This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Gold Got You Down? Expect Further Declines

Stocks in this article: GLD SLV USO UNG

NEW YORK ( TheStreet) -- About a year ago I warned investors to avoid gold and silver in these two articles, here and here.

My warnings were met with enthusiastic acclamation, praise and thanks. Here is a sample of the comments received:

John: "Is this guy for real????"

Rafi Farber: "The market is a Zero Sum game. Smart money buys low and sells high. Dumb money buys high and sells low to compensate. This guy Robert Weinstein will be the dumb money on this trade. God bless him."

Robertfwaxman: "Thanks, you are the epitome of contrarian indicators."

Texas: "...Mr. Weinstein fails to discuss the macro economic reasons that led to , and will continue to push gold/silver prices higher. Analysts like Mr. Weinstein (which i submit are in a majority right now) seem to bash silver gold without due regard to the fundamentals..."

It's ok, I'm used to it. When you write a bearish article, you normally don't gain a lot of friends. But if you do your homework, you gain respect. I remain bearish on metals and believe gold, as shown by the SPDR Gold Shares (GLD), will test $100 before $200. In other words, GLD hasn't reached the bottom yet.

I'm not nearly as bearish with silver, as shown by iShares Silver Trust (SLV), though. Don't take it the wrong way, it's not a deal yet, but it may bottom out in 2013. The key takeaway with buying dips is that they generally fall further than they "should." The markets are based primarily on emotion in the short term and fundamentals over the long term.

Emotion is why we see blow-off tops and dead cat bounces. Logically and fundamentally, silver (as represented with SLV) isn't worth 85 cents an ounce less today than it was yesterday. Silver probably wasn't worth $45 an ounce either (I didn't think so or I wouldn't have written the bear thesis published).

Wait for SLV to fall below $15 before buying, and I strongly suggest selling put options as a conservative synthetic hedge for those who want exposure to the shiny metal. For example, if SLV is trading at $15, instead of buying the ETF, sell a $15 strike price put option with at least 60 days until expiration. Doing so will provide a timing buffer and lower your risk.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs