Tag Archives: silver

Why Mark Cuban’s Comments On Gold Make Me Want To Buy More

Below is a must-read essay from a friend and colleague of mine, Chris Marcus, who is a former options trader (Wharton MBA) that now lives in Denver.  Many of you may not be aware, but Mark Cuban made his fortune the old fashioned way – he was lucky to be in the right place at the right time. Cuban owned Broadcast.com (a relic of the 1990’s tech bubble).  Yahoo.com used tech bubble stock “wampum” to acquire Broadcast.com.  Broadcast.com was no longer around a few years later.

If anyone knows how to get lucky off a worthless asset, it’s Mark Cuban.  Currently he spends his time running the Dallas Mavericks into the ground.   Chris Marcus eloquently presents the counter-argument to Mark Cuban’s absurd comments about gold in a Kitco.com interview.

During my time training to be an equity options trader, the shop I worked for required that I log 100 hours of poker training. Under the belief that there are great similarities between the decision-making required for poker, and that required for successfully trading the financial markets.

Along those lines, there was a particular lesson that always stood out to me. That while the numbers and percentages are important in both sciences, understanding the people you are playing against is equally, if not a more important element of the game.

Because you might think you’re right, and the person you’re trading against might think they’re right. But if you can identify why they’re wrong and spot the flaw in their thinking, that can really arm you with some confidence in your bet.

If you’ve seen the movie The Big Short, you may remember the scene where right before one of the funds was getting ready to increase the size of their bet against the mortgage industry, they were a little bit concerned.

But to ease those fears, the Deutsche Bank character played by Ryan Gosling took the fund managers to meet the people they were actually trading against. Because once they heard how the people they were trading against were completely caught up in the mania and missing the bigger picture, it gave them the confidence to pile on their trade in even bigger size.

Along those lines, for those investing in gold and silver, there were some interesting recent comments from Dallas Mavericks owner Mark Cuban. That are somewhat reflective of the mainstream view of gold, and similar to the rhetoric you hear out of the central banks.

Which in my own personal opinion comes as extremely fantastic news for those who own precious metals and wonder whether there is still upside to the pricing.

Cuban was interviewed by Daniela Cambone of kitco.com. And with all due respect to Mr. Cuban, some of his answers were so far detached from the reality I’m living in that the more I heard him talk, the more I was tempted to dial Andy Schectman and buy more gold.

Consider the following:

Cambone: Where do you think are some of the safest bets for your money right now?

Cuban: If you need safe, just put the money in the bank.  (Editor side note – seems safe to say at this point that Cuban likely hasn’t been reading Von Mises during halftime at the Mavs games).

Cambone: Gold, up 2.5% for the first quarter. I know in the past you’ve seen it as a speculative bet. How do you see it today?

Cuban: I hate gold. Gold is a religion. There’s some fundamental value to gold, but everything else…it’s a collectible.

Cambone: Well hate is a strong word. The miners too?

Cuban: Individually as people, I heard they’re great people (he says giggling). But as an investment, hate is not strong enough. Hate with an extreme prejudice.

Cambone: So you don’t see gold as money.

Cuban: I do not see it as an alternative to currency. No not at all.

Cambone: Do you feel the same about silver, palladium, or platinum?

Cuban: I don’t know those others as well. But those are pretty much based off their intrinsic value as much as I can tell.

Cambone: So you’re in the camp of gold is just a pet rock.

Cuban: Pretty much. But I’d buy a pet rock first.

Mark Cuban Says Gold And Bitcoin Are Equally Useless – Part 1  – Ironically in 2016 in response to market turmoil, Cuban bought call options on gold. At the time he explained how “when traders don’t know what to do, they go where everybody is, and I thought there was a good chance that would be gold.”

Which makes his current comments all the more baffling. Although perhaps Cuban doesn’t see any cause for concern with rising interest rates and foreign creditors walking away from the dollar system.

Ultimately what Cuban thinks about gold may be irrelevant. Yet to the degree that there are many in the markets who share a similar line of thinking, it’s worth registering that if you own gold, this profile and argument is essentially what you’re betting against.

Personally I receive it as great news. Because in my career, the best trades are not when a person thinks they’re right and puts the trade on. But when a person thinks they’re right, knows why the other person is betting against them, and can spot the flaw in that person’s logic.

I’ll leave it up to you to decide whether Cuban’s argument makes much sense. But his views are generally reflective of what the anti-gold crowd is thinking, and it makes me feel better than ever about owning physical gold and silver. (Article LINK)

Insane Valuations On Top Of Insane Leverage

The recent stock market volatility reflects the beginning of a massive down-side revaluation in stocks. In fact, it will precipitate a shocking revaluation of all assets, especially those like housing in which the price is driven by an unchecked ability to use debt to make the “investment.” This unfettered and unprecedented asset inflation is resting precariously on a stool that is about to have its legs kicked out from under it.

The primary reason the U.S. is now holding a losing hand at the global economic and geopolitical “poker table” is that this country has been committing too many sins for too long for there not to be a price to be paid. With bankrupt Governments (State and Federal), a bankrupt pension system, a broken healthcare system, all-time high corporate and household debt levels and a broken political and legal system, the U.S. is slowly collapsing. This is the “perfect storm” for which you want to own plenty of gold, silver and related stocks.

Eric Dubin and I are producing a new podcast called, “WTF Just Happened?” The inaugural show discusses the topics mentioned above:

“WTF Just Happened?” w/ Dave Kranzer and Eric Dubin is produced in association with Wall Street For Main Street       –       Follow  Eric here: http://www.facebook.com/EricDubin

Is The Silver COT Bullish?

There’s been an abundance of commentary on the net long position of the “Swap Dealers” in Comex silver futures per the COT report.  As of the latest COT report, the Swap Dealers are net long almost 22k silver contracts.  This is unprecedented.  At the same time, the “Large Speculators,” the majority of which is comprised of the “managed money” (hedge funds) sub-component, are net short nearly 17k silver contracts.  The data my business partner tracks goes back to April 2004.  In that period of time, the Large Speculator category has never been short until February 2018.

On the surface, the silver COT report appears to be extraordinarily bullish. However, there’s a bigger picture not discussed by “COT” analysts that includes the other segment of the large “Commercial” category and the COT structure of gold.

The other “commercial” segment includes producers of silver, commercial “users” of silver (jewelers) and “merchants.”  It would be naive to assume that the Comex banks do not throw a large percentage of their gold/silver short positions in to the this category.  That would be within the CFTC regulations.  Hell, JP Morgan was fined a little over $650k a few years when it was caught by the CFTC putting a portion of its trades into the “speculator” category of trader.  This was not within regulations.  $650k is a joke and would not deter Jamie Dimon from speeding on the Long Island Expressway let alone manipulating the silver market.

Currently the “Commercial” segment per the latest COT report is net short  2.6k contracts.  Again, this is by far the lowest net short position in the Commercial category going back to at least April 2004 and likely ever.  The closest the net short position has been before now was for the June 3,  2014 COT report, when the Commercial category net short in silver was down to 9.6k.   Back then silver was trading at $18.80.  It bounced briefly to $21 by early July then headed lower from there.

While the silver COT appears to be exceptionally bullish, it needs to be analyzed in the context of the gold COT structure.  The gold COT structure currently, based on historical statistics, is neutral but trending toward bullish.  I looked at data going back to the beginning of the current bull market cycle in the metals, which is commonly considered to be early-December 2015.

From the beginning of December to the latest COT report, the average large spec net long position in gold is 171k. The high was 315k (bearish) and the low was 9.7k (very bullish).  For the Commercials as a whole, the average net short during that time period is 209k contracts.  The high was 340k (bearish) and the low was 2.9k (very bullish).  The low net short  in gold for the commercials banks occurred in the December  1, 2015 COT report.  This also corresponded with the low print in the large spec net long.  This type of COT structure is the most bullish for both gold and silver.

Currently, the large specs are net long 166.5k gold contracts and the commercials are net short 188.8k contracts. You can see vs the averages over the time period that this is still neutral to bearish, but it’s trending in the direction of becoming bullish.

The other element for a bullish gold COT structure is open interest.  A high open interest tends to correlate with a bearish COT structure – i.e. a  high commercial  bank net short – and a low relative o/i correlates with a cyclical low-point in gold.  From December 2015 to present, the average o/i in gold has been 492k contracts.  The high was 652k and the low was 357k.  The net short of the commercials as percentage of the total o/i at the low-point in total o/i was 0.74% – again in the December 1, 2015 COT report.  Currently the open interest is 493k which is about average.  The commercial short position as percentage of total o/i is 38%.  Again, about average for the time period.

I have noticed that the last two moves higher over the last two years have occurred with the total gold o/i in the 420-440k range.  This would suggest that, minimally, the open interest needs to drop by 60-70k contracts before the gold COT structure can be considered favorable for a rally in the price of gold.

On average and  in general, gold and silver are highly correlated in their directional movements, especially over long periods of time.  Since 2001, it’s been my experience that major moves higher in the precious metals sector begin with gold taking off and tend to end with silver outperforming gold by a substantial margin.  The numbers presented above would suggest that both gold and silver will not be set-up to embark on a major move higher until the both the total open interest in gold and the net short position in gold of the commercials banks declines by another 60-70k contracts.

In the context of my analysis and my view on methods used by the banks to manipulate the paper price of gold and silver on the Comex, in my pinion the silver COT report – though remarkably bullish on a stand-alone basis – is not as bullish as some analysts are presenting when both the gold and silver COTs are considered in tandem.  At this point, I believe gold will lead both metals higher when the next big move begins. Once that move is underway, I’m highly confident silver contract short-covering by the hedge funds will send silver soaring.

Economic, Financial And Political Fundamentals Continue To Deteriorate

I’ve been writing about the rising consumer debt delinquency and default rates for a few months.  The “officially tabulated” mainstream b.s. reports are not picking up the numbers, but the large credit card issuers (like Capital One) and auto debt issuers (like Santander Consumer USA) have been showing a dramatic rise in troubled credit card and auto debt loans for several quarters, especially in the sub-prime segment which is now, arguably the majority of consumer debt issuance at the margin.  The rate of mortgage payment delinquencies is also beginning to tick up.

Silver Doctor’s Elijah Johnson invited me onto his podcast show to discuss the factors that are contributing to the deteriorating fundamentals in the economy and financial system, which is translating into rising instability in the stock market:

If you are interested in learning more about my subscription services, please follow these link: Mining Stock Journal / Short Seller’s Journal. The next Mining Stock Journal will be released tomorrow evening and I’ll be presenting a junior mining stock that has taken down over 57% since late January and why I believe, after chatting with the CEO, this stock could easily triple before the end of the year.

“Thanks so much. It was a pleasure dealing with you. Service is excellent” – recent subscriber feedback.

The Mining Stocks Do Not Want To Go Any Lower

It feels like were at the point in the “correction” cycle in which the mining stocks are reluctantly going lower. I also believe that aggressive hedge funds looking to buy at this level are trying to push the stocks down in early trading in order to induce remaining weak hands to sell in their bids. Tuesday (March 20th) is a perfect example. Several of the stocks I own were hammered early and then snapped-back during the course of the day. As an example, USAU opened at US$1.84 but was slammed down to $1.75. It rebounded to close down only 2 cents at $1.80. This was despite sideways movement in gold after gold was hit in early morning trading.

The graph above is a 1-yr daily of the GDX. You can see that it’s been trending sideways since early February this year. You can see also that it’s managed to hold the 52-week lows on several occasions. It just “feels” like the miners do not want to get lower. Similarly, the sentiment regarding, and interest in, the mining stocks is at a low level seen at cyclical bottoms in the precious metals sector (Oct 2008, Dec 2015):

I sourced the chart at the bottom of the previous page from Turd Ferguson (TF Metals Report). It shows a timeline of Google searches on “gold mining stocks” over time.

The trading patterns and sentiment indicators are thus at levels that is typically associated with market bottoms. The best time to buy into a stock sector is when it’s at its most unloved. I would argue that were are at that point right now.

As far as the timing on when the sector will begin to take-off again, I’m loathe to assign a time-frame other than that I expect a big move to begin before the end of the summer. A subscriber emailed me to discuss the sector and expressed frustration over the fact that the enormous physical off-take in the eastern hemisphere has not stimulated a big move in gold. I responded by explaining that I’m not relying on the Chinese to squeeze the market.

I think the market will move higher on its own accord. As things fall apart more quickly in the west, gold will soar. Look at Wednesday’s FOMC rate hike event. Gold’s response to the Fed’s rate hike completely surprised me. We put on a trading hedge this morning thinking that gold would get hammered when the rate hike news hit the tape. Gold did just the opposite. This is bullish.

The commentary above is from the latest issue of the Mining Stock Journal. My goal is to find junior mining stocks with huge upside potential before the get discovered by the “heard.” You can learn more about the MSJ using this link:   Mining Stock Journal.

MSJ to the rescue! (of my mining stock portfolio). I’m up 198% currently on a significant stake @ .18 cents.
Thank you for all you do!
– Subscriber “Phil,” in reference to Mineral Mountain Resources, which I presented July 7, 2016

The Stock Market – Dow And SPX – Could Easily Drop 50%

Jim Rogers stated in an interview with Bloomberg that “the next bear market will be worst in my lifetime,” adding that he didn’t know when that bear market would occur. The stock market has become insanely overvalued. Before last week, several market-top “bells” were ringing loudly. The stock market could easily drop 50% and, by historical metrics, still be overvalued.

Gold, silver and the mining stocks have been pulling back since late January. In fact, I warned my Mining Stock Journal subscribers in the January 25th issue that the sector was getting ready for bank-manipulated take-down. In the latest issue I offered a view on when the next move higher could begin. Mining stocks in relation to the price of gold and silver have become almost as undervalued as they were in December 2015, when the sector bottomed from the 4 1/2-year cyclical correction. In a recent issue I listed my five favorite junior mining stocks.

I was invited to join Elijah Johnson and Eric Dubin on Silver Doctors’ weekly Metals & Markets podcast. We discussed the stock market, precious metals and the Fed’s next policy direction:

I also publish the Short Seller’s Journal, which is a weekly newsletter that provides insight on the latest economic data and provides short-sell ideas, including strategies for using options. You can learn more about this newsletter here:   Short Seller’s Journal information.

The Stock Market Is Setting Up For A Historic Collapse

There is no history to suggest this is sustainable. This price move remains the most extreme technical disconnect in the $DJIA ever.   – Northman Trader

The U.S. dollar has had the worst January since 1987.  There’s a lot of reasons why the stock market crashed in October 1987, but the declining dollar was one of the primary catalysts.  The rest of the world, led by China, is methodically and patiently removing the dollar as the world’s reserve currency.  The cost for the U.S. Government to fund its rapidly expanding spending deficit is going to soar. Absent the ability to print unlimited quantities of electronic dollars, the U.S. Government’s credit quality is equivalent to that of a Third World country.

Silver Doctor’s invited me to join Elijah and Eric Dubin for their weekly Metals and Markets podcast.  We discuss the issues above plus have a little bit of fun:

The cost to buy down-side protection has never been cheaper.  No one, I mean no one is short or hedged this market.  When slide starts, it will quickly turn into a massive avalanche.  You will have to be set up with hedges and short positions or you will miss the money that will be made from taking a lonely contrarian view of the market.

My subscribers who shorted my homebuilder stock idea two weeks ago are now up 17.7%. That’s if they shorted the shares. They are up even more if they used puts. If you are interested in learning how to take advantage of the coming stock market crash, you learn more about the Short Seller’s Journal here:   Short Seller’s Journal information.

Raymond James Recommends Gold?

From King World News on October 12th:

With very little in the U.S. stock market looking like a low-risk entry, consider gold as an alternative option. Recall, the metal broke the downtrend that had been in place since 2011 back a couple of months ago, and has now pulled back to that former resistance line. It should now offer some support, and the 40-week moving average also sits around there, further adding to the importance of the zone (see bullish breakout and test of support below). (click to enlarge):

This graphic above from the KWN report is based on chart-reading analysis. I’m not a big “chartist” or “technicals” advocate, but hedge fund algos and day-traders love to chase “technicals” and price velocity – in either direction. To that extent, the completion of chart “formations” can become a self-fulling prophecy.

Having said that, the fundamental support for substantial upside adjustment to the price of gold becomes more compelling the day, not the least of which is an acceleration in the accumulation of physically delivered gold bullion by several eastern hemisphere countries.

I wanted to highlight the call by Raymond James because, interestingly, a couple different advisors from Raymond James subscribed to the Mining Stock Journal yesterday. I was wondering why until I saw the report posted on King World News. If just a small percentage of retail/high net worth investment advisors begin to allocate capitol to the mining stocks, it will trigger a massive move higher in mining stock prices. Currently, relative to the price of gold, the only time in the last 20 years that mining stocks have been more undervalued was in December 2015.

Sprott (the firm) is currently recommending that its clients invest in an emerging junior exploration gold mining company.  I recommended this particular stock to Mining Stock Journal subscribers in April about 25% below its current price.  I’m chatting with the CEO today and will be updating my outlook for this stock in next Thursday’s issue.  I will also be featuring the stock of a mid-cap mining stock that I think has 30-50% upside by the end of the year if the price of gold continues to move higher as I believe it will.

On average and in general,  since the inception of MSJ, I have been able to dig up junior mining stock investment ideas before the big firms discover, promote and channel client money into them.  I am starting to feature mid-cap miners with stocks that have been unreasonably beaten down in price this year because those are “low hanging fruit” risk/return plays in which 25-50% can be made in a short period of time.  I recommended call options on SA (Seabridge Gold) in the 9/21/17 issue that are up 300% since then.

You can find out more information by clicking on here:  Mining Stock Journal information.

Can The Fed “Normalize” Without Collapsing The System?

The official lies about the economy keep mounting.  The Dallas Fed reports that its regional economic activity metric surged in early September, despite the complete shut-down of Houston for a few days during the “measurement” period.  The “general activity” index spiked up to a 7-month high. Clearly the quality of this report is suspect, to say the least.

Contrary to this report, the Chicago Fed’s National Activity Index plunged to -0.31.  It was the weakest reading since last August and a huge plunged from the July reading of 0.03. The Street was expecting 0.11.  Because of the nature of this index (85 sub-components measured at the national level) it takes a lot to “move the needle” for this metric.  A negative point-three-one reading implies that the national economy broadly contracted during August.

Clearly the Dallas Fed propaganda was intended to reinforce the Fed’s empty threat to raise interest rates and “normalize” its balance sheet .  Silver Doctors invited me onto their Friday weekly market podcast to discuss the latest propaganda that spewed forth from the Fed’s FOMC meeting earlier in the week, the western Central Banks’ losing battle to push the price of gold lower and the continuing deterioration in the U.S. political and economic system:

The precious metals is in the early stages of another bull market run, like the one that occurred from 2001-2011. This one is being driven by the China-led movement to remove the dollar as the world’s reserve currency and replace with a currency that will incorporate incorporating gold back into the monetary system. The Mining Stock Journal is a bi-weekly newsletter that will help you get invested ahead of the next huge capital flow into the precious metals sector. To find more, click here:  Mining Stock Journal

“Best 20 quid a month I’ve ever spent.” – subscriber from the UK

The United States Of Hubris

The U.S. Government is following the propaganda formula used by Joseph Goebbels that was devised by Sigmund Freud’s nephew, Edward Bernays. The basic idea is to keep repeating a lie enough times so that eventually the masses believe it. The “Russia hacked the election” propaganda is the perfect example. Hillary Clinton first mentioned it in reference to “Russia hacked the DNC emails” during one of the debates. That lie transformed into the “Russia hacked the election” false-narrative repeated every 30 seconds on Fox News, CNN and the greater mainstream media. In truth, to this day not one single shred of evidence has been produced to support the claim. And yet, the lie perpertuates and the public fears Russia. Charles Dickens could not have scripted a better socio-political parody.

This guest post is from “Antonius Aquinas:”

This year, as of yet, North Korea has not been responsible for a single death of a foreign national. Nor has the tiny communist state ever used a nuclear weapon against an enemy like the US did with its immoral and hellish destruction of two Japanese cities, Hiroshima and Nagasaki at the conclusion of WWII.

On the other hand, since the start of the Trump Presidency, US-backed forces have been responsible for the deaths of some 3700 civilians in Mosul, Iraq.** This is not to mention its murderous armed strikes in Yemen and Afghanistan. Nor is American aggression limited to direct military action, but its arms supply sales to despots and its puppets has escalated tensions and makes conflicts that do break out much more brutal.

Fortunately, for the future of global peace, US hegemony is coming to an end. The nation is hopelessly broke while its welfare/warfare economy is beyond reform and faltering badly which means that when the inevitable collapse does happen, it will mean the end or a serious pull back of the Empire. A similar situation took place in Great Britain in 1945 after it took part in another senseless global conflict which liquidated the British Empire once and for all.

Click here to read the rest: The United States of Hubris