May 2013 Intelligent Investor Part 1 Opening Statement

Commodities continue to correct as we expected. As readers will recall, we were on the leading edge in predicting the correction in commodities more than two years ago.

At that time, with the CRB approaching 700, we discussed three possible correction destinations that we felt would be determined by the economic progress; one at 400, 450 and 500.

In contrast, many sources were insisting that commodities would soar due to continued quantitative easing.

What is remarkable about this is that these individuals have remained sour on the global economy and thus should have realized that weakening demand would outweigh any inflationary effects of loose monetary policy. This anecdote once again points to the limited if not delusional mindset of these reckless individuals, the list of which is much too long to mention here.

During our initial analysis warning of the commodities correction in February 2011, we stated that even the lowest support at 400 would not signal a reversal in the long-term bull market in commodities. We have already tested the 500 support and we feel that the 450 is possible in over the next several months. 

In recent publications we have been discussing the fact that gold does not protect against inflation. Moreover, given the various economic events and geopolitical risks, the price of gold should have been rising over the past two years. Instead, gold has remained in a worrisome bearish trend. Not even the persistence of quantitative easing has been able to resurrect gold pricing.

In defense of shrinking support for gold, the usual suspects have continued to spread myths, delusions and lies about the economy, the stock market, and gold. Unfortunately for them, investors are beginning to wake up. 

As subscribers are aware, we have been warning about the high price of gold and its limited days as a bull market asset. We have discussed this in reference to its perceived safe haven status, which as we previously noted has now all but vanished.

Last month gold suffered from one of the largest two-day sell-offs in history. As panic spread, the gold charlatans quickly went into hiding. A few days later after the slide stabilized, they were once again out in full force trying to lure more naïve investors into this non-productive asset by conjuring up all kinds of delusional conspiracy theories to explain why the price had collapsed. According to these con men, gold and silver were now at ridiculously low prices and the selloff represented an amazing buying opportunity.