The following is an email I received as a member of the Elevation Group and was penned by Mike Dilliard. Take note, nothing has changed. Good info. Enjoy.
So why are metals dropping?
Well he dominant trend in the market right now is deflation. Credit markets are locking up once again, things are slowing down, and when that happens, everything gets sold as institutions move into cash or bonds.
This is exactly what happened in 2008.
As the selling kicks in, large sell-stops are triggered which initiates even more selling, triggering more sell-stops, and the whole thing just falls like dominos until the price gets so low that buy orders are triggered and the selling slows.
Welcome to the world of algorithmic trading. It’s always a wild ride…
In addition, the Dollar is the prettiest horse in the glue factory at the moment.
The Swiss screwed the Franc, and the Euro is falling apart, so the only real currency option left is the Dollar.
Even though it too is doomed, it will be the last fiat currency standing. Once it starts to falter, gold and silver go parabolic and the greatest wealth transfer in history will take place.
As I’ve been saying since Day 1, deflation is what should/needs to happen, but the banks are going to do everything they can to try and prevent it.
Their primary solution has always been to simply print more money, which is what the Fed has been doing since 2008 with QE1, QE2, and now “Operation Twist” this week.
The worse things get, the more they will print. They don’t have a choice. And this will eventually lead to a hyperinflationary depression at some point over the next 2-5 years.
The destruction of an Empire’s financial system (which is what we’re watching), isn’t going to be a smooth ride. We’re going to see fluctuations like this one often, but the overall, long-term trend for precious metals is up, and down for the Dollar…
None-the-less, when I started investing in the metals market almost four years ago, I was always emotionally involved in the price on a daily basis.
But after going through so many ups-and-downs, I finally realized that the short term is irrelevant. All I care about is the long-term trend, which is infinitely higher for precious metals.
Back when I was buying in 2008, I saw the price of silver drop by 60%. If that happened today, we’d see prices drop from the $49 high, down to $19.60.
Will that happen? I doubt it, but damn I hope so… Nothing would make me more excited than the opportunity to buy silver for less that $25/ounce again!!!
So if you’re panicking and wondering if you should sell when big price drops take place, it means two things…
1: You don’t understand the fundamental reasons you made the investment to begin with.
2: You’re making investment decisions based on emotion, which is the single best way to end up broke.
When I see declines like this one, I get EXCITED because they give me an opportunity to buy more of my favorite investment at a discount…
And that’s exactly what I did about 10 minutes ago, making significant purchases of both gold and silver.
Have any of the fundamental reasons a person would buy gold and silver changed recently?
Is the US debt level is mathematically impossible to pay off? YES.
The US has chosen to print more and more currency out of thin air in order to pay its current debts? YES.
Has very single fiat currency in history like the US Dollar has been destroyed? YES.
Has every fiat currency had an average lifespan of 30-40 years? YES.
Has the US has created more fake currency out of thin air in the past 36 months, than it has in the last 85 years? YES.
Have nations like China and Russia have started moving away from the Dollar in trade, which signals the end of its role as the global reserve currency? YES.
Has silver has been manipulated by the Fed and its partner banks such as JP Morgan for decades? YES.
Is the EURO about to implode? YES.
Have the major US and EURO banks just been downgraded by the rating agencies this month? YES.
The bottom line is that things are not getting better, they are getting MUCH WORSE, just as we’ve always said they would.
All of the reasons to buy gold and silver are stronger today than they’ve ever been, and RIGHT NOW the market’s giving me a chance to buy more, for less money.
So a big “thank you” to all of the sellers this week… I’ll gladly take those shiny coins off your hands :)
The bottom line is that you need to know why you’re in precious metals, and if you’re in them, then stay in them for the long, profitable run ahead of us and forget about the day-to-day moves.
Gold has declined less than 15% from its top at $1900.30, which means it is long overdue for a correction, however I know that most recent buyers of gold --and by "recent" I mean since 2008-- most of these might panic and sell. This is always to be expected in a bull market and is completely normal.
Don't make that mistake.
New buyers probably don’t even realize that silver is STILL up around 60% since the beginning for 2011, and around this time last year, it was only $17 an ounce!
So if you’re like me, you’ll start to get excited when the price drops, and use those moments as opportunities to pick up your investments at a discount…
I’ve just placed an order for both metals this morning, and I’m holding 50% of my available funds until next week incase they drop even more…
Then, I'm just going to sit tight and be right as I have been since 2008.