James Turk - Gold to Have a Staggering Up-Move This Summer

With gold close to new all-time highs in the Euro and the Pound and silver beginning to stabilize, today King World News interviewed James Turk out of Spain. When asked about the volatility and what he expects this summer Turk stated, “I think this summer is going to surprise a lot of people. Many are thinking this is going to be another typical summer where precious metals prices are weak, but it doesn’t always happen that way Eric. Sentiment is set up this way because it has been 29 years since we have seen a big rally in the summer. Back in 1982, the Mexican debt default lit a fire under the precious metals and the gold price nearly doubled over the next six months.”

Turk continues:

“This year it is not Mexico in the headlines, but rather Greece that is ready to default. Of course the other big news item coming up this summer is the Federal Reserve’s announced intention to end QE2. It’s amazing that so many market participants are taking the Federal Reserve at their word. 

 

All one has to do is look at how much money the US government is borrowing and what they intend to borrow in the future to meet their spending needs to clearly understand that the Federal Reserve is going to keep buying the US government’s paper. This is the point that John Williams made clear in his KWN interview.

 

I think we have to be prepared for tremendous volatility and the possibility that this summer could be a repeat of 1982 where gold took off to the upside in a major way. Gold became the go to asset in the summer of ’82 that everyone wanted to own.  

 

The extraordinary rally in the summer of 1982 began in the second week of June and by the first week of September gold has risen 50%. That’s a 50% move in less than three months!”

When asked about silver specifically Turk replied, “The gold/silver ratio has climbed back into the 40’s, and from a technical point of view is very close to achieving my mid-40’s target. That suggests to me that silver’s low is in place. My only concern here Eric is that this is options expiry week. We know from past experience that the shorts try to keep precious metals prices from rising to have as many possible calls expire out of the money. 

 

The other side of the coin is that if investors use options expiration weakness to buy, this has generally provided a good entry point. So don’t be worried if you see any additional price weakness this week.

People should be saying to themselves that they don’t care what the gold price is doing today, if this is the day of the month they are scheduled to buy, then buy it. Continue on with their dollar cost averaging plan and the same goes for silver.

 

Too many people who are new to the precious metals markets attempt to trade them. Non-professionals are attracted to trading like moths to a flame and both are very dangerous. The bottom line is to focus on accumulating physical gold and silver because at the end of this bull market what will matter is not how many dollars you have, but how many ounces of gold and silver you own.”