Published September 05, 2013
Gold prices are down 26% and silver is down 45% over the past two-years and gold experts say the worst is over. Are they right?
Here's just a brief summary of their hilarious views and ridiculous behavior:
Gold's Uptrend is Still Intact: Peter Schiff - Yahoo! Daily Ticker (Dec.6, 2012)
Gold at $5,000 and beyond: Peter Schiff sticks to his call - MarketWatch (Feb.13, 2013)
James Turk ups his $8,000 an ounce peak gold price forecast to $11,000 - Arabian Money (Jan. 6, 2013)
Hedge Fund Billionaire John Paulson Lost $736M In Second Quarter Gold Bloodbath - Forbes (Aug.15, 2013)
Should it really surprise us that stubborn experts have been so badly wrong about the direction of bullion prices?
The fact is they ignore every important technical and fundamental data point that contradicts their bullish views.
Plus they have a heavily vested interest in being bullish on gold (GLD) and silver (SLV) because it's good for their businesses. Schiff and Turk both have large marketing enterprises that sell physical bullion to the public. Paulson rakes in hefty fees for making quarterly appearances about why he's still bullish on gold.
Meanwhile, as their customers continue losing money, gold experts are laughing all the way to the bank.
The uncomfortable truth is that gold prices have been in a bear market since 2011 and gold investment demand has crumbled. Anyone that's bought and held mining stocks (NEM) or physical gold and silver bullion over the past two years probably knows that much.
The Truth About Gold Demand
Is gold demand really up? Actually, it's not. Over the past year, aggregate gold demand is down 23% and is led by a a massive 68% decline in investment demand along with a 62% collapse in buying from central banks. (See table below)
To view larger image of table, click here.
The only two categories that show increasing gold demand is jewelry and bullion bars/coins and both areas are closely tied to consumer behavior, especially in Asia. Is this really bullish?
The fantastic theory that frenzied buying of physical bullion by Chinese and Indian consumers is a bullish signal is laughable. And so are many colorful conspiracy theories about the manipulation of the gold market.
In case you never got the memo, consumer sentiment is always a contrarian indicator, as the gold experts, once again failed to mention. When besides never would a prudent investor ever make an investment decision based upon what the freakish masses are doing?
"Common sense and careful logic show that it is impossible to produce superior investment performance if you buy the same assets at the same time as others are buying," said the great Sir John Templeton.
That means the true sign of any market bottom - gold included - isn't panic buying, but panic selling. (See Ezekiel 7:19) And by that harsh measure, the gold market has yet to see its capitulation moment.
Profiting from a Gold Shock
Contrary to what the very wrong gold experts have said all along, the ETF Profit Strategy Newsletter alerted its subscribers that the real money in gold and silver would be on the short side.
In our Weekly ETF Pick from Feb.14 we wrote:
"Despite a modestly rising stock market, the Market Vectors Gold Miners (GDX) has lagged both the broader U.S. stock market along with the SPDR Gold Shares (GLD) by a very significant margin. At present, GDX trades around $41.50 and is well below both its 50 and 200 day moving average. Buy the Direxion Daily Gold Miners Bear 3x Shares (DUST) at these levels. A double digit slide for gold would likely translate into a 20%+ loss in mining stocks. This scenario offers some big upside potential for bears."
Since then, GDX has slid 31% and we exited our Feb.14 DUST trade with a +29% gain. But that's just the tip of the iceberg.
In that same report, we told our subscribers to buy JUN 40 GDX put options at $190. In early June, we sold the GDX put options for a +525% gain at $1,200 per contract.
Our GDX trade was a grand slam, but forget about what already happened. What's coming next in the gold market will shock the world.
Winners are On the Right Side of the Market
Our examination of the precious metals market points a very high profit opportunity for investors and traders who are 1) on the right side of the market, and 2) who are correctly positioned in the right investments.
The Great Gold Crash of 2013 is one of the biggest investment themes the experts never saw coming.
The ETF Profit Strategy Newsletter and Technical Forecast cut through the daily reams of misinformation by telling subscribers what to buy, what to sell, and when to do it. Through mid-2013, 78% of our time stamped Weekly ETF Picks have turned a profit.
P.S. Lightning strikes again: Our 8/1 to 8/6 trade in DUST resulted in a 23.5% one-week gain.
Follow us on Twitter @ ETFguide