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Questions on Gold

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#1 QUESTION: Mr. Armstrong, do fundamentals really matter? It seems like the commentators can focus on whatever they want flipping it bullish or bearish based upon their views at that moment.

Thanks for all you do


#2 QUESTION: Hi Martin,

   Thank you for all that you do. I have truly been enlightened to the gold & silver scams that have taken place over the last several years. I was taken in by this non-sense as well. Anyway, I have a question that I have not seen addressed on your sight. If it has please forgive me for asking it again. When gold & silver final begin their ascent, would it be safe to use the GLD & SLV ETF’s instead of the physical.
Best Regards,
ANSWER: Fundamentals really mean nothing. It is the aggregate mood of the entire economy that dictates the trend. When there is a recession, it is next to impossible to convince anyone things will change. Likewise, in a boom, people simply expect it to continue. Those who pretend to be fundamentalists can spin all they want. The trend is bullish or bearish and no single event will reverse the entire trend of the economy as a whole. Everything has to move in coordination.
Physical gold is a starkly different animal today that was in 1980. As governments are desperate for money, gold refiners are obligated to report every ounce they refine, where it came from, and to whom it was sent. You cannot leave gold in a safe deposit box. Read the fine print under the terms and conditions. You are not supposed to keep cash in there. This is now considered to be money laundering and it could be confiscated. If the bank failed, good luck. They will go through the safe deposit boxes and seize whatever the government wants. I have just reported the shockingly low level of cash being seized from people in Washington DC – less than $20 at civil asset forfeiture. This is coming down to if the police need pocket change for donuts – hey hand it over.
You cannot hop on a plane with a brief case full of gold. Those who fled Russia wove gold wire into clothing and painted it black. Women wore full length skirts made of gold wire. Today, that would set off every alarm. So physical gold should be restricted to coins. I would restrict it to $20 gold pieces etc. You can at least claim it’s a coin collection if that works next time.
As far as the miners and ETFs, I do not think there will be a problem before 2016. Keep in mind, as government becomes more desperate for money, anything is possible. Gold rallied with the decline in the ECM and peaked at the bottom in 2011. This illustrates my point – it is the hedge against government and uncertainty – it is not some magical investment that defies all logic. It is part the global economy and just look at this from a rational perspective. We do not need wild stories of fiat and how the demand in Asia will change the trend – sorry gold has declined since 2011 with such rising demand.
We will be sending out an update to those who purchased the International Precious Metals Outlook updating the weekly and daily numbers as we move into the seasonal reaction high. This should be emailed next week.