Gold vs Dollar. Edelson vs Dent
by freejon | June 9, 2014 8:57 am
Right now I am receiving promotions from two sources.
One is Larry Edelson[1] (via Weiss) who claims a good track record in forecasting gold[2] and precious metal movements. He says that the bottom for Gold is fast approaching and that the coming conditions will send it to $5000 in three years, citing ”War cycles” that will run until 2020 as the core reason.
The other is Harry Dent[3], king of the demographics, who shows all the ”bubble” graphs, a description which also applies to the shape of gold prices. He makes a strong economic argument that we are about to experience major deflation[4]. While others expect the money-printing to eventually trigger inflation and a dollar collapse, Dent says that we would be in deflation if it were not for QE and that the end of QE will see the start of massive deflation. He also says that the dollar will not collapse because all other major countries have also done QE, so there is a ”race to devalue” in place which the dollar will survive, relative to other countries. He sees a gold price that will be half or less, in the same timeframe that Edelson says will be triple.
They can’t both be right- can they?
- Larry Edelson: https://www.stockgumshoe.com/tag/larry-edelson/
- gold: https://www.stockgumshoe.com/tag/gold/
- Harry Dent: https://www.stockgumshoe.com/tag/harry-dent/
- deflation: https://www.stockgumshoe.com/tag/deflation/
Source URL: https://www.stockgumshoe.com/2014/06/microblog-gold-vs-dollar-edelson-vs-dent/
John Mauldin has coined the phrase muddle through recovery. What is going to happen is that they are both wrong. Gold is a commodity that costs about $800 per ounce to get out of the ground. At $1200-$1300 per ounce numerous new mines are opening. So as the new mines start operations the price is going to drop until some of the mines close. I see gold as being stuck trading between $2000 to $1000 per ounce for the foreseeable future. When it approaches the low end buy the junior miners. When it approaches the high end sell the junior miners.
Actually most gold miners are struggling to make a profit with gold at $1300, when you count all the costs. That’s why their stock prices are in the toilet. However, with gold stocks above ground vastly exceeding the quantity mined each year (a situation very different from base metals) new gold mined could stay at low levels for a long time without driving the price up — most demand is met by moving gold from one bin in a vault to another. Nobody has a crystal ball for gold prices, although $5000 in three years sounds like a good prediction to bet against.
I partially agree and disagree with above two comments.
Mining costs for most gold mines are near or at current gold prices. Silver costs are more variable among different minies but most silver mines are multi ore mines, and lower resource prices of other minerals currently drag down profits – a situation unlikely to change near term without explosive world growth – don’t see it. The mining industry has been forced by shareholders to an all-in-costs accounting approach including development and overhead, and some mines are below profit breakpoint.
There are three impediments to sharply higher gold prices in the next two years – all political: 1) Major governments are all printing money be it in differnt ways, including China, and will not from their perspective let gold get the upper hand, 2) China is just starting a gold exchange but the effect will be slow – besides China (and Russa) want more time to accumulate gold at lower prices, and are working at slower, long term defusing the dollar through non dollar trade relations (note the unusual – private, not government – depressant accounting accusations & actions against Silvercorp these last five years; it has its major mines in China, supposedly a good relation with that government, silver costs at MINUS $5.00/oz because of other mined metal credits – AND YET its price has been driven down from a peak of $15 in 2011 to $1.60 today – yet it still shows a small dividend. How does that all fit?), and 3) governments have shown, when desprate (as in the US which has no gold in Fort Knox and little at the Fed from decades of gold price depressing – ask workers or a waitress in the town near Fort Knox), the ability in many ways to defuse gold’s value even short of confiscation — fostering constant wars that boost the war economy, expanding mining regulations & moratoriums, royalties [which apply pretax], and windfall profits taxes, declaring nationalization of mines, and creating defacto confiscation of much gold without doing so – asserting property OWNERSHIP of official government minted coins, declaring them worth only face value and criminalizing thrade otherwise]. The G-20 and banking elite are increasingly coorinating as to governments power, and are not going to let individuals regain power over out of control government easily. We have to take the Chinese long view of patience and non self-destructive, non violent persistent protest in ways that are effective – including investing in real (hard) assets generally. As Louie B. Mayer of MGM fame used to say, “include me out”.
It was Samuel Goldwyn, head of Goldwyn Studios, formerly of MGM, who said, “Include me out,”
First of all Shoe, I am really p#ss#d. I wrote a relatively length comment, and it was all deleted when I clicked on the CLICK HERE IF YOU WANT TO SUBSCRIBE TO THIS THREAD.
So, this is the abbreviate version. Larry Edelson couldn’t predict himself out of a paper bag. I just got his latest promo, and on p1 it says the next dark chapter will NOT be triggered by hyperinflation or a bond market collapse, yet on p6, he states, “Plus the Feds wild money printing has created a veritable powder keg of inflationary pressures. The slightest spark could set it off like a gunpowder factory in a five alarm fire. Years from now, you can count on Larry picking the correct statement from these two divergent “predictions” and blowing his horn about being right. Larry and Weiss got themselves in deep do-do with the Feds a couple of years ago, and you can probably find it online. Larry, however, is good at picking gold stocks, but if he has the direction wrong, you are a big loser.
I bought gold and silver at $250 and $3.00 at the millennium (a no brainer), but now is a different circumstance. Gold is going down. Put a 310 day moving average on it and the average is going down. Unless the price of gold crosses above the 310 day moving average in definitive fashion, and secondly pivots off the top of a flat 310 day moving average, DON’T BUY AND DON’T BE A PIG. If Larry is correct and gold goes to $5,000 (I have another Larry promo that said AU will be $2000 by end of year), why not buy off a RISING 310 moving average? If gold goes to $5,000, you will make $3,500 an ounce and maybe lose out on a few hundred. TRADE WITH THE TREND AND NOT LARRY.
Good point at the end. Why this strange number (310 days moving average) and what charting site do you use for gold? Thanks.
just buy great dividend paying stocks and see you in 25 years when you are rich.
Sorry about the 5 year delay in responding to a 310 day moving average. I use this in my day trading of the Dow mini. Because loose lips sink ships, I am not going to explain other than create a chart with daily gold and see where the moving average is in relation to gold. Being five years later, I am still right in saying gold is still in a down trend (no confirmed uptrend).
I would also think that the Globalists would prefer a deflationary environment which helps them keep control. There are still a lot of foreclosures out there, and the 30 year bond just took a small dip. Crop prices are still in a long term downtrend. If there is high inflation, think about what double digit rates would do to Social Security and paying our national debt. The national debt is only a small portion of our liabilities, so think about paying 10% on $21 T, which would gobble up 50% of current revenues. With wild inflation, now add large job losses, and you are now talking about 75% or more of the revenues. We were in a deflationary period for almost 20 years after the Great Depression. If the government seizes gold again, they would have to pay market rates, I would think, otherwise, it is theft. Seizing gold may be helpful in beating inflation.
As far as the Dent Edelson pick, this economy can go either way from what I see so far in my charts. Gold just moved above the 310 moving average for the first time in a year, but the 310 and 750 (don’t ask why) have been flat for a whole year. When flat, it is not uncommon to need a double top or bottom to change direction. If one were to jump into gold stocks now (particularly juniors) and we had deflation, one would get creamed. I would rather look for a trend to develop before committing in any case. You don’t lose much of the gain in doing so. If Dent is right, you hold cash, perhaps Swiss Francs if the dollar goes down. If we have inflation, I had good luck with Edelson in 2000-2001. I had gold coins, 300 pounds of silver bullion and junk coins, and two of Larry’s picks. One went from $1.66 to $42 and was bought out.
It also wouldn’t hurt to hold a small investment in gold bullion, as its price is often even driven, and events cannot necessarily be predicted.
I would like to add a couple of thoughts and observations. Larry Edelson passed away. Also, if you don’t think deflation can happen, look at Japan. It went thru 30 years of deflation, and no one there is interested in the stock market. Fortunately, our economy is much better diversified, has mega energy reserves and the dollar is still the world currency despite what some say.
In terms of gold stock, I just looked at the major gold producers such as Barrick, Newmont and others, and they have not even shown a sign of recovery. Matter of fact, they look sick. Until these major gold stocks show an uptrend, I would not even consider buying junior stocks. As far as I can see, the majors are still in a downtrend. Here is a great article by FOOL.com;
https://www.fool.com/investing/2018/05/09/top-gold-mining-stocks-to-buy-in-2018.aspx
Final message; don’t be stupid and buy on hope. Once gold and gold stocks were in an uptrend at the turn of the century, the run lasted for years.
I read the Sevens report daily and to summarize they say the trend for gold is bullish. Dow is bearish- based on Dow theory.
“Gold
• Technical View: Gold has been stuck in a compressing range since late 2016, but reg- istered a higher low in early October leaving the outlook skewed in favor of the bulls.
• Proprietary Model: Bullish (Since the week of December 3, 2018)
• Key Resistance Levels: $1326, $1337, $1359
• Key Support Levels: $1302, $1280, $1256”
I’m not sure what to think. I’ve been rotating out of some equities into gold related ones last week or so. That’s why I asked for an update on Altius. Also buying utilities and a few reits. I’m just trying to follow the experts advice while still playing “regular” equities esp. for these earnings plays via calls, puts. Thoughts welcome…encouraged