In response to the last piece, several of you asked me to clarify my views on gold and silver, especially regarding whether this is a good time to buy…or sell. Here are my thoughts.I’m going to preface the views that follow by saying that they utterly depend on QE II (quantitative easing) ending on schedule and as advertised. There are numerous ways that the Fed might short-circuit the proposed termination of QE, such as simply calling “additional money-printing” something else, asserting that it is being done for some other purpose, or other new sets of reasons. What we are looking for, very simply, is for the Fed’s balance sheet to stop expanding. Even here we have some difficulty. Although the Fed publishes the data at a high level, we cannot easily track whether or not it is playing games by revaluing the assets already on there, or even whether the Fed is being truthful. Without an audit, we’ll never really know.
But we go with what we can get, and right now we are relegated to taking the Fed’s data at face value, with the idea that we might mentally discount it a bit. This is not idle crankiness on this analyst’s part; rather, it comes from such revelations as the 21,000 separate transactions that the Fed clandestinely conducted with companies and banks all over the world during the depths of the 2008-2009 crisis. With every new admission revealing the Fed operating at the very edges of what is permissible by the Federal Reserve Act, our faith in the motives and transparency of the Fed takes a hit. Right now, trust is quite low.
The final part of my preface is that your core position in gold and silver should not be held hostage to the idea that ‘now is not a good time to buy.’ It never is. Either both gold and silver have run up (and nobody likes to buy at the top), or they are incredibly weak (and buying when there’s blood in the water is equally hard).
Every single time I’ve bought gold and/or silver, I did it with my heart in my throat. Sometimes I had to endure a period of ‘losses’ (where I didn’t sell; I just mean that the market price dipped below my purchase price). But it has always worked out for the best for me…