Tag Archives: gold

Buying the Long-Term Trend

15 May

The best way to figure out when to purchase gold or silver is by following long (at least 10 year) trends. In my opinion, short term analysis gives you short sighted impulses. Long term trends give you sustainable expectations.

With that said, look at this chart and note the similarity between now and the 2008

10 year gold price per ounce

And for silver, note the return to the 2008 trend:

10 Year Silver Price

With both of these charts, you see the one crucial thing: silver and gold are placing themselves in an area that is highly synchronous with a long-term, multi-year, trend.

It seems like silver may come close to its low of 26, but I can’t imagine that you could buy it any more than you could 5 months ago, when it was last there. And gold may go a bit lower, but based on this chart, I have a hard time imagining it will break lower than 1500.

I’m curious for anyone else to give his/her input, but to me, it seems like a good time to buy. What do you think?

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A Coming Bull Market in Gold and Silver?

10 May

I am sick of people saying what is and is not a bull market. I want to see real evidence before I even begin to ask the question. When we think about how that kind of claim can be justified (instead of going by what CNBC tells us) one of the first places to start is the accumulation-distribution line.

According to www.stockcharts.com, here’s what the A/D line indicates:

“The Accumulation Distribution Line is a cumulative measure of each period’s volume flow, or money flow. A high positive multiplier combined with high volume shows strong buying pressure that pushes the indicator higher. Conversely, a low negative number combined with high volume reflects strong selling pressure that pushes the indicator lower. Money Flow Volume accumulates to form a line that either confirms or contradicts the underlying price trend. In this regard, the indicator is used to either reinforce the underlying trend or cast doubts on its sustainability. An uptrend in prices with a downtrend in the Accumulation Distribution Line suggests underlying selling pressure (distribution) that could foreshadow a bearish reversal on the price chart. A downtrend in prices with an uptrend in the Accumulation Distribution Line indicate underlying buying pressure (accumulation) that could foreshadow a bullish reversal in prices.” 1

Translation: acc/dist line shows when people are buying more or selling more. That means that REAL predictive value about bull or bear markets lies in one’s assessment of buying momentum.

I want to draw your attention to how this is happening right now in gold and silver. Check out this silver chart from stockcharts.com:

And this gold chart from stockcharts.com:

Note the massive divergence in the a/d line from the price line. What does this say? Two things: 1) that someone is selling a lot of gold and silver right now (either in physical bullion or paper contracts), and 2) that, despite the massive selling, much more money is flowing into these assets than the price reflects. In short, someone is intent on selling low and everyone else is much more intent on buying it up.

So, is this “sell-off” bullish or bearish? According to the article I previously mentioned, “A downtrend in prices with an uptrend in the Accumulation Distribution Line indicate underlying buying pressure (accumulation) that could foreshadow a bullish [emphasis mine] reversal in prices.”

This line does not say what the future will bring. It could be at some point that this buying momentum drops off. But so far, there is a massive divergence that often portends the coming of a bull market. Silver and Gold may continue to go down, but the a/d line should inform you about the level of risk you are taking if you decide to buy.

Video

Something to Think About

9 May

I write about gold and silver. I write about why our economy is where it is and where it might go. But when I think about what that will look like, I’m not happy about it.

There are people in the precious metals trade who feel the way I do. Guys like Chris Martenson, Peter Schiff, and others.

And then there are people that seem to be emotionally attached to gold and silver sky-rocketing one day. When it goes down they cry and talk about their pain and lament the powers that be “smacking it down”. I get that things shouldn’t be manipulated. But you should never feel that emotional about money.

Furthermore, think about this video, which shows what Zimbabwe is like: a place where paper money is worthless and gold is everything. It’s pretty awful.

Just think about that, next time you start hoping for silver or gold to double or triple. Be real. Focus on what matters.

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Ron Paul Demolishes CNBC for an Hour

30 Apr

This show is unbelievable. At least 6 different people offer the most complex questions they can throw at the aging-yet-energetic congressman, Ron Paul. Calling his views “extreme”, bringing on multiple economists, and implying that he has no chance of victory are just a few of the games they played with him. But Congressman Paul rose far above the fray.

No one can watch this video and deny his competence and commend him for such excellent answers. Furthermore, Paul is extremely patient, dignified, and nuanced in all his assessments and responses. This appearance is flawless as it gets.

And yet, one gets the sense that, in spite of his ability to comprehensively speak to all types of issues, these people will simply continue obfuscate and misrepresent such ideas in the future.

But man, what an incredible performance from Ron Paul. Go Ron!

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Condensed Crash Course

18 Apr

One of the reasons young people are having attention deficit issues is that there are few people worth paying attention to any more. Chris Martenson is one of the people you need to pay attention to. And it isn’t hard to. This condensed version of the much longer 3+ hour version “Crash Course” (also equally worth your time) is an excellent way to get to know what Chris has to offer.

Why should you listen to Chris?

In short, because he has a very holistic view of the world. I don’t agree with everything he says, but there is very little he ignores when he says what he does, and that’s important. One of the main priorities I have in this blog is to incorporate what God says into as much of what I think about economics as I can. Chris has helped me to do that.

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Blythe Masters Shows her Hand in New Interview

6 Apr

Throughout the blogosphere, especially ZeroHedge, there has been major news due to a rare appearance from the head of JP Morgan’s Head of Global Commodities: Blythe Masters. The vitriol poured out on her in the comments at zerohedge is unbelievably bad. Some comments should not be read, let alone written.

Let’s shift away from the smut and point out a few things no one has yet said: Blythe should be congratulated on such a great performance. While she starts out looking quite pensive, her overall demeanor is composed, she made eye-contact continuously, and she generally engaged in very few lying “tells”. But also note how her attire itself (today and, to some extent, the 2009 interview) is almost militant. Most women try to look strong in a competitive business world. But Masters seems to wear clothing that appears particularly secure and defensive.

Second, this interview is highly scripted. CNBC camera crews don’t just hang out at UC Boulder waiting for executives to drop by. This is a coveted exclusive interview with a reclusive voice from the financial center of the world. And just judging from the interviewer’s incidental remarks, they had an extensive pre-interview talking about silver already. Blythe has been extensively prepped by the interviewer. You think they do that for Peter Schiff? You think they’re going to cut her off when she filibusters? Not a chance.

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Invest vs. Prepare: Two Necessary Goals

31 Mar

ImageFor people who understand a financial crisis is imminent, there are two categories of response: investing and preparing.

Generally, investing is a way to prioritize the way you save while preparing is prioritizing the way you spend money. Lines can blur between the two. But essentially, the question is this, when you go to buy deodorant, would it be better to buy 12 sticks and be prepared for a time when it may be either unavailable or too expensive, or would you rather by 1 stick and invest the money in a good company’s stock, precious metal, or some other form of savings. The preparations will get you through the hardest part of the crisis; the investments allow you to preserve purchasing power until the crisis ends.

Here’s why this matters.

Let’s say you decide that you know of one good investment that will guarantee profit in the future. You live day-to-day, buying goods only as the need arises. You take all your extra money and buy that stock or precious metal. As the crisis hits, you initially realize you have less and less money to buy investments. Eventually, you have no extra money. You can only get by on what you make. If things get worse after that, what do you do? You have to start selling assets.

So you go to your bank and withdraw cash. You go to your coin dealer and sell your metals. You log on to your online brokerage and sell some stock. See any problems with that? There are many.

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