May the Games begin! Who will be the Gold Metal winner?

On Friday close, Jan 16th, 2015, Friday,  Long dated options for GDX and GDXJ, and many other stocks will expire.
I expect this week to be the week of games, as large bets over years come due this Friday.

Miners could do anything.  If they explode higher, I'd be tempted to dump some positions on Friday.
Gold has been holding its own for months, and miners are above their low.  GDX was down to 17 now trading around 20.

So the week ahead will be interesting across the market.

Will there be a Gold Metal winner?  I am hoping so!  good luck!

Gold Miners - Missing the boat?

Yesterday I posted "Gold Miners, Break Out?" indicating we may be on the verge of a break out.  Today there was a nice follow through.  GDX could turn back down lower, but with this channel break I think it is safe to put stops now in at 18.

GDX has been on such a slide for years, this maybe on the beginning on a multi-year run.
We haven't had a weekly moving average cross yet to confirm a multi-year run, but in the short term a nice trend change.  (see this post for long term indicator)

I also wouldn't be surprised in a whip-saw action into the yearly options expiration in mid-January, it simply becomes where the big money wants it to go.

To the chart!

Also Oil has taken a huge hit, which will help gold miners profits.  Whenever Oil bottoms, huge buying opportunity, anyones guess how low it will go.  There is severe international games going on with Oil, and Russia is taking the worst hit!

Russia 2 year federal bond is paying about 16%!!!! compare that to USA 2 year bond at 0.66%!!!
Oil price collapsed with Ruble devalued and Russia rates soaring is not a good time for Russia.

Gold Miners, Break out?

Gold Miners have had a nice run the last couple of weeks.
Of course, I am happy to see finally some gains, however I want to temper this optimism with a larger context.

I do believe gold miners can do well WITHOUT gold appreciating, simply due to cheaper energy.  A flat gold price with cheaper costs will improve stock price.

However, after watching gold miner beat down for last few years, best to wait for indicator of a trend change.

Taking a step back, Gold Miners (GDX) is on the cusp of breaking out of a range.  If it does, it maybe an explosive move.   Buying here at 19.44 you can use as a stop out price of 17.44, risking about 10% for upside gains of potentially much more.  I rise back to price of  $60 3 years ago would be 200% gains.
It is also important to know that USD has risen insanely rapidly since October, and Gold has held its price.  If USD reverses will be interesting to see if Gold rises.

To the charts! Use your own judgement.

GDX hits through 17.34

Just this past Thursday I said GDX should go lower around 17.75, well, we sliced right through to 17.34.  I still hold true that buy now, stop out 10% lower, now at $15.60, a low for 2008 is a relatively low risk play.  10% loss for possibly buy low deal.

Good luck!

Last Entry point for GDX?

If you want to get back in, consider putting various buy points at 18 through 16.25, with a stop at 16.
This will provide a 5-10% risk entry depending on your cost averaging.
Miners hit 60 bucks only couple of years ago, as the saying buy low sell high, unless of course buying low turns out to not be low enough :)

Considering 2008 crash brought GDX down to 16, its pretty low now.
To the chart!

Steve Basker, UK Parliament speech

A VERY good public speaking summary of the currency challenge the world is facing.  And the impact of how the entire wealth system is being skewed by the current system benefiting money creators.



I am thinking Bitcoin was simply the first volley, the NEXT thing is likely to be the big thing.
But overall this is VERY healthy to see we are bringing to the public discussion items I pointed out in January 2011, 'Ideal form of money, empower the people'
Time will tell.

Gold, USD, and 2015

If we ignore relaity, and look at the measuring sticks of USA proclivity, USD valuation, and  thins such as inflation, I think 2015 looks insanely awesome!
This statement comes with caveat of those who are employable and those who are not.
As I explain in March of the Robots Deflation for Decades, we will experience in the west downward pressure on the masses for income.

But right now, the question focuses on three things.  Interest rates (govern everything for future growth), USD valuation compared to world currency basket, and GDP to debt ratio.

The GDP to debt ratio is actually immaterial, for it rests on the stronger vs weaker to maintain sustainability.   So it less about mechanics and more about people positioning.

So lets take a look at on Interest rates and USD valuation:

We are not even close to 2002 valuations, so USD as room to run upward.
If it does all commodities are downward, including gold.

The real story is borrowing on future income, interest rates.
Looking at USD 30 year bolds, the gold standard for long-term debt, we can analyze the 10 year return:

then we come to gold, the outdated form of deflationary protection:

We have been on a tear since 1970, about when Nixon decoupled:

This DOES NOT mean gold = money.  Gold is the WORST money ever.  What this shows as an investment since 1970 god is about 3-4 times more valuable.  Depending on stock market plays, this is either great or terrible.

The low-down is we continue to be in a middle ground, looking for direction.
when that happens I expect gold to rocket 15% higher in one day.
Good luck.

Election Week and Miners

Miners are near a multi year low, there is no question when looking at an historical chart.
The question is, do we go ANOTHER 40% lower first?
Whenever the bottom is hit, I expect a mega rally back.
I won't add a dime here, wait for miners to break above 24.
However from the low of 16.89 on Friday to 24 is a 42% gain, and GDX was at 24 just last month!

I think the bottom will depend on the elections and reaction, so I don't think we will know the result until next week.
Today GDX rebounded to 17.91 from 16.89, a 6% gain.

I recommend a read from ChartFreak by clicking here.

Market Zooming to the moon, comments on miners

Very nice snapback rally, and we very well could see a nice rally into the end of year with new highs.
I don't see anything really to kill this bull, unless buyers simply disappear.

But who could be buying? Big institutional money I have to suspect has replaced the common stock investor.  I can't imagine tons o money from the 18 to 40 year olds pouring into the market.

As for Gold Miners, follow Chart freak through this, see what he says, now through the 30th may be interesting.

http://www.chartfreak.com/2014/10/23/look-dont-touch/

Permabear says time to buy?

Its no secret, I tend to see reality wich is negative.
But that permabear slant ignores that rules and measurements change.
We have changed the measurements to make a better outcome.  How unemployment was measured in 2007 is not the same criteria in 2015.
How we judge companies using accounting rules 1945 to 2008 is not the same since 2009.

So, is it time to buy? Without rules to judge something is wrong, really I can't wrap my head around how the market can make a move significantly lower.  If you have faith in system to repair itself and move higher, YES!!!! BUY BUY BUY

Until we return to honest accounting, there is no neutral regulation its up to you the IGNORANT reader (due to lack of honest corporate reporting) to decide.  Good luck

Market Returns vs Fixed Income

Today the S&P 500 took a 1.65% hit, which with current annual S&P 500 returns that is a major hit.
But lets take a look on how you fared if your money was in fixed 30 year US Treasury bonds vs the market, the ROI, assuming 3.25% fixed.

Over 5.5 years a return of 19.25 % vs 203% over the same period from S&P 500 low to high.

To put into perspective, lets look at the S&P 500 during that time period.

So almost any market correction will still put market investing ahead of fixed income investing over the same period.  And that assumes all stocks owned give zero dividends.  Therefore market correction of 4.8% over the last 3 days hardly puts this into a loss category.  

GDX has been holding about flat over the same period, we will wait to see if it pans out to be a winner.

Please see post Possible Turning Point posted on October 8th before the 4.8% market correction began.   If history holds true the market will rebound this week resuming the advance.  Then again, market history is not a gaurantee rule of thumb. See post Market Dislocation if you place faith in history repeats itself in the markets.  All I know is GDX has been beaten to a pulp, thinking it can't go much lower, and what won't go down will go up or sideways :) See Gold Miner Implosion, whats up with that?

Possible turning point

Turning points are impossible to spot.  Since 2008 my greatest fear is US over-reaction to financial crisis will spur an even bigger crisis.  Since then some of my worst fears have come to pass including lack of law enforcement, fantasy accounting, and worst of all appeasement.

Some rule breaking in the depths of 2008-2009 was needed, best not to take all the medicine at once.  But there has not yet been a time to knuckle down and return to normal law.

Today, the Federal Reserve bank released it's minutes and the International Monetary Fund warned the FED of possible trillion dollar losses.

Instantly, gold miners EXPLODED higher, as well as gold, and the overall market.
The 3x Junior miner ETF rose 43% in about 2 hours, quite insane.

Unfortunately, what this looks like combined with my other posts is a shift internationally.

First the FED basically announced more of the same, appeasement since 2008, easy money equals all is lookin great!  I fear that once this buzz wears off we may see reality finally sink in that more of the same fixes nothing, combined with the world critiquing the Fed.

This fear may be unrealistic so we'll probably get our answer by February, if not earlier how this 'free money' announcement plays out.

Its hard to say if my post 'full route in gold before the going gets good' is now behind us.  Every fiber of me says we saw the bottom and say its all good to buy GDX between 20 and 22 (probably will pull back from high today).
The post I did Sunday details how insanely low GDX is, how HEAVY buying was this past Friday, so buying at 'bottom 10% range' is all good.

Good luck out there, if what I think happens unfolds, gold and gold miners will have a VERY rough ride climbing the wall of worry from here to 5x higher. Once GDX hits 100 bucks a share we may start to see political bs appearing. This will not be easy money and will take until 2017 to reach a peak.

And of course, the USD has taken a hit.

Good luck out there, some charts!

USD

Gold Miners IMPLOSION, whats up with that?

If you have anything in Gold Miners, it has really been destroyed last few months just as the market exploded higher.
The beating of gold miners is so severe, I feel like a truck ran over me.
The question is, what the heck is going on?
Gold miners profits are a combination of price of gold, production quantities, costs, perception, and politics.

I say politics because for better or worse Gold has an element of Politics in the mix.
First lets take a look at the price of gold, in the last 3 months, it has dropped about 7%

During the same period USD has EXPLODED higher by over 8%

The correlation of price of gold to USD valuation seems correlated.  Thats because Gold like all commodities are priced vs demand, but the 'localized' cost is a reflection of each countries currency valuation.  If Gold demand collapsed, I would expected much more collapse in price.  Basically gold price is trading in a tight range for the same period.

Now lets take a look at USD over the longer haul, is 86 really out of line?

Still within reason, but it is amazing the market is at near highs and USD is also on a rocket ride up.  We are fast approaching the panic levels seen in 2009, and levels not seen regularly since pre 2005.  So from a near historical perspective, it is appears out of character.

OK, lets see what happend to Gold Miners (Brace yourself).

Holly hell, that can only be called an all out destruction of Gold Miners during the same period.

It can be partially explained that the change of Gold price down to US valuation combined with overall market strength and overall perception of low near term demand due to market stability.  Throw on there any political games and its a recipe for destruction.

The question is, are we near a bottom?

Lets take a look at GDX over the long Haul.

From a HISTORICAL perspective Gold miners is near its all time low from the 2008 collapse.  That is outright amazing! the worst collapse in modern history and GDX hit 16 bucks a share, and now we are at 20.6, amazing!  The panic selling began in earnest when the trend line broke down Friday.  This could be beginning of a freefall of GDX down to 16, or a final panic sell for a reversal.  There is NO NEED to jump infront of this train by adding more that what you may already have, wait and see.

NOTICE that the trend lines still show GDX is on a BULL trend up, not down, read and watch the video for the longer term trend indicator described on When to buy and get out of the stock market.

But I can say, from a historical perspective, Gold miners are DIRT cheap. Gold was at 700 oz at the depths of 2008 collapse and GDX at 16, while now Gold is at 1150 with GDX at 20.6.

PLACE all of this into context with my post Market Dislocation to help gain perspective. (click to read)

So in the end, whats the deal?  Frankly I am shocked at the beatdown Gold Miners has taken.  I knew this would be the hardest trade of my life, but still nothing prepared me to see GDX at these levels.

The facts remain, GDX is near all time lows, and it is possible it breaks those lows.  But as a logical guy, playing the odds, the odds in history say GDX will go higher than it is today.  I really doubt gold miners en-mass go bankrupt or the Asian demand for gold evaporates.  China loves gold, the greatest threat to gold is if China adopts Crypto-Currencies and runs from gold, a distinct possibility.  They could announce their own Bitcoin as the new standard for China.

If so the I would expect gold to go lower than 700 an ounce quite quickly.  Outside of such an event, Gold Miners are experiencing a panic sell off.  Once all those who will sell, sell, the bottom will be in, its anyone's guess when that will be.

At this point I am watching like a deer in headlights.  Once Call Options for 2017 for GDX are publicly tradeable, I may buy some at these depressed lows for the long haul.

I'll post when I do, for now its a watch and see.

I would expect if USD doesn't continue on a vertical line straight up, Gold price will stabalize.

I recommend checking out this blog for more frequent commentaries, Alex talks of any trading opportunities:

http://www.chartfreak.com/

The next currency

USA is the world currency barometer that all other currencies are measured against.  As such, no one country wants their currency to value or devalue against the USD.
If a currency becomes more valuable, their exports will become expensive.  If their currency devalues then imports become expensive.

This is simply because the other participants in the system will try to keep their currencies to be stable against USD while outlier countries fluctuate.

This system is freaking pure genius, the US can do whatever it wants and the world will react to ensure that status quo remains.  This includes if the US issues 1 million, 1 billion, 1 trillion, or 10 trillion new dollars in any given year.  The excess currency will be 'soaked up' by other countries preventing those countries from spending on local economies, but instead to buy US bonds to prevent currency fluctuation.

Think about that, there is NOTHING too outrageous the US can do without the world attempting to maintain stability of their currency no matter HOW BAD the impact is immediately to the country funds.   Simply because the currency change could cause severe and lasting effects from current local economies.

I am in awe of how the US was able to put this together under Nixon and cut from the gold standard to rely on this model for stability.

This system is pretty awesome really.  Lets ASSUME the US never abuses it's position and always does the right thing for everyone.  In that world, the status quo compels everyone to moderation for self preservation reasons.  And since fiat currencies can be created as needed, with almost ZERO cost, it serves as a very efficient value creation and maintainer.

So, whats the issue? For each country the currency creation is NOT done by governments, but instead is done by banks by 'lending' money to governments to create money.  This in effect puts a tax on every single dollar every created with an annual tax paid to the banks.  Don't get me wrong, I am not against banking, simply against an infinite fee for creating a dollar in 1945 STILL being paid to the banks through bonds.

Further the entire system is done behind closed doors.  Banks today declare their asset values simply by fiat, before 2009 it was by market valuations.  That's like someone in Detroit who's home is worth $1K declaring it is still worth 100K from 1980 prices.  You can't get away with such a declaration, and neither should anyone.  Currency and accounting must be equal from the lowest person to the richest person.  The richest should have every single advantage money can buy, without special 'systematic currency' privileges.

Bitcoin's secret sauce is the block chain.  Every single bitcoin is tracked and recorded publicly with millions of computers around the world.  NO ONE PERSON owns the general ledger of who owns what.  No one person can TAKE a single cent without the right key to prove ownership to transfer.
I have HUGE problems with bitcoin, but zero with the framework that Bitcoin brought to the world.

So when I see the graph below, I hope that when the USD finally loses it's status as the measurement of the rest, I hope a bitcoin-like public record replaces it.  I suspect the Chinese Yuan or worse yet, gold, replaces USD before we can 'discover' the genius of an open corrupt-free general ledger system.

I know with every fiber of my being that a system controlled by people who 'declare' new rules, special privileges, insider knowledge, opacity for protection of questions, or any paradigm that relies on individuals to simply do the right thing daily for 100 years is subject to atrophy, corruption, and failure.

A system such as block chain that DOES evolve, with clear transparency to every single human on the planet, and does so with intense visibility and critique will be much more trustworthy and long lasting.

Further innovation is to take the smallest bitcoin unit and use it to track a myriad of other items, such as contracts using the blockchain.


Good luck!

Market Dislocation?

For the last 2 major bull runs, the market ran about 5.5 years before a severe correction.
We are about 5.5 years in this bull run, the question is, what next?


I have been playing chess recently, and as such, I come to realize in chess, as in work, often it is all about positioning.   The global economic control, power struggle, and what is next is about what next moves benefit the USA in what seems like the right path.  More on this later.

Please look at picture below. Using history as a guide, we are in dangerous territory.
I honestly think we could have a 1-4 year parabolic run that explodes to the market of 2-5x current valuations.  The byproduct would be a full on collapse of USD in the world, relegating USA to second tier status.  The casualties of this would be severe in the world.
I am NOT saying likely, just that it is possible.  The driver of course would be full crystalization of lack of law and currency injection.  I give this a low percentage of possibility.
The 'Blame' of such an event would result in USA loss of global leader, hence, low probability, but possible.


What is more likely is for a correction to begin, we need to blame something.  Right now we are full of excuses for the picking.  We have Ebola in USA, ISIS, China, Russia, and a host of other challenges.   One thing is certain, if we have a market meltdown the result cannot be its because of the current structure, blame must be assigned elsewhere.

Ignoring paranoia talk about USD collapse or a tense market waiting to be pricked by an excuse, one thing to ask yourself.  Assuming USD and politics away, are stocks undervalued, equal value, or over valued.  To me, they are NOT undervalued.  At BEST equal value, but quite likely over valued.

Keep in mind that standard accounting in place since the great depression is STILL suspended, making valuations of financial companies truely a fantasy guess.  Without mark-to-market accounting, its pretty much 'take our word for it'.  With such loose standards, and a nice run up, I can't make a case for undervalued.

If there is a prick in the market, bonds should yet one final bull run, collapsing interest rates.  Afterwards bonds would be the last place to be, as I expect we enter the final phase of this game.
For now, cold cash, debt payoff, and investing in yourself are best.  Gold and Gold miners are pre-beaten up, but if a market correction happens tends to take all down with it.

In 2008, gold miners collapsed hard.  But when the market hit low in March 2009, they where up quite nicely.  Since miners are PRE-deflated, this time it may be a safe play.  China is a backer of gold and as I posted in previous post, aligning direct currency trading to avoid USD.  If they make a push with a crisis, I have to think gold atleast holds its own.

A mix of cash, stocks, and resources hopefully to weather what maybe a nasty turn.

Good luck!

Full route in gold before it gets good

Who knows, maybe the bottom is in.  But I fear a full routing of gold and we won't see a bottom until December-January 2015 finally.

Hopefully we get a nice bounce for a couple of weeks before the routing resumes.  For a really good objective look at gold and miner charting see chartfreak post here.

Gold is being politicized, and with politics comes games.  China is trying to get into the gold game in a big way, and I believe its part of their mult-fork strategy to take away USA as the global currency, signing deals with UK, French and German Corps, Russia, Brazil, Australia, Canada, Argintena, South Korea, Singapore-Malasia , UAE-Saudi Arabia (limited trade), and of all things Bitcoin!   

With such high stakes I can't imagine that we have a smooth ride ahead in any market.

In the next 3 months, I really have no clue about gold, I could easily believe it hits 990 an ounce before the bottom is in, and GDX hit 16 bucks.  Or its quite possible we are near the low and its a great time to buy.

With politics comes games, and with games you can't trust anything.  The US dollar has been the world currency for quite a while, and as the graph below shows, it isn't that crazy that the world will seek a change.

I am for Crypto-Currency to be the next world currency, meaning no country has it.  But I suspect we'll have to go through the pain of China attempting to take the world currency first, then later after that fails go to Crypto.  that could take a decade or so!

Eh, if only the worl operated effeciantly and just jumped to the end game :)

So your on your own through December, I really can't imagine 'knowing' the bottom is in until then.

Gold Blood

There is no denying it, gold in on an epic crash right now.
Frankly, I have no idea where this goes, and its likely to get worse.

The hope, thought is, when this is done, there are no more sellers, and the bottom will be in.
Is that 10% or 30% lower to find that bottom, who knows.
I wouldn't be surprised if gold hits 990 an ounce, enough to get full capitulation.

Starting Sept 26th-ish, China will open it's gold exchange in an attempt to take leadership in gold pricing.
Perhaps thats when the bottom hits, or not.....

I took an edge off Friday, I may dump more monday, each buck is a bigger % loss now, I simply can't take it.
good luck.

Robotic army advancing, deflationary forces accelerate

The sheer reason why the dollar and fiat currencies will not implode is that we will continue to have people increase in unemployment, lower wages, and generally people getting poorer.
As the money printing increases, there is NO WAY to force the money to the people, outside of government handouts in benefits.  The extra money of course, will continue to flow in those who own the technological infrastructure that is killing off jobs.  For those calling foul of politics why top 1% is accelerating in wealth, one has to only look at who will own the future robot army to see how wealth continues to concentrate.

I present to you different developments, click on each to watch the video or go to the article.
Keep in mind, technology gets 100% faster every 18 months for a lower price.

Robots are in use in Germany airport today to park your car.
Driverless taxi's are being deployed in the UK in 2015.  Robots already drive mining trucks.  In a decade I am sure 75% of transportation driving jobs will be lost.
Robots taking over restaurant jobs in China.  Apparently Chinese wait staff make too much money.
As wages rise for low cost workers, this will force acceleration of robot workers replacing fast food workers.
Not just low cost workers are being hit, Anesthesiologists making upwards of 300,000 a year are being replaced.
Associated Press will employ Robotic writers to create 1,00's of business articles each year.
Sports writers are already being replaced by robots, will readers notice?
I personally ate at a bar/restaurant in LaGuardia airport with no waiters, using tablets to handle ordering and paying for food.  A food runner dropped off the food to your table.
Amazon is leading the way of using robots to run their warehouses.
Robots are being used to do artistic work, such as writing music, and create paintings.
As I posted previously, robots are building houses at a fraction of the cost, 10 simple houses in 1 day in china.  Want a traditional house? Employ a robot bricklayer.
Bartending, Soldiers, Farming, Housekeeping, are also seeing robot army approaching.
I predict 10,000's of well paying jobs in corporate data centers will be downsized as operations move to centralized cloud hosting.
And of course, my favorite robot, Baxter.  A general purpose robot equivilant of the PC of the 80's, easy to program simply by showing it what to do.

This video highlights the massive deflationary forces the world faces.

America Economic Thugs, beats up Argentina for Vultures

Deflationary Forces

Market tanked yesterday taking everythign down, including gold and gold miners.
As of Friday AM, the market appears to be opening lower, but only marginally.
Setpping aside and waiting to see gold go ABOVE 1326 before buying in is prudent.
I'll be lightening positions today and sitting on sidelines somewhat.