some analysts are predicting lower prices ahead for gold and silver. (Not me!)

[Serpo]

With all of the money printing that is going on worldwide, it beats me why a number of analysts are predicting that the price of gold and silver is going to fall, after gold has just corrected by 19% and silver by 40%.
Here is a chart that they have obviously overlooked:

http://67.19.64.18/news/2011/10-18pd/chart%20one.jpg
Featured is the ‘Bullish Percentage Index’ from the GDM gold producers, with the price of gold bullion added for comparison at the top. The index is turning up at the most oversold point since the credit crisis of 2008. The gold price then rose from $760 to $1010 over the next 3 – 4 months. Since the credit crunch, every time this index has dropped below 30%, it has turned out to be a buying opportunity. Why would anyone expect the price of gold this time to produce a different outcome? Every minute of the day the central banks of the world put out 2 million dollars in new currency. At the same time the world’s mines produce 90 ounces of gold. The ratio is 22,000 to 1. As long as this process continues - gold will rise.

“Gold is an expression of the world's justifiable distrust of the way our central bankers conduct their affairs”. ….Jim Grant.

http://67.19.64.18/news/2011/10-18pd/chart%20two.jpg
Featured is the daily gold price chart. Price became temporarily overbought in September and the correction, instead of finding support at the 50DMA, fell off a cliff (was pushed over the cliff?), and needed support at the 200DMA. There it became oversold and the bounce off the 200DMA sets up a target at the green arrow. The supporting indicators are turning positive (green lines) with lots of room to rise. The 50D is in positive alignment to the 200D (green oval), and both are rising (bullish). Any short-term pullbacks along the way should be viewed as buying opportunities.
èCentral banks have an estimated 1.5 trillion dollars worth of gold on their books. The amount of privately held gold has been pegged at 1.5 trillion dollars also. The total of world financial assets is approximately 200 trillion dollars. A shift of this 1% out of these 200 trillion dollars into precious metals will send gold and silver through the roof.




http://67.19.64.18/news/2011/10-18pd/chart%20three.jpg
This chart courtesy Cotpricecharts.com shows the ‘net short’ position by commercial traders remains very low. There are 169,000 net short positions reported this past week, compared to 165,000 the week before. This chart continues to be the most bullish of the past 12 months. It shows that commercial traders are hesitant to take on short positions.

“Determine what is best for the government and know that is what the powers are working to make happen. Inflation is what is ‘best’ for a government with enormous debt.” Ayn Rand.



“The five basic reasons for the decline and fall of the Roman Empire:
1. The undermining of the sanctity and dignity of the home, which is the basis of human society.
2. Rising taxes, the spending of public money for bread and circuses for the masses.
3. The mad craze for pleasure becoming each year more exciting, more brutal, more immoral.
4. The building of great armaments when the real enemy was within, the decay of individual responsibility.
5. The decline of religion, fading into mere form, losing touch with life, losing power to
guide the people.” Edward Gibbon (The Rise and Fall of the Roman Empire).



http://67.19.64.18/news/2011/10-18pd/chart%20four.jpg
Featured is the weekly silver chart. Price closed at the highest level in four weeks and the supporting indicators are turning up from the most oversold readings since the 2008 credit crunch. The first target is at the green arrow. Once silver breaks out above the green arrow, the next target is at 40.00. According to the USGS a total of 46 billion ounces of silver have been mined so far. The estimated total for gold is 5 billion ounces. The ratio is 9 to 1. Keep in mind that gold is recycled will silver is primarily ‘used up’. A 9 to 1 ratio puts silver at $185. The conclusion is that silver is currently severely underpriced.

The lower gold and silver prices are forced down via manipulation, the higher they will rise in the future. When the price of any commodity rises, it increases incentive to produce and decreases incentive to consume. The longer a price is artificially depressed, the more pressure builds on the price, due to a lack of increased production, and due to a lack of constraint on consumption.


http://67.19.64.18/news/2011/10-18pd/chart%20five.jpg
This chart courtesy 24Hgold.com shows the number of registered ounces of silver at the COMEX continues to decline. When this number (currently at 30.97 million) reaches zero, the COMEX will be out of silver to deliver against futures contracts.


http://67.19.64.18/news/2011/10-18pd/chart%20six.jpg
This chart courtesy Cotpricecharts.com shows the number of ‘net short’ positions on the part of commercial silver traders increased from 19,000 the previous week to 21,000 this past week, leaving the chart pattern once again very bullish, as it indicates that commercial traders are still hesitant about going short. The last time the ‘net short’ reading was this low was October 2008 while the price was 9.35; silver rose over the next few months to 15.00, an increase of 60%.

Here are the three reasons why some analysts go out on the limb and predict lower gold and silver prices.
#1. They do not understand the gold market.
#2. They have not bothered to look at the fundamentals.
#3. By predicting lower prices they will either be right or wrong.
If they are right, they can brag. If they are wrong they know you’ll forgive them because you will be in a good mood when you portfolio is rising. My advice is simple: Keep a written record of the predictions you read. It will help you to eliminate the analysts who do nothing but flip a coin in order to come up with a prediction.

In 1980 the US national debt stood at 930 billion dollars. Gold was briefly priced at $850. Today the national debt (without counting off-budget commitments) is over 13 trillion dollars, or 14 times the 1980 deficit. Gold is priced at $1680 – barely double the 1980 high! By comparison – gold is cheap!

Summary: During 18 of the past 22 years gold has produced a Christmas Rally. The rise usually begins in September and this year should be no exception.

Disclaimer: Please do your own due diligence. Investing involves taking risks. I am NOT responsible for your trading decisions.
Happy trading! Peter Degraaf


http://news.goldseek.com/GoldSeek/1318950900.php

[Uncle Salty]

There is only one reason gold and silver will go lower...because the current gold and silver price is based on paper gold and paper silver contracts that can be manipulated by the entrenched powers.

[chad]

don't look at the ticker then, because it's all going lower in real time.

[Twisted Titan]

If they slam it past dealer purchase......they will create a silver lockout and attract even more attention to the metals.

only the fool or the most desperate will sell in those markets and that pool is growing smaller by the day.

makes no difference those with strong hands are going get paid in spades when the roof finally blows on this mother

[Spectrism]

Silver and gold should go lower. They are not backed by anything like the dollar. Such as... the federal reserve and therefore such as... FDIC.... so I am investing in dollars.... uhh.... such as. I am getting real dollars backed by the FDIC and social security.


http://www.youtube.com/watch?v=lj3iNxZ8Dww (http://www.youtube.com/watch?v=lj3iNxZ8Dww)



And, I like money. Wanna go to Starbucks?


http://www.youtube.com/watch?v=sZHCVyllnck (http://www.youtube.com/watch?v=sZHCVyllnck)

[Hatha Sunahara]

For several years, I've been confident that our financial system was going to crash as a result of hyperinflation. I could not see how the elite could engineer a depressionary deflation. But lately I have been getting a few insights into what is in store for us. I recently read a good explanation of a deflationary depression here:

http://seekingalpha.com/article/176804-deflationary-depression-the-simple-explanation

This makes sense to me. However, I am not sure what will happen to gold prices if we get a deflation. Gold is a special commodity because it is money. Or a monetary metal, and perhaps immune to the market influences that affect other commodities. From the article linked above, I can see two possibilities.

Bernanke is printing money under QE for the government to spend to keep the economy going in insufficient quantities to offset the loss of money in the money supply caused by falling prices for real estate. 2 $Trillion in QE hasn't offset many more $Trillion in property valuation loss from falling real estate prices. So Bernanke isn't printing enough money to keep us out of a depression, and we could go into a depression. Compare this with the confidence that Jim Sinclair has that Bernanke will give us QE3 which will print up much more money, and make the money worthless. So Bernanke holds the key to this.

No more money printing, we go into depression. More money printing we go into hyperinflation and default for the government. I'm not sure which way it will go. I am biased slightly to agree with Sinclair--that QE will go to infinity. If it doesn't, I doubt seriously that gold or silver will lose any purchasing power.

And then I listened to this long interview with Lindsey Williams here:

http://radio.goldseek.com/nuggets.php

Williams thinks we will have a deflation, but he says to hold gold and silver. I am convinced that gold and silver are immune to value loss regardless what is happening with the money supply. We could have a hyperstagflation--which is where everybody loses their jobs, their houses, their pensions, and prices rise so much that nobody can afford anything. That would cause the maximum distress to the largest number of people, and that is what I think we are going to have. Bernanke fighting deflation ineffectively by printing infinite quantities of money--none of which gets to those who could improve the economy. TPTB are going to lead us into the Totalitarian Welfare State.


Hatha

[solid]

Hatha, great post, and something I have been unable to logically get my mind around when it comes to value. That was an extremely helpful post, and that article from seeking alpha a must read, imo.

[Hatha Sunahara]

I'm convinced that the politicians, and the people advising them haven't a clue about what needs to be done to prevent a huge number of people from slipping into poverty. TPTB want the 99% to be slaves or vassals. When everybody is desperate for money, they'll go along with anything TPTB want. Say hello to the NWO.


Hatha

[Spectrism]

Three things need to be considered when looking at theoretical inflation/deflation scenarios.

1) The experience of inflation/deflation is not even across the marketplace. We think that the market will smooth all the ripples evenly to everyone so that we all feel the same thing. In a free market, that would happen over time as shocks cascade their impact outward. What we are seeing in this controlled marketplace is an increase in money to banks and cronies to cover a contagion of deflationary disasters. The common people don't get the free handouts but do feel the whip of deflation at the income end and inflation at the expense end.

2) This destruction of the monetery system is planned and being executed for a purpose. This is not a series of mistakes, but a calculated downfall to usher in a new order. Sure, there are fools who are the useless and unwitting tools for the controllers. But the unfolding events are insidiously going according to schedule.

3) None of the rules need be followed by the controllers. Laws of man are violated just as readily as laws of God. They do not care about right or wrong.