Important Update on Gold and Silver …

Gold has plunged through many of the support levels I’ve previously provided you. It’s dropped through the $1,730 level … the $1,610 level … and has thus far reached as low as $1,564.

Once it closes below $1,610 on a Friday, which it will likely have done before you even read this column — the stage will be set for gold to collapse to at least $1,435 and, very possibly, as low as the $1,100 mark.

And silver, precisely as I’ve been warning you, has started to crash again — losing more than $4 last week and shattering support at the $30 level … then the $29.16 level — and is now ready to make a beeline down to $25 and, very possibly, much lower to $22 to $23 an ounce.

As a result, suggestions I made previously to purchase inverse ETFs such as the ProShares UltraShort Gold (GLL) and the ProShares UltraShort Silver (ZSL) are now paying off very nicely. GLL has already soared as much as 29.8%. ZSL, as much as 37.8%.

I’ve taken a lot of flak over the last couple of months for being bearish on commodities, especially because of my forecast for much-lower prices for gold and silver. Some even treated me as if I were some kind of traitor.

But that’s OK. I will never succumb to the crowd that believes markets can go up forever and that bull markets always have blue skies overhead. I’ve been around too long to fall into that trap, which causes nothing but blindness and losses.

And most importantly, I will never, ever tell you anything but what I believe … or what my indicators tell me. I can assure you that I’ll never report on what anyone wants to hear.

There are way too many pundits in this business who tell you what you want to hear, all in the hope of keeping you as a customer or a subscriber. Not me. I refuse to do anything but report on what I see … and what I would do with my own money.

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Are the Precious Metals

Really Losing Their Luster?

So why are gold and silver falling? Why could they fall much more? Why are they plunging in the face of a crisis as bad as Europe’s?

This is where you need to separate fact from fiction, and use critical thinking skills to understand markets. And the truth is that most gold (and other metals) bugs don’t have a clue when it comes to what really drives the precious metals.

They figure gold and silver are all about inflation. When inflation is escalating, gold and silver do well. Sounds good, right?

But nothing could be further from the truth! Inflation is a very minor force driving the prices of gold and silver. And at that, inflation isn’t even a force. Rather, it’s a symptom of a much-deeper issue, which is none other than what I call a “crisis in confidence.” That’s the true underlying force behind the precious metals’ behavior.

Simply put, when confidence in government or in fiat currency is falling, precious metals do well regardless of whether inflation is at hand or not!

Once you understand that, then you have a better understanding on what really drives gold and silver.

But that’s not nearly enough either. You have to delve deeper and determine where the crisis in confidence is manifesting itself.

Right now, the crisis in confidence is clearly in Europe. Though the United States certainly has many problems — many of them bigger than those affecting Europe — right now, it’s all about Europe, and it’s making the United States look like an island of safety.

Put another way, plunging confidence in Europe is bolstering the United States and, most importantly, the U.S. dollar. Since the euro is NOT the world’s reserve currency, that means that the capital that’s fleeing Europe right now is heading, guess where?

To the U.S. dollar, for safety and liquidity … which is, by default, bearish for the precious metals.

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Should You Get Sold

On Selling Silver, Gold?

So you see, plunging gold and silver prices are not so hard to understand when you delve a little deeper and view the world in international terms and with no biases.

No biases about inflation, one currency or another, what markets can or cannot do. Just pure, simple, logical reasoning — unaffected by emotion. That’s all it takes.

Don’t get me wrong. There will come a time when a massive crisis in confidence hits the United States. The time is coming, and that is when you will see the next leg down in the U.S. dollar and the next big bull market in precious metals. But it is not here yet!

Which is precisely why I continue to recommend that all precious metals investors be very careful now. Gold and silver can fall much further than you think possible.

And odds are they will. Because their next bull market legs higher will likely not form until most gold and silver investors have thrown in the towel, and there are very few left to sell. That’s when the precious metals will violently turn back to the upside, leaving most investors in the dust.

If you’ve acted on my suggestions to hedge your gold holdings, or take outright speculative positions in inverse ETFs like those mentioned earlier, hold those positions. There’s a lot more downside potential in gold and silver right now.

Ditto for most commodities. As Europe continues to go down in flames, capital will pour out of Europe and into the U.S. dollar for cash and liquidity purposes … boosting the dollar higher, and forcing the prices of nearly all commodities lower.

My Real Wealth Report members have been way ahead of these moves, and I’ve had them hedge up their gold holdings and take some speculative short positions well ahead of time, and they’re doing great.

My more-speculative service, Resource Windfall Trader, is doing fantastic. Every one of my closed trades over the last 12 consecutive months has seen an average 45% gain in market price. That includes all seven of my losing trades over the last year.

The average hold time for those trades is just 44 days — or about a month and a half. Some examples include big wins such as 233.3% gains on a bearish gold position … 118% and 354% on a bearish silver bet … and much more, including 101.85% gains on a bearish S&P 500 play.

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Best wishes, as always …

Larry

Your thoughts on “Important Update on Gold and Silver …”

  1. Well kudos to you Larry,I take my hat off to you and I will never doubt you again…..well at least I’ll take you more seriously!I have waited to buy more silver this time until your correction prediction came true,it took a lot of nerve to wait for a pull back on rising prices but I saw you were right too many times so I waited this time..thanks.
    Kerry

  2. Larry, please continue your excellent reporting, being true to yourself, and telling it like it is. Thank you, Karen

  3. I am somewhat new to Weiss Money and Markets and maybe somebody can explain something to me. Why would one of their contributors recommend buying, GLL for example, when Weiss Watchdog has it listed as an E?

  4. Larry,

    Thanks for your RWR subscribers video update last week, as well as your Dec issue & latest flash alert. Your analysis & communication to RWR subscribers is greatly appreciated.

    You have truly separated yourself from other gold ‘experts’ and other market analysts.

  5. Thanks again Larry for the update. Will be looking out for those levels and getting ready to buy when the golden opportunity comes. I looked at the dollar chart and can see that it is near resistance. It is taking a lot of effort for the dollar to rally through this point but, I know it is because of this bear market bounce. Well, will be long gold and silver once the media(CNBC) starts to hype “king dollar” again. If many of you think Larry’s advice is that bad then maybe you should watch CNBC..LOL! However I don’t see the ones who has dogged Larry out over the past weeks and months posting any comments here today. Hmm I wonder why? Bulls make a lot of money and bears make a lot of money, but pigs? Oh they get slaughtered.

  6. ok well done on the metals…. for those of us who werent shorting metals but were short s&p …spxu is stilll wat below 18 where you first started recommending…brag when thats at 20-22

    1. It’s not job well done on the metals until he gives the signal to get rid of the hedges and there is some profit in hand. The reverse ETFs leak profit steadily due to daily compounding, so holding them through volatile markets just saps their value.

  7. Thank you for saving my butt. I almost piled into gold & silver in July but decided to hold off based on your warnings. That would have been a disaster. Maybe you should give Sean Broderick a complimentary subscription. He must be sulking over the lump of coal in his stocking.

  8. Wow… $ 3400 a year for Resource Windfall Trader…. better make a lot of profit . But besides that Larry sticks with gold / silver much lower . Since 2001 gold never closed lower in Dec. than the year before … NEVER .
    $ 1435 his next target – that would be roughly down by 25 % from it’s all time high . But now he goes as low as $ 1100 …. close to a 43 % drop . Why would that be ? That’s more than what happen in 2008 . In Nov. 2008 gold dropped by 34 % and it took until Sept. 2009 to be right back at $ 1020 .
    At Larry’s rate- gold at $ 1100 / silver at ? $ 22 Dow at 10,000 brings the HUI to ???? 300 – 350 ?
    You got guts , Larry . Not that other writers are very bullish at this time … just the opposite ” Blood in the streets ” are only a few headings .
    Really wonder how Larry did in 2008 … anybody here ?

  9. Larry, what about the massive multiple amounts of paper oz’s trading vs physical and could that lead to difficulty in obtaining physical when the prices drop?

  10. Larry likes charts, he should have seen gold drop below 200 day moving average 8 or 9 times in the last 10 years of this bull run only to rise again to new highs.

    Did Larry get a memo from all the politicians that they are no longer spending money? Did the fed and ecb raise interest rates and contract the money supply? China, India and Mid East just said screw stupid gold we want US dollars…nope

    Selling your real phyical gold now is just crazy….

    Larry, didn’t you say for years the you knew ben bernanke’s secret to destroy the us dollar, did gold going down for three days change the secret plan?

  11. i understood everything in this essay until he got to the drop to $1100. that one is a very lazy prediction without any thought proces at all.

    any expert that predicts an equity or commodity that has been in a such a long term bullish trend cannot possibly predict a break below the 200 week moving average. personally i don’t see gold falling below $1485, but as most things go these days, there is often more violent moves than one could expect.

  12. What has fundamentally changed with gold and silver. I will tell you NOTHING! The printing presses are running faster and faster and oh boy you just wait they are going to go into overdrive soon and gold will hit $2000 and silver 75$. What a clown Larry will look like then. I am sure he will change his stance before then and do another flip flop and then tell you how he was right along when he was dead wrong. This isnt the first time he top called and was proven wrong buy the mighty gold bull. I am just amazed at how these people draw these squiggly lines on a chart and all these goofy formations and tell you because it broke it 200d moving average that now it is a bear market. GET REAL! Gold’s fundamentals are the strongest I have ever seen and Larry thinks it can go to $1,100. You really have to question his judgement and basis for such a claim. Could the banksters paper it down further? Yes, but I seriously doubt it to $1100 or even $1500 for that matter. AT $1,100 gold, all the physical gold would be sucked up by the Chinese and the Comex would have to default.

  13. I respectfully desagree with you Larry. You do try to terrorize us a little with your ‘rock bottom’ targets. 9000 for the Dow, $1100! for Gold, $22 for Silver. I have agreed with you over the last months that in the intermediate term the trend was down for most markets, but not to those targets you set. Gold has an important support in the long-term-up-trend line that it reached last week at about $1565. You have mentioned the 1567 level yourself many times in previous columns. It seems to have respected this level and bounced back up again. Gold may continue weak during the next months with some sideways action and even go lower but somehow I don’t see it plummiting to 1100. I really appreciate your views though, thank you for sharing them freely.

  14. Larry, One doesn’t have to have much in depth understanding to know that severe Euro weakness would place temparary pressure on the dollar price of gold. It’s tempting to cash out of PMs during this cycle per your recommendation; however, no one knows how long this so-called “bear” in PMs will last. In my opinion, the worst thing one could do is cash out and fail to get back in when the S__t hits the fan for the dollar. My recommendation to your readers is to sit tight and ride out this PM “breather” with their horde of Gold and Silver in place. The fundamentals for PMs have not changed and the real blow off in PMs, which will be based on the long awaited US Dollar monetary crisis, still lies ahead.

  15. O.k. guys… a reminder from Larry’s Important Year-End Signal ( written Oct. 24/11 )

    ” 2012…Gold momemtum $ 1243.60 – $ 827.50 . Clearly, with gold trading at the $ 1620 level right now , it remains HUGLEY POSITIVE as we head into the end of this year. ( Dec. 21 at $ 1617 ) Plus as long as it closes above $ 1243.60 at year-end it will be positive in annual momentum for 2012 as well – which is entirely consistance with my forecast that gold remains in a long-term bull market .
    But , and importantly , gold is WAY above the upper range of the momentum figure at $ 1243.60 – which also suggests that a correction is way overdue . ”
    The correction – so far – brought gold down to $ 1530’s …..hmm ..Larry writes : ” Gold remains HUGELY positeve at $ 1620 …hmm

    Larry continues : ” I’ve been short-term bearish largely as long as gold remains below $ 1705 on a weekly closing basis. ”
    DIDN’T HE JUST WRiTE “…. Gold remains hugley bullish in momentum with gold at $ 1620 ? ” … hmm…
    LARRY ON SILVER : ” 2012 MOMENTUM $ 19.78 to $ 10.77 . Mayor support at $ 19.78 but don’t think it will fall that low . Tech. support at $ 25 and $ 23 level which I do expect to be tested into years-end . ”
    Dec. 21 .. SILVER AT $ 29.50 –

    1. Heidi,
      Not agreeing or disagreeing, BUT pulling out a technical analysis from a year ago and trying to tie it to recent events has no relevance.

      1. Hello Zachary … Oct. 24 2011 is NOT 1 yr. ago but 2 month . Nothing changes that fast in 2 month and besides that … this is what Larry wrote for the yeasr ending in 2011 !!!!

  16. Larry… when you use words like “next bull market” are you trying to tell us that gold has entered into another 20 year secular bear market?

  17. Merry Christmas to all, and a Happy Holidays to those who celebrate a different holiday. As someone who has been a rather harsh critic of your forecasts, I do appreciate the honest opinion you offer Larry. I wanted to wish your self and all the other readers a Happy and prosperous New Year. May you all enjoy the time you spend with your family and friends, for with the love of others, are you truly wealthy.

  18. I love Gold, but all these dam gold nuts with their conspiracy theories really can put one off….all this is just end of the year profit taking combined with releasing margin to cover losses in bond positions, alot like the drop in 2008 during lehmans….liquidations to keep the margin clerks of their backs….even the vampire leech devil himself is calling for higher gold, doesn’t make sense if they were trying to manipulate the paper market price.
    http://www.guardian.co.uk/business/2011/dec/22/goldman-sachs-forecast-for-2012

    Although Larry got the short call a bit early in the spring, he was the first to admit it and now deserves a big congratulations for getting the timing perfect on this latest move down…good job Larry. Losing is part of trading, but recognising when you are wrong and having the courage of your convictions is the mark of an expert. very appreciated.

  19. I hate to say this as I think that Larry is right so many times, but his loose prediction of 1100 gold may just be a sales ploy to get us to sell out and then continue as subscribers in order to get his buy signals. But what if he misses the correct timing? and gold explodes to the upside, and never gets anywhere near 1100. Could it not be safer to just sit it out and wait for the good times? You have to wonder a bit when advisers need to sell subscriptions?

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