. WHAT IS YOUR CURRENT TAKE ON STOCK AND WHAT HAPPENED TO THE ILL-FATED CORRECTION THAT NEVER WAS?

Tren October 28, 2015

LOL you're asking Larry about the DOW, the guy who spent 2 years waiting for the big correction to finally say I told you so. The train has left the station - remember his second leg down was scheduled for week of Oct 12 - ooops!

sTUTTGARDE October 28, 2015

I know it is not exact, cycle analysis that is. But I think at least a mention of stocks would have been appropriate for today's article after a whopping 1600 point melt-up since dow 16,000...You think?

Tren October 28, 2015

Why would he mention it if it's really looking like he was wrong now - better to sweep under the rug and hope everyone forgets.

King Kong October 28, 2015

Larry's been calling for 5K gold for how long now? He knows very well Armstrong's computer doesn't give 5K gold till 2032, so why does he keep saying it - cause it keeps the newbies who don't know better flowing in and onto the Edelson conveyor belt!

sTUTTGARDE October 28, 2015

Armstrong has issues. And I will stop t that...

Robert P October 28, 2015

Hey Barry! You said what about the Fed hiking rates......??

sTUTTGARDE October 28, 2015

Hiking rate Schmikeing rates; she won't be able to do it. She is a weak leader of the Fed, she is indecisive, timid, and politically correct .... If they dont raise by end of March 2016, they won't raise till 2017. Fed is in the business of propping up stocks no matter what as we saw recently their Plunge Protection Team quickly filled the correction crater and more....wall street rules the Fed. She has no guts to stand up to wall street and TBTF banks. They even cooked the last job report to make it look worse than it really was 2 Fridays ago, so PPT can then pick upu and do their job rallying stocks. Highly manipulated market.

Tren October 28, 2015

No rate hike and markets all go opposite of what you'd expect - ya think it's rigged? But let's wait and see perhaps it just a "knee jerk" reaction.

ian November 1, 2015

TREN,with so much loose money(Trillions) being held by the banks and other bodies,the stock market could litterly go to the moon,but its got to come back,then Hell

Weston October 31, 2015

The US Economy reflects the manipulation of economic data to serve certain government and media agendas. If the perceived data is flawed and the laws economics laws are broken then the economic fundamentals are disconnected from the economic reality. The Fed's 4.5 Trillion Quantitative Easing Program was a band aid to save our 60 Trillion Credit System . The QE has also created a currency war between the global central banks. The current gold price is manipulated lower by Central Banks, JP Morgan, and Citigroup with extreme contract leveraging thru the Comex. So when does the Credit Ponzi Scheme end and the system collapse, next week, next month or next year. No one knows, there is no data point or chart indicator or resistance point, because we are in uncharted waters. Now is the time to buy a safe and fill it with Cash, Gold and Silver and hedge your portfolio. Prepare for the worst, but Pray for the best.