WILL GOLD AND SILVER EVER GO PARABOLIC?

[Pete in Wisconsin]

I bought into the hyperinflation, currency collapse camp back in 2006. Unfortunately, I believed the fear-mongers and precious metals "perma-bulls" who were ABSOLUTELY CONVINCED we'd have total economic collapse, hyperinflation, and parabolic metals prices...before 2010!

I never realized that MOST of the guys I was reading and believing had vested interests in selling fear, such as alarmist show radio guys (Alex Jones), newsletter writers (Ted Butler, Jim Willie, Bob Chapman), and precious metals sellers (Jason Hommel, James Turk, Peter Schiff). I feel duped and embarrassed for living in fear for many years.

Gold and Silver have certainly outperformed almost every other asset class since 2006, but the parabolic surge, hyperinflation, currency collapse never happened.

I'd love to get your perspective on this question:

The next five years of Gold and Silver (priced in US Dollars)...

1) Down?
2) Flat?
3) Up nicely?
4) Parabolic explosion?

I was a #4, but now I'm a #3.

[Kel]

I personally never fell for the gold & silver nonsense. Unless you plan on using those heavy metals to crack open some walnuts (you know, food, something of real value), then when all hell breaks loose you won't find much use for them.


Alex Jones and the other fear-mongers have a vested interest in scaring you into their money making schemes.



-NonE-Prime

[NonEntity]

(11-21-2011 10:44 AM)Pete in Wisconsin Wrote:  The next five years of Gold and Silver (priced in US Dollars)...

1) Down?
2) Flat?
3) Up nicely?
4) Parabolic explosion?

I was a #4, but now I'm a #3.

Someone Wrote:"It is difficult to make predictions, especially about the future."

- NonE

[zonsb]

(11-21-2011 10:44 AM)Pete in Wisconsin Wrote:  The next five years of Gold and Silver (priced in US Dollars)...

1) Down?
2) Flat?
3) Up nicely?
4) Parabolic explosion?

I was a #4, but now I'm a #3.

In my experience, technical trading has been much more successful than fundamental trading. That is, predicting where a financial/commodity market will go on whatever time frame; be it day trade or long term using price action signals with horizontal support and resistance lines and etc.

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[Jonathanr]

I can guarantee that the feds will keep spending, the Federal Reserve will keep purchasing the treasury bonds, and the value of the dollar will continue to decline. There will be a few bumps along this road, but the trajectory will continue. As to the point of collapse, that's anybody's guess. The continued denial of the problem by the political class is very much reminiscent of Zimbabwe. I think that the final hyperinflationary push will be the result of collapses of Japan and China, who are the two big players in the US treasury debt market. When they can no longer participate, then the only funder of the deficit will be the Federal Reserve. There will be no deflation while the banks can hide the losses on their loan-book. The liabilities hang around long after the corresponding asset is written down. Entire banks will have to go bust with no FDIC rescue of the depositors, for any significant deflation to occur.

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BTW, I see no problem storing excess wealth in the form of gold, but you nerd to be sure that you own life's essentials free and clear first. You won't get rich holding gold, but I don't think you'll lose too much either. It's a store of wealth, not an investment. There is no return on it. You need to divorce your mind from assessing wealth in terms of dollar denominated values.

Put it this way; as (dollar denominated) houses prices were rising, they weren't becoming more valuable. A house was still a house, for all intents and purposes. HELOCing out half the equity meant you owned half a house, or less when prices fell.

[NonEntity]

(11-21-2011 02:30 PM)Jonathanr Wrote:  ...but you nerd to be sure...

No need to insult the poor fella. He was just asking a question!

- NonE

[Pete in Wisconsin]

In my experience, technical trading has been much more successful than fundamental trading.

Thanks for your input!

MY trouble with technical trading is that the charts can be interpreted subjectively. For example, in the past two weeks on goldseek, silverseek, and dollarcollapse websites, I've seen technical analysis predicting silver to drop into the mid-twenties in the next several weeks. Simultaneously, another analyst thinks a pendant formation almost guarantees silver to sixty! One of these guys is probably right, but which one?

[zonsb]

(11-21-2011 07:06 PM)Pete in Wisconsin Wrote:  MY trouble with technical trading is that the charts can be interpreted subjectively. For example, in the past two weeks on goldseek, silverseek, and dollarcollapse websites, I've seen technical analysis predicting silver to drop into the mid-twenties in the next several weeks. Simultaneously, another analyst thinks a pendant formation almost guarantees silver to sixty! One of these guys is probably right, but which one?

I do my own technical analysis as do all the profitable forex traders I know. Patience is a virtue. Waiting for confluence at a support or resistance level with a price-action signal for entry. A fifty percent win rate -- essentially the odds of a coin flip -- with a 2:1 risk-reward ratio is profitable. Technical analysis and strict adherence to a set of rules typically yields better than sixty percent wins month to month.

When I see a really big intra-day spike, that's about the only time I check outside sources for why it spiked. It happened a couple weeks ago when Japan's central bank bought the majors across the board against the yen.

[Pete in Wisconsin]

zonsb: Any predictions on gold and silver in the near to long term based on the charts? The five and ten year charts look awesome to me, like a road map up Mount Everest, but I don't know how to do technical analysis. I suppose Enron charts looked good once, too.

Ted Butler had me convinced that the concentrated paper short position would be over run by the end of 2010, and that silver would be over $100 by now. Obviously, Ted was a little early on that call. Silver still kicks a**, but it may not be the winning lottery ticket I thought it was five years ago. Still, 20% plus gains per year is nothing to complain about!

What do you think?

[zonsb]

(11-21-2011 10:58 PM)Pete in Wisconsin Wrote:  zonsb: Any predictions on gold and silver in the near to long term based on the charts? The five and ten year charts look awesome to me, like a road map up Mount Everest, but I don't know how to do technical analysis. I suppose Enron charts looked good once, too.

Ted Butler had me convinced that the concentrated paper short position would be over run by the end of 2010, and that silver would be over $100 by now. Obviously, Ted was a little early on that call. Silver still kicks a**, but it may not be the winning lottery ticket I thought it was five years ago. Still, 20% plus gains per year is nothing to complain about!

What do you think?

I trade forex and track eight currency pairs. I don't follow the gold or silver markets.

That said, I pulled up a daily gold chart. Its short term counter-trend is down and it's now sitting on a support level at 1666.2 that had been a resistance level last month. It may consolidate on the support for a day or more, staying within the range of yesterday's candle. The four-hour chart shows the support is holding as price creeps higher. I'd be looking for a pull back to support with a rejection hammer and wait for price to break above the hammer to enter a trade.

Conversely, if the counter-trend doesn't reverse to realign with the long term uptrend and instead breaks below support at 1666.2, the next support is at 1661.0-1660.0. I'd be looking for that support to hold and for the long-term uptrend to resume; thus wait for a price action signal to enter a trade.

That's a quick analysis of how I read a chart. I let price action tell the favorable market direction and entry point.

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