As Peter Grandich said a couple weeks ago, gold will never go below 1200 again
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There cannot be a fall in the major markets until QE is reduced. It is mathematically improbable. Further, when QE is reduced interest rates will go up and money will transfer out of the bond market. A possible place for that money to go is into the general stockmarket. It is possible money is already about to transfer from bonds to stocks.
I feel very strongly that the future will bring a major hit to the conventional markets and that is not calling you crazy! (Well, maybe just a little!)
I agree with you, Al. QE can’t stop a stampede. Printing is bad for the economy. More printing, therefore, will only make things worse. The stock market will discount the worsening outlook. Additionally, big up days in the precious metals and undervalued miners will attract nervous investors away from the overpriced stock and bond markets and their deteriorating fundamentals. As we know, such action tends to be self-reinforcing. Strength begets strength, and vice versa.
The Shiller PE ratio for the S&P 500 is about 50% above average. I’d call that more than slightly overvalued, but not ridiculously overvalued, historically.
http://www.multpl.com/shiller-pe/
Fundamentally, the general stockmarket is slightly overvalued, but given the level of interest rates, it is not ridiculously over-valued. Because there is little alternative to the stockmarket, providing there is not high deflation or disinflation, there is no practical place to move money to, considering the state of other country’s stock markets. (With the possibility of buy Nikkei, short Yen)
Buy nikkei short Yen. Actually buying the Nikkei is almost exactly the same as shorting the Yen. the Nikkei priced in Yen is almost exactly the same chart as the ETF YCS, which is the double yen short ETF.
http://stockcharts.com/freecharts/gallery.html?s=%24NIKK%3AYCS
It has traded between 190 and 225 for most of the last 3 years. and is basically a flat line, with some volatility, though it has a slight uptrend right now.
In summary, the Nikkei in US DOLLARS once you back out Yen weakness is like a single short Yen trade. So why buy the Nikkei and take on all that company risk? Why not just sort the Yen and have done with it?
Silverbug, I guess you do not believe in Abenomics. The past is not necessarily predictive of the future. I believe the Nikkei will rise and the Yen will go down..
2 cents.
You do have a point, CFS (who is not crazy).
I simply feel that in the future with the potential economic collapse the market will follow.
Agree with that Al. I have a sense we could see a very substantial decline that will take years to recover from. The longer trend charts don’t make me feel warm and fuzzy. We got a hint of how bad it could be not long ago when everything but dollars fell at once. There was no safety…not even in gold. That was a wake up call for me and it answered a question I had long puzzled over. How was it that so many people who had otherwise been solvent and financially well off prior to the great crash subsequently ended up penniless?……and that was how it happened. EVERYTHING declined and even a little debt was enough to impair even the wealthy when assets plummeted like a flaming arrow into the ground. They could neither sell nor cover as a result. The banks got it all for pennies in the end and even the rich burned their own furniture to stay warm during the winter. So it was told how it ended on the Canadian Prairies for some.
Any chance we can get some warm and fuzzy thoughts that don’t include burning furniture? Man, I am going back to my Merlot!
Next post I will try to be more positive!
Al, I know you were reporting from Seattle but you sounded like underwater!
Difficult to record on the road. I will be on a mine visit Tuesday, Wednesday and Thursday. I will take my computer and, hopefully that will solve the problem.
Thank you for the advice/comment.
Yeah. Kind of cool actually. It sounded like a radio report from the thirties.
Since the general Media is disgustingly silent:
Let me remind folks that Bradley Manning is on trial and will probably spend most of the rest of his life in jail, for letting the world know that illegalities were happening under the watch of the US military in Iraq.
Swept under the carpet.
I believe in looking under, and reminding us what scum politicians can allow.
Okay, okay you are very sane!
By the way, please provide a link.
I wish I could, but the media is not reporting Mannings court Martial.
I just find it unbelievable a whistleblower (for Abu Graib) will get life (probably), while people that killed Iraqis for pleasure and did other things to demean prisoners of war, are free, not investigated, get no punishment. No wonder Arabs hate the US. I thought the US was civilized and justice would prevail.
It is rather amazing that this is not being reported.
Justice? It can still be found in fairy tales I hear.
Benb,
You bring up an interesting point.
In my opinion the concept of justice has become very tainted with the concept of politica correctness.
Is abortion just?
Well the federal government is on record as stating that it is yet my God calls it murder.
Are some of our miliary’s actions just? Well , many people in this country would say these actions are just. My opinion is that they are not.
It gets pretty convoluted doesn’ t it!
Grandich has once again stuck his neck out by saying gold will never be under $1200 again (I believe he said in his lifetime). Another factor that has separated himself from most other newsletter writers in the hard asset camp has been Grandich’s ability to predict stock market rallies. Go look at Casey, Taylor, Roulston and the like and find me a time they were suggesting being long general equities. Yes, Grandich was smoked in juniors like most of us but here too he openly reminds us while others fail to mention it and hope we somehow forget.
Pete said that the Dow and S&P would reach new highs, Wow and they did. The thing is, he said it quite a long time ago. It was a GREAT call.
However, I am not yet convinced that this is not just a bounce in gold. There could be more legs down in the future, perhaps if the EU and Japan unravel before the US and thos currencies collapse against the US dollar.
THE S&P 500 is looking uncannily like silver in 2010-2011. If it reamins so, there is an upcoming S&P bubble blow off then a long crash back down to around 1000.
Check out these two charts:
http://1000gold.blogspot.co.uk/2013/07/uncanny-similarities-between-s-500-in.html
I too have done fine in the “conventional” market, Frank. That is why nobody can talk me out of diversification.
P.S. Thanks for the comment.
Seasonal effects no longer exist. Everything has changed regarding gold and silver. Nothing will be normal anymore going forward. Nothing was normal from the $1923 gold high and around the $50 silver high on the fraudulent way down.
I have to agree with you Fred.
Fred, Why would you believe seasonal effects no longer exist?
Do you believe cars will not be driven more in the summer than the winter? Do you believe the Indian wedding season will change in such a way that silver and gold are not purchased? Please enlighten us with your logic.
That is just it, CFS! THERE IS NO MORE LOGIC…Ha! Even the real smart, highly educated guys like you – for instance, are befuddled..well, C’MON…just a little, right?!
I’ll let you know after the seasonal effects are over, Marc
I am going with Pete, on the FALL, IN THE FALL
Jerry, I am still waiting a call from my elite friends.
Pete, never say never, I thought a wizz kid would have known that.
I too, am waiting on my elite friend Irish, to call,,,wizzed or not………
Seriously, I hope he is okay!
CFS,
The seasonals you point out have nothing to do with gold and silver.
Gold and silver are now in a Mad Maxx world. The day to day moves are now unpredictable by anyone here. Certain people at the Federal Reserve, GS, JP Morgan, HSBC, Deushche Bank, in Russia, in China, in Dubai and some other places know what’s happening in the gold market and where the price is going.
Pay attention, Fred, I have been predicting fairly accurately….
Al:
There is positive activity in International Tower Hill but no news or press release to support the interest. Any info as to what caused the up tick?
For what it’s worth, the same price action has been seen in many stocks within the sector recently. More and more investors appear to be gaining confidence that a significant bottom is in place. Breakouts are starting to appear and buy-side volume has been confirming the action. If you are looking to buy THM, I think a pullback to the low 70 cent area is likely before it continues higher. Just my opinion.
Thanks Matthew and I do agree.
No. ,but I will look into it.
Matthew:
Agree that that could be it…just momentum in the sector. THM did have some talks with Al that a report was due out in July that may could be leaking. Or some kind of joint venture, etc…just trying to see if it is something more than speculator pump and dump. Thanks for your input…probably just momentum.
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