Investing in the face of a potential interest rate hike
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- Segment 1 and 2: Chief Market Analyst for the Lindsay Group Peter Boockvar shares his thoughts on the Fed meeting next month and a recap of the markets.
- Segment 3: Chris Temple, founder of the National Investor, discusses how to invest in times of rising interest rates.
- Segment 4: Ronald Peter-Stoferle, Managing Director at Incrementum AG, is a recession around the corner for the US?
- Segment 5: We open Traders Corner with one of our favorite technicians Rick Ackerman.
- Segment 6: Peter Brandt, founder of the trading service Factor LLC, shares his technical outlook on currencies and the precious metals.
- Segment 7: Fund Manager Dana Lyons addresses the key drivers of US markets to reach new all time highs.
- Segment 8: We wrap up the show with a recap of the Mises Circle in Seattle with the President of the Mises Institute Jeff Deist.
Click here to take advantage of Dana Lyons Memorial Day offer for his My401KPro.com site.
Dana asks that when you sign up you send him an email at info@My401kPro.com telling them about your service with the military and he will extend the trial to 6 months.
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I would not do anything on anticipation….wait until it happens then act.
Agree! You produce super, über, awesome podcasts!
I’d also like to thank many of the frequent blog-commentators for sharing links, thoughts and stock-ideas. The KER-site is really something special!
Cheers, guys!
😎 Anders
Love listening to the KE Report while changing accessory belts on my Scion xA and pulling body parts off my 83 Caprice. Cooking breakfast for Stinky (son) and myself while listening to segment 3. Love the show yall!
Absolutely. A lot of great stuff to listen to here thanks to Mr. Big Al Korelin, Mr. Big Cory and their guests…
Be sure to listen to the stuff from the week, too, Gotta here that Jeff Deist speech.
I listen to all this stuff while doing various chores although I reserved listening to the Janet Yellen piece for when I clean the toilet.
You named your son Stinky?
Dang typos…
Thanks guys Rick so far a great call on the markets. If the market is going up over the next week or two what do you think the USD is going to do?
Such a show of appreciation is really nice. Al and the team/s fully deserve it.
These central bankers are corrupt and they think their forecasts are the prettiest baby in the nursery for lack of better terms…dang…two Korelinisms back to back…but hey, you gotta go with what works.
YELLEN
SEES
NEAR
–
TERM
RATE
HIKE
AS
“
APPROPRIATE
”
Fed Chair Yellen’s remarks at Harvard lent some credibility to recent hawkish rhetoric
from Fed speakers and the April minutes. This supported a broad rally in the USD as
well as a partial unwinding of yesterday’s rally in fixed income. North American equities
closed the week on a positive note; the S&P 500 gained over 2% this week while the
TSX was up just 1.4% in four days of trading. Gold suffered a large hit today as Yellen’s
comments weighed on inflation expectations; the precious metal fell by $11/oz. Oil was
roughly flat on the day to end the week just shy of the $50 level.
US
:
Fed Chair Yellen spoke at Harvard today. Though most of her remarks were not
relevant to monetary policy, she did offer a few clues about the timing of the next rate
hike. Overall, her comments were fairly balanced and lent some credibility to a near
–
term hike. She began by noting the significant improvements across all facets of the US
economy. However, her characterization of the labour market was fairly cautious, as
she chose to highlight the lower participation rate and measures of underemployment in
addition to the broader gains in employment. She concluded her remarks by stating that
“another rate hike in the coming months may be appropriate.” We still believe a
September hike is the most likely outcome, however there is a significant and growing
chance of a move in July should the data continue to improve.
On the data front, revisions to Q1 GDP added 0.3% to the initial print while personal
consumption was unchanged. While the revised 0.8% advance fell short of the market
consensus for 0.9%, it still reaffirms the view that economic data is improving and will
not diminish the expectations for a Q2 rebound. Revisions to University of Michigan
Consumer Confidence were less supportive, as the sentiment index dropped to 94.7
from the initial 95.8. Inflation expectations also trended lower and while the long
–
term
expectations remain in their recent range, short
–
term expectations fell by 0.1% to the
lowest level since 2010.
Is June rate hike off the table? It has been talked about so much lately. Is it a big nothing?
Or if FED just create rate hike expectation for every coming FOMC meeting, then they will achieve the effect of rate hike but not really risk the outcome of rate hike?
RE: Seg 5
On Labor Day please do remember our veterans.
OK, Memorial Day, too.
Gdp is likely to remain below 2% for years to come.
HPQ is trading at only about 6.4x PE and has a high dividend yield of 3.77%. Based on the past Q earnings it is around 8X.
AT&T is paying a 4.92% solid dividend but is trading at the upper range near 52 week highs.
Cisco is paying 3.6% and Intel 3.3%. I am holding these 2 and HPQ from recent
purchases and added Twitter 2 days ago which is up about 7% already.
UYM materials ETF (2x) is now $42. I had suggested buying this under the $30 area back in January. I ran out of money back then and could not buy it near $27. It could easily get to $50+ with the market going to new highs.
Yes, Uber is the future of the US economy… a low paying service sector job.
UBER type companies will have self driving cars and self writing software to drive said cars so even UBER might be replaced in five years by anyone with the self righting software and cars.
Seg. 6
Peter Brandt gets it. Correlations come and go and there’s no reason why gold and the dollar can’t go up together (as they have many times in the past). The dollar can rise because it is truly strong or it can rise because the euro is weak. If it’s the latter, gold will be fine. I believe that it will be the latter and that he (and Edelson) are right to buy the coming low.
I also think that the Loonie will continue to surprise to the upside.
Birdman Monday stock market will be closed for the memorial day .Thus tuesday is the last trading day for the month of May and if price doesnt exceed the 1231 level we would have a bearish engulfing pattern on the monthly.That does not bode well for the price of gold.Not at all.The bigger the engulfing candlestick the more bearish the reversal. Ideally, the body of may’s candlestick should engulf the shadows of april’s candlestick as well, but this is not a requirement.Birdman should gold start a retracement next tuesday the possible target levels are 1255,1266 and 1283.
Thanks Don. Yes I had forgotten about the holiday. But my excuse is I am Canadian. We already had the Victoria Day holiday on the 23rd but the TSX is open Monday and it should be hopping since miners sold off so strongly last week.
About the bearish engulfing candle…..yes, its already formed as you mention and can only grow larger. But it cannot get smaller and go away at this stage of the game. So it is already a fact in other words even if the last day of trading is not here. Its significance though is that its on the monthly chart so there should be repercussions now that it has come to light.
Anyway, keep your eyes peeled on the TSX Monday morning if you are curious about what kind of action might transpire in the US on Tuesday. Judging by some of the charts I look at the selling in miners may continue even if gold moves up a little.
Speaking of the dollar, does anyone recall that article in April from James Rickard about a so-called Shanghai Accord? Per Rickards, the “secret” accord was an agreement struck by the G20 Finance Minsters to tighten in Europe and Japan, ease in the U.S. and maintain the U.S.-China peg.
In this scenario the US dollar would weaken as the Euro strengthened and China would not be put in a position to have to devalue its currency artificially because due to its peg it would follow the dollar down.
But there seems to be a problem with that whole idea.
Instead of USD getting weaker it has instead risen 4% in the past month while the Euro has taken a dive on Brexit concerns and the Yen meanwhile is also not cooperating as it has also lost value against the dollar for all of May….something it was not supposed to do.
Maybe its just me but I have doubted since the beginning that such a thing as the Shanghai Accord ever existed or if it was just a flight of fancy concocted by Rickard’s to again show everyone how well connected he is in the world of fiance and politics.
Whatever is was…if there was truth to it the idea sure is a bust because the opposite is happening and none of it is positive for gold. And that brings up another point. Rickards at that same time was pumping gold as a shrewd investment in light of the idea the dollar would be falling.
Bad timing perhaps? Or is Jim an insider helping to set up the dominoes?
Good question birdman.Is james rickards an impostor?I bet that he is? Too intellectual to not notice that the world economy is in a deflationary spiral.My gut tells me that he is pushing their (pms call writers) agenda 🙂
Clever plan. Because once this next drop is over most of the bugs will be ruined once and for all and they will finally sell at the bottom in a ghastly capitulation. By 2017 they will hate gold so much that nobody will be talking about a gold backed currency any longer.
Any government is a business and it must be run on that basis. Nobody in the real world would go bankrupt if you allowed individuals and corporations to keystroke currency. The printing presses must be taken away from the folks in the government so it will go bankrupt and stop destroying the rest of the economy with it. Government officials are afraid of a crash because it will do what private citizens have always had to do find another job if your employer no longer needs you. Ninety nine per cent of the state employees will never get the compensation that they earn working for Uncle Sam, and they will need to learn the meaning of keeping your nose to the grindstone and producing a decent days work for decent wages.
Bookvar says he is down on the $ because according to the tape it is still 5 points under the 100 level it made two years ago. According to him since it has been two years since it made those highs and haven’t gotten back to them yet that is a negative sign.
That said, I would say you could (and would have to) say the same thing about gold.
Let’s face it it’s been 5 years since it made those highs, and we aren’t even close to highs were.
Sounds like a double standard if you ask me.
Of course if someone wants to take a stab at it I’m all ears.
Considering the dollar has been in a 100 year bear market for retaining purchasing power, what’s all the fuss about 2 weeks, 2 months or 2 years. If you think the big 100 year bear in the dollar is about to turn around and government has changed its ways…again, what’s the fuss.
The funny thing about periods of deflation Jerryck, is that they only come around once or twice in a lifetime. As far as most of us are concerned there has never been a deflation in our lives and so we are naturally unprepared for the currency to appreciate when all we have ever known is that it loses buying power over time.
So basically…..it is going to be different this time.,
So you’re saying $500 gold? $250 gold? Please be clear. Just don’t say new lows.
I’m not predicting price. I’m saying government hasn’t changed. And history is what it is.
My target has been 968 for several years now although a final bottom with an 8 handle is not out of the question and there is some good support levels down there. Silver should fall just below 10.00 dollars before we get the final bottom sorted out.
I don’t believe for one second that we have started a new precious metals bull though. That’s just the usual spinning and weaving from the promoters to bring on new followers and pump up the troops.
But their magic will wear off just as soon as we start going negative on price again and the argument will weaken further as long as prices refuse to return to their recent highs. Give it time and I am sure you will agree with me.
Birdman
we’ll see. good luck on your prediction.
I’m batting 100 so far. But yes….we shall see.
I noticed the same comment James and thought it curious. Five percent difference is really not much compared to the move that preceded that number. If a price refuses to fall after such a long time then it might mean that its future is up, not down because its actually just in a consolidating pattern.
But Peter may be suffering cognitive dissonance. He “knows” that gold should be entering a new bull market but the idea that the dollar is resistant to a decline is inconsistent with his thesis.
The dilemma is that in the minds of the majority of market participants the dollar must fall for gold to rise. If that does not happen then there is a problem with the markets not your theory. This conflict is easily resolved and set aside by some guys who will instead state that both gold and the dollar can rise together because that happened once before.
So there you go…problem solved.
But that’s not likely to happen in my opinion. Just as the idea that gold can rise when interest rates rise because that also happened once before. Both of those scenarios are exceptions to the rule though and so we should not bank on them to happen despite all the entreaties and evidence of a past occurrence.
They are probably long shot bets in other words.
With the US dollar now in something of a breakout to the upside and the Euro taking heavy hits due to Brexit at the same time the Fed is seriously talking up rate hikes we have an unusual case where two common and well understood hindrances to precious metals strength must be overcome simultaneously .
Those two event risks for gold cannot both be massaged away so easily anymore as both would have to come into play as exceptions in order to anticipate golds continued rise.
And this, I believe, is partly the reason gold has been unable to exceed the 2015 price highs as the market cannot reconcile those headwinds with the assertions from the gold community that a new bull market is now in progress.
So Peter is not alone in having conflict with his observations about the dollar and gold. And I think once people get past the idea that this is a *new* bull market they can relax again and treat it for what it really is……
Just a bear market bounce that will inevitably lead to new lows.
Birdman if we are still going to put in lower lows for the PMs do you think the final bottom will come this year and will it be a V bottom or take weeks or months to even return to these levels I appreciate you thoughts and knowledge anything you would feel comfortable telling the rest of us as to what you feel is going to happen over the next 6 months would be appreciated
No Jim, I don’t think there is enough time remaining this year for us to hit the final lows so it looks like 2017 will be the time. But we should get very near a 1000 on gold before 2016 is done. That’s the number I am looking for anyway. It will be up to the bulls to keep prices from dropping below that major psychological level next year.
Who knows….maybe they will pull it off.
Thank you for your thoughts do you think the good PM miners will stay above their December lows? Or is the lower prices going to take most everything down with it?
Good companies are going to rise anyway. Especially if the markets are turning up again. Some were already moving up last year irrespective of what gold was doing and that should continue.
At worst the miners should see stock prices consolidate so some will retest lows. There is good value out there even if gold prices are sluggish for another year. Why its getting interesting though is that the M&A’s really picked up so there is a bid under the floor now for better acquisitions. And that usually tells you that the bottom is in for the companies themselves.
We never did see a washout stage though where the weakest were culled and I am sorry to say that I believe that still lies ahead so maybe be choosy about what you hold.
When the default cycle starts to pick up steam the banks are going to be under substantial pressure. Lending will tighten significantly and some of these companies are going to lose their life lines and die.
Anybody that needs to borrow is going to have to meet a higher bar than they are today because no bank, especially one whose own balance sheet is suddenly impaired, is going to be taking big risks. Unfortunately, mining is risky and out of favour. If commodities keep falling its going to be a very, very tough environment out there for everyone.
Right now its just been a lot of fun. You could buy almost any gold company and they all seemed to make gains but that probably isn’t the future. Nobody ever expects the worst of course but I can tell you that one of the most financially distressing periods in American history was during the Thirties when credit died.
If you believe that we are entering the terminal phase of the credit cycle then you will also be aware a lot of the weaker mining company stock is not going to be worth the paper its written on by the time this period ends.
So stick with the companies that are actually profitable at lower gold prices and maintain a decent balance sheet and whatever you do don’t fall for all the gold hype about ounces in the ground because that’s usually just bullshit anyway.
So the short answer is yes,…. the bottom is in for good mine companies. But the bottom can fall out like a rock for weak players so stay the hell away from anything that looks unstable. The next couple years are going to be a really rough ride.
Matthew, I hope you are right about the dollar and gold both going up, as I got carried away gave in to an urge just before the close on Fri and bought Torex@1.42 and PPP@1.66. They will probably drop 20 cents on Tues.
What I don’t understand is why people incessantly fret over the price of gold and silver and whether they may go lower in the coming weeks.
What a complete waste of time with limited life resources and time value that you cannot get back. Gold is going to do what it is going to do, right along with other commodities in the greater financial complex.
I’m not only expecting gold to go lower in the medium-term, I hope like hell it does because I want to buy more valuable assets (miners/bullion) on-sale that will in all likelihood be selling magnitudes higher three, four, five years from today. And just like clockwork, during that time span there will two or three more 25%-40% draw-downs in prices in a normal corrective environment.
If you wake up every morning and go to bed every night thinking about nothing but gold and silver……….you have issues! Gold and other commodities should all be apart of a well balanced financial and lifestyle architecture that includes all kinds of things that allows an individual to actually have a life and put other more important things in their proper perspective.
But just look around and you can clearly see that realistic perspective and actionable lifestyle balance is in short-order globally.
Absolutely agree Vortex and its funny you mention it because precious metals are only one aspect of why I even follow these markets. You want to know my real concern?
It is the inevitability of what is coming with a reconciliation between credit and debt that keeps me awake at night. It is that we are nearing a point of no return when a default cycle will kick in.
And although we all have a pretty good idea it is going to be painful, I don’t think there are many people who are able or willing to freely articulate exactly what that means to us individually.
But we can try. A great many pension plans will fail just for starters.
Some banks will go down. We do expect bail-ins to become a fact rather than a conversation topic on threads like these. And we can be pretty sure we will see a spike in unemployment followed by all the collateral damage that usually accompanies deep recession such as housing loss, displacement and personal bankruptcies on the rise.
I don’t think the world is going to end but neither do i think we will have a mild garden variety set-back. What is in progress is a generational event that comes at the end of a long credit cycle. Because this one was particularly extreme the outcomes and consequences will likely match.
It is why those of us who are in the markets need to pay careful attention to the companies that we own and do our best to avoid those that will become natural casualties of a very serious downturn.
The contraction that is coming cannot be avoided. Its just part of the long run business cycle. What we can do however is take steps to lower our risk profile as it approaches. To eliminate debt that will become a hindrance. And to set aside a little more for our emergency fund.
Following the price of gold helps me on some level because what it does is help determine how close we are to when the defaults begin in earnest. When I refer to defaults you probably already know I am not talking about mining companies but rather states, nations and municipalities.
We are on the edge now and its pretty hard to conceive of how many dominoes will fall in the wake of those bankruptcies but I suspect it won’t be an easy time if your risk profile was elevated going into the downturn.
Basically, I expect a deflationary bust caused by debtors that will renege on their obligations. And because that is coming it is improbable that most commodities including gold and silver will be able to buck the trend as resource demand weakens across the globe.
That’s why we are not at the bottom in precious metals. Its because most of the pain is still in front of us and buying metals for defense is still too anticipatory because we are not there yet. When the trouble finally hits though there could be a rush into hard assets and premium mining companies as the words “counter party risk” suddenly develop a real world meaning.
But in order for that rotational shift to happen we will need the general public behind the trend and right now that is just not happening. Most of the activity in miners right now is still restricted to those who are very familiar with the sector and those who are always among the devoted.
Hedge funds have naturally caught on….but Joe Public is still nowhere to be seen and until he arrives there won’t be a bull market. Just guys like us counting off the days until the SHTF!
Bird,
I’m going to make you’re already large-head (ego) even bigger when I say I agree again with everything you said.
There really is no reason for me to provide a long detailed reply when you have already cover the bases.
There is no doubt that some serious ugly is coming down the global tracks and it is going to be painful. Honestly, I’m not even sure anyone can truly prepare for wars, banks going under, bail-ins, massive insolvencies both national and local and the real biggie………LOST PENSION’S!
At the end of the day, everyone of us are going to need a hell of a lot more than a chart that tells us what the spot price of gold is on any given day. So just fretting over a gold price daily, while beneficial to traders to some degree, is, in the big scheme, small potatoes to where you better be mentally when the SHTF.
Ranging far, far above the gold price in importance in the hierarchy of needs is your health and general safety, after that it should probably be stored food and food and water sources giving you the best ability to survive. Mixed somewhere in that kaleidoscope of importance is a sound spiritual foundation of your choice and in the form you find to be most meaningful to you and your loved ones.
Not to poo poo the gold agenda in the extreme, but the real important things in life are completely unrelated to things like gold and silver. Gold and silver to some degree will only be useful if you are still alive to see the other side of what coming.
So while I like gold and own plenty, a perspective and balance of the real hierarchy of need is the linchpin and vastly outweighs the importance of a substance that is listed on the periodic table.
V
Amen to all your comments Vortex! Very best to you.A
Andrew,
Always great to hear from you! Thank you for the kind words my friend.
V
Don’t feed any ego’s around here Vortex. They are already bloated and at serious risk of a bust coronary! Anyway I agree with your comments too. Time to stay focused on whats really important in life.
There is a shit storm coming. we all know it even if its not a fact yet. People like those on this site who do their own investing will probably be OK since they are most tuned in to the risks in the world. You have got to feel for everyone whose pension is lost or reduced though as the global debt load starts to unwind.
And feel even sorrier for those guys who don’t have the means to start again late in life. Making your own pension through personal investing is a lifestyle choice of course. Few do it well and even then it takes years to learn to buy and sell stocks or other investments with reasonable success.
I mean, investing for yourself can be almost be a career because it will absorb most of your free hours if you are serious. Most of the retirees I know don’t have a hope in hell of making a recovery if their company pension plan folds or benefits payouts are reduced as is happening in the US and Europe already.
You could not even begin to teach those guys to fish at this stage of their lives either.
But what is interesting to me is that the same kind of person who takes his own financial success seriously and does it themselves is also the kind of person who is not totally reliant on the state.
They likely already have extra food, water and supplies around the house in case of emergency because their mindset is already designed around being prepared for unexpected outcomes. They have a Plan-B too if the worst happens.
Private investors in other words already have a prepping mentality as you suggested. And that includes keeping themselves healthy, living where opportunities are better, risks to security are low and not forgetting there is a spiritual element to all they are trying to succeed at.
Bird, completely agree! Thanks for the thoughts and words of wisdom.
V
Really great comments on this thread and I very much agree with Vortex’s point about the balance of a real hierarchy of needs and living a full and well-rounded life.
THE RUSSIAN BEAR UNLEASHED
Many or maybe everyone is totally unaware NATO/US has surrounded Russia on it’s Eastern borders and US is demanding Russia give back Crimea by early summer 2016.
Not only that they are going to add more deadly sanctions removing Russia from the international SWIFT banking system and this will paralyze Russia by early summer 2016.
Russia will not give back Crimea because this is a very strategic port.
Any future projections with regard to future economics and investment predictions are useless and meaningless in this current state of affairs.
Why, because Putin has said many times he will defend the sovereignty of Russia even if nuclear weapons are to be used to accomplish his goals.
Suggestion: Get ahead of the curve or get in back of the line.
IF THE RUSSIAN BEAR IS UNLEASHED IT WILL BE A DEADLY BLOW TO THE ENTIRE WORLD.
I did forget to mention that this is the largest offensive against Russia since 1941 since Hitler invaded. However, Americans seem to be very complacent and confident that all these massive military moves against Russia is unimportant.
I smell smoke and its not only apparent a conflict will be certain and assured.
Annihilation will be on both sides of the pond is poised and guaranteed.
Reason is clear :
Mother nature is about to unleash a cleansing upon the world in abominations.
Regarding future price projections of gold. Without a fatal war with Russia the gold to oil ratio is 24. Very bearish.
So that’s not going drive gold. I purchased dozen eggs for a buck yesterday. A gallon of milk was 2 bucks. The list is long. Food prices are dramatically lower. That’s not going to drive gold. A deadly war with Russia is not going to drive gold. Hiring robots is not going to drive gold. Removing our borders like the liberals would like to do will not drive gold.
In the 1980’s gold never was above $500 after the spike in 1980 of $800. In fact $500 gold was traded for very short period spike highs as well. For 10 years gold traded in the 80’s around $350 to $400. In the 90’s around $300.
Anyway, do your own due diligence. Tell me where the driver of gold is. Its not in the price of silver because its down against gold last 3 years. Platinum is very depressed.
Thats interesting,
I paid $4.60 for a dozen XLarge eggs today.
My milk is $2 for 2 litres (which is what? Approx double your cost?)
Fueled up one of the cars too….that was $1.02 per litre today.
Too many of you focus only on gold & commodity prices only in US dollars. I’ve said this before.
Gold & other commodity prices can be going down in US dollars but rising elsewhere at times.
The investing World is a big place.
If you don’t look beyond your own borders the you are asleep.
….”You snooze….you lose”
Enjoy your weekend.
Cheers.
Sorry to hear that. I paid $2.50 per gallon for fuel yesterday. Strawberries paid a buck a pound too.
Your right, I’m snoozing and sleeping well. As far as the losing part. You need to find out Mate, why you are being ripped off.
Anyone who buys gold is being ripped off. There is no inflation. NONE !!! Just wait till the world deleverages. I see a 3 for one sale.
Big hair cut. At least 60 % off all the prices I mentioned. Gold will be trading at $800 bucks. Happy investing. !!!
TJ – You’ve missed Skeeta’s point. He lives in Australia and is talking about paying 2 Australian dollars for 2 litres of milk.
95% of the world’s population does not live in the U.S. and is experiencing plenty of price inflation.
Even the U.S. is experiencing far more inflation than most people realize. There are many gimmicks and tricks that the BLS AND big business use to camouflage inflation and they obviously work when you consider how many people continue to have so much faith in the dollar.
Consider this: In the summer of 2001, the dollar was worth at least twice as much gasoline as it is today and the current “low” gas price just happened recently. For most of the last 10 or 12 years, the dollar has purchased just one-third to one-quarter the amount of gasoline that it did 15 years ago.
Gold, on the other hand, is worth about five times as much gasoline today as it was in 2001 (and 2-3 times as much Dow).
Whether the dollar goes higher from here or not, nominally, it is very likely that it made a long term high in real terms (purchasing power in the real economy) a few months ago.
USD:CRB
http://schrts.co/0c12a3
Thanks Matthew and valid concerns. Maybe he should have never left the US. Or probably consider taking up residency here. Costco, might be a good option if he has one nearby. Could always take up country living. The cities in some areas are very unreasonable for food and necessities. Prestigious areas and metropolises fair the worst. In some cases, driving a few miles outside these prestigious areas can be successful paying much lower prices saving 50% and more.
Not sure if that’s true or not in other countries unless it’s expensive places like Switzerland as an example. In Mexico, as long as its not in a tourist trap, taco’s are very cheap. $1.50 for a good taco or $3.00 for a burrito. Apartments go for $250 a month. No inflation.
A person can live very inexpensively if they can accept certain conditions etc. Here in the US, the cost of living is not high unless you have expensive taste.
It’s all debatable and at the end of the day anyone can live a good life if they are not using high expectations.
My comparison with gold at the 1980 spike top has validity. The top in 2011 was a spike top. Not that we can definitely use this as a projection for future market behavior but both are spike tops. It’s fair to say since gold was not able to break out we have much more work to do on the downside. How much is questionable. Since these are highly volatile assets, I believe there is a good possibility gold breaks to new lows.
2001 you are using criteria that benefits arguments in favor of gold. Gold on the other hand has done very poorly last 6 years. We need to avoid using all these different time frames and focus on what lies ahead in the future. Spike highs and the following market action as I have stated above, does not help the bullish case. IMHO.
The gold to oil ration is very bearish coming in at very high number of 24.
Using 1970’s market action except for the spike top is an invalid comparison which so many use. It’s never worked out and never will. Gold was capped for 40 years and of coarse the lid would come off.
2011 top was about a 10 year bull run, as with the 1980 top. In conclusion, everyone must decide if the odds are good and take their chances. I beg to differ. It’s a risky bet especially when fortunes can be made like this top we just had in gold several weeks ago going short. Gold I maintain is for astute experienced well disciplined traders. It’s a traders market and has been for many years.
Lastly, housing is a bust waiting to happen now. So no inflation there in the years ahead. Deflation is on the mend and with gold it’s going to precise timing and patience going in for a long term investment strategy. IMHO
I want to comment on Larry Edelson. He has and will change his mind. These guys are promoters and like to keep people fantasies alive but also while keeping the trade in perspective. Maintaining reputation and pulling in as many subscribers as they can. Then a few months or weeks later, the analysis has changed. Support levels broke etc. And the beat goes on.
The 2011 top has little in common with the 1980 top but I’ve addressed that before.
Also, inflation in places like Mexico cannot be determined by how cheap goods/services might be to someone who doesn’t live there. Do you know that the taco you’re talking about was $1.50 five, ten, or fifteen years ago? If even the gov owns up to 2.5%+ then you know that actual inflation is even higher. 2.5%+ can hardly be considered “no inflation” anyway.
Those stats, who knows. Mexico is cheap. Would I live down there, heck no. Its dangerous now. Philippines is very cheap and dangerous too.
2.5% inflation is not going to drive gold. We had that spike top and likely we trade all over the place with a downward bias. IMHO.
Its a traders market. You can make a lot of money just playing the extreme trades. Like 2 weeks ago, going short. A long trade in December or January. High leverage in futures or leveraged ETF’s. Like JDST or JNUG.
Using a big bank roll and trading a few times a year. Anyway, gold is not in my risk category going long. Not for long term investment. It’s high risk using all my criteria
and scores low for long term investment. Always another train coming through the station. A leveraged short position on the SPOOS in the next several months could qualify for a very low risk free trade. Once it’s a 100% risk free, I will go short.
Opportunities must come to me, I don’t chase them. Never looking at the dollar signs ever. Playing to win like a chess game and greed is always blacked out. Never a factor and saying I need this money to pay bills or do this with. Once that’s a factor, people end up losing money. Disciplined and keeping my mind off greed to go have fun with my gains and spend money. All speculators end up back employed again because of all the factors above. Its a very rare breed of cat out there.
You got it Jake. Don’t let these guys fool you with ratios. Gold has been a very poor investment for many years if you just bought it and held on tight like so many suggest. It might have been the worst investment of all depending on the date you use to start counting. But the yahoos in the room would have had you averaging-down with monthly purchases of physical which only compounded the problem. It’s why I keep saying that the gold bugs are some of the biggest manipulators of all.
They can prove almost anything with a chart and some number magic. Just be careful not to believe it until you check the facts for yourself. Especially the start and end dates.
They are all cherry pickers.
Oh look…..golds down another 15 dollars this morning! And the dollar will hit .96
Wheeeeee!!!!!
The intermediate top in gold was a very easy call a few weeks ago. I suspect too, this bear in gold will not end until we see much lower prices. Oil to gold is at 24.
Extremely bearish !!
The white metals are sick. They can’t wake up in the morning , never mind get out oi bed. This is a long trade for rookies. They saw all that big money several years ago and this market is not going to recover to entertain their pipe dreams.
Very unlikely. Gold has always been a traders market. Rarely has long term investing been successful. Lots of volatility.
Trader Jack.
I never moved here. I was born down here.
What I meant was look at currency plays worldwide…dont be just US logic based.
Over here gold was at a new record high in local currency at the last pop up.
But investors like you seem to constantly overlook it…too US centric.
But no drama…like I said…..you snooze, you lose.
….there is always money to be made somewhere…. if your willing to take the blinkers off.
Cheers.
Nobody has mentioned the commercial COT report so far and so I’ll throw out a summation. For this week the disaggregated futures report of the commercial COT report reveals the silver position moving to about a net 8000 contract long position while gold showed a massive net 52000 contract long position move. Next week should reveal a further net long positioning for the PMs by the commercial especially since we’ve had 3 straight down days in the metals since the aggregation of the report on the Tuesday close. If this coming Tuesday is down, it’ll just add more fuel to the fire. As mentioned in the past we reached the 16.50 mark for silver and now have a chance to reach the before mentioned 15.50 figure—the odds are high. This move down will give those that missed the move up by the miners to get into an initial position while those that purchased prior will get a chance to slowly add to their positions over the coming 3-4 weeks.
I’m up to the task of playing a bounce Doc. But now we have arrived at the moment of truth. Because if this bounce cannot take metals prices over their major resistance levels and instead fall short of a genuine breakout then I can almost guarantee that its game over. In other words we need to see a higher-low AND a higher-high on the gold and silver charts to keep this so-called bull alive. And failing that it becomes exactly what I have asserted all along…..just a dead cat bounce in a secular bear market decline.
We won’t have long to wait to find out which way this thing will really goes.
Sorry, run that by me again Doc….are you saying the Commercials have gone from net short to net long?
Bird, what I meant to say is that the commercials reversed positions considerably as to direction —the trend has reversed where they are now exiting their short positions and purchasing long positions. The “net” verbiage signifies only that not the fact that their aggregate positions are now long—I hope that clears up any misunderstanding. Let me know if it does.
Thanks Doc.
How’s your holiday going btw? Been to any Crusader Castles yet or other great historical places? Whenever I travel its always the architecture that gets my interest the most. Especially old Castles, Churches and Mosques.
Have I seen castles? How about cathedrals. I’ve been castled to death—I feel I’ve been in a chess match. We’re leaving tomorrow–am in Praque. I think its’ the most interesting city we’ve been in. The history is great.
Doc,
I love Prague! I was 18 when I visited Prague in the fall of 89 when history shifted…..it was a magical time there a lot of hope and sadness for some of the students who stood up. I remember being in a commemorative parade of about 300,000+ strong walking the same route in commemoration of the uprising/strike…..as we walked in front of the opera house where colour printed Vaclav Havel pictures littered the sky….then the crowd stopped and sing….still gives me shivers!!!
Well I can relate to that sentiment Doc. The next time I step foot inside another pyramid is exactly never. I am OK with just watching them on TV now rather than taking a hot trip on a smelly camel just to get a few pictures and sit on an old rock. But that’s me.
This reversal is actually very important; it says to me, that we will have a higher low in gold/silver prices and a resumption of the upward move, resulting in a higher high later in 2016.
Anyone who has not started to buy the PM miners is being given a nice gift this summer.
By the way, going forward, I have decided to keep a much smaller core position in the PM miners, while doing a bit more trend trading with the ETFs. The impulse moves will probably be much bigger (both up and down) than I was expecting. For example, this may be a 50% re-tracement (when I was really only expecting a 25%)
Sounds good to me Brian. JDST is already up almost 50% from its lows a few days ago and looks like it has some very nice upside ahead this coming week. DUST is looking positive on the charts too as it broke above two prior peaks.
Bird, I don’t think the “bounce” is in the near future—we have more work to do on the downside. Silver has to hit at least 15.50 as mentioned before I’ll even consider a bounce, Gold has to get down into the 1150-1175 range and GLD down in the 110-112 range. Weeks ago I mentioned that we would see an interim low in gold in late May but it looks like June to me now. When we get the bounce, the next “intermediate” cycle will be decisive for gold as far as telling us whether we have a lower low in the offing or not. Months ago, I mentioned that if we don’t see a lower low by the end of the year, the probability of the low being in will be very high. The next 7 months will tell the story in my opinion,
June is a big month. No question about it. We have the next FOMC meeting on June 14 and 15 followed a week later by the Brexit vote on the 23rd. Both those events should put added downside pressure on metals during their seasonally weak period as the Euro softens and interest rate speculation is heightened. The other thing of course is that equity markets look to be on stronger footing and should rise into that period which is often gold-negative. Although I am bearish metals I still try to keep an open mind but lately it is getting harder to find reasons why precious metals will perform positively in the next while. Even the usual advocates have gone radio silent and pretty much stopped talking. Have you noticed how pessimistic the mood turned in just the last week?
That seems to be the case in all markets—I believe it was Vortex that mentioned how he doesn’t care where the PMs go in price since it’s not determining his purchasing of the stocks—I frankly agree with that thought process. Having said that, I’ve started purchasing the PMs themselves for the first time in about 5 years. I’ll continue to do that on a quarterly basis for a number of reasons. By the way, I love pessimism–it’ll create a nice correction in the PM stocks.
Don’t get trapped Doc. I still say this was a big suckers rally.
Doc glad you had a good holiday – doesn’t seem like a fortnight! I agree with Bird that June will be a hugely significant month. However in a recent interview over Brexit Paul Craig Roberts says that even if we vote ‘out’, which given all the propaganda looks unlikely, Washington will force down the pound to such an extent that on a yah-boo told-you-so rebound we’ll be forced back in. That said if Britain is forced back in, other countries like Greece and Portugal (with nothing left to lose) will according to Roberts choose their own outing. Thus not forgetting the FOMC and the Brexit vote, there’s Switzerland also voting next week on whether or not to accept helicopter money for every Swiss citizen.
Talk about the ides of (March) June.
Andrew, Switzerland is a very rich nation, why they would want to join in a union with anyone confounds me, along with it they will have to participate in accepting refugees which could destroy their existing way of life.
The developed economies can kiss the good life behind if they don’t start taking in a lot more immigrants because most are going off the demographic cliff otherwise. How else are the pensions going to be paid when there is one retiree for each two workers?
Developed economies need immigrants what they don’t need are refugees that don’t have anything to offer. It has to be you chose based on what they can offer. DT
It’s hard not to believe the EU is toast unless of course, the marxists in Brussels don’t allow it to happen along with the Western European US puppet led leadership.
Doc,
let me correct you they are not “marxists”, they are NEOLIBERALS.
The beat goes on, Toronto and Vancouver real estate in gridlock:
http://business.financialpost.com/investing/toronto-and-vancouver-suffering-buyer-gridlock-as-even-existing-homeowners-cant-afford-to-move
They are delusional there DT. Instead of just admitting they live in the midst of a huge bubble the author of that article spins the problem of lack of sales as though its some kind of traffic issue.
Too damned funny!
Falling sales is a precursor to the bubble popping though and it looks pretty sure the high end is springing a leak already which will trickle down to every other sales and income bracket over time. Remember, the most carnage is going to be felt in the least desirable properties first.
Junk that might fetch a million today because of the stupidity of bubble mania thinking might not catch a bid for a few hundred thousand a year or two down the road. Those get priced right back to reality quick.
And then outlying regions also will take a gut wrenching dive with many years before they can return to their highs (if ever).
Birdman- Do you still have an interest in Vancouver real estate.. downtown? or did you sell?Thanks. . just curious..
EU Passed Tax ID Numbers for Everyone – Armstrong
The EU is laying the groundwork for everyone in Europe to be given a new tax ID number in preparation for moving to electronic money.
BREXIT = SWEXIT Armstrong
REPLY: This is why they will rig the BREXIT vote. They cannot afford to let the British leave for it will set off a contagion. They know that. Sweden would vote to leave as well. They are getting the blunt end of the stick from the EU.
https://www.armstrongeconomics.com/international-news/europes-current-economy/brexit-swexit/
The Euro would double if Britain, Portugal, Greece and any other heavily debt ridden nations left the group. The Germans CANNOT let this happen or they will put several millions of their people out of work. They need these debtor nations to pump their product and surpluses into or the whole show comes to a close. What a s#i%t circus!!!!
The ugly truth about stock market manipulation and gold prices…
http://sgtreport.com/2016/05/the-ugly-truth-about-stock-market-manipulation-and-gold-prices/#more-456736
Major electronics company starts panic buying of silver from First Majestic.
http://sgtreport.com/page/7/
Andrew, an enlarged demand in electronics is probably due to Artificial Intelligence and the robotic machinery, they don’t need food what they need is a steady supply of quality electrical conductive metals at a cheap price. Nobody here but me has been talking about the super conductive revolution where machines are more qualified than humans. DT
Does anyone think I am fooling when I say ” The Machines are coming for your jobs. ” DT
Humans can’t prosper anymore without electronic intelligence, who is the slave and who is the master, ask your cellphone, or computer. DT
Not at all Dick: the robot acceleration is further speeded up by the new minimum wage requirements. Fast food outlets are in the front line for making lay-offs in this regard. Best, A
With vehicles of every description driving themselves and robots doing household chores we’re all being dumbed down into slouch potatoes. Hell, we don’t even have to spell anymore with prescriptive texts. I for one believe we’re being enslaved by technology.
Andrew, this article might be of interest to you.
https://www.armstrongeconomics.com/international-news/europes-current-economy/open-letter-to-the-guardian/
The article pretty well sums it up, especially looking at that growth chart.
The Guardian headline is supporting government propaganda that 9 out of 10 economists warn of a dire future if Britain exits the EU. For a newspaper who published Snowden, I would expect a lot more integrity on this issue. The Guardian is reporting propaganda on a grand scale. They reported that “Some 72% [of economists] said that a vote to leave would most likely have a negative impact on growth for 10-20 years.”
The propaganda implies that economic growth in Britain has benefited from the EU single market since it joined in 1973. Let us expose the lies and corruption propagated by this pool of economists. Using the government’s own statistics from the Office for National Statistics, annual economic growth for Britain peaked BEFORE it joined the EU and has been declining ever since. This forecast that leaving the EU will have a negative impact on British economic growth is clearly a bunch off lies. Annual economic growth for Britain has fallen ever since it joined the EU in 1973. Each rally produced a lower economic growth peak.
72% sounds reasonable, they all had the same teachers from the same school, therefore they should all pretty much think the same.
public buys it as they dont know there is more than 1 school of thought.
heck, they might not know what a school o thought is concerning economics, why should they?
Lots I dont know, global warming/ice age stuff for example.
Bobby – thanks – yes I too am near to disgusted with the Guardian’s ‘remain’ bias. Perversely it seems that The Sun is the only paper goading the government for its mis-truths. If you’ve got a spare hour the Mind Renewed interview with Dr Roberts offers a pretty powerful take on the argument. Best, A
Cameron getting Mainstream Media to Brainwash People – Armstrong
There are serious concerns arising in Britain how the mainstream media is on board on betraying the people at the request of the government. The press has been given the word to convince the people to surrender all their rights in Britain to save the bureaucrats in Brussels. The Telegraph newspaper has been using a different polling agency than they normally do in order to skew the pools to brainwash the British public that staying in the EU is the right decision and the majority are in favor.
Cameron has pulled out all stops to keep Britain in the EU. He is not telling the British that they will be assigned a tax ID number by Brussels and will be taxed to support the federalization of Europe. Cameron has called on Obama to the head of the IMF and the S&P to tell British they will be ignored if they leave Europe. There is no way the government is telling the truth and now mainstream media is in Cameron’s pocket. With so many people rejecting BREXIT, this demonstrates how important this is to prevent the meltdown of Europe. Britain is being told to commit suicide to try to save Brussels, which they cannot possibly do. This now includes the media.
of course they useing mainstream media to influence people, nothing new there.
Jeff Nielson on Crush the street talks about the recent rise in PMs as a head-fake prior to the banks taking down the market including gold in the coming crash. HOWEVER what may or may not be a lower price in gold is only an artificial contrivance by which the physical metal can no longer be bought. In other words despite the exhausting process of waiting for gold to make its unstoppable rally we should not be discouraged., i.e go on buying the metal for as long as it still remains available.
Go to SGT and scroll down to Crush the street
Jeff is a nice guy but he is going to get that one wrong. And the reason is that Central Banks buy the highs and sell the lows. It is no accident either Andrew. In that way the price is always moderated and if you are curious the CB’s have a long history of being on the other side of the trade when price is rising or falling. People are still confused why Brown sold off England’s gold at the very lowest of prices or why the Chinese and Russians bought the highs. Just watch and learn. There will not be any precious metal shortages once the final bottom is struck as it has always been this way. The CB’s will keep the market readily supplied if only to ensure that too high a gold price might destabilize the dollar and by default destabilize all the worlds currencies (it is hardly a dollar-only problem).
Bird, silly question on my part. Well, one that shows my lack of chart reading
knowledge.
“USD bounced firmly off the lower range of this seventeen month-long consolidation, with an outside reversal monthly candlestick, suggesting that the consolidation is complete. Expect a new high in coming months.”
This candlestick is the opposite to the one you showed for gold? would it be confirmation of the gold candlestick? they confirm each other?
Its from Jack Chan 321 gold if you want to look at the article.
Ive followed him for awhile, he is not too bad, always a week late tho.
Guess ya subscribe for daily thoughts.
Thanks bb. It’s great news! I had missed that entirely as I had become kind of focused on the metals charts the last few days. A lot of the stocks I was following are off 25 to 35% and just inches away from breaking below their 50 DMA.
When they start going through that line we are going to see a bloodbath.
Price is also just hitting the lower Bollingers and some people will assume a bounce is coming for many stocks. But the BB’s are turning down sharply in too many cases. To me that just means one thing…..that price will follow the lower BB down just as during the rise in price since January where price followed the upper line to the recent highs.
Anyway, yes, Jack is right. The dollar is heading higher on a direction change implied by the outside reversal and so we have a double confirmation which is very nice. I think this means the market has sniffed out a summer rate hike by the Fed.
It’s showing up on the USD chart as strength. Too bad for gold
(Yipppeee! 🙂 )
Well let others open up the debate here BM as without apology I’m out of my depth here.
OK…but I already know what most of them will say. They will agree with Jeff because it is in the interests of the gold agenda being constantly pumped on most blogs to assert physical PM shortages are coming. They have been saying the same thing for years. If its really true then why have gold and silver been falling since 2011?
Personally I would not touch physical metals with a ten foot pole anymore. Been there and done that. Its a losers game. The ONLY way to benefit from metals is to play contrary to whatever the bugs are doing.
Which is what I am back to doing now. They are buying…..I am selling.
On reflection my good friend Alasdair Macleod provides answers sufficient for me. So fear not all those who believe in gold! Best to all.
Scroll down:
http://sgtreport.com/page/7/
He is a chronic bull. Alistair never says a bad word on the topic of gold. Totally biased and so you cannot rely on his viewpoints because there is no balance. But he’s a good guy too so I won’t bother with it.
By definition my idea of a good guy is somewhat who is balanced.
Should read ‘someone’ – too much time spent with the grandchildren!
As always,
Thanks for the show/your efforts guy’s.
Much appreciated.