Gold Bull Set to Rage: A glimpse into the past and future

By James M. Carrillo
April 16, 1013

In my most recent article (March 1, 2013), I wrote "The Ultimate Precious Metals test is here. You believe or be prepared to panic."

Precious Metals

I have broken down on all of the “technical” models I have used for decades. They indicate we are heading down perhaps sharply as low as $1250.00 in gold and $20.00 in silver. Support levels in the nearer term for Gold are at $1525.00, $1425.00 then $1250.00, perhaps by as early as June as outflows could be rapid due to margin calls on highly leveraged futures market positions, these leveraged positions can create immense volatility.

From a fundamental standpoint, I can NOT see this happening, so I suggest using this as an incredible opportunity to accumulate physical holdings of both gold and silver. As the speculators and media panicked sell, I will be looking for the extremes to accumulate. The bottom line right now is that this will be purely technical selling with no fundamental basis to support it. Therefore, it could be a like a trampoline effect to much higher highs, down fast then rebounding to even higher highs. LINK

Well it did happen ...

Now everyone is asking if the Gold Bull's days are behind us? Here is how you may be able to answer this question. Below is my take on the situation ...

Which of these statements is true?

gold bull 1. The US Dollar is now trusted worldwide
2. The economy looks healthy again
3. Incomes are rising again
4. The stock market is a safe bet
5. Banks can be trusted
6. QE obviously won't effect the dollar's value
7. Bond yields are healthy
8. Savings rates are good
9. Wars are a thing of the past
10. The Gold bull market is over

The answer in my humble opinion to all of the above is false. What you are now being offered is a huge discount on wealth insurance. That ugly duckling that everyone is kicking to the curb will now blossom into a beautiful swan. That's right Gold is now on sale but it is an ugly duckling according to the media and pundits. But if you clear your mind and look at the real facts you will see that a beautiful swan will emerge.

Here are the true statements ...
1. The dollar is the ugly duckling and many of us are coveting it, hoarding it and being forced to liquidate everything else because the perception is nothing can be trusted. This could be a detrimental move! The BRICS want nothing to do with it and many more countries no longer want to trade in U.S. dollars so why should U.S. Citizens be coveting a currency that many are preparing to abandon?

2. The economy is not healthy. I don't need to expand on this too much, look around you, talk to your neighbors, look at your city, state and be aware.

3. Incomes are horrid

household income

Source: Advisor Perspectives

4. True, the stock market has rebounded but when adjusted for inflation it is well below the levels of 2000 and upon careful examination looks very similar to the Dow of the 70's. In fact we appear to be at about 1973 levels, right before the real bloodbath. So be cautious.


5. I don't trust banks very much right now. If you look at the big bank ratings services you would realize how close your bank is to the edge of a cliff, the majority are teetering and having to get free money from the Fed to survive. That doesn't give me the warm and fuzzies. The truth is, all banks, all around the world, are bankrupt, and have been for years. That's because all of the world's banks run on a fractional reserve basis. Look it up; do your research.

6. QE isn't effecting the value of the dollar yet but look again at this graph from the Federal Reserve and explain to me please how this monetary expansion won't lead to a eventual collapse in the dollar's buying power. The lag between cause and effect is your friend and you can protect yourself from the consequences that lie ahead.


7. The 10 and 30 year Bond yields are the lowest they have ever been. Yet people own them for "safety". I contend that this is the real bubble, perhaps the biggest bubble we will ever witness. When rates begin to rise, the exodus will be swift and the Fed may not be able to print money fast enough to save it. They have been buying back there own debt for years. They must get confidence going in the economy or they implode along with the bond market. QE to infinity appears to be the only Fed solution. Pay no attention to the man behind the curtain.

8. Cough, cough. Savings rate? What is that? Retirees are in trouble if they depend on banks for yield, even with the reported current low inflation rate they are losing badly as are all savers.

9. We appear closer to another conflict than ever. Iran, North Korea, etc ... need I say more. The big war is the currency war and the U.S. wants to win this war at all costs and as always there are casualties to war. In this case it will be YOU and me if we trust in U.S. Dollars, Bonds, Bills, CDs and Stocks. So what do we do now that gold is no longer a great buy? Or is it?

10. Gold. Central banks are buying every opportunity they get, entire Countries are loving this price decline. If you own gold in any form other than physical metal you more than likely currently hate gold. As a physical owner I don't like what happened, or should I?

Gold has NO debts and No liabilities attached to it. This, upon careful examination, appears to be the best buy since the 2008 collapse. We had a huge 30% decline in 2008 from $1,000.00 to $700.00, the media screamed gold's bull market was over. They cried that it wasn't a safe haven after all. Sound familiar? I argue that this only put gold back on a better plane at a much more healthy angle of ascent. If you understand that options are limited, that the stock market is looking like it did in 1972, that we can't save and keep up with the cost of living, that bonds are a bubble, that soon nobody but us will want U.S. Dollars, that we are in a currency war designed as a race to devalue our currency and that banks are bankrupt just like the United States ... you will see this as I do. A MASSIVE OPPORTUNITY to buy wealth insurance at the lowest premium in years. I believe, as in 2008, we are now in a position to potentially see gold better than double from current levels, as it did after 2008.

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