How to handle gold/silver ETFs now

I was asked to comment how to handle precious metal ETFs such as AGQ, SLV, GLD, GDX etc, which were bought long time ago and have been decimated by 60-80% by now. I can feel your pain and indeed it is difficult to face it. But I think I have a more positive view on this, which hopefully can alleviate your anxiety and pain a bit. Of course, please be aware, I'm a super gold bug, i.e. I have a firm belief that gold/silver are money and they will go up a lot more in the future. My view is obviously biased but I truly believe that gold will go up substantially from here, $5000 that someone is calling for is not something unthinkable as long as you give it patience and time. Personally I'm investing also with this strong belief! Just to let you know, I started to invest in gold almost 10 years ago with the very first gold stock I bought, GoldCorp, when it was about $15 I believe. Since then I have put money into almost all kinds of forms of precious metals that you can think about. So I personally have a huge stake in it.

The fundamental question everyone is asking is whether gold/silver has bottomed now? The short answer is I don't know but I feel it is very close if not yet in. Historically during the last super bull run for gold in 1970s/80s, gold got crashed by 50% at one point and then shot up by 7-8 times higher when everyone simply threw in the towel. So if the history wants to repeat itself, we may see gold to drop to $980 or so, another 10% decline from here. But I'm not saying this will happen and I think it is coming. I'm just saying if it happens, I'm not surprised, so that I'm psychologically prepared. Having said, with all the messes going on around the world and more and more countries going with negative interests for their currencies, I think gold/silver is likely at the bottom now. I've started to buy again. Of course it is easier to hold and keep the physical gold or silver regardless up and down of its prices. It is money and insurance that you can count on it. The most challenging question is how to treat those ETFs that have dropped so much. The short answer is: close your eyes, pinch your noses and hold them. Why so? Two reasons:

• As I said, I expect gold/silver has been likely very close to its bottom, if not yet in, and actually may have started to turn around. The sentiment for precious metals is extremely poor, even based on what I heard from you guys. The depression and extreme pessimism are usually seen at the bottom and when no one wants to talk about it. If you sell them now, you may be astonished and more depressed if indeed they start to jump high from here. Keep in mind, no one has a crystal ball when the bottom is in and when is the exact turning point. When it starts, it tends to start quickly.
• You may ask, what happens it it starts to go down further? Well, you have to be honest to yourself for this question: since your positions are already down by 60-80%, will a further drop by 10-15% do significantly more harm to you? If your answer is yes, then probably you indeed need to consider to get rid of them. But for me, I don't think it will hurt me too much more by now as long as I know they will not likely disappear. For GLD, GDX, SLV, and even DGP, I'm quite confident they will stay with the precious metals in the foreseeable future. Actually now is the time to even buy them for anyone who have the nerve and gut. I'm less sure about AGQ though. The leveraged ETFs are really not for long-term investment, more for short-term speculation. You have to decide for yourself: if the remaining amount is not something that will change your life, then keep holding it. If it is significant, then use a tight trailing stop loss, say 1-2%, to try to catch as much the upside as possible and get out if it turns down again. If I were you, I'd consider to get out AGQ and put the money into SGDM and RGLD. Both of which will be likely doing much better in the long run and much safer.