Is The Gold, Silver And Mining Stock Pullback Over?

The precious metals sector began to pullback in early August after a frenzied run-up in July. The technical/momentum indicators were flashing “overbought.” In the meantime, most economic indicators have been telling us the so-called “V” bounce in economic activity is over with the exception of some lingering “impulses” in certain sectors.

In the meantime, price inflation is starting to accelerate. This is reflected in the move toward 1% by the 10-yr Treasury despite the Fed’s efforts to keep interest rates suppressed. Furthermore, the Government is getting ready to issue another avalanche of debt and, notwithstanding bank CEO propaganda expressing exuberance, bank balance sheets are starting to melt-down again.

Over the last couple of weeks several Fed officials on a daily basis have been delivering speeches which appear to be prepping the public for a lot more money printing.

In short, both the technical and fundamental indicators are now in place to support another big move higher in the precious metals sector. Chris Marcus (Arcadia Economics) and I discuss the reasons by the precious metals sector is set-up for the next leg higher:

The Next Flight To Safety Rush Into Gold, Silver And Mining Stocks

Another round of “QE” money printing, another round of the flight-to-safety rush into gold, silver and mining stock…

For as insanely overvalued as are many of the “tech/unicorn” bubble stocks (SHOP, W, TSLA, CVNA, etc), the precious metals sector, especially silver and silver mining stocks, are just as undervalued. With multiple Fed speeches per day everyday for the last few weeks, the Fed is priming expectations for another big round of money printing in order to monetize the deteriorating credit quality of bank balance sheets and to fund the next round of Government stimulus payments as well as the massive spending deficit.

An eventual, inevitable stock market “accident” like the one in March will likely take everything with it, including the precious metals. However, like in 2008 and March, I expect an event like that to create a buying opportunity because a lot of the money that is pulled out of general risk assets will find its way into gold, silver and mining stocks. At that point the precious metals sector will head higher while the stock market continues to head south.

Silver Bullion TV invited back onto its podcast to discuss the precious metals market in the context of the next shoe to drop in the global financial system:

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Buying physical gold and silver – not GLD or SLV – should be your first priority in seeking shelter from the eventual fate of the dollar.  But mining stocks offer the potential wealth enhancement as well “optionality” upside to the prices of gold and silver. If you would like some ideas for investing in mining stocks, take a look at my  Mining Stock Journal.

The Next Bull Move In Mining Stocks

The big rally in Q2 continued into Q3 until early August. At that point, all of the technical and sentiment indicators I monitor were registering levels which indicated that the speculative frenzy that developed in July had reached the point of “boiling over.” I see the decline in the sector that began in early August as a healthy “corrective” pullback that will set-up the next move higher.

The precious metals sector made a big run since mid-March, outperforming every asset class with the exception of a handful of insanely overvalued tech stocks. When a market makes a big run like we experienced in Q2, it’s not unusual to run into some interference while it consolidates and percolates for the next move higher.

Contrary to popular myth, it’s impossible to time a market top or bottom unless complete luck is involved. It’s always good to keep cash on hand to take advantage of opportunities in your favorite holdings or new ideas when the market creates those opportunities.

Bill Powers invited me back onto his Mining Stock Education podcast to discuss the precious metals sector and specifically the junior mining stocks:

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Buying physical gold and silver – not GLD or SLV – should be your first priority in seeking shelter from the eventual fate of the dollar.  But mining stocks offer the potential wealth enhancement as well “optionality” upside to the prices of gold and silver. If you would like some ideas for investing in mining stocks, take a look at my  Mining Stock Journal.

Why Gold, Silver And Mining Stocks Are Going Much Higher

I’m the most disconnected from politics as I’ve ever been. It’s a waste of time. Capitol Hill is one big Kabuki Theatre performance space. The country is completely screwed and the elitists know it. Everyone who is in a position to grab wealth and power is scrambling to grab what they can by any means necessary. Think about the dysfunctionality of a system that allows the head of its Central Bank to make the effort to convince the populace that price inflation is good for the economy. It’s Orwell on hallucinogenics.

Craig Hemke (TF Metals Report) invited me onto this weekly podcast to discuss the systemic corruption, precious metals market manipulation and where gold, silver and the mining stocks are headed over the next 12-18 months:

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Buying physical gold and silver – not GLD or SLV – should be your first priority in seeking shelter from the eventual fate of the dollar.  But mining stocks offer the potential wealth enhancement as well “optionality” upside to the prices of gold and silver. In the next issue I’ll be featuring a junior silver explorer with 10-20x potential upside. For more information:  Mining Stock Journal.

We No Longer Have Markets – Only Interventions

The actual quote is:  “There are no markets anymore,  just interventions – GATA.”  The only people who deny that Central Banks and Governments prop up the financial markets are those who are completely ignorant of the facts, tragically naive or those who stand to benefit from some way from the market manipulation.  Et tu, Bill Fleckenstein?

Of course, a populace which enables and allows the head Central Banker to stand in public and convince everyone that creating inflation is good for the economy – when in fact price inflation of necessities is running around 10% across the country (Chapwood Index), far out-pacing income growth,  can probably be convinced of anything.

Rather than trust hearsay from me or GATA, how about from the horse’s mouth – the former White House Chief of Staff just 5 days ago:

It’s hard to label those who make an effort to expose the truth as “conspiracy theorists” when in fact those “conspiracies” are confirmed to be “conspiracy truths” by those who are involved with the activity being labeled a “conspiracy.”

The entire economic, financial and political system in the U.S. (and in most of the rest of the world) is skating on thin ice.  I said 17 years ago that the corporate, billionaire and political elitists who are pulling the strings on our system will print money and manipulate the markets until they’ve wiped every last crumb of middle class wealth off the table. And then they’ll let the Comex default and the dollar collapse.

The money printing by the Fed enables these people to prop up the market s AND transfer wealth from your pocket to their’s.  That the purpose of a fiat currency based system and that’s what is happening now.  It’s also why I convert a meaningful percentage of my earnings into physical gold and silver (emphatically not GLD or SLV).   The devaluative effect of the money printing on the dollar is the reason gold has risen in price from $35 to $1900 since 1971, with the majority of that rise in the value of gold occurring after 2000.

That end game is growing closer.

The Price Of Gold When The Dollar Index Hits 70

There’s been a lot of media/Wall St/blog noise about the relative strength or weakness with the U.S. dollar.  With respect to gold, the daily vicissitudes of the gold price are associated with the daily price variations of the dollar index. This is incorrect analysis.

To be sure, over longer periods of time, there will be a high inverse correlation between the gold price and the dollar index. But prior to the run-up over $1900 in the current period, the last time the gold price was trading above $1900 was in September 2011.  At the time the dollar index was trading in the 70’s.

The investment value of gold – My thesis for devoting the last 20 years to researching, analyzing, trading and investing in gold has been twofold. First and foremost to protect my savings from the ravages of eventual catastrophic policies implemented by the Federal Reserve and the Government. But secondarily, both gold and silver are extraordinarily undervalued relative to the quantity of fiat currency AND fiat currency derived debt circulating globally.  As such, both gold and silver have extraordinary investment value.

The graphic above compares the price path of gold and the USDX over the last 12 months. Without question there’s an inverse correlation – over an extended period of time.  But from mid-March thru June, gold and the dollar traded almost perfectly in tandem.  Since June, gold has risen as much as $400 while the dollar index in the same time is only 300 basis points lower.

In fact, between their respective lows in March and now,  gold has soared 31.7% while the dollar index is largely flat.

This latter occurrence is what I call “the investment value of gold.”  Gold (and silver) functions both as a wealth preservation asset and a wealth enhancement vehicle.  Both metals are singularly unique with these attributes.

Let’s face it. The U.S. technically is insolvent. The only factor preventing collapse, for now, is the willingness of our trade counterparties to continue accepting the dollar for trade settlement. With the continued deterioration in the economic, financial and fiscal condition of the United States and the accompanying escalation in money printing by the Fed, the global acceptance of the dollar will diminish more than it already has over the last 20 years.

At some point the dollar index will quickly revisit the 70 level it tested in 2008.  When that event occurs I expect the gold price to be at least double its current level and silver to be pushing $100 (gold/silver ratio below 40 from its current 80).

Buying physical gold and silver – not GLD or SLV – should be your first priority in seeking shelter from the eventual fate of the dollar.  But mining stocks offer the potential wealth enhancement as well “optionality” upside to the prices of gold and silver. If you would like some ideas for investing in mining stocks, take a look at my  Mining Stock Journal.

Silver: 2011 Was A Preview Of What’s Coming

The precious metals sector is getting primed for big move higher. The rally that started in March was nothing more than engine revving.  Physically deliverable gold and silver are becoming scarce.  That is making it problematic for the gold/silver market manipulators to keep a lid on the prices of gold and silver.  Rising U.S. domestic and global geopolitical tensions will help serve as rocket fuel for the precious metals sector.

All of the above factors lead me to conclude that there’s a high probability that the precious metals sector will stage a big move between now and the end of the year.

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The Mining Stock Journal is a bi-weekly mining stock newsletter that focuses primarily on the junior exploration stocks. The latest issue includes a review of a junior silver mining company with huge silver optionality. You can learn more about  this newsletter by following this link:  Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

Gold, Silver And The “Shit-Show”

“I’m just gonna say it like it is – that was a shit-show.”  Dana Bash, CNN in reference to the “Presidential” debate.   “The debate was a national mortification – ‘shit-show’ was an understatement” – Chris Powell, GATA.

Last night’s debate was nothing short of a complete tragedy:  the tragedy of a collapsing empire.  I saw an ad on one of the financial propaganda cable channels that billed the debate as “The Main Event”  as if it were to be promoted like a championship boxing match.

Politicians and the political environment are nothing more than a reflection of the surrounding system and populace at large.  The entire U.S. system is a shit-show.  The financial markets have become so disconnected from the underlying economic and fiscal reality that it takes several trillion dollars in monetary intervention from the Central Bank to keep them from collapsing.

The stock market’s complete dysfunctionality is represented by the dozens of tech-related “unicorn” type companies that collectively burn billions in cash every quarter and yet have market caps in the tens of billions of dollars.  If anything, Tesla is emblematic of the degree to which the entire U.S. financial and political system is a complete fraud.

And then there’s gold and silver. The mainstream financial media dismissively reported the $920 million dollar fine to be paid by JP Morgan for manipulating the gold market – “it was just some rogue employees ‘spoofing’ the market.”  Spoofing is not the issue.

The gold market  is, and has been for several decades, manipulated systematically at the direction of the BIS to prevent the price of gold rising to a price level vs the dollar that reflects and embodies everything described above. “Spoofing” is nothing. A $920 million fine is the cost of doing business for JP Morgan. The Fed has injected billions into JP Morgan since March. $920 million is not a deterrent – it’s an odd-lot.

The source of the manipulation is, among other devices, the creation of derivatives with a notional value in the trillions to be used in large quantities to push the price of gold lower.  Here’s an example:

Part of the problem is that the mainstream financial media has become nothing more than hand-puppets for the Wall Street operators who pay their compensation by sponsoring their media abortion. They merely print the words fed to them. You’ll note that Investing.com is attributing the sell-off in gold this morning to a “weak dollar.”  Yet yesterday Investing.com told us that the big move higher in gold was attributable to a “weak dollar.”  See what I mean?  Zombie hand-puppets.

That price plunge in the graphic above has nothing to do with the trading action in physical gold. Or with spoofing.  It’s a product of the gold market manipulators like JP Morgan unloading  massive quantities of paper gold onto the Comex and  triggering stop-loss orders set by hedge fund black box trading systems just as gold was about to launch through $1900 again.

The Central Banks, with the help of their bullion bank phalanges, are desperate to keep the gold price in check in order to maintain the credibility of the dollar-based fiat currency monetary system – a monetary system in which trillions worth of currency can be created with a computer keystroke.  A monetary system that is 100% fraudulent.

Who benefits the most?  The primary target of the $3-plus trillion printed since mid-March are the big banks, which started to collapse last summer.  The phony “repo” operation implemented in mid-September is the evidence of that fact.  But the Government’s fiscal “shit-show,” a financial system held up by an electronic currency printing press and an economy largely in a depression will lead to trillions more in Federal Reserve intervention.

The implication of the shit-show described above is that eventually the price of gold is going to move considerably higher in relation to all fiat currencies and, specifically, the U.S. dollar. You’ll never see Investing.com or financial TV report that the dollar has lost 98.2% of its value vs. gold since 1971.  But do the math – it’s a fact.  The loss of the remaining 1.8% vs gold is the what the western Central Banks are fighting to prevent. It’s their Maginot Line.  And it’s the eventual loss of that 1.8% that will send the price of gold measured in fiat currencies into orbit.

The short term gold chart looks as bullish as it has looked all year, including in mid-March at the bottom of the last manipulated take-down in the metals.  Last week’s sell-off was a gift to those who understand what is happening, why it’s happening and what can be done to protect wealth.

Think I’m blowing smoke?  I put my money where my mouth is.  Last week, all week long as the gold and silver were pushed lower in price vs the dollar, I bought gold and silver bullion coins for the first time since early 2017 when gold was near $1100 and silver was around $16. On a relative scale, in which the “scale” is the severity of the shit-show,  gold and silver are cheaper now than in 2017. That’s why I converted more fiat currency into real money.

This chart is coup de grace:

The Central Banks are starting to lose their grip on that final 1.8%.  The value of gold relative to the U.S. dollar is beginning to accelerate along with the amount of systemic corruption, fraud and general perversion.

Tech Bubbles And SPACs

The following is an excerpt from the latest issue of my  Short Seller’s Journal:

I thought this chart showed yet another interesting signal that the stock bubble could be ready to pop:

It shows the spread (the difference) in the percentage sector weightings in the SPX between Technology and Energy & Financials. Prior to 2000 and between 2002 and 2016, the Energy/ Financial sector had a higher percentage weighting in the SPX than Technology. Currently the differential in the percentage weightings between Tech and Energy/Financials is negative. The last time this differential was negative occurred at the peak of the dot.com/tech bubble.

My interpretation is that the technology sector is a bellwether indicator of when market speculation becomes extreme and when retail piles into the action with blind ambition. Another indicator is the proliferation of SPACs (Special Purpose Acquisition Companies). Politely called “blank check companies,” these are blind pools of capital raised in the public market. SPACs do not have any existing businesses. Their purpose is to make some type of business acquisition within two years. This is what the top of a stock bubble looks like – just throw your money to a blind pool promoter and trust that they know how to invest it:

The SPAC sponsor may have an acquisition in mind at the time the money is raised, but the public stock investors have no idea what company or companies they are investing in at the time of the IPO. How’s that sound?  Why not pay a nose-bleed valuation for a business at the top of a business cycle?

In truth, SPACs are fee-generating cash cows for the sponsors. In addition, sponsors often end up with 20% of the shares, gratis, after the SPAC has merged/acquired a business.  Half of the IPOs YTD have been SPACs. Of the 18 that have gone public, 11 are trading below their IPO price. It’s one of the ultimate indicators of reckless speculative behavior, especially from retail investors, and the degree to which a stock bubble likely is reaching its limits.

A possible top indicator for the housing market?  United Wholesale Mortgage (“UWM”) is going public via a merger with a SPAC. The deal values UWM at $16 billion and it will be the largest SPAC deal to date. UWM is the largest wholesale mortgage lender in the country.  A wholesale mortgage lender funds mortgages offered through mortgage brokers, credit unions and banks.

The SPAC, Gores Holdings IV (GHIV), is paying UWM $925 million ($425 million in cash plus $500 million to raised via debt) for a 6% interest in UWM. UWM will own approximately 94% of the new United Wholesale Mortgage, which will trade under “UWMC.” Gore Holdings went public on August 10th, raising $525 million.

This type of deal is essentially a “reverse” IPO in which a private company goes public by merging with a public shell. The full terms of the deal are not available yet, but in all likelihood Alec Gores (the SPAC sponsor) and the senior executives of UWM will be awarded a large chunk of shares that will dilute the public shareholders. GHIV shares jumped to $12 on Wednesday after the deal was announced but closed Friday at $10.44.

Great time to invest in a mortgage finance company?  The delinquency rate on FHA mortgages is now at a record 17.4%. FNM/FRE/VHA mortgages will soon follow.  FHA started underwriting sub-prime-like mortgages in late 2008.  FNM/FRE/VHA began doing the same about 5 years ago.  In fact, the delinquency rate on VHA mortgages, which require zero down payment, is starting to accelerate.

This is a deal that I will be ready to pounce on with a short position after it goes public. I believe this is a bellwether indicator that the housing market is topping. Speaking of which, I’ll review the housing market data released this past week in the next issue. But, per usual, the headline reports for new and existing home sales sensationalized the actual home sale numbers.

As with general economic activity, there was a burst of activity in the housing market after the lock-down period. This was further fueled by the $1 trillion-plus in stimulus the Fed injected into the mortgage market. That, combined with the Fed’s zero-interest rate policy, pushed mortgage rates to the lowest in history.  I expect the burst of housing market activity to taper off quickly, similar to what we’re seeing in the reports for general economic activity for August and early September.

Click on the graphic below for more information about this weekly newsletter:

The Stock Market Could Be In Trouble – Buy The Dip In Gold / Silver

The price take-down in gold and silver is 100% a product of the trading activity – aided and abetted by the bullion banks in NY and London, who manipulate the price in the paper derivative market. All of the trading activity dictating this sell-off is occurring in the paper derivative markets – it has nothing to do with the economics of the physical gold and silver markets.

How do I know this? Consider that 404,000 Comex December paper gold contracts contracts traded on Wednesday. That’s equivalent to 1,262.5 tonnes of gold. That’s roughly 42% of the total amount of gold that will be mined in 2020. In other words nearly half a year’s worth of physically mined gold traded in one day in just one contract month.

The ONLY physical gold and silver that is transacting is at the London price fix. And it’s dubious as to whether or not physical gold and silver is actually changing hands. Most of the “settlement” occurs digitally and gold and silver do not physically change possession. It’s a bigger scam than pet rocks.

At some point the coming market, economic and political turmoil will trigger a big bid for gold and silver which in turn will translate into a big move higher for the mining stocks.

Silver Liberties invited me on to it’s podcast to discuss the imminent stock market crash, the popping of the housing bubble 2.0 and precious metals: