Now Is the Time to Buy Gold And Silver Low If You Want To Sell Them High

I thought I send my readers some charts I’m looking at; here are the Bear’s Eye View (BEV) charts for gold and silver during their decade long bull markets.  The BEV format displays each all-time highs within the range selected as Zero %, all other closing prices are displayed as negative percentages from their last all-time highs. The data used in these charts are daily closing prices. 

As is painfully obvious, the correction in the price of gold since August 2011 has been long and the deepest since the summer of 1999.  It’s not surprising that since April of this year many gold bulls have given up hope after the price of gold dropped like a rock below its BEV -20% line and can’t seem to rise above it.  But there is a ray of hope in the chart below; the lows of June 2013 have so far held.  That’s a good sign the worst is over.  But keep in mind that prices are where the supply and demand lines cross.  Unfortunately the supply and demand curves used in these prices are set by the paper gold being fed into the COMEX futures market, which really isn’t gold at all.  The gold supply used in these prices are only the insincere promises made by big banks to deliver gold that doesn’t exist to satisfy the demand for gold by people who for the most part really don’t want to take delivery of actual metal.

The real gold market, where physical gold is actually transferred from the seller to the buyer has moved to Asia.  Currently the Asian buyers of actual gold are very happy to let New York and London drive the price of gold far below its true market price.  But that will only be for as long as Western Central Banks continue to feed their monetary gold into these Asian gold markets.  It’s a crazy “policy”, but that is the “policy” the best and the brightest in western-central banking have come up with to save the dollar and financial markets from the effects of decades of grotesque monetary inflation these same central banks have inflicted on holders of US dollars and other paper currencies.

Here is silver’s BEV Chart, the same comments for gold above hold for silver below, except silver being silver always moves in extremes when compared to gold.  Gold’s current extreme 35% correction has been a typical correction for silver since 2002, that’s not saying that the current 60% correction isn’t painful.  But silver was down here before in 2008, just before it took off in a historic move that came within pennies of its current all-time high from January 1980.

To see what that move looked like, let’s look at the price of gold, silver and the Dow Jones indexed from their credit crisis lows.  For silver that would be from the bottom of the 57% correction “D” above.  Silver’s BEV chart above doesn’t do justice for the move in the price of silver from October 2008 to April 2011, as we see below.

From their 2008 & 2009 credit crisis lows, the Dow Jones hadn’t outperformed gold until its smash-down of last April, and it has only done better than silver since October of this year.  Had the force of government not been applied to the precious metals and stock market in the aftermath of the 2007-09 credit crisis, the Dow Jones would have continued falling far below its 53% decline of March 2009 and gold and silver would today be far above the 6.0 line in the chart above. 

These extreme price moves in gold, silver and the stock market will happen anyways.  How can I say that?  Because the Federal Reserve’s extreme expansion of credit and currency, as seen in the chart below will ultimately force them on the markets.  It’s amazing that anyone in the financial media still takes anything said by the Ph.Ds. at the Federal Reserve doing this to the US dollar, the world’s reserve currency seriously.  Look at the chart below, since March 2008 we are looking at an act of desperation by the monetary reprobates in control of the Federal Reserve.  But dutiful members of the mainstream media still faithfully pass on the incoherent ramblings of American central bankers to the consumers of their “news.”  Saying nothing positive about precious metals investments as the dollar is being destroyed before our very eyes is part of the program for all the team players in the media. 

All this will change with time.  Like Obamacare, the media will continue reporting the monetary fantasies of Doctor Bernanke that his QE is stimulating “economic growth” until reality can no longer be denied. What reality is being denied above?  That the American political class can no longer bailout the criminals in control of the Western banking system, the same bankers who are so generous to members of Congress during election years.  The current QE to infinity is only delaying the inevitable, and making the coming market-price reconciliations with reality all the more extreme.

Here is the silver to gold ratio (SGR), or the number of ounces of silver one ounce of gold can be exchanged for.  Currently one ounce of gold can be exchanged for 61.76 ounces (3.86 pounds) of silver.  Silver at these prices is very affordable, and should the SGR reach 15 again as it did in 1980, an investment in silver today will prove to be 400% more profitable than one in gold for retail investors.

Will we see the SGR at 15 again?  I think we will, just before it goes single digit.  Unlike the global supply of above ground gold, the world’s stockpile of silver has been greatly depleted since 1980.  To my way of thinking, buying as much silver as an investor can afford at current prices is a smart move.  I say that with the understanding that the volatility in the price of silver can make getting a good night’s sleep difficult. But Geeze Louise, silver is down 60%.  Historically speaking; since 2002 that doesn’t happen every day.  If you want to make money by buying something low, with the intent of selling it high, silver is now very low.  So, buy it now and forget about it until it becomes high again, say when an ounce of silver is above $200 an ounce.  When will that happen?  I haven’t a clue!  But take another quick look at the Federal Reserve’s balance sheet chart above.  America’s central bankers are doing everything necessary to make that happen!

PS:  I’ll have my tumor removed at the end of December, and probably be back home sometime in the first week January 2014.  Thanks for all the nice letters my readers have sent to me.  God willing, my doctors will be proven to be correct that my cancer is not an aggressive form and that my coming operation will be the end of my illness.

Mark J. Lundeen

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