Friday , 28 October 2016

Why the Pessimists May Be Right. What That Means For Gold & Silver

Predictions that a crash will occur in the fall of 2015 have been gaininggold-silver traction bolstered by market events of this summer which suggest that something big is indeed unfolding….The question before investors now is whether the pessimists will be right. Will the doom-and-gloom scenarios play out? Their arguments are worth considering, keeping in mind that nobody knows the future and that market forecasts are, at best, educated guesses. Read on!

The above comments, and those below, have been edited by Lorimer Wilson, editor of (Your Key to Making Money!) and the FREE Market Intelligence Report newsletter (see sample here – register here) for the sake of clarity ([ ]) and brevity (…) to provide a fast and easy read. The contents of this post have been excerpted from an article* by originally entitled The Next Financial Crisis May Already Be Unfolding ‏ and which can be read in its unabridged format  HERE. (This paragraph must be included in any article re-posting to avoid copyright infringement.)

Cycle Analysis

Cycles analysts such as Bo Polny predicted a summer high in the stock market. He was right with that call (though his bullish call on silver for July notably failed to pan out). He now expects stocks will “put in a devastating crash cycle low in 2016,” in keeping with his views that we live in prophetic times. He sees the worst of the stock market meltdown occurring next year – not in September or October of this year as some are predicting.

One of the reasons why there is so much attention focused on this fall is that mid September marks the end of the 7-year Shemitah cycle, based off the Jewish calendar. Some see Biblical implications in what’s about to unfold. It’s not our place to weigh in on the religious aspects of market-cycle theories but, regardless of what drives the 7-year cycle, it does seem to exert a significant influence on markets.

  • The financial crisis of 2008 hit 7 years ago.
  • Go back another 7 years and the September 11, 2001 terrorist attack happened, followed by a recession and bear market in stocks.
  • In 1994, we had a brief bond market panic.
  • Seven years before that, in 1987, the stock market crashed.
  • A little over 7 years before that (in January 1980), gold and silver prices peaked.

Many are expecting some kind of disruptive event to take place as the 7-year cycle concludes this year. Precious metals analyst Egon von Greyerz said that “this coming September/October, all hell will break loose in the world economy and markets.”

Add to that the Fed’s moment of truth. Earlier this year, the Federal Reserve had signaled the commencement of rate increases this fall after nearly 7 years of zero-bound rates but growing turmoil in the financial markets, combined with transitory dollar strength, could prompt a rattled Fed to throw such plans out the window. The Fed’s credibility at that point may be hanging by a thread.

Remember, nobody knows the future

Investors shouldn’t completely rearrange their finances around a narrow window when a major event is predicted to take place. Instead, prudent investors try to anticipate how current known fundamentals will play out over the long-term.

In the precious metals markets, for example,

  • we know that the mining industry has been gutted…Gold and silver mines are now being shut down left and right and, at those mines that remain open, production is being scaled back. We can therefore reasonably expect supplies to be tight in the years ahead.We fully expect that the next cyclical uptrend in precious metals will last for years. That’s the time frame investors should be positioning themselves for.
  • There is a chance of a sudden dollar devaluation that causes gold and silver prices to spike dramatically overnight but such an event won’t necessarily occur in the time frame that a market guru identifies in advance. As an investor, you need to be prepared for an unexpected one-off event to strike at any time.
  • Stocks or other financial assets…could be vulnerable so hedge your risk. Gold is one of the very best counter-weights to financial assets you can own, because it exhibits low correlation (and often negative correlation) to stocks and bonds. When they tank, gold can surge. If investors begin to flee the dollar itselfthen silver will likely emerge as the best asset to hold.
  • Silver tends to perform better than gold in inflationary environments and few assets are as depressed in price today as silver.
  • This summer, institutional sellers took on a record short position in silver futures as inventories on both the Comex and Shanghai silver exchanges got drawn down. That sets up the potential for physical shortages and a massive short-covering rally.
  • We’ve seen shortages for many types of silver bullion products since late June as depressed prices attracted large-scale bargain hunting. That could be a harbinger for things to come in the broader physical market.

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Related Articles from the munKNEE Vault:

1. The Next “Shemitah” Occurs on Sept. 13th – Be Ready This Time

On the very last day of the last two Shemitah years, the stock market crashed so badly that it set a brand new all-time record and now we are in another Shemitah year. It began last fall, and it will end next September. Could it be possible that we will see another historic market crash?

2. September To Bring Stock Market Crash & Beginning Of Economic Depression

We are now on HIGH ALERT!!!!! Grand Supercycle degree wave (IV)’s decline could start soon. We need to pay close attention and be prepared for a September 2015 event that triggers a stock market crash and economic depression.

3. The Stock Market Crash Season Is Here & Here’s What the Future Holds

Where do we go from here? I can promise you, it’s only going to get worse! Like our economy, there is clear seasonality when it comes to stocks. Trends flesh out overtime. It’s not random. From that data, I want to give you a picture of what the next few months might look like.