Are happy days here again in the conventional markets?
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Yes , JAMES….It certainly is LOOP’Y…….The only ones who will make big money out of this , are the one’s at the top , the big money people , because when it’s about to POP they will be the first to know & they will be out like a shot , taking huge profit’s with them…..As for JOE average he will see his savings disappear in front of his eye’s , because he wont get out on time ……
I could not agree more!
Big Al
Really Al? You agree with James that the conventional market is in a bubble? I wonder how many here think so.
The market, while hardly a bargain, is short term overbought — that’s it. Remember, 14,000 is 2,150 in 1999 dollars. I remain bearish the conventional market in terms of gold, but neutral if we price it in dollars. Many here (and everywhere!) have been way too bearish for the last 18 months (or much longer).
QE to infinity cures all the economy’s trouble until it doesnt…And when that time comes…DO YOU WANT TO BE IN PAPER WITH COUNTER PARTY RISK OR GOLD/SILVER which doesnt answer to anybody except the person who actually OWNS them is possession?!
……..”owns them with physical possession”?!
Everything else is just noise and BS.
Marc, as I’ve stated before, I do not own any conventional stocks. I simply have a much more negative view of the dollar. The balance sheets of MANY blue chip stocks are much healthier than those of most nations — especially the issuer of the dollar.
NOWHERE did I ever state that QE cures any economic troubles. Note that the Zimbabwe stock market absolutely soared while that economy collapsed and the currency went away. We have shades of that process happening here and now. The market lags or leads the the economy all the time. Right now, I believe it is discounting the unhealthy effects of all this currency debasement. The Austrians call it a “crackup boom.” It will trick, then destroy, many investors as they become convinced that the coast is clear.
As far as everything else being “just noise and BS,” all markets everywhere, and at all times, contain plenty of noise and BS by someone’s estimation. The hallmark of all big moves, in any sector, is that most people are not on board until the end. There is a lot of sidelined money that will now buy the dips.
Getting married to a long-held point of view is natural and common. It happens when we become excessively biased. It can be costly.
Matthew,
Thanks for your observations. Yes, I do agree with your views. I was just saying that QE is the government’s way of “fixing” what ails the economy…we know disaster awaits. That is all I was implying. I generally agree with your very astute comments. If I didn’t I would definitely bring up my opinions. Am I biased about the PM’s. Yes. Why?
1. Negative real interest rates
2.Keynesian dominating global insanity.
3. Governments inability to stop or want to stop the madness.
4. The Eastern’s play on transferring real wealth to their coffers.
5. The West’s arrogance and myopic view that blinds them.
6. Currency swaps/trade agreements bypassing the US dollar with gold-backed bonds, letters of credit (back by gold) or direct outright purchases by gold. I could go on……
As it stand now I am married to the PM/natural resource sector until I see a drastic change or paradigm shifts that create as window of opportunity some where else.
Matthew,
Great point about the balance sheets.
And, another great point about being excessively biased.
Thanks,
Big Al
Marc, don’t get me wrong. I’m biased too. I might be less diversified than anyone here. I just like to keep my biases to a minimum if possible. Looking at value (using asset ratios) rather than the dollar price of anything is a good start.
great point Matthew……always thinking…..
I think equities remain overbought because there are no underlying fundamentals that are improving. Where are the customers or increases in demand? Even the Fed’s biggest apologists admit that more stimulus won’t do much for GDP.
As I said above, overbought, yes; bubble, no.
As has been the case for years, no real increase in demand is necessary. For example, if GDP were to fall by 2% this year, and, at the same time, the dollar were to fall by 10%, the net nominal gain in GDP would be about 8%. This, coupled with shrinking share floats, due to stock buy-back programs, helps to get per share nominal earnings up in the face of a bad economy. Also, with more and more people waking up to the risks they face in the bond market, a lot of money will be looking for a home. Most investors still would not even consider gold/silver/mining stocks. Waking up and wising up takes time. Until people do, the stock market looks likely to benefit by default. Even without immediate widespread interest, the resource space will still way outperform general equities.
Currency destruction has been the cause of inflation over the last decade, not demand/real GDP growth. Adjusted for inflation, GDP is WAY off its 1999-2000 highs. Western central banks have all been papering over a deflationary collapse. They’re not fixing anything, just hiding the REAL destruction to most people’s asset values. When the economy reaches its final bottom, there will be virtually no middle class left.
matthew….where do you see the dow….what number…..thanks….jerry ootb
Hi Jerry, I still think we’ll see a new high this year. If we get there quickly, the old high won’t be exceeded by much, maybe 20 points. If the rise is more methodical, with some “backing and filling,” we might see 14,450 or so before a meaningful correction begins. Or, if we go sideways first, building a base near the current level, we could approach 15,000 this year. I think we’ll see 16,000 or a bit more in 2014. This area is not only the point and figure target, but also the upper resistance of a big megaphone pattern. If we get through it, 19,000 is the target. If not, we could see 5500.
Whatever happens, gold will outperform.
thanks….Matthew…..
Oh sure, Matthew,
Here is why I feel that way:
To me, a bubble in the financial sense is a level that is not based on reality. I firmly believe that the current value of the conventional maket as measured by the Dow or the S & P is not based on reality.
I am convinced that the action in the conventional market is based on optimism cause by “interesting” reporting in the main stream media.
Am I perhaps getting cynical!
Big Al
Al, it could be that you are just not bearish enough on the dollar. Some would argue that the dollar’s value is not based on reality and should be much lower.
I would agree with that Matthew!
Big Al
In 1952 The US held 20,663 tonnes of gold, ( the last year Fort Knox was audited) by 1973 after they were taken off the gold standard they list their gold holdings at 8,584 tonnes of au.
In twenty years the treasury had disposed of 12,000 tonnes of gold. (1952-1973)
Forty years later they claim to still have 8,153 tonnes left. (unaudited)
Even foreign gov’t’s can’t get their gold holdings in the US audited, where has it all gone? DT
DT…..Try the “ROTHCHILDS”……………..If we ask for some back …..PRETTY PLEASE.
They will give us the one finger salute.
Is that a salute that you learned in the military, Mr. Irish?
Big Al
Hi Machine Gun,
I don’t know man, maybe Mr. Irish has it!
Big Al
DT- those pesky Germans only want a measly 300 tonnes. Yet it will allegedly take 7 years… As Schiff says the Fed may print the money and buy gold slowly to satisfy repatriation requests without setting off panic.
Yes indeed. Happy, sunny all over the conventional market but otherwise for resource industry..
silverfox – So lets get this straight, after 7 years the DOW is right back to where it started from, not accounting for the loss of purchasing power, the loss of investing time, and the tax bite that needs to be paid on paper profits and this is happy and sunny? I think not. Maybe you should follow Nadler to his new endeavor…
Really a good point The Greater!
Big Al
Insider executives are selling stock at an unprecedented amount right now—–9 sellers to every one buyer. The retail investor has gotten in recently in larger amounts—IRA’s etc. I’m shorting the vix since it’s at a low not seen but a few times over the last 2 decades. Bullish sentiment is high with some telling technicals.
http://finance.yahoo.com/news/sucker-alert-insider-selling-surges-181720960.html
IMHO I don’t think the retail buying is quite done yet but will end in a mini-blow-off-top soon. The masses may be getting clever enough to try to exit before the go-away-in-May logic takes over. Now try and figure out where the chips may fall for the PMs.
Dan
I believe we’re getting close—-for a number of technical reasons. One are the large price swings and we haven’t seen this for awhile. It often signals a market top. We’ve been in overbought area for a little while on the momentum indicators as well. Of course you can remain in over bought territory longer then one would like if you’re short.
That would put the timeline between now and early April for a ballpark Dow top IMHO only.
Dan
For what it’s worth, insider selling in August of 2009 was much heavier. For every $1 of insider buying, there was $31 of insider selling. The S&P was about 1000 and has gone higher ever since. Those on the buy were obviously the true contrarians. The current 9:1 ratio might need to grow before it becomes a worthwhile contrary indicator.
I tried that earlier shorting the vix with the etf: vixy but gave up. I learned that these vix etf’s don’t quite correlate with the true vix and are too risky. I bought some aapl today after selling a large number of gdxj at a loss and gained a good amount. It is easier to short with a market etf but still too early to do that I believe.
At least we think alike, Doc!
Big Al
Probably dangerous, Al.
Doc,
If thinking like you is dangerous….where do I sign up?…I could use some of that Doc (Matthew) intelligence about now…:)
BTW,
After so more thinking, I moved some more (modest) funds into the NEW Sprott fund SPPP today…platinum/paladium 🙂
I think palladium is a real “pretty” metal…it looks like the more expensive metal…interesting
Marc, palladium is at about $760. The chart shows it’ll probably continue to head up to $850 where it in all likelihood top in a double top. You might want to sell then or be a long time holder since the 50 and 200 week moving averages are in a nice swing up. The metal may move back for awhile when it double tops but the long term trend is still your friend.
marc…..you should have bought some of those platinum coins when they first came out…….now those are really attractive…..
But, The Tall, they don’t work in cigarette machines!
Big Al
The G&S Mining Index is scraping along at a triple bottom since last May for the last several days. If the conventional markets start to drop whether this index holds or not may be telling for the G&S stock perfomance until Doc’s outlook for this fall.
Dan
Thanks, as usual, Doc!
Money is “gushing” back into the market. Tells me that QE to infinity is creating another bubble. Peter Lynch, former Magellan Mutual Fund Manager, wrote in his book that a smart way to invest is to start your research by looking at who’s doing well in your own community. If you take that advise and stroll into Wal Marts sporting good section, for example, you’ll see nearly all their ammo is sold out! Try to buy something as common as 22LR. Nope. none there—ditto for all the other common calibers.
If “happy days are here again”, someone needs to tell that to the plebes cause it’s looking more and more like a Nightmare on Elm Street is in the brew than Happy Days on Main Street.
Afternoon bj,
Here is the million dollar question:
Remember way back when to a time when our parents complained about all the bad stuff that was going on in the world? I do.
None of my parents predictions ever came to fruition.
Are we playing that same game?
I would have to say that I truly don’t think that we are. How about you?
Big Al
I’m starting to use the fingers on my second hand to count the decades I’ve been blessed to walk this beautiful earth. Looking back, the 60/70s were kind of crazy–the Kennedy assassinations, riots in Watts and Detroit, Kent State shootings, riots outside the Democratic Convention, and undeclared war started via the Gulf of Tonkin Resolution which turn out to be based on mythology and so on. But back then, people had jobs, it wasn’t raining make believe money from the Fed, and our Constitution still overshadowed the totalitarians. Watergate looks like Candy Land compared to what routinely goes on today in government.
But today, the audacity of money and power is making a mockery of our institutions of government–and the plebes are starting to get it. Even the slow learners. The DC crowd and their mouths in the mainstream media are running out of hot air. The people feel cheated and lied to; yet the DC crowd doesn’t feel it; they don’t see it. They’re blinded by pomp and circumstance. THey’re drunk with power. I don’t know what they’re thinking. But their true overlords don’t want them thinking anyway. Obedience trumps brains any day. K-Street writes the laws, and our elected officials vote on them without even reading reading! Democrat, Republican–it’s all the same totalitarianism. Each divesting private citizens of their rights, but usually from different directions.
When I left the grocery section today to go pick up some fishing tackle, I was stunned to see the ammo shelves almost completely empty. In all my years, I’ve never seen that before. Actions speak louder than words, and that’s what’s going on on Main Street. They’re locking and loading, and that’s scary. That tells me people aren’t looking at the world like Ozzie and Harriet. The masses are angry and scared, and that’s not good.
IF money is flooding into stocks that is not a good economic sign, because of the reasons why. We don’t know for sure if people or fund managers are actually putting money into stocks, because the greatest percentage of trades are actually computers buying and selling for a dozen or so big financial firms mostly banks. How many actual trades are done by individuals? Very few.
In any case and regardless of whether or not money going into stocks is done by people or machines, the important part is where this money is coming from and why? If the money is coming from treasuries or other bonds, that is not good economic news because it means the Fed will be increasing its money printing to buy increasing amount of bonds. Perhaps the Fed, Walls Street and Washington believe that increasing money flowing into stocks will rev up the animal spirits in people to work more and harder, after all Washington and the Banks think people love their country, love their leaders and love to pay increasing taxes, never mind all the fraud, corruption, crimes and other disgusting things these people do.
Trillion dollar platinum coin, Yep that was really smart so what more incredibly stupid and dangerous ideas can these failed people come up with. Truthfully, I hope they play this current run up in stock scam a little longer because their other ideas are really terrible.
CLAY……Great points, you make….& i must agree.
What the opinion of the Silver Wheaton/Vale deal ?
1.8 billion gold stream deal
SLW which was not even a blip on a screen 10 years ago streams into a 100 billion dollar company.
This deal is interesting on a lot of levels.
One interesting take is this puts “Silver” Wheaton probably over 20% plus in AU production….this might convince those looking for exposure to Silver look to a
First Majestic sort of company. I own them both…now I guess I own a little bit of a Gold mine in Brazil and a few in Canada.
In Re….S&P lawsuit
Although I never was fan of the rating companies….what a company/instrument/institution is rated can be ignored when engage in proper due diligence.
With that said….. I find it odd that S&P is being sued likely because it downgraded US Debt…not because it triple AAA’ed all the what was later to be called toxic assets.
So it is being sued by an entity that is mad because its debt was downgraded….so said entity sues because S&P graded too high what should have been graded lower.
I can only conclude that S&P US debt downgrade may have been consistent with the merits of this lawsuit.
It can properly be concluded that S&P has a history of grading debt vehicles too high.
Therefore on can conclude they did not downgrade US Debt far enough!
When the last average Joe retail investor that got burned in 2007 and swore off stocks can’t take sitting on the sidelines anymore and rushes to the phone calling his broker shouting “Get me in!” you know we are at the bubble phase. We are there. That when the boys clear the table and rush for the exits. This is madness. Nothing new under the sun here. Hear we go loop de lou, hear we go loop de la, first I lost all my money, then I watched it soar, then I called up my broker, then I lost some more, here we go loop de lou, here we go loop de la…