HomeExpert ColumnsAdam CrumWhy Gold & Silver Got Hammered

Why Gold & Silver Got Hammered

By Adam Crum – Monaco Rare Coins

It seems that there a perfect storm brewing for the metals and it has caused what most are calling a near term “corrective phase”. Both metals had been red-hot and setting new all-time highs.

By my view, one positive for the longer term picture surfaced in the trenches a couple of weeks ago when many big fund manager’s sentiment turned short-term negative. While there remains a ton of long-term bullishness, the near term will most likely remain on shaky ground according to a survey taken today of bullion dealers, investment banks, futures traders and technical analysts.

However, for the better part of two years, some of the world’s biggest hedge funds have been piling into gold betting on it as a safer hedge against the Fed’s policies to massively increase the money supply. Couple this massive printing of new money with Bernanke’s desire to keep interest rates at near zero and you have the making of what long-term market watchers consider a driver for a rapidly decreasing value in the U.S. Dollar.

Yes, the dollar has rallied against other majors in the past few weeks, but the long-term fundamentals suggest further deteriorating.

In addition to short-term negative sentiment in gold and an increase in the value of the dollar, we have seen the equities markets across the globe taking a beating. For many big funds this meant covering leveraged positions. The tendency for individual hedge funds, or anybody else for that matter, is to sell winners before selling losers.

The Perfect Storm

  • 1. Short term sentiment turns negative towards gold.
  • 2. A sudden increase in U.S. Dollar due to Euro Zone fears.
  • 3. Global markets take a beating in massive sell off of all assets.

What’s been one of the few winners this year? Gold!

For the year, gold saw a 42% spike higher than it’s low…that’s right, it moved over 40% in just seven months from its price in February, and even though it has taken a beating this week. Gold is still less than 15% off its better than 40% increase of the past few months.

Generally a diversified portfolio allows you sell what you WANT to sell, but when you can’t, you sell what you CAN and this years only bright spot has been gold, silver and many other commodities. I believe a lot of this current liquidation is profit taking from traders that will re-enter the market.


Why you ask…according to the survey mentioned above, the participants see gold in a bull market correction, in fact, most see it moving higher in the coming week. The ones who see going higher after the dust settles from the current down turn are saying that “gold is currently caught up in the mass move to sell all assets and that the cheaper price will be a lure to bargain hunters.”

Adrian Day had this to say, “the sell off is overdone. I expect back and forth for the next few weeks, but a bounce is in order now. The market had gone too far too fast, and was disappointed by Uncle Ben’s new “twist” program…”

While there remains a risk of continued de-leveraging in all financial markets most analysts see the high $1500s and low $1600s as a wonderful opportunity to jump in or add to current positions.

To take advantage of this downturn I have made available a small number of the very popular pre-1933 MS63 St. Gaudens $20 gold coin. It the best way to invest in gold as they move with the value of gold and don’t have a big premium over the spot price of gold. The supplies can at times be very tight creating a “spiking trend”. The long-term charts strongly suggest that when you can buy them for less than 20% over the current spot price, then you should buy aggressively.

We currently have that scenario…so again, I am making a small number available for only $1899 and if we are trading at this corrections current low then these MS63 St. Gaudens are a “buy now”. Contact your account representative now at 1-888-900-9948 before this small cache is sold out.


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