Gold and Silver: When Will They Bottom?

Posted by Larry Edelson - Commodities, Stocks, Technical Analysis

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I hope you’ve been following my forecasts for the precious metals. If not, then here’s a brief summary of all the opportunities you missed …

arrow black September 2000: Gold was trading at the $255 to $265 level. That’s when I turned bullish on gold as the Co-Editor of Safe Money Report. Gold began an 11-year bull market.

arrow black September 2008: Gold plunges in the middle of the real estate crisis. Most analysts were convinced it was the end of gold’s bull market. Not me. I stood pat and told my subscribers to buy into the selling panic and increase their allocations from 15% of their portfolios in gold to a full 25%. Gold subsequently exploded higher, soaring to well over $1,000 an ounce.

arrow black September 7, 2011: Gold hits a record high of $1,920 an ounce.

arrow blackSeptember 18, 2011. In my Real Wealth Report, issue #89, and in other articles I publish, I proclaim the high is in and that gold is entering an interim bear market.

Eleven days after gold’s record high, I give my Real Wealth subscribers specific recommendations to exit or hedge their gold holdings. Gold plunges almost $200 an ounce. 

arrow blackOctober and December 2011: I instruct my Real Wealth Report subscribers to add to their gold hedges and to exit ALL mining shares. Gold plunges anew.

arrow black February 2013: George Soros DUMPS half his gold holdings, reeling in losses. Unlike Real Wealth subscribers, who already knew gold was in an interim bear market and who exited or hedged their gold, measured from gold’s record high — Soros’ gold holdings lose roughly 29% of their value.

arrow black April 12, 2013: Goldman Sachs turns bearish gold. Gold has already lost more than $350 from its record high, or 18%. 

Goldman turns bullish again after the mid-April 2013 devastating gold rout. I say no: Gold is set to fall more.

arrow black April 15, 2013: Clinging desperately to their gold, giant gold investors John Paulson and David Einhorn are hit with $640 billion in losses.

Click image for larger view

You can see all the dates and twists and turns in gold and my forecasts in this chart here. Since I initially forecast gold’s interim bear market way back on Sept. 18, 2011, by April 2013 gold had plunged more than 28% while the average mining share had lost more than twice that, a whopping 59.8%.

arrow black June/July 2014: I announce that gold and silver’s bull market may be bottoming. But after quickly seeing that they failed to hold support, I warn my readers of a resumption of the bear market. 

Gold and silver begin their next leg down. Gold plummets from roughly $1,350 to its July 2015 low of $1,073. Silver from its July 2014 high of near $22 to its August 2015 low of just under $14. 

So how much longer will the precious metals bear market last? And how about their latest rallies —  are they the real thing?

No one knows for sure, and anyone who says they do is full of it. But I do have models and tools that I believe can get us close to the bottom. Just like they did in September 2000, or the wicked decline in 2008, or very near the top in 2011.

I can’t give you my detailed forecast in this column. It’s not fair to paying subscribers. But I can tell you this …

A. The bear market in precious metals is not yet over. 

B. The final lows though, may not be that far off in time. And …

C. When they do come, gold is likely to be well below $1,000 and silver near $13, or lower.

Moreover, when those lows do come, almost everyone will be proclaiming the death of precious metals. 

Another question …

Why are precious metals collapsing when all is not well with the world? 

There are several reasons and I’ve written about them numerous times. But there are three chief reasons …

First, from a cyclical and technical perspective, it’s just not time yet for their interim bear markets to come to a close. Nor is it time yet for the next phase of their long-term bull markets to reemerge.

Second, deflation still has the upper hand right now. It’s everywhere, from sliding prices in Europe, to Asia, to Japan and the U.S. 

Most recently, it’s Germany that’s now feeling the pain of deflation, with its economy rolling over, industrial production sliding. Economic growth stalling and little or no inflation.

Third, there are still too may bulls in the market. They jump all over every rally, like the current one, proclaiming a new bull market is at hand.

But that’s not how markets work. Important lasting bottoms occur when the majority of investors want nothing at all to do with that market. 

Conclusion: The precious metals bear market is not yet over. But the potential for it to end soon is now within sight. 80 to 85 percent of the price declines are over. It’s time to start paying very close attention to the precious metals, which I am of course doing. 

Best wishes,