By  Bob Moriarty

Over the last 15 years I have come to realize just how much disinformation and simply bad information there is available to readers of financial matters. Much of what you watch and hear is simply wrong. People wonder why they consistently lose money and it’s simple. The best-informed investor is the most profitable investor. But that’s not in terms of quantity of investing information; it has far more to do with quality of investing material. Listen for the signal and learn to ignore the noise.

If you reduce investing to the financial atom level, it really has to do with money flow. Money always flows from weak hands into strong hands. That’s something you should have learned in kindergarten. The smart money buys at bottoms and sells at tops. The dumb money sells at bottoms and buys at tops. I’ve heard that 70-90% of investors lose money and if the number is accurate, that’s why.

So anytime you make an investment, forget location, management and balance sheet. Look to see what the smart money is doing and what the weak hands are up to. Do the opposite of what the dumb money is doing. That makes you the smart money automatically.

Nowhere is this truer than with commodities. The amount of disinformation is absurd. No matter if you worship at the house of God the Father, God the Son and God the Holy Gold, metals are an investment first and a religion last. Those who claim gold and silver are religions have no more credibility than any other TV Bible Thumpers. They want your money and they want you ignorant. Ignorant people can never grow rich.

So when you hear about gold derivative time bombs, naked short selling, bullion banks and Comex defaults, you know that you are listening to the scammers. There is no such thing and they know it.

If you take a gander at the numbers for derivatives from the BIS, you can easily see that interest rate derivatives totaled $384 trillion at the end of December 2015 while gold derivatives only totaled $286 billion. While $286 billion sounds like a big number, compared to interest rate derivatives, gold is less that 2/3 of 1%.

In other words, a “Bullion Bank” front running interest rates by 1 basis point would have to manipulate gold by $13.40 an ounce to accomplish the same thing. And that just doesn’t happen. One basis point is tiny and $13.40 moves in gold are far larger in context. In short, banks don’t give a damn about the price of gold or silver. Why should they with interest rate derivatives being 134 times bigger than gold derivatives?

Let’s take a look at the COTs and see what they tell us. As I said before, anyone talking about Bullion Banks being short gold doesn’t know what they are talking about. The CFTC reports producer merchant or processor/users. Those are the commercials not Bullion Banks.

Mining companies are commercials as are jewelry manufacturers. While mining companies naturally want the price of a commodity to go up, manufacturers want prices to go down. So the producer/merchant or commercials are actually net neutral. One side gains as prices go up, the other side gains as prices go down. The main function of the commercials is to take the other side of the trade when speculators enter the market. Remember, commodities are a zero sum game. There are no naked short sellers. For every purchaser there is an equal and opposite seller.

This is extremely important to understand. Commercials rarely drive the market; speculators drive the price. Lots of people are constantly talking about how short the commercials are when in fact it is the speculators going long that determines what markets do.

How do we know this just by looking at facts? Well, if the market is going up and commercials are getting shorter, they can’t possibly be driving the market. After all, how do you make prices go up by selling anything? You can’t.

Lets look at what actually happens as money flows from weak hands into strong hands or from dumb money to the smart money. Gold hit about $1047 in the middle of December 2015. Go back to what you learned when you started kindergarten. Who buys at lows? That’s right, as prices go down the smart money buys, the dumb money sells. As prices go down the buyers are smarter and smarter, the sellers are dumber and dumber. If you walk into your Corvette dealer and he quotes you $70,000 for your dream car and you tell him, “No, I want to wait until prices go up before I buy.” He will automatically know he is dealing with the dumb money. Smart money buys on sale, dumb money buys after prices go up. That’s just as true of Corvettes as gold.

Examine what you have done as an investor at lows. Are you buying or selling? That will tell you if you are the smart money or the dumb money. In late December of 2015 the COTs were more favorable for gold and silver than they had been since 2001. The number of contracts was down and the weak hands were selling with both fists. The strong hands or smart money was buying.

If all you know is that money flows from weak hands into strong hands or the dumb money gives the smart money everything they own, you know everything you need to know to invest. You don’t have to worry about Deutsche Bank or the IMF or what the Yen is doing. All that information is noise, not signal. When the weak hands go to record short positions, you are going to have at least a very strong rally. And people who know how to interpret the COTs told us exactly that.

“The Commitments of Traders numbers are more favorable for gold than replaced then they have been for 14 years, going all the way back to 2001. Silver is not quite as positive but still positive. We are perfectly positioned for a bull phase even if you believe gold and silver are in some kind of permanent bear market.”

We are in the opposite sort of market today. As speculators increased their long positions to a record in both gold and silver those buying have gotten weaker and weaker. Those shorting have gotten stronger and stronger. You will hear tales about how the shorts are getting hurt to the tune of billions of dollars but how could that possibly happen? The shorts are the strong hands at tops. The longs are the weak hands at tops.

Eventually some external event will take place that all the parrots will blame for a drop in the price of gold. Of course, it will have nothing to do with the drop. It’s the longs getting weaker and weaker until some total twit decides that he needs to buy gold at the very top. “If it’s gone from $1047 to say $1400, it must be safe to buy”, he thinks.

When that day comes, the scammers will start screeching about how gold and silver are manipulated and the prices are being suppressed. But all that is happening is that once more the weak hands or dumb money has delivered the profits to the strong hands and smart money.

If you want to profit in your investments, you have to educate yourself and learn to ignore the experts, the gurus and all the other fools. Do some education and learn to make your own investment decisions. I believe we are in the midst of what will eventually be the biggest boom in gold and silver in history. In 1980 it was the bulls that lost money. In April of 2011 when silver almost touched $50 an ounce, the manipulation/conspiracy clowns were telling people to buy. Some people were warning investors about the dangers of investing at tops.

“The daily bullish consensus on silver is 96% as of Wednesday the 20th of April. On January 21st of 1980, the very day of the top, the bullish consensus was 94%. How many of the silver uberbulls are suggesting that maybe the record high bullish consensus is suggesting a very dangerous time to start buying? The answer is damned few because they have an agenda and their agenda doesn’t involve them knowing what they are talking about. As long as they tell investors what they want to hear, they will be very popular.”

When you get tired of being the dumb money, go to Amazon and spend $6.49 and learn what not to do and how to actually become the smart money. It’s called Nobody Knows Anything. It’s the cheapest good financial advice you will ever read.

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Full Article: Money Always Moves from Weak Hands into Strong Hands

Bob Moriarty
President: 321gold

Over time, charts for a bull market tend to print higher highs and higher lows on the way to the primary top. Two steps forward, one step back, creating a visual stair-step effect.

This chart “picture” has been in evidence for gold, silver, and the miners since January.

So far, waiting hasn’t been a good strategy. Yes, there were a couple of times in April, and a month later in late May where you might have been able to buy and save some money. But things can get in the way of that plan. And for a number of people I’ve talked to, things apparently did.

The first obstacle is Timing: Away from your computer, on a trip, sick, or depressed? Whoops, you missed the “correction.”

Price volatility tends to cause a surge in premiums. Over the last few years, when silver dropped sharply, premiums rose because demand surged. Now the same thing’s happening when prices rise sharply! So, even if silver declines to your target, you may still have to pay more than when the spot price was higher!

Then there’s a matter of the “experts” and the “gurus.” As a veteran of these markets since the 1970’s, I can tell you unequivocally that the way the metals and miners have surged this year, and the amount of time it took them to do it, is nothing short of amazing. In fact, “amazing” could be the operative word we keep using as the rest of this year… and next year unfolds. Fortunately for new buyers and current stackers, prices have not staged a runaway move and availability is good… so far.

But to hear the “experts” tell it, and I read just about everything they have to say – the market has become too “overbought,” the charts are showing “double tops,” “historically high COTs,” etc.

They’ve had their subscribers in and out, or are still out, waiting for that “correction.”

Yes, we may soon see the kind of “pullback” the Cassandras have been predicting. How long it will last, how deep it will go, I cannot say.

But I do know that for most of the procrastinators, it won’t go low enough or last long enough for them to actually get off the dime and do something.

Stuart Thomson of Graceland Updates likes to say that “If you’re trading through a microscope, your profits will be… microscopic.” Which reminds me of what so many of the gurus have been saying this year. They’re all “long-term bullish, but short-term bearish.” If this market is headed anyways near where the tea leaves are suggesting, this kind of thinking is going to leave a lot of people who are waiting to own precious metals… long-term empty-handed!

Truth be told, the biggest impediment to taking action, is human nature. Let’s say you’re patient and declare, “When silver hits ‘x’$, I’ll ‘back up the truck.” Maybe at some point over weeks and months the price declines to your “buy point.”

All of a sudden, everything you read is negative. “Demand is down in China.” “Poor harvests in India mean less silver will be imported.” “The Federal Reserve says it’s going to raise interest rates.” “The Maestro, Alan Greenspan, is now bearish on gold.” Yada, yada. You start thinking, “Maybe I should wait until it drops even more…” But, after a while, the price starts moving back up, and you’re still waiting.

Eventually you find yourself in one of two (still waiting) camps. Either you miss the entire bull market – as the Wall Street pros did from 2000-2011, telling their clients that “gold is too risky” for 11 consecutive years, during which the price rose over 600%! Or, at much higher levels you panic and jump in with both feet – just before a big “correction.” All of this effort for the privilege of waiting some more and finally selling out at a big loss.

David Morgan straight-forwardly addresses this conundrum. If you’re still a fence-sitter about “going long and strong” with precious metals, you might want to reflect on his wisdom:

“The problem with a lot of people is that they have an amateur’s perspective – which means they think that if they didn’t get in at the low, they’ve missed the move. Actually the best traders and the wealthiest people on the planet just take out the middle…They (will) get in and make massive amounts of money from the market as silver goes up to a hundred. They know what they’re doing; they’re not trading in hindsight.” (Or staying out, because they “missed the bottom.”)

There Is Still Good News for You

So where’s the good news in all of this for you? First, physical metals have not risen nearly as much, proportionately, as have the underlying mining stocks. Indeed, the miners are simply playing catch up, rising faster than gold and silver – as they should, because owning them comes with more risk.

Second, the general public still has not placed precious metals on their “must have” list. Sure you hear radio advertisements to buy, but how many of your neighbors, friends, and family members hold any? I’m willing to bet the answer is very few – or none!

If this overview makes sense to you, then get off the dime and exchange those base metal slugs in your pocket, along with some paper promises, for real money that has the “ring” of truth when you click two pieces together. Acquire your stockpile in thirds, every 30 days.

After that, order a copy of Bob Moriarty’s little investment gem, Nobody Knows Anything – Learn to Ignore the Experts, the Gurus and other Fools. It’s the best way I know of to stay relaxed, avoid waiting for scripted corrections, and keep from being long-term empty-handed.

Disclaimer: I own a copy of Bob Moriarty’s book.

David Smith is Senior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com. For the past 15 years, he has investigated precious metals’ mines and exploration sites in Argentina, Chile, Mexico, Bolivia, China, Canada, and the U.S. He shares his resource sector observations with the media, readers, and North American investment conference attendees.

Full Article: Still Waiting for a Precious Metals “Correction”? Get Off the Dime and Buy Some Silver Ones…