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:

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