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Two weeks ago I told you that August would see dramatic trending moves, and that we wouldn’t have to wait long for them to unfold.
Well, they’re here NOW. Nearly all markets are pressing extreme resistance levels in what most traders and investors believe are breakouts.
They see a surge in gold, and think it’s going to march to new record highs well-above $2,000 an ounce.
They see a modest rally in silver, and think they should load up the truck, expecting silver to surge to $50 and higher.
They see a rally in oil, and figure that all must be well with the global economy and that higher energy prices are a fait accompli.
They see grain prices surging, and figure rampant inflation will soon hit food prices.
And they see the Dow Industrials hanging in there nicely above the 13,000 level — and expect a new bull market in stocks.
Mind you, ALL of the above WILL happen.
- Gold will soar to at least $5,000 an ounce.
- Silver to well over $100 an ounce.
- Oil to new record highs near $200 a barrel.
- Inflation surging.
- And the Dow Industrials will soar in a new bull market, to at least 21,000, if not much higher.
But none of that is in the cards for right now. It’s not time. The moves I mention above WILL happen, but not for at least another six months, give or take.
Instead, nearly all markets will soon turn back down, taking with them the most-optimistic of investors precisely at the wrong time.
You see, all markets have one underlying rule that always seems to govern their broad behavior: At market extremes, inflict the most amount of damage upon the most investors. Take them to the woodshed and spit them out like sawdust; then go find another group of investors and start the shredding process all over again.
Don’t get me wrong. That doesn’t mean you can’t make money in the markets. It does, however, mean that you must always keep your guard up … and more importantly, know when to be a trend-follower versus a contrarian.
And right now, it is my humble, 34 years of experience that’s telling me it’s time to be a contrarian.
Not just my gut, but also all of my technical and cyclical indicators.
For one thing, though gold seems to be pressing higher and could move even higher in the short term — as I recently pointed out — gold would have to close above $1,727.70 to prove me wrong and turn the short- and intermediate-term trends back to bullish.
I see very little chance of that happening and, instead, I sense that gold is about to inflict a lot of damage on the majority of investors and stage a stunning collapse.
Silver is about to do the same. While it could press a bit higher, silver would have to close above $30.71 to reverse the short- and intermediate-term trends. Short of that, silver will pummel a lot of the investors who are now venturing in to buy “the devil’s metal.”
Oil, too, is about to hurt a lot of investors and traders. While it’s managed to rally to the $94 level, it also is on the verge of turning back down — taking with it all those investors who think energy prices have nowhere to go right now but up.
Grain prices are topping as well. So is inflation in the short term.
And the Dow Industrials — though clearly showing their propensity to begin a new bull market — are getting very toppy.
Momentum indicators are slowing. The number of advancing stocks versus those declining is beginning to wane quite dramatically. And the Dow Transports have thus far entirely refused to confirm the rally in the Dow and the S&P 500, creating a hugely BEARISH non-confirmation.
I would love to tell you that new bull markets are here in all of the above, but they’re not. Each and every one of the above markets needs more time to form the foundation for their next bull legs higher.
They need to back-and-fill support areas on their charts. And most importantly, they need to take the majority of investors out to the woodshed for a shredding. Then, and only then, will they have a chance to begin anew.
Ironic, but once those declines occur, you’ll find almost everyone will become a giant bear. Precisely near the bottom of the corrections.
Nearly everyone but me. Because when that happens …
When you see gold fall below at $1,500 …
When you silver fall at least below $23 …
When you see oil plummet like there’s no tomorrow …
And you see the Dow Industrials melting in a 2008-style plunge …
I’ll be backing up the truck and telling you to buy almost everything with both hands.
What are the chances I’m completely wrong in my analysis? I’d rate them as very low, say around 10%.
And if it turns out I am wrong, I don’t have a problem with it. With gold ultimately heading to over $5,000 … silver to over $100 … oil to near $200 … and the Dow Industrials to at least 21,000 …
There will be plenty of money to be made.
Bottom line: For now, dis-inflation still has the upper hand in most markets. There’s still too much bad debt in the world that hasn’t been dealt with.
And the Federal Reserve and the European Central Bank will NOT act until the pain is too much to bear. That pain is on the horizon, so in the interim, just make sure you’re out of harm’s way.
I repeat my advice of two weeks ago:
If you’re an investor with an eye to the long term, continue to preserve your ammo and hedge the positions that, for whatever reason, you can’t get out of. The time will come to add to your long positions — but it’s not here yet.
If you’re a short-term trader, don’t be frustrated by the recent choppy markets, or any short-term losses you may have experienced. Stay the course.
Best wishes,
Larry
P.S. I’m hard at work on the next issue of my Real Wealth Report, which publishes on Friday. To be among the first to find out how I’m planning to fully seize profit potential in the markets for the rest of the year, be sure you’re signed up to get your copy. Activate your risk-free trial subscription by simply clicking here now!
{ 29 comments… read them below or add one }
Larry – I got stopped out of the SPXU hedge last week. Should we get back into it yet or wait to see if the markets do start to drop before getting back in? Also would you personally double down on it since we bought it at $89 (post reverse split price) last fall and it’s now at $42? Thanks.
Actually most analysts, traders and investors are skeptical of this rally. To believe in the rally is contrarian. The public is out of the market as they have been pulling cash out of stock funds and piling into fixed income or cash. That could very well be a contrarian indicator. Gold has been forming an ascending triangle. A break out above 1625 and it could move much higher. I would think the Iran situation is putting a floor under oil. If war breaks out oil should sky rocket.
” the public is out of the market ” ? According to MartinArmstrong they are out of the Europe market and went to the US market….was a nice rally, eh ? I know more people that went short 2 weeks ago and still have tears in their eyes.
I would like to say according to wallstreet(the devil disciples themselves) silver is the devils metal, because they can manipulate the paper prices. If you do a history, silver has always been money. Even in the book of Genesis the word silver means money. Gold has always been associated with evil especially in the ruling nations. E.g Egyptian idols etc. We all know the golden rule”he who owns the gold makes the rule”. Well, those who hold the physical silver kills the vampires that prey on society i.e wallstreet. So silver being the good currency is treated like what happens to the poor in society. It is being manipulated and also smashed. You can look at the ratio that comes out of the ground and it is around 15:1, today it is 58:1on the paper Ponzi and that sure looks crooked. Only in a paper Ponzi this can happen but not when you own the real deal. You cannot value something with constant value(silver) with something that has no value(Fiat dollars). The jig will soon be up!
Gold and Silver now in backwardation. Physical supplies tight.
One more dip to flush out the cowards and then off.
September!
The big market decline, if there is one, will not happen until after the election. The Fed does not want a large decline pre-election and what the Fed wants, the Fed gets.
Its interesting that QE had such a mild effect on prices given the magnitude of debt creation. They are back near pre 2008 levels but not higher. Maybe that is because post-crisis banks tightened up lending for a long time, consumers delayed major purchases, borrowers de-leveraged, governments and businesses contracted payrolls, and investors stayed out of the market for a long time. I’d be interested to know how much total capital is invested in stocks versus sitting in cash right now, compared to the historical levels.
I am looking forward to your Friday report.
I do not remember in your past reports you saying anything about using OPTIONS. Can you please give us a little insight to your philosophy regarding options.
Thanks and Supreme
Regards
Surprises, surprises, surprises…………….that’s what ahead.
It is interesting that no one here is figuring in a possible Black Swan event. All the designs of mice and men may go awry if that happens.
Larry, I hope you are 90% right as you have stated. I am a suscriber to your Real Weath Report.
I’ve been backing up the MAC TRUCKS
no time to wait for this and that! I’m
buying what precious metals you are
selling. You want me to wait? Fear is
not in my game. Fear will drag you
down. Buy, buy, buy baby!
Larry,
I hope you are correct this time around about the short term. particularly the stock market, gold and silver. They act like they do not want to go down and want to continue moving higher. Silver won’t break 26.60 and gold wont break 1585. The stock market has a nice stair step increase for a very long time.
LIES……DECEPTION……….BEWARE
Some analysts have friends and/or relatives that are the owners of Inverse ETFs on silver. To keep the money flowing to those friends and/or relatives, and to keep the public buying short positions on silver (which, by the way erode with each passing day due to market manipulation)………….
those analysts have to keep crying, “The silver market will bust!!!” “Silver will go down!”
This enriches the scheister owners of the Inverse ETF funds, and robs you, the buyer of the short position.
It is white collar crime at its best.
If manipulation ended and free market forces held sway, silver would jump to $50 per ounce overnight easily.
But, the puppet masters are still pulling the strings, and pulling cash out of our pockets.
But, not for long. The jig will be up soon.
The jig would be up quickly if those who are long silver would change out of “paper silver” and into “physical silver”. And a secondary advantage to that… one would actually -have- silver. Buy physical.
Your disinflation theory does not hold water. Just take a look at the charts of UGA, USO, CORN. These charts are indicating heavy inflation is on the horizon. Gold and silver have been lagging but they should be the next commodities to run. All the technicals point to higher stock market prices. Bonds have been selling off and the VIX is low. Even transports are starting to catch up.
Sorry Larry E. ; August is hald done, and your prediction of Deflation, Doom, and Gloom in 3 commodities Gold Silver and Oil not only have not come true; but these 3 markets have increased in price.
Seems like you misled your readers and the poor subscribers? Why is that Larry? Do you consider the longs who put their purchases “on hold” and missed the low prices before now just because you are having a bad few months and are negative short term?
What are you trying to prove? That you aw the disinflation and no one else did? That if you were proven right, you would have looked like a prophet? What then?
These markets are taking off, Larry.
To see gold and silver actually going up in the summer? Now, you tell me Larry, is that a good sign or a sign of impending crash on these metal prices?
Perhaps you should take a vacation and relax a bit and return with a more optimistic view? You have successfully depressed your readers and cost them a lot of money already.
Good luck
There seem to be a lot of Obama bears, as many institutional investors, that lean right, are suggesting
that we are in for an early tax selling route after the modest run up in stock prices. Perhaps, a self
realized prophecy is in the making, and while most of us at least half agree that the 30 year stimulus
debt from moving the private debt to the public is overwhelming, and all of our domestic content
manufacturing is lost developing the Third World, and the wars slow wind down, is not enough to save
a sinking ship, we seem to be getting along fairly well, nonetheless. Is Japan our guiding light in the night?
If we get another George Bush elected it is more than probable that we will run deeper into debt,
and closer to the extreme inequality of the roaring 1920′s, which led to a mixed economy being adopted
later in order to build our large middle class. Perhaps our future will be a cyclical repetition of our past,
all over again, for old times sake, with new variations on an old theme.
Larry, I think your prognosis of lower prices in the immediate future is likely, but the volatility and complexity of interlinked world markets would likely mean that it is a spike downwards within an ongoing consolidation and waiting game as the Europeans sort themselves out, the US has its elections and get some direction in the economy, and as countries become increasingly competitive in currency devaluation. Your down forecasts may be achieved –but I expect, for only a short time before emotions reverse and we get an upswing to much higher levels than past highs –as the amplitude of a much longer consolidation increases. There won’t be any consistency or clear sailing in any market for the forseeable future because market emotion is now dependent on politicos and central bankers who are only vaguely aware that they’ve backed the wrong horse. The markets tread water in a huge cauldron under which are gas fires manned by hubristic government simpletons, watched over by central banker firemen unsure as to whether their hoses are linked to tanks of water or petrol. What are the odds on them getting it right?
Larry,seems as time goes buy the , Iknow better than you crowd gets louder. we stand by your advice because
we think you are correct. I have one question concerning companies that dominate their space MCD & WMT
as example. should they weather the storm or sell now & come back later ?
Here is Peter Krauth shouting to back up the trucks now and go long:
http://moneymorning.com/2012/08/10/the-dumb-money-hates-silver-its-time-to-go-long/
Who will turn out right?
Larry, who says silver will plunge or Krauth who says it’s about to surge? Only time will tell. But if you guess wrong you can lose a fortune.
Silver was UP almost 3% today! And it’s summer: the season when PMs should go down.
I think the swoosh down will either not happen any longer, or it may happen if no QE comes by end of Sept.
But for now: up up up.
You can only lose a fortune if you invested a fortune!!!
Larry, I have followed your Monday pieces for about 2 years. I have profited from your predictions, because I recognize that you predict what is going to happen in about e months, not the short term. My recent profits come from options selling and average about 2% per week, with no losses. Thanks!
No one can predict the market. Otherwise oviously larry would be on vacation right now as the richest man on the planet. I think larry has gotten more right than wrong.. even when people were shouting deflation in 2009 larry was right on Inflation..
Larry, first 2 weeks of August “plunge” did not happen in PMs and oil.
You have been wrong and cost me a lot of lower entry points to add to my long positions in all of the above commodities.
You failed to realize that Hussein Obama’s Damage Control Team will–and have–driven all risk assets UP.
stocks, PMs, oil included.
IN THE NEWS: Paulson and Soros have increased their positions in gold is bullish for the yellow metal last week.
Uh Oh, someone better tell them to sell what they bought last week and wait for Larry E’s crash first to get in at better prices!
In the news: “Paulson and Soros have increased their positions in gold is bullish for the yellow metal last week.”
Ooops! Paulson and Soros must have not read Larry E’s warnings of an imminent crash.
Too bad for them.
Obviously Larry E knows more than they do.
How long we have to wait “pain on the horizon” ????
Now it’s 9/24/12 and apparently the 1723 breakout from your 8/18/12 post means nothing. With gold closing at 1765 today.you have gone from this post on that date
“For one thing, though gold seems to be pressing higher and could move even higher in the short term — as I recently pointed out — gold would have to close above $1,727.70 to prove me wrong and turn the short- and intermediate-term trends back to bullish.”
to this on 9/24/12:
So let me state for the record: I will NOT change my interim forecast for gold to go bullish until spot gold has closed above $1,823 an ounce on a weekly and monthly basis. That will be the signal that gold’s next leg up is beginning.
Whether proven wrong or not, Either way, a lot of trading profits and opportunities got left on the table for those who are waiting for “the rally”.