Most analysts and traders say you should never try to pick a bottom in any market. Most of the time I agree. It can be like trying to catch a falling knife. You’re likely to get hurt, and possibly quite badly.

But in gold, it’s second nature for me. I cut my teeth in the gold market way back in 1978.

I called the top in gold in 1980 and the ensuing 20-year bear market.

I nailed the bottom in 1999, putting out my first buy recommendation in 20 years and within $5 of the bottom.

I nailed the financial-crisis bottom in October 2008 when gold plunged over 33 percent, and I told everyone: “Don’t worry, increase your holdings. Gold’s next move will be to over $1,400.”

I then called the top in gold in September 2011, just days after the top.

And as you know, I have been bearish on the yellow metal since then, looking for a final low to occur either in 2013 or 2014.

Gold had a couple of chances at a final low in 2013, namely in June and October, but it didn’t precisely touch major support at those times. So I then told you to expect a January 2014 low.

Here we are today, mere days before the new year and gold has plunged yet again … it’s below $1,200 as I pen this column … and it’s making a beeline for a major low next month.

Moreover, everything I told you that gold indicated to me — based on all of my systems and 35 years of trading the metal — has come to pass.

Deflation rules in Europe, the result of draconian austerity measures, and the latest, European Union-wide Cyprus-style confiscation policy of innocent bank deposits should another bank go under.

Interest rates all over the world are heading higher.

And here in the U.S., the latest Fed move, tapering its bond purchases, is part and parcel of the forces driving all metals lower, into what should prove to be major lows early next year.

I’ll get to the actual support levels you should watch for bottoms in gold and silver in a moment. First, I want to answer a couple of questions that I am sure are on readers’ minds:

Q: If gold and silver are so close to making final lows in their three-year bear markets, doesn’t that imply that disinflation in the U.S. and deflation in Europe are coming to an end?

A: Yes, it does. But it doesn’t mean we are on the cusp of a major new inflation wave either.

What we are far more likely to see is severe stagflation in the U.S. and even worse stagflation in Europe. For two simple reasons:

First, economic growth is and will simply not be strong enough to cause rapid or rampant inflation, either here or in Europe.

Second, further draconian measures to grab more wealth from their citizens, in the form of further increases in taxation … austerity measures in social and entitlement programs … various confiscatory policies (the potential for a Cyprus-style bail-in policy for the U.S. banking system) … capital controls … and more …

Are now all under consideration behind closed doors in Washington. Meanwhile, Europe’s leaders are well on their way to causing further problems there as they attempt to put in place a supranational bank that will effectively insist that all EU member nations give up their sovereignty.

All of this is going to counter the forces of inflation, causing stagflation in both economic regions.

So while we should see an end to deflationary forces, don’t expect inflation to come roaring back either.

Next …

Q: Larry, you no longer expect hyperinflation. So, then, what would send gold to over $5,000 an ounce over the next few years?

A: As I have said all along in my career, gold doesn’t always need inflation to roar higher.

To the contrary, gold’s best role — historically its best performance — is as a direct hedge against government folly and collapse.

And we have that in spades today:

 Patently bankrupt Western governments of Europe and the United States. Call it the death of Western-style socialist and Keynesian policies.

 The resulting attacks on private-sector wealth through rising taxation, capital controls, confiscatory measures and more.

 Increasingly authoritarian and fascist leadership on both sides of the Atlantic.

 Polices that impinge upon the private sector, causing loss of privacy, freedom and basic liberties.

 The rising amplitude of the war cycles, where government self-interest, in the name of survival, is now leading to civil strife all over the globe, even civil wars and, quite possibly, international wars in the years ahead.

These are the forces that will drive gold and other precious metals much, much higher in the months and years ahead. Not inflation. Not money-printing. Not even currency devaluation.

But revolution and rebellion. The breakdown and eventual collapse of confidence in government.

Keep all that in mind and you will profit handsomely from the coming new bull markets in the precious metals and other commodities.

Here are the levels you need to watch for major lows in gold and silver in the weeks ahead.

Right now, since gold and silver have tanked so hard, I would not be surprised to see a bit of a bounce. But a bounce is all it would be. As we head into January, look for major support in gold at:

$1,029.70

$  987.00

One of those two levels should be hit and represent a major low.

In silver, watch $16.43 and $15.18 for major support and a final low.

Best wishes,

Larry

Gold: If India Can Successfully Convince Its People To Sell Gold, Then Who Knows How Low Prices Can Go?

Gold has had a nice run up for over a decade now, but it has taken a beating this year.

The yellow metal is currently trading at three-year lows.

We reached out to commodities expert Jim Rogers for his take on what will happen next in the gold markets.

Business Insider: How much lower do you expect gold prices to go?

Jim Rogers: I am useless as a market timer/trader. Having said that, a 50% correction is normal in markets so why not in gold? The 12 year rise was an anomaly in markets so the correction may continue to be an anomaly. There will be rallies after big drops, but I expect another opportunity to buy gold.

BI: What do you think is behind the sell-off?

JR: [1] The anomaly of the 12 year rise, for one thing. [2] India as we have discussed before. Indian politicians are blaming their problems on gold so have added special taxes, tariffs, controls, and regulations. Pakistan and Bangladesh even totally banned imports of gold at one time.

The politicians are now trying to figure out ways to force Indians to sell gold. There are staggering amounts of gold there. The politicians are now trying to hit the temples which have accumulated unimaginable amount of gold over the centuries. I have no idea if they will succeed at either, but the effort is having an effect. IF they are successful to any degree, it will have an even bigger effect. I.e. India has been the largest buyer of gold for decades. Cutting back the purchases has already had an effect. IF they can force the largest buyer to become a seller [much less a larger seller], who knows how low gold could go? [3] A lot of people leveraged themselves too which hurts on the downside. Etc., etc.

BI. Are you buying gold? If not when would you buy gold?

JR: No. I hedged some again a little while ago. …I wish I knew. Read Business Insider to get answers to questions like that.

BI: Do you think the faithful are finally throwing the towel in?

JR: No. Most of them are still denying reality saying it cannot happen etc. They are also blaming it on manipulation still. They did not blame anything on manipulation on the way up, but are now finding all sorts of excuses. [I also find it interesting that I have not seen a single comment from them or anyone else about changes in India — the largest buyer in the world. The whole thing is “manipulation”.]

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