It’s rare that I react to articles by newsletter writers that utilize sensationalistic “memes” to drive sales; such as, to name the worst of the lot, “$950 gold” Harry Dent. Yes, the same Harry Dent that forecast Dow 41,000 and NASDAQ 20,000 in 1999 – to be reached in, gets this, by 2008; topped only by his April 2011 prediction that the Dow would fall to 3,000 by 2014.
Dent’s track record is as bad as any I’ve come across. However, he is clearly a fantastic marketer and charismatic speaker – as unquestionably, he has mastered the same “pixie dust” that enabled Robert Prechter to maintain a long-term career as a “financial guru” based on a single, ambiguous call. In Dent’s case, his “hook” relates to playing on basic human emotions; i.e., utilizing investors fear and greed to attract their hard-earned capital. In other words, when the market is rising, he predicts price explosions; and when it’s falling, collapses.
Anyhow, I was going to “make an exception” to my long-standing rule of ignoring carnival barkers and two-bit technicians to discuss an article last week by “Jordan Roy-Byrne.” However, just mentioning Harry Dent’s investor-killing name distracted me into the aforementioned tangent – for which I apologize. As for Byrne, the reason I’m making this point is because his most recent article not only touches on all the issues I have with the blogosphere, but one that has long irritated me to no end. And that issue, of course, is comparisons between the current PM “correction” to one that occurred in 1976; i.e., 37 years ago.
For the record, I know nothing of Byrne; other than having seen his articles posted on Precious Metal websites from time to time, of which I have read none. Thus, if you asked me last week about him, I would have said a decided “no comment.” However, after he published “Gold Bear to End with a Bang” last week, my views have decidedly changed. In it, he claims the current gold “bear market” will end in the next six weeks with a 20% crash; followed, of course, by a “V-shaped” recovery. In other words, the typical “short-term bearish, long-term bullish” prattle that Precious Metals snake oil salesman – er, paid newsletter writers – have been spewing since the turn of the century. An “esteemed” group, I might add, including Harry Dent and the literal bottom of the barrel – Dennis Gartman – among others.
As today’s title suggests, I view the “pattern” of the 1970s gold bull market to be completely irrelevant. Oh, did I just say “completely irrelevant?” Sorry, I meant to say completely irrelevant. Frankly, it’s just plain sad how anyone can think otherwise, given how all financial markets are manipulated today; and oh yeah, the fact the global fiat Ponzi scheme was just starting back then, while today it is in final death throes.
To wit, gold broke from its official $35/oz. shackles when Nixon reneged on the Bretton Woods agreement in August 1971. It then surged to $185/oz. in early 1975, and fell back to $105/oz. in late 1976 (when, by the way, the U.S. national debt was just $600 billion) – before rocketing to $875/oz. in January 1980. Based on this action, influenced by market factors – both free and manipulated – of which 99% of today’s writers have not a clue about, many take out their “technical hats” to predict what’s coming next. In fact, one of the most nonsensical technical “tools”is front and center in Byrne’s article; i.e. taking an arbitrary starting point, and attempting to overlay today’s price action with what it did in the past. In Byrne’s case, he even uses the “A-B-C” patterns utilized for years by the Aden sisters to ‘guarantee’ what gold will do next. I haven’t read the Aden’s in years, but I’d bet dollars to doughnuts their “A-B-C” analysis has been dead wrong; and frankly, better fit for toddlers attempting to learn actual ABC’s (actually, by coincidence I came across their latest piece – on the Kitco website – after editing this article; and sure enough, it not only focuses on their typical ABC’s, but mentions the 1976 correction as well!).
Honestly, I barely see any significant relationship between the two lines he is trying to correlate; let alone, evidence as to why the blue line’s move in 1976 is predictive of the black line’s in 2013. Heck, in the very same article, he not only compares gold’s likely trajectory to what it did in 1976; but comically, to the S&P 500’s (Fed and PPT-aided) 2009 bottom as well. But hey, he is a “Chartered Market Technician” or CMT – so it must be so. I wonder if in CMT School, they teach what a manipulated market looks like; or perhaps the cost of mining; the difference between paper and physical gold; the impact of money printing and debt accumulation on gold demand; the modus operandi of the President’s Working Group on Financial Markets, the Federal Reserve, or the Exchange Stabilization Fund; or oh yeah, the fact technical analysis hasn’t worked for years. I guess not, as he states that amidst the final, capitulative gold crash over the next six weeks – which via his charts, has a downside ‘target’ of roughly $1,050/ounce – “gold bugs will cry manipulation.”
Of course, the most damning part of the article is its ridiculous insinuation that mining stocks will have very little downside amidst the upcoming gold crash. In his view, mines will be saved by considerable long-term “technical support”; which, as any mining share owner of the past six years knows, means nothing when Cartel algorithms are naked shorting them. Not to mention, the fact that at $1,050 gold – and with it, likely $15 silver, not some, but most miners will be on the verge of bankruptcy. Under such a scenario, the few miners that would actually survive would likely be diluted into oblivion when attempting to recapitalize at such depressed share prices. Yeah, gold stocks will do just fine if gold falls $230/oz. from today’s levels; and if you believe that, I have a bridge to sell you in Brooklyn.
Why does he make such a moronic statement about mining stocks, you ask? For the same reason oodles of newsletter writers say the same things. That is, because his business model is predicated on investors paying him for stock recommendations. To wit, you can see here that Byrne’s website woos investors to “capitalize on the major bottom in precious metals”; while at the same time, telling them gold is about to plunge 18% in the next six weeks!
Not to pile on, but I’m sick and tired of a decade of such people destroying people with the “bearish short-term, but bullish long-term” siren song; especially when, like Dent and Gartman, they have been wrong for as far as they eye can see. Sadly, the primary reason they so badly miss on their PM predictions is failure to incorporate the most important factor imaginable into their “proprietary analyses”; i.e., the manipulation that makes short-term investing in “Paper PM Investments” a largely losing scenario, as opposed to long-term ownership of physical metal. I won’t even go into Byrne’s individual “calls” here (you can view them here); but suffice to day, Harry Dent and Dennis Gartman are in good company.
Why have I gone on this tirade, you ask? Because at the Miles Franklin Blog, our goal is to protect readers from the machinations of an at best compromised, and at worst evil establishment intent on preventing such actions. Make no mistake, I’m not judging the various characters in our space; but instead, simply warning you that the reason we own Precious Metals is not to speculate, but preserve the value of our net worth over long periods of time. The end of history’s most corrosive fiat Ponzi scheme must mathematically end soon. However, trying to “bet” on the exact how and when, in my view, is financial suicide. Newsletter writers in all sectors have been anathema to such goals for decades; but sadly, from my experience, nowhere more so than Precious Metals.
As always, do your due diligence; as only through researching who the “good, smart people” truly are, will you find financial salvation when “the Big One” finally, inevitably hits. The Miles Franklin Blog will stand on its track record with the best of them; and over the years. At Miles Franklin, our aim is to protect clients’ assets; which, fortunately, syncs perfectly with our own personal goals.
