Tag Archives: Gold

The Stock Market Is A Weapon Of Massive Wealth Destruction

The discussion about p/e ratios and other valuation ratios derived from Company-issued GAAP accounting financials is idiotic.  The GAAP accounting allowances have been liberalized beyond a Bernie Sanders wet dream over the last 20 years.   The p/e ratio at the peak of the tech bubble is completely different from the p/e ratio at the top of the 2007 stock bubble which is completely different then the p/e ratio now.

If 1999’s or 2007 GAAP standards were applied to today’s earnings, the P/E ratio on the S&P 500 would be at least as high as 65 p/e ratio registered in 2007.   By several other metrics, most notably market cap/sales ratio, the current stock market is by far the most overvalued in history.

And that does analysis does not incorporate any adjustments for the fraud component of contemporary corporate accounting.

The S&P 500 and Dow are hitting all-time highs this week.   This was triggered by the Ben Bernanke influenced Bank of Japan decision to engage in “helicopter money” activity in an attempt to stimulate economic activity.  Notwithstanding the fact that Bernanke is likely the most destructive Central Banker in history, Japan’s decision will end in destruction of its currency.  Maybe that’s what the NWO’ers are working toward achieving anyway.

Interestingly, the U.S. stock market reacted counter-intuitively to Japan’s move.  The yen and other Asian currencies plunged vs. the dollar, making U.S. manufactured exports to Japan/Asia more expensive and making Asian imports into the U.S. cheaper.   This in turn will further depress U.S. corporate revenues and earnings, which have dropped 5 quarters in a row – likely a 6th quarter when we get to see Q2 earnings reports.   To label this response by the U.S. stock markets “idiotic” is an insult to the word “idiotic.”

Beneath the glow of a stock market on fire, the U.S. economy is collapsing, especially the consumer.  I’ve detailed the decline in a key consumer spending metric, dining out, to demonstrate that middle class disposable income is shrinking quickly.  The Canadian brokerage firm, Canaccord, released a report this morning which stated that, “said the firm’s checks indicate a material decline in sales and traffic trends in casual dining restaurants was seen in June LINK.

June auto sales came in below expectations.  This is despite a new record in auto debt issuance.  The auto debt bubble is starting to look a lot like the housing mortgage bubble of 2005-2008.

The price of oil is starting to drop quickly again.  Refiners are cutting crude oil orders quickly as demand for refined products slips as another oversupply condition has accumulated:  LINK.   The Fed and the TBTF banks have been working hard to keep the price of oil propped up.  They know all too well that a big bank balance sheet disaster looms if too many junk-bond financed companies go tits up all at once.  That will happen anyway and for that we can soon expect Helicopter Money in this country.

Speaking of Helicopter Money, Cleveland Fed President, Loretta Mester, gave a speech in Australia in which she alluded the possibility of using “Helicopter Money” to stimulate economic activity.  Mester is a voting member of the FOMC. This tells us that the FOMC itself has been discussing the possibility of dropping bags of money on the population.

This reflects a Fed that is in a complete state of desperation about the collapsing economy.  $4 trillion in direct money printing plus several multiples of that amount of money injected into the system in the form of credit failed to stimulate real economic activity.  Why are they talking about even more?   Sure, housing and auto purchases using DEBT were stimulated, but that ship has sailed unless the Fed wants to give out money for down payments.

The Fed is even more desperate to keep the stock market elevated. If the stock market collapses, or just drops over 10% for an extended period of time – as in a few months – every single pension fund and insurance company in this U.S. will collapse.  It’s a simple as that.

In other words, the stock market is one big weapon of Mass Wealth Destruction.  You can protect yourself by unloading your non mining stock dollar-based “investments” and moving your money into physical gold and silver.

I am expecting a MONSTER move in the precious metals between now and the end of the year.  I will lay out an overview of my views later this week…I save details behind my analysis for subscribers to my Mining Stocks and Short Seller Journals…

 

Brexit To Catalyze Economic Collapse?

The global financial system is collapsing – not just Europe. If the Central Banks stepped away from both their observable and covert money printing, the system would collapse tomorrow. Brexit is not the catalyst and it’s not the cause. Brexit is nothing more than the cover story – the device used to deflect the public’s attention away from truth.

The truth is that the western Central Banks (let’s leave China aside for now) have created the biggest asset bubble in history. And the time has come for it to pop. It’s been a divisive, albeit brilliant, wealth confiscation mechanism.

Elijah Johnson invited me onto his Finance and Liberty podcast show to discuss Brexit, precious metals and the ongoing systemic collapse, which will be more catastrophic than the 2008 collapse financial crisis:

One of the immediate consequences of the BREXIT has been the “gating” of six UK property investment funds. Investors threw money at these funds and helped inflate a massive property bubble in the UK, similar to the one in the U.S. And now investors are trapped because the funds are unable to sell illiquid, overvalued real estate in order to meet redemptions. The same exact process will occur in the U.S. My view is that investors in mutual funds will get what they deserve because blogs like mine have been warning about this for several years now.

On another note, one of the stocks featured in my Mining Stock Journal is up over 7% today. It’s trading at a market cap that is about 10% of the potential valued of this Company’s primary gold property. It also looks like one of its strategic investors is starting to make a move to eventually acquire the entire Company. New subscribers to my Mining Stock Journal currently receive all of the back-issues when they subscribe, including the above-described company which was an early pick and is still highly undervalued. You can subscribe by clicking here: Mining Stock Journal.

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This “De-Risked” Junior Is Up 35% Since Late July

My last #1 risk/return play – Silvercrest Mines – agreed to be acquired by First Majestic earlier this summer. The takeover premium was 35%. My newest #1 risk/return play is a gold mining exploration company with a large gold deposit in both Canada and Nevada.

There are two large mining companies that are likely buyers of this company, as I discuss in my report. But aside from the possibility of an M&A transaction, the stock of this company appears poised to take-off again if we can get some cooperation from the price of gold:

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There are several reasons for this, not the least of which being that this company, in my opinion, is the potential takeover target for two large-cap gold miners, one of which is Goldcorp.  

This stock has also significantly outperformed the S&P 500 since the end of July:

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You can access my in-depth report on the stock  which I explain in detail why this Company’s stock is significantly undervalued and why it has a “takeover target” on its back by clicking on the pic below or this link:   De-Risked Junior Mining Stock Report.

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22% Of Austria’s Gold At The Bank Of England Is Missing

My colleague Rory Hall of The Daily Coin has posted an article sent to him by Peter Boehringer, who is leading the effort to force the German Goverment to repatriate all of its gold held by the Fed, the Bank of England and the Bank of France.   In the article, Boehringer presents the findings of an audit conducted by the Austrian Federal Court which states that 22% of Austria’s national gold held at the Bank of England is missing.

Essentially what the text presented by Petern Boehringer says is that a report published by the Austrian Federal Court (“OBRH”) states that at least 22% of Austia’s gold which the Austrian Central Bank – “Oesterreichische Nationalbank” (“OeNB”) – has been “safekept” at the Bank of England is missing. It also states that in 2009 as much as 56% was missing:

The composition of the gold holdings of the OeNB in the years 2009 to 2013 changed greatly. Thus, the proportion fell to non-physical inventory of approx. 56% in 2009 to approx. 22% in 2013

You can read the entire text of Rory’s post here:   22% of Austria’s Gold Is Missing From The Bank Of England.

This , of course, implies that the Bank of England is illegally leasing out foreign-owned gold which is being held in “safekeeping custody” at the Bank of England. No shock there to anyone who has been studying the precious metals market since GATA made the information available to the world about all of the illegal gold activities being conducted by western Central Banks in the late 1990’s.

 

This Junior Miner Was Up Over 9% Today

It is back to break-even from when I first recommended it and has outperformed the sector by significant about (28%) – it’s also up 6.5% from when I posted the original update last week:

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I updated the report from June and explain why I think this stock is outperforming and has the potential for significant upside over the next 12 months:   Junior Miner Outperforming The Sector.
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This Junior Mining Stock Is Outperforming The Sector – Update

This stock is green again today – with the mining stocks getting hit hard by the hedge funds/banks…

Since I posted this two days ago, the stock is up over 5% – I added a technical report which gives advice on accumulating this stock from DenaliGuide’s Summit subscription area.  You can access the updated report here:  Junior Miner Outperforming The Sector.  I explain why this stock can at least double in the next year.

I originally published a report on this Company in early June.  Since then, here is how it has performed vs. gold and the sector (click to enlarge):

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I have updated this report to reflect recent developments and I offer an explanation for why this stock has been outperforming the sector. You can access this report here:  Junior Mining Stock Report.

I know the management was in China late last spring meeting with several of the largest Chinese mining companies.  I believe the Company is engaged in very prelimary discussions about selling one of its huge copper projects to one of China’s largest mining conglomerates.   I’m pretty certain that’s why this Company’s stock has held up well since the takedown of the sector began in mid-July.

Even on its own, separate and apart from the possibility of any kind of M&A event, this stock is significantly undervalued.   It is currently generating royalty revenue from a big gold mine in Nevada.  That mine is going to be operating an expansion project in late 2015. This expansion will increase the Company’s royalty stream.

Furthermore, this Company has a massive prospect/project portfolio, a handbook of which is attached to my report.  As the price of gold and silver recover and move higher again, which will happen sooner or later, I believe this stock can provide close to a double in the next twelve months and a triple over two years.  That’s assuming the metals don’t go parbolic…(click on pic to access this report):

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Black Swan Sighting: Sub-$50 Oil Prices Seen In Bakken Shale Region

I opined the other day that perhaps the crashing price of oil would be the “black swan” that no one saw coming.  Bloomberg is now reporting that Bakken region well-head oil is being sold for under $50:  Sub-$50 Oil Surfaces In North Dakota.   Too be sure, shale-derived oil sells at a discount to standard West Texas Crude for a few reasons.  But the shale-oil model rests on $100 oil.

Wall Street has pump and dumped the shale oil/fracking industry onto the public in a major way.  Of course, now that the Justice Department new enforcement policy – spearheaded by Obama and his corrupted clan of Covington Burling attorneys (see Eric Holder’s resume) – is that Wall Street is too big to prosecute, we’ll never know the true degree of the fraud-laced hot air pumped into the oil shale bubble.

But rest assured, your pension funds and IRAs will suffer the consequences, as semi-retarded institutional money managers herded investor money into these deals.   The fall-out from this will resemble the collapse of the mortgage/housing bubble.  But this time the big Wall Street banks are protected – for now – by the $2.5 trillion in cash (excess reserves) pumped into their balance sheets by Helicopter Ben and Grandma Yellen.

Most of the oil shale/fracking stocks that went  public over the past few years have come crashing down – even harder than junior mining companies.  The difference between the two sectors:  gold is real money, shale oil is fool’s gold.   Gold mining stocks will do a moonshot once the Fed loses it’s ability to suppress the price of real with gold with paper gold.  If you have any exposure in your investment portfolios to oil shale/fracking – any exposure whatsoever – get out now before it all goes to zero.

Oil Price Plunge To Economy/Stock Market: LOOK OUT BELOOOOW

The price of oil (West Texas) dropped nearly $3 and hit it’s lowest level since the 2nd half of 2010. It’s dropped 31% since July.  The explanations being promoted by the mainstream blogosphere for the price decline is either 1) the U.S. has manipulated the price lower to punish Putin/Russia or 2) the Saudis have flooded the market with supply to drive U.S. oil shale/fracking out of business.

Both of those rationales are nonsense.  Too be sure, I have no doubt whatsoever that the price of oil can be teased lower by manipulative activities.   But for the reasons below, I believe that the price of oil can be driven lower for only  a very short period, especially if global demand requires at least as much oil as is profitably being produced.

First, it is more difficult to drive the price of oil lower using futures – as is done with gold/silver – because oil is a depletable commodity and the entity shorting paper oil risks the probability that the long side will ask for actual physical deliver.  Second, IF the price of oil were being manipulated lower using artificial mechanisms, sophisticated oil traders – Wall Street banks, big hedge funds, sovereign funds and oil companies – would buy up this supply and store the oil until the price bounced back.  It’s an asymmetry of information arbitrage play, if you will, and sophisticated entities have superior information to the market in this regard. Also, please note that several banks have invested in oil storage terminals for this purpose.  Third, I find it very hard to believe that greedy multi-national oil companies would agree to piss off Putin at the expense of profits.  And, by the way, Russia is clearly not hurting given that it bought 37 tonnes of gold with cash in October.

Instead, the plunge in the price of oil reflects the collapsing global economy, which – by the way – includes the U.S. economy:

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I wrote an article in October which outlined why I thought the U.S. economy hit a wall in the middle of the summer.

To summarize:  1) weekly and monthly nominal retail sales reports started showing declines.  This is highly unusually because typically retail sales always increase at least by the rate of inflation.   Negative retail sales reflect a decline in unit volume, which means consumers are buying less.   McDonalds reported sales declines 12 months in a row, for instance.

2)  Housing sales have been comp’ing year over year negatively for the past year and prices are starting to decline.  This is especially true when you strip away the National Association of Realtor and Census Bureau “seasonal adjustments” and you just compare year over year for each month.   The fact that both entities report their results stated in an “annualized rate” only serves to compound the statistical errors embedded into the numbers by the preposterous “adjustments.”

3)  In general, the various macro/regional economic reports from manufacturing organizations, regional Fed banks and even the Government have been showing declining industrial activity.  This too is in spite of “seasonal adjustments” tortured into the data.

The red line in the oil price chart above shows where I believe that the price of oil began to anticipate and reflect this sudden rate of decline in the U.S./global economy.   The drop in the price of oil reflects a demand-side shock – a lower rate of economic activity globally drives the demand for energy/gasoline lower relative to supply and the price drops.  Thus, a plunging price of oil reflects a plunging economy.   It’s really that simple – just ask the Democrats.

Now, what does this mean for the U.S. stock market.  The U.S. stock market has levitated higher on a flood of printed dollars and the multiplier effect created by the magic of a fractional banking and securities mechanism.  Through the magic of reserve ratio leverage, every dollar printed and given to the banks transmits into several dollars that can pile into the stock market via the banks themselves and through the use of hedge funds  – which are extended up to 10:1 leverage from banks – as a transmission mechanism.  Unless the Fed is clandestinely printing at least the same amount of money that it had been printing, that game is over now.

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(click on the graph to enlarge)  The graph above is a 1-yr daily of the S&P 500.  As you can see, for the last year, every time the SPX extends above the 50 dma (blue line) it tends to correct below the blue line.  This tendency actually goes back for three years.  The latest iteration higher has occurred on noticeably declining volume.   The SPX has also closed higher a preposterous 15 of the last 21 days, including 6 of the last 7.   On several of those 15 days, the SPX was down for the day going into the last 30 minutes of trading and, “miraculously,” would manage to rally into new high territory by the  close.  Today ia a perfect example of that, as it was red even within the last 10 minutes before the close (futures basis) before squeaking out a small gain for the day.  The futures turned red again right after the close.

In addition, notice that the RSI (yellow circle) has now rolled over from an extreme overbought condition.  And the MACD is now rolling over from its most overbought level in the last year.  The MACD is a slower moving statistical indicator than the RSI, which means a change in directional trend is a better directional indicator than the RSI.  The MACD is suggesting that the SPX has a high probability of rolling over here.

This is in the context of this stock market being the most over-valued in history (see this LINK) and in the face deteriorating economic fundamentals.   I have pointed out to colleagues that, on an “apples to apples  GAAP accounting basis,”  the current stock market is far more overvalued than it was in 2000.   Since 2001, the FASB has changed accounting standards in a way that makes it much easier for companies to report much higher non-cash GAAP accounting profits than they were able to manipulate into their GAAP net income in 2000.

One more chart that should freak out:

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The graph above shows one of the Pimco commodity funds vs. the S&P 500 for the last 10 years.   As you can see, before QE started, these two indices were highly correlated.  The divergence of the S&P 500 from the Pimco fund reflects the degree that QE has influenced the market.  I my view, there will be a very painful “regression to the mean” adjustment that will re-establish the correlation between the commodities market and the stock market.  This mean-reversion will occur without the commodities market moving higher…

Given the remarkable degree of official intervention in all of the markets, but especially in the stock market (and of course the gold/silver market), I’m not going to stick my neck out and say the stock market is headed for a plunge, although I think this is a very distinct possibility.  I will say that anyone at the retail level chasing this market is an idiot and any institutional money manager not pulling money out of the stock market right now is guilty of breaching fiduciary duty.    And with the stock market’s “theater” full from wall to wall, including those taking up standing room only space,  and with only one door leading to the exit, when the fire does start it’s going to look like Biblical Armageddon in that graph above.

 

The System Is Terminally Broken

This is a world where nothing is solved. Someone once told me, ‘Time is a flat circle.’ Everything we’ve ever done or will do, we’re gonna do over and over and over again.  – Nic Pizzalotto, “True Detective”

The Fed has formally “ended” QE, but it hasn’t really.  The Fed will continue reinvesting interest on its portfolio in more bonds and it will rollover maturities.  We saw what happens to the stock market a few weeks ago when Fed official James Bullard asserted that the Fed needs to start raising rates:   the S&P 500 quickly dropped 8%.  Right at the bottom of the drop, the very same Bullard issued a statement suggesting that QE should be extended.  This triggered an insanely abrupt “V” move back up to a new record high for the S&P 500.  Bullard either did this intentionally or is a complete idiot.

The stock market can’t function without Federal Reserve intervention.  The stock market lost 8% quickly on just the thought that the Fed might start raising rates.  Imagine what would happen if the Fed decided to “experiment” by shutting down its market intervention operations – both verbal and physical – for a month…

As for QE, if the Fed has achieved its objective of stimulating the economy, why doesn’t it start removing the $2.6 trillion of liquidity that it has injected into its member banks (LINK)?  This was money that was supposed to be directed at the economy.  How come it’s sitting on bank balance sheets earning .25% interest?  That’s $6.5 billion in free interest the Fed continues to inject into the Too Big To Fail banks.  But why?  What would happen if the Fed decided to “experiment” by removing this massive dead-pool of money from the banks?  The money isn’t really “dead,” it’s keeping the banks from collapsing.

I’m interested to watch the Government Treasury bond auctions now that the Fed is not there to soak up anywhere from 50-100% of each issue.  I wonder if the banks will be moving their $2.6 trillion in Excess Reserves into new Treasury issuance.  Obama is going around broadcasting the lie that the Government’s spending deficit in FY 2014 was something like $600 billion.  Yet, the amount of new Treasury bonds issued increased by $1  trillion over the same period.  Either Obama is lying or the accountants at the Treasury committed a big typo.  Either the Fed has found a way to continue opaquely monetizing new Government debt issuance, or the market is soon going to force U.S. interest rates up much higher.

By continuously intervening in all of the markets, the Fed has destroyed the information transmission system that is built into freely trading markets.  If the Fed left the gold market alone – instead of hammering away with the naked shorting of Comex paper gold – the price of gold would be significantly higher than where it is now.  This would be the market’s signal that our system is indeed terminally broken.

Instead, the Fed keeps interest rates artificially low in hopes of stimulating a recovery in consumption and housing. But if this is working, how come the country’s two largest retailers have begun Black Friday shopping discounts on November 3rd (LINK)?  And the Fed keeps pushing stocks higher to  new record highs in order to “stimulate” confidence and faith in the system.  The fact that the stock market craps its pants when the Fed steps away for a split-second tells us just how broken this transmission mechanism is.  That 8% drop 4 weeks ago is the real signal that our system is terminally broken.

And now it’s emerging that the Q3 GDP report was greatly inflated by a statistical error which erroneously boosted the Government spending component.  It was this component that juiced the GDP report because residential investment (housing) and personal expenditures (consumption) both tanked.    Imagine that – a statistical error artificially boosted the GDP report right before a national election…

A colleague of mine has concluded that the QE infinity policy implemented Friday in Japan is the market’s signal that the entire western fiat system is getting close to imploding.  I’m inclined to agree with him.  Wall Street, the financial media and politicians are pointing at Europe and Japan as the source of the problems.   But the heart and nerve center of the western fiat currency/debt Ponzi scheme is right under our nose in this country.   The U.S. financial system is in worse shape than both Japan and Europe.  The only difference is that the U.S. officials do a much better job hiding these problems.

Time is starting to run out for ability of the U.S. to keep kicking the can of collapse down the road.  I really believe that the full-on intensity of the recent intervention in the precious metals market is the most obvious signal of time expiring.  China has been accumulating physical gold at a stunning rate and now some research indicates that China’s Central Bank may have accumulated significantly more gold than anyone previously thought (LINK).   China has most likely maneuvered itself into owning the world’s largest stock of gold, which is where the U.S. had positioned itself after WW2.   China has done this to a large degree by buying massive quantities of western Central Bank gold.

We’ve come full circle, only with China in the Midas throne this time around.  Eventually the world is going to revert back to a gold-backed currency system.  When this happens, the U.S. will be required to demonstrate that it possesses the amount of gold that it reports to own. The only caveat here is that I believe that the U.S. will start WW3 before it’s forced to reveal the truth about its empty gold vault. That’s how broken our system really is…