The Reason Why Gold & Silver Have Frustrated Investors Since 2011


ZeroHedge/Steve St. Angelo/07-06-17

The biggest frustration to many precious metals investors, is why have the gold and silver prices under-performed the market since 2011? Actually, for gold it was since 2012. Even though gold hit a new record high of $1,900 in September 2011, its average annual price was higher in 2012 at $1,669 compared to $1,571 the prior year.

Regardless, the precious metals analysts back in 2012 were forecasting the market was going to experience even higher gold and silver prices, especially after the Fed announced QE 3 at the end of 2012. However, the precious metals community was taken by surprise as the gold and silver prices were hammered at the end of 2012 and into the beginning of 2013.

…“it appears that the markets have made a structural shift towards higher levels of complacency in the last six years.” Here, Kocic reverts back to his old, cautious self, warning that this decoupling will end in tears. This is how he frames it:

Current levels of complacency are alarming. This is what everyone is talking about. Despite growing uncertainties and tensions, the market volatility refuses to rise. Persistence of low volatility is increasing the penalty for potential dissent and reinforces one sided positioning. As a consequence, the risk of disorderly unwind is growing.

PG View: This is an important article. It’s perhaps understandable that speculators are frustrated by the performance of gold and silver. However, investors that buy gold and silver as a hedge know that it continues to do exactly what it is supposed to do. As gold corrected and then stabilized in recent years, their other assets appreciated. When that is no longer the case — when the current state of complacency eventually unwinds — those frothy other assets will correct and gold and silver will rise. It’s okay to be frustrated with the current mispricing of risk, but for heavens sake, don’t be complacent.

From Deutsche: The Market Broke In 2012, “This Is What Everyone Is Talking About”

And, if Kocic is correct, nothing will better define the mean reversion of this abnormal market volatility regime than the explosion of volatility as a result of nearly a decade of pent up “abnormalization” and the traders’ realization that just because bad news was ignored since 2012, it never actually went away, but was simply swept under the carpet by panicking central bankers.

When the mean reversion comes, and it will come, you’re going to want some gold.

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