KER Commentary – Mon 3 Feb, 2014

The markets are all connected and it is thug-ly – Bob Moriarty

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Featuring:
Al KorelinCory FleckBob Moriarty

Comments:
  1. On February 3, 2014 at 10:57 am,
    CFS2000 says:

    Tell it like it really is, Bob.

    Why buy gold when shorting the market via buying puts is a more efficient use of money. Besides it is less risky.

    • On February 3, 2014 at 12:04 pm,
      HEAVYHITTER says:

      In the great depression those that had gold were buying real estate
      for nothing. Several gold coins could buy a house or nice piece of
      land.

      My grand pappy told me one guy bought nice spread of land for a few
      gold coins so he could park all his new cars on it.

      COULD IT HAPPEN AGAIN…..MAYBE.

    • On February 3, 2014 at 2:36 pm,
      franky says:
    • On February 3, 2014 at 4:05 pm,
      HEAVYHITTER says:

      HEY…..CFS ZIPPO …ZILCH OOO……….Put your glasses back on the corn chart.

    • On February 3, 2014 at 4:51 pm,
      Shad says:

      Good interview. Always like to hear Bob on the macro level comments.

    • On February 4, 2014 at 5:16 am,
      bill buchanan says:

      If you fail you have a short piece of paper vs a short piece of gold ? DUH!

  2. On February 3, 2014 at 11:02 am,
    SEB says:

    Bob for president! 😉 Bob don’t you dare going anywhere. We need you here!
    In Sprott we trust! haha

  3. On February 3, 2014 at 11:06 am,
    Matt R. says:

    I always have time for Bob!

    • On February 3, 2014 at 12:34 pm,
      Ann says:

      Ditto ,Bob,# one!!

      • On February 3, 2014 at 12:42 pm,
        Andrew de Berryhttp://Rev) says:

        YES!

        • On February 3, 2014 at 1:05 pm,
          JERRY the Long..................O^OTB says:

          Bob M….is the man……….

  4. On February 3, 2014 at 11:12 am,
    CFS2000 says:

    Why is XAU going down?

    • On February 3, 2014 at 11:24 am,
      Matthew says:

      The XAU is only 75% gold miners while the HUI is 100% gold miners. HUI components also do not hedge beyond 1.5 years. In addition, the XAU contains more large-caps.
      The HUI has been outperforming the XAU for the past month, and for good reasons.

      • On February 3, 2014 at 11:39 am,
        HEAVYHITTER says:

        the HUI, does not hedge past 18 months ? Is that info. current.

        At one time HUI co’s never hedged at all.

        Last 5 years I heard they were all getting reckless.

        Thats why they stop moving when gold keeps moving up.

        • On February 3, 2014 at 11:49 am,
          Matthew says:

          It’s still considered unhedged. As far as I know, nothing has changed.

          • On February 3, 2014 at 12:13 pm,
            HEAVYHITTER says:

            I take that back…last 10 years a lot of them have flipped and have been hedging.

            BANKER SALES JOB.

            These miners do have some issues and problems.

            HUI was performing very poorly as gold got over 1550 on that big run.

            Anyway……………………..

          • On February 3, 2014 at 12:42 pm,
            Matthew says:

            My take is that $1550+ gold brought in big retail (bagholder) money for big early money to distribute to. The smart money had 1000-1500% gains that needed to be booked.
            In my opinion, that process of distribution is over and the current setup is similar to 2000-2001.

          • On February 3, 2014 at 1:06 pm,
            HEAVYHITTER says:

            Investors knew these miners were not hedging…HUI could have done much better.

            It lagged terribly. One reason these miners can’t get out of their own way.

          • On February 3, 2014 at 1:12 pm,
            Matthew says:

            Possibly, but big gains are good fuel for subsequent poor performance.

          • On February 3, 2014 at 1:45 pm,
            HEAVYHITTER says:

            HUI should have been screaming with gold where it was.

            Investors have always complained about hedging.

            Does not help shareholders and if you are a gold bull….

            I beg to differ….lots to do with hedging.

          • On February 3, 2014 at 11:48 pm,
            Matthew says:

            I disagree…

      • On February 3, 2014 at 11:52 am,
        CFS2000 says:

        TSX GOLD INDEX also down.

        There’s something fishy.

  5. On February 3, 2014 at 11:12 am,
    Dick Tracy says:

    Can you imagine the emberassment if Yellen changes Bernanke’s prescription, I don’t think it can be done without the markets going banana’s.

    Look for steady as she goes on the Niagara river and over the falls. DT

    • On February 3, 2014 at 2:45 pm,
      Cory says:

      I agree DT. If Yellen changes course immediately the market would be shaken. I am waiting for some new program that keeps the easy money flowing into the markets.

      • On February 4, 2014 at 1:12 pm,
        ManAboutDallas says:

        There will have to be a “cover story” to justify reversing the taper. So look for some exogenous news event cleverly disguised as a Black Swan to set the stage for the reversal.

  6. On February 3, 2014 at 11:22 am,
    HEAVYHITTER says:

    BEWARE OF INSURANCE POLICY ON HOUSE OR PROPERTY

    Exclusions are does not cover …..RIOTS AND ACT OF WAR.

    If it really gets bad…..real estate is a ….GONER…

    Get rid of your house and buy farm land.

    LAND….they don’t make anymore and its hard to destroy.

    • On February 3, 2014 at 11:33 am,
      HEAVYHITTER says:

      Insurance companies use the word….CIVIL UNREST….as well

      No, there is no coverage.

      • On February 3, 2014 at 12:23 pm,
        SILVERMAN says:

        HEAVYHITTER, I’AM AN INSURANCE AGENT 35 YEARS….. YOU ARE RIGHT ON THE MONEY ON THAT ONE.

        • On February 3, 2014 at 12:27 pm,
          HEAVYHITTER says:

          We will see another housing crash much bigger than before.

          Aging population and maybe some serious civil unrest.

          See what happens. I’m a land lover.

          • On February 3, 2014 at 12:39 pm,
            HEAVYHITTER says:

            These hedge funds who bought all these properties and renting them out
            ….also reports are all these properties look horrible not being taken take
            of at all.

            GUESS WHAT…..liquidity gets bad and looks to me it will.

            HEDGE FUNDS WILL BE SPITTING THESE PROPERTIES UP…..

            IN FRINGIN ……DROVES…..not alone on this..ask Robert Shiller…all time housing expert.

          • On February 3, 2014 at 1:09 pm,
            JERRY the Long..................O^OTB says:

            HH…..I guest the hedgies never had any tenants,,without income and a job……..

          • On February 3, 2014 at 1:10 pm,
            JERRY the Long..................O^OTB says:

            guest….guess……..

          • On February 3, 2014 at 1:40 pm,
            HEAVYHITTER says:

            Good point Jerry. Business cycle heading down. Jobs lost.

            The Fed has made the housing recovery a temporary illusion.

          • On February 3, 2014 at 1:45 pm,
            JERRY the Long..................O^OTB says:

            HH….I agree on the housing mess……….

          • On February 3, 2014 at 1:46 pm,
            JERRY the Long..................O^OTB says:

            the next move for the hedgies on housing …..will be…..RENT TO OWN……….

          • On February 3, 2014 at 1:47 pm,
            HEAVYHITTER says:

            Jerry, I’m not certain, but doing the math…odds are getting there

            HOUSING IS IN FOR A VERY BIG BUST.

          • On February 3, 2014 at 1:50 pm,
            HEAVYHITTER says:

            Another good point ..Jerry

            HA… rent to own….but when investors can’t pay their bills
            won’t last long.

            YIKES……SELL…SELL

          • On February 3, 2014 at 1:55 pm,
            JERRY the Long..................O^OTB says:

            HH……..REAL ESTATE has been in a pickle since 1982….and the start of the MCMANIONS….the baby boomers forgot to think who they were going to sell
            their overpriced house to……….Now, we have the start of ASSISTED LIVING FACILITIES.

          • On February 3, 2014 at 1:57 pm,
            HEAVYHITTER says:

            Regardless all these properties starting to look like a rats nest
            hedge funds own.

            Who is going to want to buy all those stink pens.

            Bids are going to be lowered across the board.

          • On February 3, 2014 at 1:59 pm,
            HEAVYHITTER says:

            Couldn’t agree more Jerry. Demand is just not gping to be there.
            Baby boomers are a dying breed.

          • On February 3, 2014 at 2:00 pm,
            JERRY the Long..................O^OTB says:

            I agree,,,,who is going to want to have an unemployed renter, that gets a check from a bankrupt govt……………and rent controls………

          • On February 3, 2014 at 2:08 pm,
            Birdman says:

            Hate to disagree guys but housing will rise along with rates. That is the usual correlation. Keep in mid also that US housing is still coming off a historical low point. It has momentum even if the short term picture looks bad. I would not worry about it.

          • On February 3, 2014 at 2:15 pm,
            JERRY the Long..................O^OTB says:

            BIRD……….it is all about the glut in housing,
            , and the down sizing, and the boomer, lose of jobs and income.

          • On February 3, 2014 at 2:18 pm,
            JERRY the Long..................O^OTB says:

            Here is a new stats …. Youth 20-30 yrs. old.., are going and living with their grand parents, these would normally be first time buyers.,,,,,

          • On February 3, 2014 at 2:40 pm,
            JERRY the Long..................O^OTB says:

            Bird…..rising interest rates , require more income, or reduction in the unit cost…..(with no consideration given to down payment ) The historical low point is because there are not as many x or y gens as baby boomers…..and there is a glut of housing,
            pLUS..the interest rates are not realistic, the govt. has supported the low and no down loans, which have been proven to be trouble since 1970 or before.

          • On February 3, 2014 at 2:41 pm,
            Birdman says:

            Yes but most of the money, savings and assets are in the hands of the same demographic you refer too. Ever seen the data on age groups? Like you say, the kids are poor but I think the grey generations have more staying power than we give them credit for. They don’t all need to sell their homes in any case. There is no predictable path to a big asset sell-off in other words and if prices fall so will supply as the older group just hunkers down and waits it out.

          • On February 3, 2014 at 2:56 pm,
            JERRY the Long..................O^OTB says:

            Bird…..the grand parents of these 20 -30 yr old ,,,are the boomers………..the greys are the ww2 generation and are in the nursing homes and retirement villiages

          • On February 3, 2014 at 3:36 pm,
            HEAVYHITTER says:

            HA….no way..Birdman

            The housing market is full of speculators. Thats what caused the bust in 08.

            Now Wall Street is in housing even in a bigger way.

            There is no need for housing not like homeowners wanting a roof.

            Incomes are way down…baby boomers down sizing.

            HOUSING IS WAY OVER VALUED

            HOUSING BIG BUST IS NEXT. Stock bear…Wall Street is now in trouble.

            Armstrong has a chart down for the next 15 years after 2015

        • On February 3, 2014 at 2:47 pm,
          JERRY the Long..................O^OTB says:

          Bird….the staying power ,,,has been depleted in the last 6 years…..for the boomers who were savers……….have lost a fortune……”zero on CD is a big wack out of ones earnings and potential future earnings.”..
          Only….25% of the boomers have saved $56,000 as an average…..25% do not have a dime

          • On February 3, 2014 at 2:56 pm,
            Birdman says:

            All the more reason for them to hold on to their houses for a revenue stream. Rents have been rising. I doubt the eventual selloff will be as severe as some are projecting. In any case, it would happen across a span of 20 years or more. A lot can happen between now and then.

          • On February 3, 2014 at 2:59 pm,
            JERRY the Long..................O^OTB says:

            You can not afford to maintain , repairs, taxes, on a Mcmanion,,,and rent to someone, that can not afford to own one……………..the renters are not going to pay the amount that is required if the owner has a mortgage on the property…..the numbers do not work…………

          • On February 3, 2014 at 3:49 pm,
            JERRY the Long..................O^OTB says:

            Bird….thanks for the debate….appreciate your time…..really……..and you to HH…

  7. On February 3, 2014 at 12:44 pm,
    Phil says:

    The LAST bloody thing you want is for anyone to notice this rally. We are struggling with the 200dma.

    • On February 3, 2014 at 1:09 pm,
      Matthew says:

      The leaders aren’t struggling at all. Have a look at PPP or even TGM.V or tiny TYP.V
      GDXJ is being held back by the lower quality components.
      I welcome the bears that want to short this rally. There are buyers waiting for them.

      • On February 3, 2014 at 1:40 pm,
        Phil says:

        SMF.TO IS the leader

        • On February 3, 2014 at 11:36 pm,
          Matthew says:

          What’s your point, Phil? Plenty of leaders are above the 200 dma. Like the ones I mentioned.

      • On February 3, 2014 at 2:37 pm,
        Birdman says:

        Gold is a short as I see it but that is just me Matty….a big old cynical gold bear.

      • On February 3, 2014 at 7:59 pm,
        Vortex says:

        TGM.V now has 400 Million shares outstanding. I don’t know about you but even if it is a nice little company and may produce in 2-3 years that is alot of shares with even more dilution in the future.

        I see shareholders being kicked in the ****’s with a reverse split sometime in the future on this one.

        The little guy/gal always takes it on the chin.

        • On February 3, 2014 at 11:45 pm,
          Matthew says:

          Vortex, I think you should sell TGM.V immediately if you own it. Development stage companies have to raise money. That’s just the way the real world works. Grown-ups haven’t sold a share since they are invested with an eye on the big picture and the big win. I will happily buy at 38 cents even though I own it at much lower levels.

  8. On February 3, 2014 at 1:12 pm,
    Eric says:

    FWIW, here is my approach on the broad stock market…
    wherever the market happens to find support, pay close attention to the bounce. If we fail to make a new high and then accelerate through whatever near term low is made, you will have the primary trend change which would (for me) favor the end of the bull market.

    Note that while the definition of a bear market is a 20% decline, during modern history the average cyclical bear market decline (within a secular bull) has been close to 30%. And the average decline during a cyclical bear (within a secular bear, has been close to 40%)

    If an index moves down 30% there are plenty of individual stocks that are down in excess of 50%.

    A possible strategy for someone who is overweight stocks (or simply nervous about the chance of a primary change in trend, would be to raise some cash during any upcoming bounce.

    If stocks were then to make a lower low, that person would somewhat less likely to sell aggressively into a panic, given that they had raised cash.

    With regard to mining stocks — if the market were to experience a crash, I would assume that the sector would be brought down with the general market (though I would look for a possible divergence — that is relative out-performance).

    On an intermediate/longer term timeframe, I still expect the metals prices to move higher and a large rally in the miners.

    I am not a registered investment advisor, but simply expressing my own opinion.

  9. On February 3, 2014 at 1:18 pm,
    Eric says:

    an after-thought…
    while it is extremely difficult to predict a crash, markets do not typically crash off an all-time high. More typically, they go into a solid correction and then have a failing bounce.

    It is that failed bounce and the acceleration through the initial low which is the environment for a crash. This is what happened in ’87.

    Once you live through that as a trader, you always have it in the back of your mind. Should this market have a 10% down move, and then a failed bounce, there will certainly be comparisons drawn. Whether it ultimately proves out, who knows.

    • On February 3, 2014 at 2:37 pm,
      Birdman says:

      Good point Eric. Meanwhile, the raft of recent bad market news, rising Vix, EM troubles, China worries etcetera is just an inducement to get enough people short the market to power it higher again. Does not worry me in the slightest that we have seen a 1000 points peeled off the Dow. Not yet anyway……I suppose it could get scarier and as you suggest we could get a failed bounce….nawww!

    • On February 3, 2014 at 3:00 pm,
      Cory says:

      Very interesting post Eric. I agree when you say a major fall in the conventional market will bring down the PM stocks. I do not think they will get hit as hard but if this does happen it would be a great buying opportunity.

      We will continue to watch if the trend for the conventional markets change.

  10. On February 3, 2014 at 2:55 pm,
    Eric says:

    Bird…
    I grant, it is an open issue right now. You could be right. That’s why investors will learn more from the bounce than the initial decline.

    Sort of the flip side to what we recently saw in the mining sector. When we had the initial ramp, it was at first unclear whether they would simply range trade and head down to re-test lows; or consolidate and ramp still higher.

    We got the ramp and now perhaps another round of consolidation before more of the miners make a run for higher moving averages above.

    My bias is that the broad market is finally ready to change trend, but the jury will be out until that bounce.

    • On February 3, 2014 at 2:59 pm,
      Birdman says:

      Could be right, Eric. I am a believer this is just a healthy overdue corrective period. The US equities trend is still intact pretty strongly and we should be seeing more money flow back in if the bounce I suspect transpires. The recent bad news is just meant to scare the shorts off some people!

  11. On February 3, 2014 at 3:14 pm,
    CFS2000 says:

    Until the Dow broke MA(200) today I would be in Birdman’s camp, but now I think Eric is making sense. Time will tell!

    • On February 3, 2014 at 3:57 pm,
      Birdman says:

      That just makes it all the more convincing, CFS. How else are you going to stampede some folks into running for the exits just in time to drop a curtain on them? On the other hand, Eric is making a convincing case and as you know my wife still agrees with hime that I am an idiot sometimes. We shall see!

  12. On February 3, 2014 at 10:15 pm,
    Village idiot says:

    Bob doesn’t know the big picture details. US stock market will be fine this year. 2015 on not so. He don’t see one of the biggest moves ever and now he’s going to call the top.
    Also he didn’t call this extreme mash up on gold. Common man I’ve got some guys that called both. Our windscreen is clear and we know where we are going. China is heading for the ditch but will take some time.

  13. On February 3, 2014 at 11:37 pm,
    Village idiot says:

    Bob did call the silver top….the US market can be a safety for capital?

  14. On February 4, 2014 at 1:05 am,
    Village idiot says:

    And I should mention I know a few guys that lost a shit load from Bobs moose pasture stocks…

  15. On February 4, 2014 at 10:04 am,
    SanDiegoMan says:

    nobody, and I mean nobody can time the market correctly. They may hit it once or twice but people always try to pick the time. If you have a longer horizon there are some great miners out there with good management, good cash, and some good projects, and good cash flow. They are the dogs of the market right now but they will see their day. Bob is right. Gold stocks will do very well over the next 5 years. However, most people that are reading this now will be long out of the market by then…..

    • On February 4, 2014 at 9:52 pm,
      Spette says:

      Whatever your horizon is, you are timing. You are timing by claiming the next 5 years will do very well, don’t fool yourself.