After the election of Donald Trump and more recently after the Fed decision to raise rates, we’ve seen gold and silver brought back down to almost flat for 2016 after being up significantly earlier in the year. This carnage in the paper value can be emotionally taxing for precious metals investors. Join Steven as he investigates the validity of the precious metals thesis and discusses how decision theory and a cool head must prevail in order to profit from the seemingly limitless manipulation.
Listen to “The Amateur Society – Precious Metals & Falling Paper Prices – 12.15.2016” on Spreaker.
With paper gold climbing back to the $1,300 area today, some context for these moves is in order. In my article from early October (Bear Raid Sirens Sounding For Gold And Silver – How A Precious Metals Enthusiast Responds) tracking that ugly red candle during the week-long market holiday in China I wrote the following:
Is the bull market over?
What should I do?
You should do what you do whenever something you want goes on sale: buy. Nothing about the investment thesis for gold and silver has changed. Even if risk parity funds are forced to unload low volatility and countercyclical assets in order to compensate for leverage in other asset classes creating a bizarre scenario where risk off doesn’t mean what it usually does, the case for precious metals due to global risks is only growing stronger. In other words, don’t get shook out because of some algorithm driven asset reallocation breakdown that has absolutely nothing to do with the bigger picture. If this makes you want to sell, then you should check your conviction in the original thesis. Don’t get flushed. The weak hands always get forced out before the real move can begin.
I have a feeling that the $1,250 price area is going to look like an incredible buy in a relatively short time. Because the price action is still controlled, we’ll need to see some more constructive action. Silver looks even stronger and has demonstrated the potential to move upward with purpose during this nascent bull market for the precious metals in 2016:
Continue reading “The Next Leg Up In Gold And Silver?”