Last week, I told you about the hundreds, if not thousands of readers that wanted my head for remaining bearish on gold and silver.

Well, gold and silver have taken the shirts off the backs of loads of investors and analysts who refused to listen to me!

Gold has now cracked major support at the $1,583 and $1,554 levels. And silver has now sliced right through key support at $27.58.

What’s more, it is now confirmed: Gold should head much lower, first to the $1,480 level, then even lower to below $1,400. Silver should plunge as low as $20 in the weeks ahead.

Why are traditional safe-haven assets plunging when there are so many problems in the world?

In a nutshell, it’s because they’re not safe-haven assets right now.

I can already hear my email inbox beeping like crazy over that statement. I’ll be accused of treason.

But the simple fact of the matter is that for a variety of reasons, other asset markets have now become safe havens. Namely, the dollar and U.S. equities.

And that’s because right now, there are other overriding concerns on investors’ minds.

First off, there are the new and justifiable fears of confiscation, set off by the Cyprus event. If your deposits in a bank aren’t safe, then how safe could gold be? After all, it was confiscated once before by Roosevelt.

Second, almost the entire world already knows that the sovereign bond markets of Europe and the United States are just about the worst investment one can make.

Stop there. Money deposited in a bank is not safe. Money invested in a European or U.S. sovereign bond is not safe, and no yield to speak of either.

Third, is there safety to be found investing in the euro? Hardly!

Is there safety to be found in the Japanese yen, which is actively and aggressively being devalued? Hardly!

Is there safety to be found in the Chinese yuan, which just hit a 19-year high against the U.S. dollar? Perhaps there is longer-term. But right now the yuan is not international enough and not liquid enough to handle the amounts of capital that are on the move.

So then, what and where is the best place to put your money today? It has to be an investment that is …

1. Extremely liquid and can handle huge amounts of investment.

2. Largely safe from government confiscation.

3. Offering at least some sort of chance to generate a decent income.

4. Denominated in a currency that is being, at least right now, less actively devalued than the Japanese yen and at risk of outright failure like the euro.

If you follow the above thought process through logically and unemotionally, you can now see why millions of investors, corporate fund managers and even corporate treasuries are opting to put their money into the U.S. dollar and the U.S. equity markets rather than just about anything else right now.

Of course, the above is an oversimplified explanation of the actual process underway now in the markets and the forces that are at work.

But it is precisely what’s happening.

Look, I love gold as much as any of you. Over the long-term there is no better store of value.

But gold (and silver) is a commodity just like any other. At times, its safe-haven aspect will shine, while at other times, other asset markets will perform that role.

And right now, the dollar and U.S. equities have moved to the forefront. That will change, and commodities will move back to the forefront with gold leading the way higher …

But it’s not likely to happen until investors fully realize that Washington is just as broke as Cyprus, Italy, Spain, Greece, France, and others. And that’s a ways off.

So Here’s What I Recommend …

FIRST, do NOT look to gold and silver for safety right now. Their interim bear markets are not over, not by a long shot. Ditto for mining shares.

While there are going to be the inevitable short-covering rallies and bounces, gold, silver, platinum, palladium, and mining shares are all headed lower.

SECOND, if you are loaded up with gold and silver and mining shares from much, much lower prices and you decide to hold through thick and thin to capture their long-term potential, then at least consider hedging.

As I mentioned in my special Money and Markets alert on April 3, the best way to do so in my opinion is by purchasing shares in ProShares UltraShort Gold ETF (GLL)and ProShares UltraShort Silver ETF (ZSL).For mining shares, consider theDirexion Daily Gold Miners Bear 3x Shares (DUST).

THIRD, do not expect other commodities to rally right now either.

Copper is getting killed. Oil is now rolling over to the downside and has the potential to fall substantially. Grain markets are getting slaughtered. Soft commodities, such as coffee, sugar, and cocoa are also on the cusp of sharp declines.

FOURTH, stay in the dollar now. The dollar is in an interim bull market. One good way to play it is via the PowerShares DB US Dollar Index Bullish Fund (UUP).

FIFTH, start deploying money into cream-of-the-crop U.S. equities. Buy on pullbacks. But only buy great U.S.-based multi-national companies that offer you a decent dividend.

Right now, the U.S. stock markets are due for a pullback. But the Dow Industrials gave me a very powerful long-term buy signal at the end of March. After the pullback passes, I expect the Dow to work its way up to near, or slightly above the 18,000 level ? possibly by early summer.

SIXTH, start making U.S. real estate investments. Most think I’m nuts on this one too. But U.S. real estate is dirt-cheap on an international basis and is becoming a safe-haven investment for capital that’s on the move.

Consider well-capitalized real estate investment trusts and the like that spin off income.

And if you’re in the market for your first home, or a second home, now is a great time to buy and finance it at historically low mortgage rates, but do not finance with anything other than a fixed-rate mortgage.

If you’re super wealthy, look at some other asset markets too ? such as diamonds, art work, and numismatic coins. I am not an expert in any of them, but from a broad macro trend point of view, they are likely to skyrocket higher as safe havens for the super wealthy.

Best wishes, as always …

Larry

Produced by McIver Wealth Management Consulting Group

Mark Jasayko, CFA,MBA, Portfolio Manager with McIver Wealth Management of Richardson GMP in Vancouver.

www.McIverWealth.com

Most chartists use daily or weekly charts. Few look at monthly charts. I don’t know of anyone (myself included) who pays any attention to quarterly charts. We decided to take a look at the quarterly chart of the HUI gold bugs index. It is below and we note the two big downturns in the market. Also note the importance of 300 which has been support for the past seven years.

Some have chided your humble author for saying that the gold stocks are still in a bull market. After all, these two big downturns invalidate any assertion of a bull market. Right? Well, the previous bull market in gold stocks also included two large downturns. Within the 1960 to 1980 bull market, the first correction was 61% and lasted about two years. The next correction was 68% and also lasted about two years.

Even more intriguing is the similarities between the gold stocks over the past five years and the Nasdaq from 1987 to 1990. Both markets crashed and then quickly recovered to a new marginal high. Furthermore, note the price action in the Nasdaq during late 1989 to 1990 and compare it to the price action of the gold stocks over the past 15 months.

Like the Nasdaq, the HUI formed a bullish double bottom (A,B) and advanced quickly and strongly. Both markets then fell apart. The Nasdaq declined 31% in only a few months. That was almost as bad as the first crash! The gold stocks have declined about 40% in the last six months.

After its bottom in 1990 the Nasdaq gained nearly 16-fold over the next 10 years. Following its second massive downturn within the 1960-1980 secular bull market, the Barron’s Gold Mining Index advanced nearly 7-fold in the next six years. This is not to say that the gold stocks are likely to repeat the same pattern. This is to show that there is a strong historical precedent for the current downturn to occur in the context of a major bull market.

Ok, I know what you thinking. Jordan, why didn’t you provide this analysis weeks or months ago? The answer is, we’ve been aware of these charts and that is one of many reasons why we’ve slowly “scaled into” positions. We’ve told premium subscribers what our favorites are and how we plan to scale into and build those positions over the spring and summer months. On March 1 we wrote: As for the short-term, we began scaling into positions last week but maintain plenty of cash to be deployed (potentially) at our strong targets of HUI 336 and HUI 300.

Currently, the market remains in a bottoming process. We don’t know if Thursday’s low at 317 marked the bottom or not. Judging from the quarterly chart it looks like we could see a test of 300 or a temporary break of that level. On the other hand, Wednesday’s selloff occurred on record volume and Thursday’s reversal was quite strong. There is a chance a small head and shoulders bottom could be developing. Strong follow through on Friday would certainly raise the odds that 317 was an important low.

In any event, we are moving closer and closer to a major bottom and a large rebound in percentage terms. Weeks ago we noted the extreme pessimism in Gold was beyond the 2008 low by most metrics. Sentiment towards gold stocks is even worse. Traders and momentum players think the sector is one big joke. Mainstream funds who have the slightest interest in the sector are focusing on the metals and not the shares. I can’t recall a sector that has ever been this hated within a secular bear market. It is quite amazing. That aside, we are quite confident that the sector is days to a few weeks away from the start of a very strong rebound. Be advised that there are hundreds of mining stocks and stock selection is critical to achieving strong returns. If you’d be interested in professional guidance in uncovering the producers and explorers poised for big gains in the next few years then we invite you to learn more about our service.  

Good Luck!

Jordan Roy-Byrne, CMT

Jordan@TheDailyGold.com