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What Happens To Gold & Silver When Trump Attacks The Dollar?

Get prepared because we’re going to have the worst economic problems we’ve had in your lifetime or my lifetime. – Jim Rogers, Macro Outlook in the Trump Era – MacroVoices

Make no mistake, it’s going to get ugly at some point in 2017. Elijah Johnson at Silver Doctors invited me to discuss why I believe Trump’s policies, assuming he gets anything passed and implemented, will be phenomenal for gold. Another factor not being discounted or widely discussed is an acceleration in the rate of inflation over and above the ability of the Government’s CPI sausage grinder to mute actual price inflation in everyday consumables.

Demise Of The American Farmer Reflects The Demise Of The Middle Class

Too much debt, poor capital allocation decisions (McMansions, expensive leased cars, spending to “keep up with the Jones’) and declining disposable income.  It’s hitting the general middle class in America similarly to the way in which it is hitting the American family farmer.

The Wall Street Journal posted an article titled, “The Next American Farm Bust Is Upon Us” earlier this past week.  The bubble in farm land, just like the general real estate bubble, was precipitated by the Fed’s money printing and general easy money policies.  The cover story was that the policy was directed at stimulating economic activity.  But the actual result varies, with banks, corporations and ultra-wealth elitists benefiting to the detriment of the rest of the country.

A friend and colleague of mine who happens to be a wheat farmer shared with me his real life experience with trying to compete against the Monsanto-driven corporate farms in this country.  He’s working to move the production of his farm from wheat to industrial hemp but will need legislative help in his State to accomplish this:

Where some farmers get in trouble is spending too much for new equipment, and/or not fertilizing enough (or at all)… and/or not being good farmers in general.

For farmers carrying a high debt load, it’s challenging right now. Prices for wheat and corn will rebound eventually, but I’m not sure these grains are the best crops for farmers to grow going forward.

Russia is the world’s largest exporter of wheat, with Canada and the US tied for #2. Russia is also increasing their corn production (non-GMO) to be competitive with American farmers. Although demand for wheat and corn will never go away, these reasons are why I’m bearish on grain farming… and bullish on industrial hemp.

That’s why I’m cautiously optimistic about the industrial hemp bill becoming law in my State this year (fingers crossed).

Make no mistake, the plight of the farmer parallels that of the general middle class.  While some portion of the middle class is doing the proverbial celebratory end zone dance right now over the few thousands in paper profits they are making in the greatest stock bubble in U.S. history.   Most if not all of them will hang around too long and watch paper profits turn into paper losses when this historic equity bubble pops.

Meanwhile the Establishment elitists are coming out of the woodwork and warning the proletariat to take their profits out of the market and run, like these comments from James Tisch, CEO of Loews Corp, Tisch family scion, member of the Council on Foreign Relations and former director of the NY Fed.  In reference to the average retail investor.

In addition to Tisch, several other Establishment elitists have issued warnings, including Bill Gross, Larry Fink, Ray Dalio, George Soros and Sam Zell.   As my good friend and colleague, John Titus of Best Evidence Videos has said presciently:

One of the rules by which the elite aristocrats abide is they consider it rude to not issue a warning before they do something bad to us. They’re like criminals with manners. In other words, it’s gauche to flush the toilet while the serfs are taking a shower without giving a “heads up.”

 

11.1 Tonnes Of Paper Gold Dumped In Sixty Seconds

Central banks stand ready to lease gold in increasing quantities should the price rise.  – Alan Greenspan, 1998 in Congressional testimony on OTC derivatives

Gold has been in a steady uptrend since December 18th, bottoming at $1131 after a four and half month price correction.  Firmly back over the 50 dma, the price momentum appears to be a threat to the “bullion”  banks who suppress the price of gold in the paper derivatives market on behalf of the western Central Banks and, ultimately, the BIS.

The banks must feel threatened by the recent activity in both physical and paper gold trading.  This morning the price of gold was attacked in the Comex paper market after St. Louis Fed-head, James Bullard, delivered remarks about interest rate policy that should have propelled the price of gold higher:  “We think the low-safe-real-rate regime is unlikely to change in the near term. This means the policy rate can also remain relatively low over the forecast horizon” (link).

Instead, the Comex was bombed with paper:

At 9:54 a.m. EST, 3,927 April gold futures contract (paper gold) was dropped on the Comex. Prior to this, the the average number of contracts per minute since the Comex had opened was under 500 contracts. This is 11.1 tonnes of paper gold which hit the Comex trading floor and electronic trading system in a 60 second window.  It represents approximately 30% of the total amount of gold the Comex vault operators are reporting to be available for delivery under Comex contracts – dumped in paper form in 1 minute.

This reeks of fear.  The western Central Banks have grossly underestimated the eastern hemisphere’s appetite for physically deliverable gold.  Despite an attempt by the BIS to mute India’s demand by restricting the availability of cash in India’s banking system, India’s current demand is robust and will likely increase as Indian’s now have cause to fear the Indian Government’s war on cash.

In addition, China’s demand for gold seems to be accelerating.  Based on Swiss export numbers, 158 tonnes of gold was shipped to China in December.  Far higher than the numbers presented by “official” organizations tracking gold flows.   Current premiums to the global market price of gold on the Shanghai Gold Exchange are running in the low teens.  So far this week well over 100 tonnes of gold have been delivered onto the SGE.  Except for the PBoC, all gold distributed inside China must first pass through the SGE.

The western Central Banks will have a problem if the price of gold begins to take-off, as they will lose control of their ability to control the price using derivatives.   Perhaps in addition to the standard price containment operation on the Comex this morning, the attack on the price of gold in the paper market was in response to Eric Sprott’s comments on King World News yesterday:

“There’s no doubt about it if they (investors) keep coming in and buying that kind of tonnage. At some point they will look inside at what little gold is left in the Western vaults and say, ‘No mas. We can’t keep doing this at the rate that they are buying tonnage because we will run out of gold.’ And if they see that they are going to run out of gold in a year or so, when do they raise the white flag? I have told you many times that the Western central banks have been making up for the imbalance in term of supply and demand by dishoarding their gold hoard surreptitiously”

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Rare Honesty From A Corporate CEO

In my view, the mood of these markets is in stark contrast with the many unknown from our current economic and political landscape, both here and abroad. For me, it’s a major disconnect, and it concerns me.  – James Tisch, Loews CEO (call transcript sourced from from Seeking Alpha)

James Tisch shared some extraordinarily candid observations about the financial markets on Loews Corp’s Q4 earnings conference call on Monday.   I say “extraordinary” because I do not believe I have ever heard, in well over 30 years of capital markets experience, any corporate CEO – or any corporate officer – ever speak honestly about the condition of the financial markets.

With regard to the amount of capital and credit made available by the Fed:

In the credit markets, spreads on the high yield securities are approaching historically tight levels, while key credit metrics such as leverage and coverage ratios are showing signs of weakening. The leverage loan market has been overrun by such massive inflows of capital that you could probably get loan to buy a fleet of zeppelins at this point in time.

That statement references the flood cheap capital made available by the Fed that has facilitated the greatest mis-allocation of capital since Greenspan inflated the tech bubble and Bernanke inflated the housing/mortgage bubble.

The merger market is being driven by large pools of private and corporate buyers, the wave of private capital combined with the abundance of available leverage at remarkably low rates has enabled private equity firms to pay big prices for companies that haven’t already been gobbled up by strategic buyers.

That statement is quite remarkable.  Thinly veiled in diplomatic finesse, Tisch essentially acknowledges that the private equity investors have fomented a massive M&A bubble and are significantly overpaying for acquisitions.

And the coup de grace:

In my opinion, the markets are priced for perfection, and they have been that way for quite some time, complacency reign supreme. However, my experience has shown me that this state of affairs won’t go on indefinitely.

In short, the market is historically overvalued and it will not end well for those who continue to hold long positions in the stock market.

In 2000 Greenspan has created a tech bubble which he said he could not see.  In late 2007 there was a housing and mortgage bubble, the existence of which Bernanke denied.  And now there’s an “everything” bubble, to which Yellen is role-playing Hellen Keller.

Panera Bread stock is a text-book example of the insanity in the stock market right now. PNRA announced earnings yesterday and “beat” the Street.  But here’s a synopsis of its numbers:

System-wide same store sales increased just .7%.  Franchise SSS dropped 1.4%. Franchised stores are 55% of the store base. Operating margin dropped 40 basis points. Net income in Q4 dropped $22.8 million from $24.7 million in 2015. Company bought back nearly $400 million in stock during 2016. It just issued another $200 million in debt. If it wasn’t buying back shares, it would not have needed to issue that debt. The share buybacks make the EPS look better but the net income of operations fell quarter over quarter and year over year.  That’s how PNRA “beat:” financial engineering because its net income declined quarter over quarter (2016 vs. 2015) and year over year.  – excerpt from an email exchange with a Short Seller’s Journal subscriber

For that, PNRA stock is up 8.4% today.  A $4 million year over year drop in net income has generated a $400 million one-day jump in PNRA’s market cap. This stock is trading at 38x trailing income as its ability to generate profits.  No wonder insiders are selling stock more quickly than passengers jumped off the Titanic.

I look at dozens of companies every week and insiders are furiously shoveling their shares into the market at well over 90% of these companies.  They all understand the same problem in the capital markets to which Tisch addressed.  In that latter regard, it was as refreshing as it was unique to come across an insider who was honest.

IRD To Mitch McConnell: Exactly Who Is The Thug?

The NY Post reported that Senate Republican “leader,” Mitch McConnell called Vladimir Putin a “thug” in response to DJT’s interview on 60 minutes.   It’s hard for the U.S. Deep State to hide the U.S. military build-up in the NATO countries surrounding Russia’s borders. This includes the takeover, in effect, of Ukraine by the Obama Government.   I think we can all agree that NATO is a de facto “shell” for U.S. military operations.   With that in mind, I pulled the interesting graphic to the right, with some edits from me (click to enlarge) from an article written by an options trader who also posts commentary on Zerohedge.

The U.S. has been literally flooding the NATO countries surrounding Russia’s borders with offensive military assets.  Recently the U.S. deployed tanks and special forces personnel in Poland.  A week later, the U.S. deployed 900 marines in Norway – the first time since World War Two that foreign troops have been allowed to be stationed in Norway, which is a NATO member.

So Mitch, looking at the actions the graphic above and interpreting the actions of the U.S. Department of Defense, who exactly is the “thug?”

Trump Will Be Great For Gold And Silver (If Nothing Else)

I love days like today when both gold and the dollar are green. Historically, some of the best moves in gold occur as gold and the dollar move up together for short period of time. Today, of course, is just one day. And there’s no question that the Trump Government will need a significantly lower dollar in order to stimulate U.S. industry, assuming the latter is at all possible anymore.

On the other hand, if somehow Trump manages to get Congress to pass his border control and excise tax proposals, consumer prices on the products being imported at prices much lower than the same products can be produced domestically will soar. Let’s not forget, gold loves inflation.

In terms of the fundamentals supporting gold, the Fed’s unanimous decision to leave rates unchanged confirms my suspicion that the likely next move sometime later this year will be some sort of loosening of monetary policy. Consumer liquidity continues to dry up. This is especially evident in the retail sales reports plus the big drop reported for January auto sales.

In addition, various price inflation reports are starting to emerge. On Feb 1st, Bloomberg reported that the Citigroup Inflation Surprise Index, which is a global index that measures price surprises relative to market expectations, is at its highest in more than five years. Even the Government-produced inflation reports in the U.S. have been coming in “hotter” than expected. This is a difficult feat given all of the hedonic adjustments plus other various gimmicks the Government statisticians inflict on the data in order to mute the ability of the index to measure true inflation (note: the manipulation of the CPI was implemented by the Arthur Burns-led Federal Reserve shortly after Nixon closed the gold window – they knew what was coming, which was massive money supply expansion and the resulting price inflation).

In other words, even the Government will be unable to hide fully the effect that trillions of QE and credit expansion is having on consumer prices. This will act as a turbo-booster on the price of gold when this reality eventually grips the capital markets.

In the physical markets, despite China’s week-long closure to observe the Chinese New Year (Year of the Rooster), the eastern hemisphere markets continue to “consume” a lot of physical gold. Premiums all week in India have been high enough to reflect moderate to heavy legal kilo bar importation. Dore bar imports have been flowing steadily for several weeks.  Additionally, Vietnamese were paying $135 over world spot gold, indicating voracious demand.

The latest official Swiss gold export report for December shows that the Swiss exported 154 tonnes of gold to mainland China in December. This was almost four times higher than exports to Hong Kong and more than three times the amount of gold shipped from from HK into China’s mainland. This would be the gold that enters China via Beijing and Shanghai that goes unaccounted for by the World Gold Council and the GFMS data-keepers. Additionally, East and South Asian countries accounted for 87% of Swiss gold exports in December.

Thus, contrary to the popular mainstream financial fake news, China’s appetite for gold remains voracious. Needless to say, all the “stars are aligning” for what could be a spectacular year for the precious metals and mining stocks. Not the least of which is the unpredictability of, and the undefinable nature of, the Trump presidency.

Most of the above commentary was an excerpt from the February 2nd Mining Stock Journal.  In that issue I reviewed five previous names presented, of which three are significantly higher from when the MSJ presented the idea.  Of the other two, one is down about the same amount as the sector since August and the other one is a silver exploration company that is percolating on top of what may turn out to be one of the larger silver deposits in the world in addition to containing large quantities of zinc, lead and gold. I also mentioned an emerging producer that may be acquired before summer.

You can subscribe to the MSJ here:  Mining Stock Journal.  The publication is a bi-weekly newsletter with unique insight on the gold and silver market that also focuses on undervalued junior exploration and emerging producer ideas.  New subscribers, for now, will receive all of the back-issues.

I am a subscriber to both of your journals.  I just want to say “WOW” to this post on your site. Thank you for all your work. As a financial professional of 28 years’ experience, I can tell you why there is no churn in your journal subscriptions. Your work is extremely sound and well done even in a massively manipulated environment.  –  recent email from a subscriber to the Mining Stock and Short Seller Journals

A Preposterous Jobs Report And Preposterous AMZN Earnings

On a trailing twelve month quarterly basis, AMZN’s operating income growth has plunged from 30.2% in Q2 2015 to just 3.6% in Q4 2016.  This is a stunning drop in growth considering that AMZN’s stock is trading at 92x operating income and 134x net income. That’s before accounting manipulations are stripped away.

The fake news abounds.  It’s seeping from cracks in every part of the U.S. system.  It’s one of the hallmarks of a collapsing economic and social system and, even worse, the onslaught of totalitarianism.   Orwell’s vision was stunningly prophetic.  Of course, he was simply reconstituting history and warning us about the lessons which everyone seems to forget.

The latest non-farm payroll report, the data for which is compiled by the Census Bureau and manufactured into fake news by the Bureau of Labor Statistics, wants us to believe that the economy produced 227,000 jobs in January.  If you look at the “not seasonally adjusted” employment numbers, the number of people employed dropped by 1.25 million.

This is in an economy in which retail and auto sales plunged in January, which means retailers and domestic OEM’s cut back on employment – two major sources of employment in the economy.

In fact, according to the BLS fake news jobs report, “retail trade” was largest component of job “adds” in January. This is quite interesting given that retailers have been dumping employees en masse plus big box and mall anchor concepts like Macy’s are shuttering stores by the 100’s.  In short, that statistic is simply not credible nor supported by the facts. By the same token, auto manufacturers have been cutting shifts and shuttering production lines, as dealer inventories are ballooning and used car prices are plummeting, with a flood of low-mileage, well-maintained leased cars coming off lease.

The BLS is making the claim that “construction” was the 2nd largest category of job adds in January.  No way.  An apartment building and commercial real estate glut has formed. The default rate on CMBS (commercial mortgage-backed securities) is climbing as loans mature and borrowers are unable to repay or refi them – LINK.  Furthermore, the issuance of CMBS in 2016 was the lowest in the last 4 years.  If commercial r/e loans are not being sourced and therefore projects are slowing down, how can construction employment increase?

Restaurant sales are in freefall – a fact of which I have detailed meticulously in my Short Seller’s Journal – which means the standard plug used to goal-seek a specific employment number,  part-time waitresses and bartenders, is a fraud.  Moreover, with wage growth slowing down and real inflation wreaking havoc on non-discretionary expense items, it would seem highly improbable that “leisure and hospitality” would be the 3rd biggest contributor to the employment rolls.

In short, the Government employment report is once again not even remotely credible. But this should be expected.  First, the Census Bureau’s data collection apparatus not only is called into question constantly, but the CB has been caught submitting fraudulent data collection reports.  Some of the data collectors decide to take extra long lunches or visit the pot dispensaries in States where applicable and then submit fraudulent reports rather than conduct actual data collection.   Then the BLS takes the questionable data and pushes it through a seasonal adjustments and annual benchmark revision meat grinder. The data goes in as rat poison and comes out as nuclear waste.

As for Amazon…Amazon is the archetypal accounting fraud poster child.  Whether or  not you are willing to accept my analysis of their accounting practices, let ‘s look just at some surface indicators that AMZN is running off the rails to nirvana.   I wrote a comprehensive report on AMZN in which I drilled down to the core of AMZN’s highly misleading accounting practices.  The report is dated by a year but the “proof of concept” is still valid – maybe even more valid now than over the past 10 years.  I’ll send a copy to anyone who subscribes to the Short Seller’s Journal (I’ll send a copy to existing subscribers along with Sunday’s weekly issue).  You can subscribe here:  Short Seller’s Journal.

AMZN’s quarterly revenue growth rate has been slowing for several quarters.  Its revenue growth rate peaked in 2011 at 41%.   Since Q3 2015 to Q4 2016, the year over year quarterly growth rate has slowed from 30% to 24%.  This is despite the heady growth rate attributed to its cloud computing division (AWS – which I eviscerate in the AMZN report).   Operating income is worse.  Over the last 6 quarters, its year over year quarterly operating income growth has plunged from 84% to 13%. This excludes F/X effects, the application of which would make it worse.  Net income?  Forget net income.  By the time the numbers flow through AMZN’s waterfall of misleading accounting practices, the net income number is completely useless and highly manufactured.  I detail this fact in the AMZN report.

AMZN’s AWS segement (cloud computing) is highly touted by Wall Street snake-oil salesmen.  Don’t poison your view by looking at AMZN’s highly massaged and highly misleading earning presentation slide-show.  Go directly to the SEC-filed 8K/10Q, which itself is riddled with suspect accounting.

The growth of AWS has slowed considerably and will continue to do so.  Especially if Trump cuts back on Deep State funding, which is significant source of revenues for AMZN’s cloud computing services.  On a year over year quarterly revenue growth basis, AWS’ sales growth has gone from 82% in Q2 2015 to 47% in Q4 2016.  It’s been nearly cut in half.  It’s not a scale phenomenon either, as its Q4 revenues for AWS were $3.5 billion, which was just 8% of total revenues for the quarter.  I can remember when Wall St. stock jockeys were forecasting an explosion in AWS’s contribution to AMZN’s revenues and income.   But AWS sales have been running between 7% to 9.5% of total revenues since Q2 2015.  It was 8% of revenues in the latest quarter.

I will say that AWS produced 73.7% of AMZN’s operating income in Q4.  But that’s more a damnation of AMZN’s retail sales business, if anything.  With $1.255 billion in total operating income, that means AMZN generated just $329 million of operating income on $40.1 billion of retail sales.  That’s a “sweltering” 0.8% operating margin (zero point eight percent).   For comparison purposes, Walmart and Target generate an operating margin of about 5% on similar product sales.  So much for the argument that cyber-sales are more profitable than “brick and mortar.”

There’s a lot more analysis that I can present showing the misleading to fraudulent nature of AMZN’s financials, but that’s for subscribers.  Suffice it to say that the Free Cash Flow number presented by Jeff Bezos every quarter in his ridiculous slide presentation is completely fraudulent except for that fact that he discloses deep in the bowels of the AMZN 10Q – a place where Wall Street analysts never venture – that AMZN’s definition of “free cash flow” is not based on generally accepted accounting principles.

The Apartment Glut Cometh – Adios Housing Market

Driving by the west-side border of downtown Denver (on I-25), I can count 9 cranes in air plus one semi-finished high-rise building.  What’s amusing about this is that there’s already an oversupply of rental apartments and condos as the 1-2 month free + free parking incentives reflect.   What will happen when all these new projects hit the market?

This is not unique to Denver.   I witnessed it first-hand in New York City over the holidays. Douglas Elliman, the high profile NYC real estate brokerage, issued a report which showed that NYC real estate prices plunged in Q4, with the median sales price dropping nearly 9% from Q3. Days on the market increased 14.6% and the number of sales dropped 3.7% I can recall from the demise of the big housing bubble that the impending housing bust started first in NYC.  I remember walking around NYC in late 2006 and seeing several apartment complexes under construction on which work had been abandoned. I would
suggest that the current bubble is already popping in several bubble areas per this canceled contract data: LINK.  I also am confident that the weakness that is developing in NYC will soon spread to the rest of the country.  – from the  Jan 15th Short Seller’s Journal

Miami was the leading indicator of the demise of the mid-2000’s housing bubble.  An apartment glut quickly appeared as speculators took almost free money and put deposits on apartments being built by reckless builders.  Builders always get reckless when other people’s money is cheap. Greenspan and Bernanke made sure there was plenty of cheap capital for developers.   Wolf Richter details the current apartment market implosion occurring in Miami – LINK – and coming to city near you soon.

Ditto for San Francisco/Bay Area, which was right behind Miami during the big housing bubble and is concomitantly blowing up with Miami.  The SF/Bay Area market was driven by big foreign money laundering and a massive private equity tech bubble in Palo Alto. The foreign money has dried up and the PE tech bubble is fading quickly.  It’s like the cheap money rug has been pulled out from under reckless speculators and developers.  Mark Hanson describes the situation here:  Adios SF Housing Market.

Even some of the industry associations are starting to report the truth -something we’ll NEVER get from the National Association of Realtors, as the National Multifamily Housing Council reported a week ago that, “weaker conditions are evident across all sectors of the apartment industry.”  Its sales volume index dropped for the second quarter in a row.

At the same time that a glut in apartment/condo buildings is appearing everywhere, the luxury high-end market is falling apart as well, the latter of which was also a leading feature of the demise of the big housing bubble. Douglas Elliman reported recently, “that prices in the Hamptons real estate market dropped nearly 30% in Q4, with sales volume down 14.5% But in the luxury end of the market – homes with an average price of $7 million – prices were down 42.6% in Q4. This is an all-out crash in housing in one of the most high-end areas of the country. This is exactly what began occurring in 2006/2007 in the Hamptons.

CNBC reported last week that “luxury home sales continued to slump in Q4.” It cited the
Hamptons but also Aspen and Beverly Hills. I reported in SSJ a few months ago that Aspen
was starting to go into a price freefall. Prices and volume started collapsing in the summer.
Apparently in Q4 sales volume fell another 25% and prices were down another 11%. Beverly Hills sales volume plummeted 33%, though prices were flat. Again, the affects of the bursting big mid-2000’s real estate bubble was first felt in these same markets.

Record low mortgage rates combined with the U.S. Government’s providing the easiest, most accessible borrowing terms and credit standards in the GSE program history has enabled the greatest misallocation of financial resources in history.  It’s been manifest in every asset class but is particularly prevalent in stocks and the housing market.  While it may be somewhat easy to unload stocks when they are dropping out of the sky, housing is a different matter.  It’s easy to sell a home when the buying frenzy is rampant.  But as the market begins to head south, the entire real estate becomes “offered with no bid,” meaning that everyone stuck with an “investment” is looking to dump and buyers scatter like cockroaches when the kitchen light is switched on.

The home construction market is over-ripe with short opportunities.  I have been focusing on the sector (plus retail and autos) in the Short Seller’s Journal.  Since August,  shorting the retailers has been a lay-up.

In the SSJ, I present in detail the ways in which the industry associations, Wall Street – with the help of mainstream media cheerleading – distort the facts about the housing and auto markets.    As the reality of what I described above sinks in to the market, the price path of least resistance for home builders, home construction suppliers and auto-related equities will be down.   The same is true for the companies that provide financing to these industries.

In every issue of the Short Seller’s Journal I provide what I believe somewhat unique market analysis and commentary along with dependable research sources to back-up my assertions.  I also typically provide at least 2 or 3 short ideas, accompanied by suggestions for using options (although I first and foremost recommend shorting stocks outright).  I also disclose when I’m trading an idea presented, including which options contract if applicable.   You can subscribe to the weekly newsletter with this link:  Short Seller’s Journal

You certainly do provide research and with that, Value. But also… YOU actually are there responding to emails which says a TON about you, your commitment to your products, company, and us….the subscribers. For that, I thank you.  – Subscriber, Larry

 

Here’s Why Dow 20,000 Is Meaningless

Central Bank intervention in the markets has completely destroyed the stock market’s value as a reflector of economic activity and business profitability. Rather, like the mainstream media, the stock market has become little more than propaganda tool used in an effort to manage public perception.

I was fooling around with some charts and discovered something interesting. Of the 30 stocks in the Dow index, 21 of them are below to well below their all-time highs despite the fact that Dow hit the 20k milestone and a new all-time high this past week. Only 9 of the stocks are pressing an all-time high along with the Dow:

The Dow index is price-weighted somewhat arbitrarily by Dow Jones & Company, which is now owned by News Corp (Rupert Murdoch). Each stock is assigned a weighting in the index. So for instance, Goldman Sachs – for whatever reason – has been assigned a weighting of 8.16%, which is by far the highest weighting. GE on the other hand has been assigned a weighting of 1.03%. What this means is that if both stocks move up in price by the same percentage, GS has a nearly 8x greater affect on the move in the Dow index than GE.

Of the nine stocks that are at their all-time high, the first four stocks listed are 4 of the 6 stocks with the highest index weightings (3 thru 6 and the numbers next to the symbols represent their respective weightings. Cumulatively these four stocks represent a 21.8% weighting in the Dow index. Goldman Sachs (GS) has the highest weighting in the Dow at 8.1%. IBM is 2nd highest at 6.08%.

In other words, primarily four stocks out of thirty are fueling the Dow’s move to 20,000. In addition, GS did most of the “heavy lifting” after the election, as it hit an all-time on January 13th. GS soared 27% for some reason between election night and December 8th. Think about how easy it would be for the Plunge Protection Team (Fed + Treasury Dept) to “goose” the four stocks on the right side of the list in order to induce hedge fund algos to chase the momentum.

The point of all of this is to show the insignificance of the Dow hitting 20,000. As discussed in a recent Short Seller’s Journal, the indices that represent the critical components of GDP – housing, autos and retail spending – are well below their all-time highs. In fact, the XRT S&P retail ETF is nearly 10% below its 52-week high hit in early December and 14.8% below its all-time high hit in April 2015.

You can read the rest of the accompanying commentary plus see the three short ideas presented in the last Short Seller’s Journal by clicking on this link:  Short Seller’s Journal subscription info.

I present compelling data and analysis of the public reports that explain why the housing and auto markets are getting ready to fall apart.   Just today an article was posted by Wolf Street that describes the impending collapse of the condo market in Miami.  Miami happened to be one of the first markets that cracked when the big housing bubble popped. What’s happening in Miami is also happening in NYC, San Francisco and several other cities (for sure Denver).  In the latest SSJ,  I describe several more indicators which are nearly identical to the pre-collapse signals that emerged in 2006-2007.

Major Silver Bounce – Can It Last?

The bullion bank gold cartel pulled out all of its stops last week in order take down the price of gold and silver. Particularly useful was selling by longs connected to fear over the week-long closure of China in observance of the Chinese New Year’s celebration (Year of the Rooster). Interestingly, last year gold was volatile during the Chinese New Year week off but traded sideways, not lower.

In addition, this upcoming week features the FOMC meeting and the January employment report. On average and in general, both of these events typically are accompanied by a take-down in the price of gold. On Friday, however, after the obligatory smashing of gold and silver associated with Comex options expiration (Thursday), gold snapped back sharply $9 from its Thursday low of $1181 and silver soared nearly 50 cents from its Thursday low.

Eric Dubin and the Doc invited me onto Silver Doctors’ weekly Metals and Markets Report to discuss the factors behind last week’s gold and silver trading activity and the reasons why gold and silver could turn in a better 2017 than 2016:

If you agree with the views in the above podcast, the Mining Stock Journal offers great junior mining stock ideas to help you take advantage of the next move higher in the precious metals sector. You subscribe using this link:   Mining Stock Journal subscription link.   As subscription includes all the back-issues and superior customer service.

Hi, i really like your mining stock newsletter. I am fairly new to the mining sector and i did start investing in last febuary pretty much at the lows  –  recent new subscriber “Thomas”