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Confessions of a Gold Analyst: Will You Let The Inmates Run The Asylum?

Recently, I read an interview, which was deemed “extraordinary,” which concluded:

“never say gold hit a new low because it didn’t.”

Extraordinary indeed, because price clearly states otherwise.  (Although, I probably could come up with many more accurate adjectives to describe this interview).  However, I think the interview could be summed up by a quote from a popular television personality from my youth:

“Don’t bother me with facts, son. I’ve already made up my mind.”
Foghorn Leghorn

I know I have been on a tirade of late against all the falsity being propagated in this market, but the lower the price goes the more fodder I am given for such articles.  And, this past week truly takes the cake.  Yet, there are many people out there that actually buy into this perspective.

I have written before about why I use Elliott Wave analysis as my primary methodology.  One of the main reasons is that it provides me with a platform to engage in unbiased, objective analysis of the market.  If price turns in a manner in which I did not expect, then it tells me that my initial perspective was wrong and I need to adjust in order to be able to maintain on the correct side of the market.  Our Fibonacci Pinball even provides us with early warning so that we can adjust rather quickly.  But, the point is that we have an objective basis upon which we analyze the market and if the market tells us we are wrong, we can listen and change perspectives rather quickly.

But, this is not what the rest of the metals market seems to do.  You see, they know they are right no matter what the market does.  The market is wrong while they are right.  Price means nothing to them.  Don’t burden them with the facts, they know better.  And, such perspectives are termed “extraordinary.”  I would agree.

This actually leaves me with a question as to who is truly more delusional; those that completely ignore price, or those that recognize that their analysis has been wrong for the last 4 years, but continue to engage in the same analysis?

In this market, we seem to have some who ignore price and don’t want to be burdened by the facts and others, like some from GATA, who recently noted that “[n]o amount of quantitative easing anywhere in the world has done the price of gold any good. Neither have near-zero interest rates. Nor has enormous physical demand from India and China. Nor the staggering debt in the United States. Nor a race to the bottom in many currencies.”   They have recognized the facts, yet, they have not changed perspectives even though they note how wrong they have been for over 4 years.

You see, the intellectually honest among us would look at this situation and recognize that our underlying assumptions have probably been wrong if the market has moved so aggressively and significantly opposite those assumptions. That is because most of us have set our goals as aligning our investment accounts with price.  But, these people have set their goals as coming up with excuses as to why their accounts have not aligned with price, even when presented with facts that suggest their analysis has been wrong for years.

Yes, I know, “manipulation” has caused them to be wrong so they are really not wrong.  But, I want to quote something I wrote in a recent article on

“If you read all the “proof” presented by the manipulation theorists, and really think about what it means, you would recognize that they have either presented statements being taken out of context (which I have shown in some of my prior published articles), or they have shown that there may be  small movements in metals that may have been manipulated. 

But, there is no way that anyone can prove that gold has been manipulated down by 50% if one is reading their “proof” from an intellectually honest perspective.  You see, at best, they have evidence of what is akin to a paper cut in the market.  Yet, they are trying to claim that their proof of a paper cut is what caused the market to bleed to death. 

There is not a single market in the world that does not move in two directions over the short and intermediate term. However, overall, markets generally trend upwards over the very long term.  And, the reason financial markets trend upwards over the very long term is that society is generally progressing over the very long term.  However, can we say that society only progresses and never experiences periods of regression?  Have all the “manipulation theorists” lost their perspective on history?

Have you ever heard the saying “three steps forward, two steps back?”  Have you ever thought about what that really means in life?  You see, man is generally progressing over the very long term period.  This is why we have been able to transform from cavemen into the society we currently enjoy.  But, even so, throughout our history, have we not had some periods of regression?  In fact, we have seen some seriously difficult periods of regression. 

Over time, our financial markets experienced the exact same phenomena.  And, gold is absolutely no different “

So, while the inmates seem to be running the asylum, you have to ask yourself whether you want to align your investment accounts with price or excuses.  At the end of the day, since the very long term trend of society and financial markets is moving forward, I am quite certain that the inmates will still claim victory when price is finally aligned with their perspective. 

But, let’s not lose sight of the fact that their perspective has caused them to take 50%-75% drawdowns while they were making excuses all the way down.  And, do you think they have any snowball’s chance in hell of identifying when the next correction will ensue once the bull market re-asserts itself?  You see, price improvement – which should be the goal of every investor – means nothing to them because price means nothing to them.  Shouldn’t price mean something to you?

Again, just something to think about.


Avi Gilburt, Esq.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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