By Dave Ambrose

Story Stocks – GLD

The ride is over folks.  Gold is done.  As sure as the death cranes rising over a city at the height of a real estate bubble, the items highlighted below are literally signs of the impending free fall of silver and gold.  I have CNBC on in the car since I like to be entertained while I drive, and what I notice that saddens me, is the three or four commercials for gold and silver investing that I hear every hour.

The verbiage in these things is despicable.  “Gold, it’s been the right choice for 3,000 years.”  Really?  Can I pull the chart on that?  How long would a stock chart that covers 3,000 years be?  Could you imagine that on a weekly?  The reason this statement irks me so much is that is casually inserts the blatant lie that gold is a good long term investment.  Actually, that statement is completely false, for obvious reasons, and here are a couple:

  1. Gold underperfomed if you bought the hype in 81. It only took 30 years for the break-even trade to work out.
  2. Gold was confiscated during Roosevelt’s tenure (Executive order 6102)
  3. Gold is inherently volatile and can be very difficult to sit through the violent swings.

Which brings me to my next little radio quote du jour: “Buy silver, use your IRA”.  Now we’re saying there are no speculators in there and that it’s safe enough for a set an forget retirement account asset.  Wow.  How old do you have to be to effectively use your IRA to invest in silver and gold.  I hope that it’s not 55 or older, because you could be setting yourself up for a fall.

Still not convinced the speculators are busting at the seams of the metals?  I remember those crappy signs going up everywhere in 2006.  You know what they said back then?  “We buy houses.”  Hey you think it’s the exact same people?  You’re probably right.  Gold stinks and so does silver, and the barrage of radio ads and signage and mall kiosks (yes, mall kiosks) that offer to buy your gold are the sure signs of it.

My absolute favorite radio ad quote regarding buying gold coins, “There’s no [dramatic pause for emphasis] reporting requirements”.  Oh so not only does “everyone” need to have gold, but it can be a shady investment too.  Here’s a hint, if everyone is buying it, and loading it into their set and forget IRA’s, and shady people are pimping it, you don’t want it, at least not long term.

The story in a nutshell is this:

  1. Too many common sense bubble signs are literally popping up
  2. It’s being over hyped to the average investor
  3. It’s had a great run but talk of currency debasing and the destruction of currencies is not new, and will more than likely pass

My bet here is that best case for die hard gold timers is a last chance gasp as it makes a run for a double top, then it’s over.

Dave Ambrose is an individual investor who found his niche in trading through researching stocks and basing his trading decisions on a company’s story. Dave is also co-founder of the daily deals site helping traders get discounted trading tools – WallStDailyDeals.com

5 Responses to “All That Is Gold Is Rusting”

  1. jeff pierce Says:

    I’m not in the camp that Gold is done for, because when I look at the long term chart it is quite bullish. I do see the topping signs you are pointing out and they are red flags, and that is one of the reasons I think we’re yet to see a bottom.

  2. dk Says:

    Yes, there are way too many annoying gold ads, but there are also way too many annoying Scottrade ads. Please recall the real estate peak, when normal folks quit their real jobs to become a RE agent. How many people do know have diversified their portfolios with gold? Exactly, almost none. Watch for the yield curve to turn negative similar to the late 70′s, that will be the final top for gold, til then buy, buy, buy. Thank you.

  3. sirdave Says:

    Yeah I hear ya, it’s certinaly a workable trade. But I stress the word “trade”. And I think that alot of that advertising is aimed at taking advantage of people who have not yet initiated a position in gold and they may be tempted to enter a set and forget, retirement type trade at this stage in the game and I just think that they are being sold a bill of good that is really incorrect. I feel like those ads should come with a disclaimer like, hey you know gold is totally parabolic right now so really really have to keep your finger on the sell button with this trade, not investment, which is what they are calling it, but trade.

  4. Geoff Says:

    Look for a top when everyone is buying gold, and hoarding it. So these places in the malls start disappearing, watch out.

  5. Kate s Says:

    Every time they have started the gold ads especially the pensioner should buy ones it has been at the top of a cycle and imminently crashes … I couldn’t agree more !!

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