The Reason Why Gold & Silver Have Frustrated Investors Since 2011

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:

During this period, the gold price fell 30% and the silver price declined nearly 50%.  Did something fundamental change in the markets for investors to suddenly ditch precious metals?  Actually, something really big happened….. THE MARKETS BROKE.  Of course, many in the alternative media believe the financial market died in 2008, but when we look at another indicator… it clearly shows that the markets drastically changed even further in 2012.

The following charts (below) from the article, Deutsche: The Market Broke In 2012, “This Is What Everyone Is Talking About”, show that the market is totally under-pricing RISK by orders of magnitude never seen before.  Now, when I say “under-pricing risk”, all that means is that the market has no idea of the dangers ahead.  It is similar to someone driving a car that doesn’t realize the engine is burning up and the brakes don’t work because the WARNING LIGHTS aren’t functioning.  So, the poor slob continues to speed down the road, without out a care in the world… until the car blows up or he heads over a cliff.

In the Deutsche Bank article linked above, analyst Aleksandar Kocic providing actual evidence that the WARNING LIGHTS in the market are no longer working:

Regular readers are familiar with the Economic Policy Uncertainty (EPU) index which is constructed by counting the frequency of articles in ten leading US newspapers that contain three of the target terms: economy, uncertainty; and one or more of Congress, deficit, Federal Reserve, legislation, regulation or White House. These numbers are then properly normalized by their means and standard deviations of occurrence and combined into an aggregate index. As such, EPU is completely market independent (in the same way the mechanics of a coin toss is relative to any particular gamble).

Okay… the description of the indicator above may be a bit difficult to understand, so I will simplify it.  The BLUE LINE represents the “Economic Uncertainty Policy” (EPU index) shown by the frequency of articles in the MainStream media.  The BLACK LINE is the VIX index, the volatility index (S&P 500).  Basically, economic uncertainty printed in articles in the Mainstream Media should correspond with the volatility indicator of the markets (the VIX).

And… this is precisely what took place from 1996 to 2011.  The blue and black lines moved up and down in tandem.  However, after 2011, something changed.  According to Kocic:

Intuitively, when VIX is in tune with EPU, the market is acknowledging the levels of risk through the prices. However, when VIX is low and EPU high, markets are complacent – they are underpricing risk.

After 2011, the two measures of risk decouple with VIX consistently low despite growing uncertainty. The breakdown is structural, and it is visible across all market sectors, not only equities.

What Kocic is saying is that the market has become highly complacent and is seriously underpricing risk.  In the next two charts, Kocic takes the difference between EPU Index and the VIX to get the second chart at the bottom.  As we can see, something changed after 2011, and especially after 2016.

This chart is showing the level of COMPLACENCY in the market.  From 1996 to 2011, the market complacency level fluctuated around the base line.  However, after 2011, market complacency is now trended much higher.

According to the article:

This is where things get even more interesting, because by this measure, “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.

Because market volatility is so low, investors have been brainwashed to believe EVERYTHING IS OKAY.  Unfortunately, the situation is quite dire because the market’s “Warning Lights” have been turned off.

I decided to take that chart above and show at what point the gold price peaked:

There’s no coincidence that the gold price peaked at the same time the EPU – Economic Policy Uncertainty index decoupled from the VIX, shown at the end of 2011.  The market has been deluded to believe that GOLD DOESN’T MATTER anymore.  This is shown in VIX index, as it continues to trend lower to the same level in 2007… before all hell broke lose in the markets:

Again, the EPU Index just shows how much “Uncertainty” is taking place in the markets via articles on the MainStream media.  According to Kocic, the EPU Index below, has been at a record high level since 2016:

However, the VIX Index (volatility) is now at the same level it was in 2007.  Which means, the market is totally disregarding ALL THE BAD NEWS coming out of the Mainstream Financial Media.  Again, it is just like a speeding car heading down the road with an engine ready to blow and with no brakes, but the driver doesn’t know anything is wrong because the warning lights aren’t working.

So, for all the frustrated precious metals investors out there who continue to BELLY-ACHE and COMPLAIN that the “Analysts Got It Wrong” about gold and silver since 2011…  have also been BAMBOOZLED, like the rest of the market, that EVERYTHING IS FINE.  Well, it isn’t.

Lastly, the question I receive the most in my INBOX is “WHEN will the markets collapse?”  Before I answer that, I want to say the following.  The amount of contact email I receive now from my website is off the charts.  I used to be able to reply to everyone within a few days, but now it has become impossible as the amount of requests for information have now become a part-time job.  I apologize for not being able to respond to everyone over the past few weeks (month)…. but it has been a very busy time for me.

Furthermore, the SRSrocco Report site is a ONE MAN SHOW.  Those who run their own websites understand what I am talking about because there is a great deal of work and logistics just to keep the site running.  Many of the alternative media sites have more staff to deal with maintaining the site and etc, so they are free to spend most of their time on research, writing and doing interviews.  Unfortunately, I don’t have that luxury, which is keeping me from writing even more articles and publishing new Reports.

That being said, I want to thank all the individuals who have been very generous in sending donations to the site.  These donations have allowed me to maintain and upgrade the site.   Gosh, last year before my excellent webmaster, Peter, upgraded the site, it was very slow and at times generated site errors which kept some visitors from being able to access it.  Some followers let me know that it was taking upwards of 15-20 seconds to load.

Now, the site loads exceptionally fast as we have upgraded to a Virtual Private Server.  Also, my webmaster has done a lot of additional programming to make the site even more efficient and fast.  I can tell there is a big difference in the performance of the site now when I visit some of the other alternative media sites that take a long time to load.  Unfortunately, it is hard to find a good webmaster, but I was very lucky to come across Peter.

When I first started the site, I decided not to do a subscription service because I wanted to make sure the information got out to the public.  However, I have received several emails from followers who have suggested that I should start up a PATREON site, like Sean at SGT Report and James Kunstler and Kunster.com.  While the site will still be open to the public, this is a service that allows people to become a PATREON contributor to the site.

So, I will be working with my webmaster over the next week to consider implementing this option.  Again, I appreciate the generous support by many of you all as I try to put out original information that is not found elsewhere on the internet.

Okay… so, WHEN does COLLAPSE happen??  If I had that answer, I would be able to pick the winning numbers on the lottery ticket.  However, the indicators, like the ones shown in this article, point out that the situation in the markets are deteriorated much quicker than before.  The Central Banks asset purchases of $1.5 trillion in the first five months of 2017, are more than double the annual trend since 2011.

The U.S. and Global Oil Industry is being GUTTED from the inside out due to the current low oil price.  As Chris Martenson stated during my interview with him, the global oil and gas industry’s total debt is now closer to $3 trillion versus $1 trillion in 2006.  These energy companies have to pay a lot of INTEREST EXPENSE just to service their massive debt.  Once the energy industry starts to really disintegrate, then it will take down the entire market.

My gut tells me that this will likely start to occur within the next 6 months to 2 years.  It could happen sooner, or it could take a bit longer.  However, there is no way to TIME THIS EVENT.  So, don’t try to.  It would be prudent to own some physical precious metals before the market cracks, or it may be difficult to access any…. or if so, only at much higher prices.

For those who continue to be frustrated by the low precious metals price, silver is down another 20 cents as I write this article, take a GOOD LOOK at the charts in this article.  The market WARNING LIGHTS are no longer working, so when the CRASH happens, it will be a complete surprise.

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40 Comments on "The Reason Why Gold & Silver Have Frustrated Investors Since 2011"

  1. “…it will be a complete surprise” and TPTB will say they never seen it coming, which should prove to be some rather (in)famous last words.

    • Agreed…but TPTB will actually say “Don’t blame us, because NOBODY saw this coming.”

      • OutLookingIn | July 8, 2017 at 8:45 am | Reply

        Concur.
        Dashboard warning lights to a gear head, are known as “idiot lights” since instead of warning, tell you when a system has failed and the damage has already occurred. Whereas dashboard gauges provide advanced warning of trouble. Steve’s article with real “gauges” (charts) show exactly the trouble brewing.

  2. Charts mean very little when you have a manipulated market like gold, silver and even oil. Until they run out of the ability to manipulate…as long as they can supply the physical shortage of these assets with stockpiles , there will be no change in the price. I think your comparison to picking the lottery numbers as when to predict the coming end of manipulation is spot on. It could be tomorrow or not in the next 20 years. You’d be better off prediction the next mass extinction asteroid strike.
    Some people have been stacking silver since the sixties waiting for it to reach its true market value. That’s over a half a century with almost a decade or two added on. Maybe picking lottery numbers would be more prudent. Put me down for two dollars on powerball…6, 34, 42, 50, 52, pb. 14. I’m feeling lucky.

    • Crayfish-You forgot to mention the media manipulation on how oil, EROI, and debt is presented in its articles. In addition, stocks are overvalued to the limit with debt being it’s biggest harbinger. Finally, the health of all international trade and bank allocations, i.e. Spain, Italy, Greece. . . Oh yea, how about Venezuela that seems to be muted in the Main Steam Media.

  3. William Chandler | July 5, 2017 at 12:42 pm | Reply

    Trouble is ….. the EPU is rapidly dropping back to more stale levels …….

  4. There’s a lot of liquidity to keep paper markets elevated. Paper stays elevated, period. Central banks will taper their promises, but they cannot allow markets to break. They are trying to manage the exponential rising difference between the paper economy and the real economy. The real danger is when 15% of the population knows we’re in trouble and start doing ‘bad things’ like stop consuming. At that point all bets are off and all currencies will die. The swift payment system provides knowledge for the puppetmasters, they see real threats before we can see them, and they will come up with their usual solution: mandate money. Maybe based on blockchain, but of course properly managed by financial elites.

    But first we will see the collapse of the Middle East, war with North Korea, trade war with China, refugee crises in Europe and lots of political madness.

  5. Excellent article. I’m seeing vast discrepancies in every market, and everything you say confirms what I’m seeing. Joseph Tainter stated that collapse is, in essence, “rapid simplification on a wide-spread scale over a short period of time.” I believe most of us alive today will see collapse. I’m working to brace for that shock as quickly as I can.

  6. Great Article Steve,
    I guess you need a raise. Include me.
    I’ll make a donation! All the best, Keep up the hard work!
    For all the naysayers; A Prophet is never accepted from his own town!

  7. Great article though i must admit to having ADTRC ( attention disorder to reading charts ) all the pretty lines and all just seem to make my brain bounce off the sides of my skull with my eyes twitching more than my head ever did with Tourettes syndrome-:) So reading your analysis and other’s comments AND youtube interviews are most helpful to me. thank God I’ve a smart wife that actually enjoys rtes arch/analytics of such things. Keep up the good work Steve and great work on the upgraded site! Just as KerriEllen believes most of us alive today will see collapse and is working to brace for that shock as quickly as I can, so are we.

    • Is this ( site )double talk or what? Maybe you’ve not yet seen this so click and read…it’s interesting if not humorous to read how The IMF sees things.

  8. Great article but I’m having a really difficult time believing that these people, the powers that be honestly don’t know their car has no brakes.. ! They can’t literally be THAT stupid!?

    • Terri, this is something many people have problem believing. That’s the source of all the crazy conspiracy theories. But, yes, you would have to meet these so-called leaders to believe how apeshit stupid they really are. Remember, they are the perfect mirror image of the average Joe who votes the into positions. And the bankers and CEOs are their slightly (just a teeny-tiny bit) more intelligent buddies and classmates.

      • watch this why would they deliberately destroy the world economy? https://youtu.be/l78LyzcDcPM

        • We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K. – Eddie George, then Governor of the Bank of England, 1999

          • DisappearingCulture | July 7, 2017 at 6:57 am |

            “Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded.”

            Are you part of the “we”? And as far as “have now succeeded”, relative to how long they have had it under control [2011], I would bet they can’t for another 6 years.

    • Nope, they’re not that stupid. Just 40 years too late. And they know it. Greed, false promises of endless prosperity brought us here, it happened before, many many times. It just got bigger, and bigger. Now we will experience the mother of stupidity.

  9. Virginia in Eastern Oregon | July 6, 2017 at 12:27 pm | Reply

    Steve, I see your articles posted in total on several sites. I hope they are sending you compensation. I asked Creator for patience and He said to go buy some precious metals.
    Thank you Fed for killing the U$ dollar. Because of listening to traders on AOL in 2000, I bought some gold. Sold out in 2012 and bought my wilderness retreat. Even though disabled, I am having good luck with a raised bed garden this year. Better to be lucky than smart. Smart helps, tho. Good luck, Campers. Thanks, Steve.

  10. Asian countries are not frustrated with gold, as they are soaking up most of it anyways, last we heard they do not trust the stability of the dollar.

  11. PM destroyed again after stellar jobs numbers. The only 50% and 75% assets which is going to decline are respectively gold and silver. Stocks, bonds and real estate will do extremely well. I am more circunspect from now regarding crypto are they are a buy from this website.

  12. DisappearingCulture | July 7, 2017 at 11:32 am | Reply

    “Okay… so, WHEN does COLLAPSE happen??

    People who ask this…perhaps they should be asking what form or way will it will collapse or fail. For example I don’t think the dollar will collapse early on. More like bad recession at first.

    • Dedollarization meme has namely been promoted by this clown of jim willie : it just won’t happen before many years.
      Recession will come probably by 2020 but who knows when as credit growht is still quite high.

      • Recession will come…. BS! Recession came 5 years ago and will stay as long the Bull shitting continues

  13. It’s obvious that silver is very rare.That’s the reason why it is falling 6 years in a row.
    Same to the miners.What a complete nonsense.Until now i know no miner companys, which has closed, because of the bad silver price.

    • Escobal Mine, Does it ring on your empty skull? Cost for most mines is over 25, if your overlords fix at anything below 20 you will have a cascade of bankruptcies. Bravo, you want even more restrained supply! Now it will not go to 200, it will go to 300.

  14. silverfreaky | July 7, 2017 at 2:51 pm | Reply

    https://www.wallstreet-online.de/aktien/tahoe-resources-aktie#t:3y||s:lines||a:abs||v:week||ads:null

    This is the chart of tahoe resources.One of the biggest silver mine companys in the world.They worked years without permission.Now the permission was cancelled.

    What did i say.The stupidness of the CEO’s and the overproduction of silver is unbelievable.
    I only can hope that some miner companys close.Unfortunately i own Tahoe.At one day 30% down.Befor that the Super CEO from Lakeshore gold make buyout for cheap money to
    Tahoe.

    If stupidness hurts, than this miner manager must cry night and day!

    • Wow! Count me in on that too. I own Tahoe as well. I´ve been sick as hell for three days now and that´s in for a nice recover when I´m still all sweaty and shivering. Seems like they always pick the very rare dates when you just can´t keep up to bury you alive, unbelievable! Hope you didn´t get too hurt by the slash bro, keep stacking and s**** them. There´s no freaking way to trust anything anymore, dd is an impossible task these days.

    • Yep..Owned Tahoe myself. Sold it for a 37% loss. What upsets me isn’t that I lost the money, but that I paid for this recommendation. I considered it a low volatility miner 😉 . Makes me question all the “higher” risk miners I own. Bottom line if you can’t afford the losses and the risk, then you shouldn’t be in the market.

      • petedivine,

        Would you mind letting me know where you received the “Paid Recommendation” to invest in Tahoe Resources. If you don’t want to reply here in the comment section, please contact me via my contact page.

        I am writing an article on Tahoe Resources that offers more information about the future of their Escobal Mine. I listened to Dave Kranzler’s interview this past week on TFMetalsREport where he said he believes this will be a short-term suspension, and has purchased some Call Options and plans on possibly buying some stock.

        I would be very cautious about owning this stock going forward.

        steve

    • Get the f*ck out of paper.

  15. 222K jobs created in June. Wages growth at 2.5% Unemployment at 4.4$.
    Not bad for an economy that is supposed to be on the verge of collapse & debt implosion.

    Your recommendations always pushing Gold & Silver aren’t looking very good as Gold is headed down below $1,200 again and Silver has been smashed.

    The world is awash with oil so the collapse of oil companies due to EROI hasn’t happened yet. I know you will say it will but we will have to see as your other predictions haven’t turned out too good.

    • DisappearingCulture | July 8, 2017 at 8:48 am | Reply

      Stuart,
      “222K jobs created in June. Wages growth at 2.5% Unemployment at 4.4$.”

      You can’t be so naive or gullible as to actually believe that bullshit…are you? Tune into some reality: http://investmentresearchdynamics.com/non-farm-payroll-propaganda-aka-fake-news/

      And EROI is “happening”. A lot of things are “happening” before most people become aware of it. In health matters, tooth decay, heart disease, high blood pressure, diabetes, cancers, etc. usually are “happening” long before the symptoms manifest.

      • Disappearing culture,

        I have learnt that every time government data is released that doesn’t agree with the biased view of Gold bugs then they claim the data is fake, bogus or manipulated. However when the data does agree with a Gold bugs pinion then the data is obviously correct.

        This is the case where even the same organisation using the same methodology produces the data at different times. For example when the jobs data is bad Gold bugs herald it as proof they are right. However when the jobs data is good Gold bugs claim conspiracy, manipulation, fake, etc.

        So you have once again proved what I said above is correct.

        • Also Steve quoted to me Peter Schiff as someone who foresaw the housing bubble crash in 2008 and he was laughed at but was proved right. Well Peter Schiff has always been predicting imminent financial disasters well before 2008. They all turned out to be wrong except the housing bubble. He then continued making disaster claims after 2008 including –
          hyper-inflation
          bond market collapse
          Collapse of the USD
          US debt default
          Depression worse than 1930’s
          etc.

          None of these predictions since 2008 have happened> However if he keeps making these claims eventually he will be right about something (just like a broken clock is right twice a day).

          So I say be careful of doomsayers who make predictions of coming disaster as history has shown 99% of the time they are wrong.

  16. The FED should be closed.If miner managments are stupid i have no word for this criminal union.

    The pumping of the stock markets with credit financed money is really dangerous.At the same time to increase the interest rate leads to the possibility that those investors must sell the stocks.Than the downwards spiral starts.We had seen a very long bull market.
    This is not the problem.In earlier times the stocks where expensive too, but the economy was increasing.Now the bond curve gets more and more flat.
    An unmistakable sign that the USA goes in direction recession.How will the FED shrink the balance?

    In the meantime italy is discussing the exit of the euro.In history now common currency worked in such different economys.Only the EZB dreamers think like that.

    It happend exactly what i saw years ago.Italy and the rest of the southern countries wants a debt cut.Italy wants to introduce a parallel currency.In Lira 2 they cannot pay back the debts.The Lira would soon devalue.In the EZB parlament they already have the better voting right than the northern countries since the exit form Great Britain.

    So the direction is clear!Vanish the debts ore make them common or we leave the Euro, what soon leads to an state bancrupty.The point where the debtor can blackmail the creditor is arrived.

    In the moment i ask me what leads earlier to an end:
    The american way of life(credit financed consuming) or the big economical difference in europe.

  17. But dont you think its really about belief? At this time and for some time because a significant number believe that for want of a better term ‘nothing can go wrong’ then nothing will go wrong.

    Hitler said when the allies started bombing germany that they have stopped believing – meaning the german people of course.

    In the television series Mr Robot that ceo of the bank gives a speech that basically claims that the market is held together by belief, as it was after the 1929 crash – you should listen to it.

    We will believe whatever they say – or at least enough will.

  18. What no ever talks about is AI. I don’t have any proof other than a collapse hasn’t happened yet, but I believe there is a powerful AI that is running the markets. It is juggling balls that normal humans can’t.

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