As the day progresses optimism increases.
Click download link to listen on this device: Download Show
Good video. Must watch.
Big Al,
Interesting????? If you like lemmings running to their death as they get precariously close to the cliff, in their herd-like fashion; as they come to the inevitable conclusion of a tremendous CRASH awaiting them at the END of their CLIFF-DIVE!
What I love about Rick is he’s not a “one way, always buy, cheerleader”. A true trader.
BTW,
Grant Williams in his latest presentation – “DO THE MATH” outlines, at the end, what are the key points to take away from it. I think it is very important to re-emphasize one of those points that I have actually stated many times on this blog. (I am in no way implying that I “hold a candle” to Williams’ intellect and superior skill-set). But, here it goes again (grossly paraphrased). Just as important as being able to see the VAST, negative consequences of the distorted, mathematically improbable market indicators, you have to have THE TIME necessary for the markets to re-adjust themselves to the standard operating mean of the markets to account for these VAST MARKET DISTORTIONS. Having enough TIME and ‘buying” time is JUST AS IMPORTANT than KNOWING THE END GAME of this con-job, so you don’t get “BUMPED” out of the market PRIOR to reaping the benefits of YOUR ability to “see through the BULLSHIT”!
All the best,
Marc
Marc: Take look at the 10 and 5 year US treasuries. Sovereign debt is the basis of these distortions which because of the adage “Whats good for the goose is good for the gander” has created the massive trillions in derivative created by the TBTF banks starting back in the 90’s.
Unbelievable and just as insane ups and downs in nearly everything is now happening world wide as result of the Global marketplace. I believe we are transitioning from a market where people that have been trying to make money are changing to trying to save money. This is why people in nations with lower debt both public and private are buying gold while those living in nations with gigantic and increasing debt are not buying gold but playing the central bank puts. As sovereign debt in the west continues to expand, their bonds are sold by the private owners to the central banks who not only have to print to purchase these older instruments but all of the new ones being issued. Kyle Bass has talked about this disorderly transition out of bonds which causes the associated currency to decline. Japan is first, then UK and then US, Kyle says. Central banks print new money to buy these bonds which expands the money supply, but because governments in these nations see this as cheap low interest money they actually increase their burrowing and spending spree. Conventional stocks go up, military spending up and entitlement programs expands, but the currencies on trade weighted basis weaken.
People will say that the dollar is getting stronger, NO it is no because they are using a shrinking ruler to measure dollar value and not trade weighted constant ruler. Of course in economics there is no such thing as a static ruler that stays the same size except over the very long term which gold best represents.
Most people on this site are traders, but few are long term. Those that are long term stay the course both here and in the markets while those short term traders jump are short timers both here and in the markets. Who is right and who is wrong, that is dependent measuring stick being used.
You know who won by how much is in the bank at the end of each period, Clay. Some of us don’t like holding stuff that falls month after month no matter what the great reasons or what fundamentals are saying. This is a “drive by” market we are in now. You take what you can when the moment presents itself and then you get the hell out and do something else. In my own case, I am no fan of day to day trading by neither am I interested in big-picture long term theory plays. Neither work well for most unless you are a terrific timer or really plugged in politically. Everything meaningful is happening in the medium term periods meaning trade setups are considered over reasonably short periods of a month to three. I find if I focus on that I have a much better handle on what is worth buying and what is a sell.
PS…..gold is going to get
….dot dot dot…(I am not telling. You guys don’t believe in it anyway)
Very wise Bird Man!
It’s nice to see a man of similar thinking.
HaHa! Thanks Mark. Birds of a feather?
Mark and Birdman.
We are different philosphers….very different. I think I will sit tight and be much more successful in the long run than, especially Birdman, could ever hope to be. That is NOT to be construed as a “shot across the bow”. I am here to learn and listen…but, consider this:http://www.silverstrategies.com/story.aspx?local=1&id=40765. I can spot the PRIMARY trend..I stink as a trader…I dont have the time or patience. But, I will tell you, I have LOST plenty of POTENTIAL profits – knowing the primary trend AND losing my focus and nerve…..good luck!
Howdy Marc!
Long time no chat! I don’t have any problems with your approach, in fact there isn’t anything wrong with it, so long as it fits your style of investing. I am much more of a trader than an investor. I do own metals that I got a long time back and believe in their purpose. But I also have learned the hard way that a person really should differentiate between the “hype” that is evident in any sector and market cycles. I have found that being able to step back and look at things outside the circle, you can make a lot more money and reduce your headaches and nausea substantially. I had the learn it all the hard way but it is a lesson learned. As for luck. Nah. I’d rather stick with my charts, the use of stop losses, and limit orders than luck.
Stay frosty in San Diego!
I’m mostly in Marc’s camp, but I do trade a significant portion of the miners I have. Only a trader would call 1 to 3 months “medium term!”
I can’t imagine not looking at charts, but I wouldn’t consider other approaches to be based on luck. I would also never consider using stops for most of my juniors, but they have their place.
Afternoon Matthew!
I agree with not using stops on your miners. That type of approach would cause you to lose your shirt more often than not since they are more thinly traded than what i trade. I’ll take option plays on the higher volume, big mining companies like FCX,ABX, NEM. As for the smaller miners, that is where I would approach completely different. Some are so cheap and good quality, that one could simply put a small amount of “flush money” into them and just sit tight. Everyone has a different style and the important thing at the end of the day is trying to make green…or gold in some cases.
stay frosty!
Bird Man,
I guess it depends on what you are holding. My shortest trade so far is five years and I dumped that investment because I was tired of the aggravation. Still made money. I read the daily posts here strictly for entertainment and education. I have held physical metals for 20 years and never sold. I have stocks that are twenty years old also. I don’t grab what the moment presents. I simply hold as long as the fundamentals are right and/or the company remains strong because in the end fundamentals will win. I don’t care what happens in between. I do, however, have a hole in the water in which I dump money. It’s called a pontoon. Gator bit, snake bit and rusting but still manage to explore nature on the St Johns and enjoy a cold beer at the end of the day. I enjoy your comments along with the others on the board. Regards !!
Gatorman: I hear your thinking loud and clear. First gold I got I found mining in the mountains of the Pacific Northwest in 1969. The northwest because that is where I was born. I can remember each and every grain of gold I have sold in the past because it hurt and made me cry like pulling teeth even when the money was used for root canals and gold crowns for my own teeth. But I still have some of the gold in my mouth. Scuba diving in the Pacific off the Oregon coast is what I like to do and I hope and pray I don’t get bit by whats out there, because if Whitey does get me I wont be coming back. At least it wont cost my wife any big funeral charges.
Many thanks Gator Man. Maybe one day I will be down on the docks sipping a (non-alcoholic) drink along with you and admiring the wildlife. We have big Crocs where I am and they are dangerous as hell if you get too close to the water. Sneaky buggers too. Just a pair of eyeballs and a snout at the water line. They can sit for hours waiting and you hardly notice (except for all the signs telling you to keep back!). Anyway, I know the experience of having boats. Can’t think of a better way to drain a pocketbook but what the hell….you only live once. Despite all the money I put in the last pit of a hull I have few regrets. Nothing beats fishing.
Thank you, Clay.
Extremely well-articulated and spot-on. I REALLY appreciate all the BRILLIANT missives on this site. I have and will continue to learn A TON!
http://moneymorning.com/ob-article/schiff-us-will-win-currency-war.php?code=3243 2/3 of Americans to lose everything, Schiff, I will not be counted in that stat. DT
tie this in with the” 40 reasons to be concerned” ,,,,,and it is a sign not all is well,,,
That was a terrible article, OOTB. I read it and was less than impressed. Just cherry picking of data and exaggerating the potential outcomes. Not to mention it was repetitive on a number of points including poverty rates and the SNAP program. I could argue every single point the authors made without breaking a sweat and show they have come to the wrong conclusions but it is a waste of my time because like all sensational narratives little can be done to dissuade readers or believers that we are all doomed.
We are not all doomed by the way.
BIRDMAN,,,,,The article was most likely over your head, to comprehend such matters, you must speak in the form, most suitable for the masses to understand. While, trying to prove a point, it is proven that in today’s society one must speak no higher than an educated 8th. grader, and many things as you are aware, must be repeated more than once…………………AND YES, YOU ARE CORRECT, BUT, THEN AGAIN YOU ARE ALWAYS CORRECT…..right,,,,,,,lol………………….ootb
I do my best Jerry!
OMG…..not another Peter Schiff warning!
Does everyone realize he has been dead wrong for the past 5 years about what Fed easing would do? It was Peter who said we were heading into a hyperinflation (any day now), that our assets would be destroyed, that the dollar would collapse into a smoking pile of rubble and that gold was the sure-fire best place to be invested.
He suggested moving your assets offshore to protect them from the financial Armageddon that is surely on the horizon while eschewing the stock market as it was guaranteed to destroy your portfolio in the end.
Well, well, well… Years later, the dollar is higher, inflation is nowhere to be found, the US remains the most stable of all debtor nations, we have no hyper-inflation and no depression and the Fed is indeed going to withdraw stimulus little by little.
Anyone listening to that guy lost a bundle. Not only by divesting US dollar assets (the dollar is strong) but also by avoiding the stock market which has risen substantially and by being overweight in commodities and more particularly Gold which are now in sharp decline.
He is amongst the worst advisors I read. All his advice was just fluff and nonsense. Do I really need to say “Peter Schiff is wrong”!
🙂
We have a strong dollar? The dollar is down 75% versus the CCI (Reuters CRB) since its 2002 peak. We have no inflation? Commodities (CCI/CRB) have quadrupled since their 2002 low! Oil is still up almost 10 FOLD from its 1999 low. Even with this cyclical, counter-trend rise, the dollar has only returned to its 2010 levels in real terms. The USDX hasn’t even come close to its 2010 highs.
The fact is, VALUE is different than price. Value is what matters. This 2 year Dow rally has only taken the Dow back to its 2008 high when measured by the CCI/CRB. It is still DOWN 50% from its 1999 peak. When priced in gold, the Dow is currently down 75% since 1999-2001 top. In 2011, it was down nearly 90% -an extended rally from such a level is hardly surprising.
The dollar lost more than 60% of its gold value since 2008 as gold nearly tripled off its lows. At today’s “crushed” gold price, the dollar is still down 50% since 2008 and a whopping 80%+ since its 2001 gold peak.
A constitutional $1 million is worth nearly 50,000 ounces of gold. $1 million FRNs is currently worth just 720 ounces.
The number of people on food “stamps” has nearly doubled in the last 5 years. In the 1970s, 1 in 50 people were on food stamps; today, it’s 1 in 6.5. Savers are being plundered by your wonderful Ben in order to keep up the appearance that all is well.
With due respect, it is you, not Schiff, who has “fluff and nonsense” cornered.
By the way, Schiff never said “any day now” regarding hyperinflation.
Afternoon Matthew
I don’t think anyone would argue your points in certain commodities increasing in prices. If we wanted we could go all the way back to 1900 and show the same thing, thus you and I both know we have had a progressive devaluation in the U.S. dollar. But the argument for deflation currently is looking back just a few short years from when the Big Bubble popped. My agreement with Bird Man is in regards to Mr. Schiff’s predictions and the “timing” of those predictions, and like many others they have not been exactly spot on. But if we had “normal” market conditions, then no doubt much of what he said may have taken place. The problem is that almost all of these “experts” keep focusing on domestic economics and have not really taken into account how internationally linked everything is now. With Japan being on the verge of breakdown and Europe right around the corner from Mad Max Syndrome, do not be surprised if our U.S. dollar gets legs and moves to levels that would surprise a lot of people. This could very easily allow Uncle Bennie a great opportunity to exit the QE they currently practice. This may effect gold in the intermediate term, but in the coming years, gold will have its day, no doubt.
Good comment the hazards of Europe, Japan etc, Mark.
This is inflation:
http://mises.org/content/nofed/chart.aspx
Falling asset prices is not deflation. Even Keynesians know this. The cost of living continues to rise while wages and assets stagnate or decline.
But remember Matthew…
We still need to have all that created money PUT INTO circulation, thus increasing the Velocity of that money, which creates inflation across the board.
Robert Fitzwilson had this to say to Eric King:
“For all of those focused on velocity, it cannot turn up in our opinion as long as the denominator, M-2, is increasing to such bloated levels. It is arithmetically impossible.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/5/28_Gold,_Silver_%26_The_Fallout_Of_Continued_Chaos_In_Key_Markets.html
Remember that hyperinflation and “regular” inflation are very different outcomes with different causes. While both are ultimately the result of money printing, hyperinflation only becomes a risk when the supply of money overwhelms the demand for money. “Good” inflation happens when the economy is expanding. This leads to demand for currency/credit for investment and speculation. “Bad” (hyper)inflation is due to a contracting economy at a time when the money supply continues to grow. Rather than demand for the currency, the currency becomes a “hot potato” and gets dumped with an increasing urgency that becomes a self-reinforcing spiral. This process began more than 10 years ago, yet few recognize it. Gold has been lecturing in front of an empty classroom. Gold perma-bears wear the dunce cap.
The market will continue to discount the actions of the Fed. Record low money velocity in the face of such Fed actions should hardly be comforting or confidence inspiring. Instead, it should be seen as an opportunity to exit at-risk assets while you can still do so at a decent price.
Consider, too, that the terrible performance of the dollar (that I was talking about above) took place WITHOUT all that new money going into circulation. In addition, it took place without a bursting bond bubble. In the 1970s, gold and interest rates went up together. Few seem to realize that fact. If real growth slows in Asia, etc., it will be good for gold since there would be less demand for the record amount of new money sloshing around.
He has only one flaw to his argument.
That being that the demand for dollars is INTERNATIONAL right now, not domestic. This is why I can’t agree to hyperinflation. We aren’t a third world economy whose money only circulates within our own borders. Plus he once again compares it to a certain time of our nation’s past and not across a current international financial sovereign debt crisis. I keep hearing a lot of the “model” economic arguments being brought up but they aren’t playing out like so many have been calling for.
For clarity, I want to make sure readers know that only the first sentence belongs to Fitzwilson, the rest is mine.
My intention was to distinguish hyperinflation from plain old inflation. The focus of any debate should be on whether we’re in for more inflation or (finally) deflation. Hyperinflation is not the opposite of deflation since it is the result of the central bank’s efforts to fight underlying deflationary forces.
If every large economy in the world suffers a severe economic contraction simultaneously, the potential for a global hyperinflation increases.
It bears repeating, falling asset prices is not deflation. A contracting money supply is deflation. If it weren’t for all the inflation since 2000, the cost of living would have declined since then to reflect the falling real demand for most goods due to a contracting economy with high unemployment and flat to falling wages.
Thank you for clarifying that, Matthew! Have a great afternoon and remember…
Stay frosty! 🙂
Cheers Mark, it’s beer o’clock!
Matthew
Since you like to trade those miners so much, did you catch that nice bounce in PVG? Past two weeks a feller or missy could have made some nice coin on that one! I didn’t missed it though 🙁
In just the last 8 sessions I’ve had good gains in several, including some way out-of-the-money calls on GDXJ, but I don’t own/trade PVG. It was trading over $15 the last time I looked at it!
Gold is not a valid measurement of dollars, Mathew. It is a commodity that has been experiencing a period of excess speculation and has reached bubble proportions. A bubble by its definition is an instrument, stock or asset that appreciates far beyond usual measures based on sentiments and beliefs amongst investors that it will continue to rise and be profitable for buyers. The notable attribute of such events are increases in price above historical norms that ultimately go parabolic as new waves of buyers are attracted and then it bursts in a steep decline. So it is therefore folly to measure gold against dollars as the one is stable (dollars) while the other is experiencing a euphoric rise that cannot be sustained over the long term. This is easily proved by looking at graphs both present and past. Silver in particular has made a notable parabolic move to almost 50 dollars and has now burst. That is not in doubt. It is now in descent and cannot recover until it has mean-reverted. Both the rise and fall of silver are notable on charts as the price behavior is clearly exceptional rather than the norm. Look at the historical graphs for yourself before arguing this point. Peter Schiff meanwhile is no dummy. He knows this as well as anyone else but is not being entirely truthful with his audience because he runs a political agenda. Try to look past what he is saying and think for yourself rather than lap up any nonsense spewing from his microphone. The issue of food stamps was never being discussed here by the way so I am not clear on why you brought it up. I will ignore the rest of your post.
Gold is the MOST valid measure of dollars. IT is the most negatively correlated. IT is only a commodity in the general sense. As an asset, IT is a financial asset; IT is money. That’s why it trades at the currency desks. Commodities –NOT gold– tend to understate the decline of the dollar because they are tied to the economy. Just as demand for the dollar begins a secular decline (due to economic contraction), demand for commodities declines even further.
Gold has been money for thousands of years. It still has the most stable, enduring value of any asset on earth. The dollar has been evaporating for the last century while gold continues to buy what it always has. Gold has also outperformed the Dow by 3 to 1 since 1971.
I would be happy to debate the details (why gold is not in a bubble; why the dollar is not stable) with you, but it seems you don’t like facts.
Your analysis is confined to a 40 year window dominated by a grand socialist experiment.
First Birdman:
I don’t agree that gold has reached a bubble status. yes it got ahead of itself but a bubble…naahhhhhh. We are FAR from a bubble but we will see one in due time.
Second Matthew:
There is ONE thing I am going to disagree with you on and that is your comment that “gold has been money for thousands of years” This is simply not true. There has NEVER been a CONSISTENT and CONSTANT use of gold as money for every day purposes, throughout every year, every decade, every century, across all empires. Gold and silver have been used intermittently, throughout much of human history as a form of money or currency but not always and definitely NOT by all empires. Gold HAS always been considered as having value but has not consistently been used as currency. Heck, even the early Native Americans didn’t value gold like the white settlers. I used to believe in that story as well until I started researching this. Value is perceived by the individual. Some want utility and convenience over stability. This is where I think the term ‘”value” gets misconstrued.
Mark, of course I agree that it was not used everywhere and at all times, not even close.
I based my argument mostly on its long term value (purchasing power). As a unit of account, it has remained remarkably stable no matter what the political environment is. The proof is in the pudding, not in the demands of tyrants like Stalin, Mussolini, FDR, or Hitler. It remains money whether governments like it or not. This is why they hate it and have to outlaw it.
Gold is also fungible, durable, convenient, and has no counterparty risk. Only U.S. treasuries are more liquid; but they fail as a store of value. They fail in every other property money should have as well. Only gold is private money.
Shouldn’t money also have intrinsic value?
So, money and currency are different. The number one job of money is to store value. The number one job of currency (besides looting the people) is to circulate. And circulate it does once people realize it is evaporating!
http://www.youtube.com/watch?v=fA51wyl-9IE This song is for DB and the others, Richie Havens at Woodstock. DT
DT…..Richie should have ran for president, at least he can play the guitar
oh, btw….I forgot to tell you, that is the first time, I remember running into'” BIG BANJO AL”, he was suppose to play after Richie, but ,got tied up in traffic………..
Jerry, do you see how my generation that thought they had it right because their parents were so wrong became the biggest hypocrites of all time, not only did they sell out themselves but they sold out the future. DT
http://www.youtube.com/watch?v=xuUBCF3KKxc What are we fighting for. DT
“Come on Wall Street, don’t be slow,
Why man, this is war a-go-go
There’s plenty good money to be made
By supplying the Army with the tools of its trade…” Country Joe and the Fish
War is a Racket -US Major General Smedley Butler
In the (First) World War a mere handful garnered the profits of the conflict. At least 21,000 new millionaires and billionaires were made in the United States during the World War. That many admitted their huge blood gains in their income tax returns. How many other war millionaires falsified their tax returns no one knows.
How many of these war millionaires shouldered a rifle? How many of them dug a trench? How many of them knew what it meant to go hungry in a rat-infested dug-out? How many of them spent sleepless, frightened nights, ducking shells and shrapnel and machine gun bullets? How many of them parried a bayonet thrust of an enemy? How many of them were wounded or killed in battle?
http://www.ratical.org/ratville/CAH/warisaracket.html
http://en.wikipedia.org/wiki/Smedley_Butler
http://www.zerohedge.com/news/2013-05-28/nyse-margin-debt-rises-new-all-time-high-net-worth-slides-record-low
I wonder how much margin is taken out for gold shorting.
Thanks Paul. I read the link and conclude the author is wrong (like most who don’t understand the politics of the region). An Israeli incursion into Syria will have almost zero impact on gold if oil is not threatened. Not to worry. Assad is in a weak position and cannot mount a credible defense against his own countrymen never mind launch an offensive against Israel for no purpose whatsoever except to create distraction. The rest of the world is already pretty savvy to those tactics and nobody is having the wool pulled over their eyes in that regard. He has few remaining allies in the Gulf in any event and none of significance that will disrupt oil supplies if his arms shipments are attacked and destroyed. The preposterous idea that he will be fortifying his nation to battle another country while he is in the midst of a civil war is almost a joke these days. His position is very weak on all fronts including the majority amongst the UN Security Council and more particularly amongst his neighbors in the Arab states. Attempts to acquire and deploy missiles against neighboring Israel and expand his war without provocation are unwelcome by most nations under the circumstances and little will come of Israeli strikes that deprive him of Russian weaponry. This is a Red Herring story as I see it and not a condition or setup that will promote gold prices in way shape or form. Even Russian intransigence on the issue of the provision of weapons to a regional ally are not cause for real alarm. This has already been going on for many decades and is just business as usual for the partners. Call it an irritant in the larger scheme. During the days of the old Soviet empire, Syria was a key ally in securing and legitimizing port access to the Mediterranean for Russia. Little may have changed in that regard over the years but we are now witnessing a shift that will deprive modern Russia of the benefits they had fostered with their close relationship to the Syrian dictatorship. A new government in Damascus will no doubt look unkindly upon their past support for a regime that has been responsible for so many deaths of the civilian population and even the Brotherhood (if elected later) will have a pro-Western bent. That is to say an anti-Russian position comes out as beneficial to Western interests in the big picture. You have no doubt heard of Katyusha Rockets. These small, unreliable Russian produced weapons have been shipped into the countries neighboring Israel by the tens of thousands for almost 40 years and have never (incidentally) materially impacted gold prices in all that time despite their continued use. I know this for a fact having lived bunkered down through a 48 hour Katyusha rocket attack launched by Syria (via Lebanon) on the Golan many years ago. Gold stayed flat. What else was news? What really affected gold was, in a nutshell, oil and oil shipments and in that respect we can divine a great deal more by reviewing our history of the oil embargo and the energy crisis of the 1970’s. Even more to the point, the moment when Israel sunk 40 ships in the Suez back in the late Fifties depriving us all of the most strategic shipping route to the Mediterranean and by virtue of that to the West was a moment when both gold and oil responded. While Israel did play a role (on several occasions) in the troubles and by damaging the Suez canal they were not a primary reason behind the energy crisis itself that came much later. That was indeed driven by money alone and a desire of the exporters to cut a better deal with the major importer (who we all know is us). In that regard, Israel was but an excuse of convenience to drive up the heat in the region and pressure the administration but it is important to understand no such similar circumstance exists today. The major exporters are for the most part satisfied with their oil revenues and trade agreements and as a result what Israel does or does not do to protect its interests is immaterial to energy itself. An Israeli attack on modern missiles to protect its self interest will not therefore impact oil and so it will not boost gold. Do not make gold bets from that viewpoint.
BIG AL………could you get someone to talk about the HEDGE FUNDS shorting gold and silver, and outlook based on this case…………..thanks oooooooooooooootb
http://www.brotherjohnf.com/archives/176323
This is a youthful opinion. Not sure if I should call him AL Jr or the anti-Al.
bobby……his opinion….is exactly that …..OPINION……which ,,I do not think he has all the story…………educated by the system…..I had to stop the tape,,,two min. into his ,wishy washy, talk………..GEN.2 -11………the name of the first (river) was PISON,
that is it which compasseth the whole land of HAVIIAH, where there is gold……
vs 12..and the gold of the land is good……………….
Jerry, exactly my point! Does it not remind you of anyone?
Does Al still own Canasil?