Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20

Market Oracle FREE Newsletter


Did Your Analyst Keep You Invested In Gold?

Commodities / Gold & Silver Feb 27, 2008 - 07:14 PM GMT

By: Peter_Degraaf


Best Financial Markets Analysis ArticleWhen prices rise exponentially, as they are doing now, the temptation is to take profits and wait for a pull-back. Especially when the analyst you happen to follow, tells you that gold and silver are ‘overbought'.

In November of 2007, while gold was trading at 804.00, I wrote an article titled: “Gold and Silver, prepare to back up the truck”. (Available in the archived section). At the time a lot of analysts were quoted as saying that gold was ‘overbought'.

Since then, I have steadfastly advised my subscribers to ‘hang in there', except for some partial profit taking (less than 5% of portfolio), at the end of January, and we re-invested that money a few days later with a small profit.

Once a week I inform my subscribers, the level at which I am personally invested in resource stocks and bullion. Today it is 99%, (no margin).

Please remember that gold is nowhere near the $2,300.00 it will have to reach to equal the 1980 high (adjusted for inflation).

Since 1980 there are several billion more consumers on the planet. Many of them reside in India and China , where gold is recognized as a store of wealth and prestige.

The middle class in those two countries is growing by leaps and bounds!

It has been estimated that the various central banks will need to provide $500 billion dollars of liquidity to the banking system, to save some banks from collapsing. Since the central banks are owned by the banks, you can ‘bet your bippy' that this money will be provided.

Just as adding water to a glass of milk tends to dilute the consistency of the mixture, so adding liquidity to the world's money supply reduces the value of that money.

I wrote an article about ‘money' last year that has proved to be very popular, and many readers have told me that they forward this to friends and relatives who are unaware of the current trend of fiat paper money towards zero value. Everybody wants it .

Since the middle of the thirteenth century, when Marco Polo returned from China with news of a paper substitute for real money, (such as gold and silver), no paper money has ever retained it's value!

It is an interesting fact that every piece of paper with an imprinted monetary value, be it a dollar, euro, franc or peso, has gone down in value against a basket of commodities during the past month, or past 3 months, or past year, or past several years!

So before you give in to the temptation of ‘taking a profit', ask yourself this question: “What will I do with the money?”

The following charts are courtesy

Featured is the 5 year gold chart. Last week the IMF threatened gold traders with a possible sale of 400 tonnes of gold. The resulting price pull-back lasted about a week, and price dropped around 3%. The obvious response of the market was: “Bring it on”.

Featured is the daily silver chart. Price made the best move of the past year yesterday, the RSI and MACD are positive (green lines), and appear capable of breaking out above the purple resistance lines (blue arrows) thereby assisting price in its rally.

Next chart courtesy

Featured is the 5 year rhodium chart. Price moved from $425 to $9,100 in five years. An crease of over 2000%! Traders who sold out at $6,167, hoping for a 50% correction, or even a Fibonacci 38.2% correction, missed out on the rest of the move which is still on-going.

Who can tell if silver is not capable of putting in a similar performance? There are those who will say that silver is more critical to our hi-tech world than rhodium. There are a number of commodities that have already moved up a lot more than silver. Silver is still a bargain!

Next chart courtesy of John Williams ( )

Featured is the US M3 money supply chart, as maintained by Mr. Williams. It is currently expanding at almost 16% per year. This is 10 times the rate at which gold can be extracted from the earth. The world's gold supply increases at 1.6% per year.

The next chart is courtesy of Bud Wood, and is borrowed from a March 22/2004 article by Alex Wallenwein, titled ‘Inflation or Deflation'

If a picture ever was worth a thousand words, this is it.

To find the original article, just Google Mr. Wallenwein.

The last chart is again courtesy of

Featured is the US dollar index. On February 26 th price broke down below the four month old support line, heading now for our next target at 72. The RSI and MACD are negative (purple lines), and thus support further slippage in this index.

Summary: Gold and silver are in long-term bull markets. Nimble traders with a lot of time to analyze the markets, may be able to take partial profits from time to time, but the majority of investors, should head the advice of legendary investor Jesse L. Livermore who said: “It was never my trading that made the big money, it was always the waiting”.

Happy trading!

By Peter Degraaf.

Peter Degraaf is an on-line stock trader, with 50 years of investing experience. He issues a weekly Email alert. For a 60 day free trial, send him an Email at ITISWELL@COGECO.CA , or visit his website: WWW.PDEGRAAF.COM

DISCLAIMER: Please do your own due diligence. I am NOT responsible for your trading decisions.

Peter Degraaf Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules