The gold price may have taken a tumble, but Ian Gordon, chairman and founder of the Longwave Group in British Columbia, is watching for a recovery. As bullishness in gold reaches some of its lowest levels, Gordon, in this interview with The Gold Report says he believes that is indicative of a turn and he discusses where he has invested his money to ride the upswing.
The Gold Report: On April 15, the gold price plunged about 9%—the biggest one-day loss ever for the yellow metal. Many gold investors got "murdered" that day. Has your personal investigation revealed any suspects?
Ian Gordon: I suspect it was akin to what happened in 1999. The then-governor of the Bank of England, Edward George, supposedly said that "any further rise in the gold price would take down one or more trading houses." He said the rising price of gold was curtailed through the work of the Federal Reserve and the Bank of England. It appears that a bullion bank was caught offside on the short side and they had to take the price of gold down quite dramatically to allow it to cover.
I think something similar happened in April. I think it was manipulated to the downside. Goldman, Sachs & Co. encouraged its clients to short sell gold two days before this occurred.
TGR: Could it have just been an error?
IG: I always suspect the worst. There's so much manipulation in all the markets as I see it.
TGR: That one-day drop caught even long-time gold investors off guard and shook their confidence. Is being a precious metals investor at this point simply about having the resolve to stay the course, or should even the ardent investors make adjustments to their gold portfolios?
IG: I'm extremely bullish on gold. Bullishness in gold, according to the website Market Vane, is at 40%, the lowest it has been since 2001. Bullishness in the stock market is at 70%, which is almost the highest it has been since Market Vane began tracking it. I see a reversal occurring here, for the gold price to the upside and the stock market to the downside.
TGR: There's no way to sugar coat the disappointing performance of gold and silver in 2013. But has the current global economic backdrop provided some new and compelling reasons to own gold and precious metal equities?
IG: There are compelling reasons to be bullish on gold particularly, simply because there is a real worldwide crisis in fiat money. The unfolding crisis is similar to the 1930s, when the whole monetary system collapsed. We're envisioning something quite similar to that collapse is now occurring.
We can see that there's this huge move to gold, not only by countries like China and Russia and even the small "-stan" countries, but major investors are also taking up the physical metal because they can see this crisis unfolding.
TGR: Most of what I'm reading says that there just aren't a lot of bids in the market right now for precious metals. Investment demand has waned, with gold falling consistently lower since its high in 2011.
IG: Investment demand is huge. The output of American Eagle gold bullion coins by the U.S. Mint is at record highs. Demand by the small investors for gold and silver is at unprecedented levels. The amount of gold that's being imported through Hong Kong into China is at a record level.