Tag Archives: stock bubble

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.

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.

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.

Carvana: Financial Fraud Pays Well

CVNA’s valuation vs competitors like CarMax (KMX), Autonation (AN) etc is completely irrational. I was a CEO of a subprime company in this space. CVNA’s valuation is a crime of capitalism.” – @beaconstagezero

Ernest Garcia II was convicted on felony charges in connection with his involvement in the Charles Keating S&L Ponzi scheme which stole billions from innocent bystanders.  Garcia is the founder and Chairman of Carvana (CVNA).   His son, a chip off the old block, is the CEO.

This morning CVNA released a terse “preview” of its expected Q3 results in which it said the Company will achieve record revenues, units sold and gross profit per vehicle plus it said its EBITDA would “approximately” breakeven.

In the same breath it announced another $500 million bond financing. YTD including this deal, CVNA will have had to tap the capital markets for $1.7 billion.  Why?  Because it’s operations burn cash like a home furnace in Weimar Germany in the early 1920’s and because the founder/Chairman and his CEO son use CVNA as their personal piggy-bank.

The press release tandem can be read like this:  “Hey suckers, our results in Q3 will be ‘great’ so give us another $500 million loan because we can’t seem to make any money.”

Carvana’s Q2 2020 showed 15.3% YoY revenue growth vs Q2 2019. But the gross margin dropped 100 basis points from 16% last year to 15% in this year’s Q2. No wonder CVNA is generating revenue growth – just like every other overvalued “unicorn” company hatched in Silicon Valley, CVNA charges a price for its product that does not cover the cost of its business model.

How do we know this? Its operating loss soared 66.4% to $106 million of red ink from $64 million in Q2/19. The cash burned (used) in operations fell to just $7 million from $168 million in Q1/20. But this was attributable to a $215 million run-off of inventory from Q1. As I’ve discussed previously, CVNA does not price the cars it sells at a price high enough to cover the full cost of the business model. This is why it issues debt and stock quite frequently.

A big red flag for me is the fact that has had to issue stock three times raising $1.3 billion subsequent to going public in 2017 plus another $700 million in two separate junk bond deals in 2018 and 2019. Two of the three stock financings occurred in Q2 2020, yet the cash balance between Q1 and Q2 increased by just $76 million dollars, part of which is restricted cash.

The Company used $781 million to pay down a short-term revolver used to finance inventory. This also explains the run-off in  inventory.  Including the inventory run-off in Q2, the Company has raised $2.7 billion in funding since going public, including the $500 million bond deal announced today. This is essentially the amount of cash burned by CVNA’s operations since its April 2017 IPO.

This Company does not make money and it never will unless it charges a much higher price for the vehicles it sells, in which case its sales volume will plummet. CVNA is 60% owned by Chairman/founder, Ernest Garcia (a convicted felon), and 40% owned by the public. Garcia sucks money out of Carvana via a series of “related party” arrangements which include the leasing of office space and other facilities, paying a Garcia-owned business for used car reconditioning services and selling usage time on a corporate aircraft indirectly owned by Garcia. A Garcia-owned company also gets paid for servicing CVNA’s finance receivables. The conflict of interest and self-dealing between CVNA and Ernest Garcia II (Chairman) plus Ernest Garcia III (CEO) is mind-boggling.

The bottom line is that CVNA is functions as a vehicle (so to speak) that Ernest Garcia and his son use to raise money in the public capital markets and suck that money out of CVNA for personal gain.  It’s the epitome of fraud and corruption.

The short interest represents 30% of the share float, which explains the ridiculous run-up in the share price after the Company’s announcement today. Clearly I’m not the only one who has dissected the footnotes to the financials and determined that CVNA is to a large degree Ponzi scheme with an absurd market valuation.

Quite frankly I would bet that the asset value of the Company is not a lot greater than the amount of debt outstanding. The tangible assets – finance receivables (i.e. subprime loans extended to customers), inventory and unrestricted cash – are carried at $1.2 billion. The finance receivables ballooned in Q2 to $358 million from $199 million in Q1. This tells us that the Company lends aggressively to subprime borrowers.

There’s no way the market value of that crap is worth $358 million. PP&E is carried at $704 million. Thus, CVNA’s “hard” assets total $1.9 billion giving full value to receivables. Total debt plus payables was $1.4 billion at the end of Q2. Subtracting the debt from the tangible assets leaves $500 million of asset value. Beyond that, what is the value of a business that burns several hundred million in cash on an annual basis?

CVNA’s market cap at Friday’s close was $30 billion. If you laid out the numbers in the paragraph above and told me that the business described was valued this high, I would have thought you were hallucinating.

CVNA is an example of the type of business model, along with the operational and financial fraud crawling like cock-roaches beneath the surface, that has been enabled by 13 years of money printing by the Fed.  Thirty years ago when the financial regulator still maintained some independence from the big Wall Street banks, CVNA would not have survived very long.

The commentary above is from the August 9th issue of my Short Seller’s Journal. You can learn more about this newsletter here:  Short Seller’s Journal information.

AMZN’s Free Cash Flow And Profitability Myth

Jeff Bezos was a master at GAAP accounting manipulation back when Elon Musk thought that “GAAP” was a clothing store chain. AMZN’s numbers are just as manipulated as Tesla’s. But the difference between Jeff Bezos and Elon Musk is that, whereas Musk is a pure caveman with his fraud, Bezos is clever about disguising and hiding the accounting manipulation. About six years ago I spent a considerable amount of time deep-diving into AMZN’s financials going back to 2004, which is when AMZN’s business really began to takeoff. After about two weeks of tedious but intensive study of the footnotes in 10Q’s and K’s, I pieced together a lot of the GAAP manipulation tools embedded in AMZN’s financials.

I will note that in 2018 Amazon denied a request from the SEC for more information about the Prime business, including disclosing in its financials the amount of sales attributable to Prime members. I’m certain Bezos rejected this request because Prime is a money-losing proposition and does not want to provide the evidence of that by breaking out the numbers. I recall sometime around 2013 or 2014 Bezos admitted in an interview with Bloomberg that Prime lost a couple billion per year.

AMZN pulled a lot of of the usual GAAP tricks to generate this quarter’s net income “beat.” Bezos slashed marketing expenses by a considerable amount as a percentage of revenue, as the marketing expense was essentially flat vs Q2 2019. Historically the marketing expense has grown YoY at a healthy rate. He may have just figured out a way to justify capitalizing some that expense – i.e. throwing some amount of the marketing expense into an asset account and amortizing it over time. This would reduce the amount of marketing expense shown in the income statement, thereby increasing operating and net income. Too be sure during Q2 a lot of companies cut back on web-based advertising, but if this was the case with AMZN, the cost-improvement is one-time, non-recurring.

Though AMZN reported EPS of $10.50 vs. $5.32 in Q2/19, several red flags for me point to the improbability of net income nearly doubling YoY. The operating income margin in the North America product segment (e-commerce + whole foods + sundry other small businesses) declined again to 3.7% from 4.1% in Q2/19. For the first time he showed a tiny operating profit in the International e-commerce business. I’m certain there were accounting games to accomplish this but I can’t prove it with just the publicly available numbers.

AWS (the cloud business) continues to experience slowing sales growth and declining margins. AWS contributed to 59% of the Q2 operating income but just 12.1% of the total revenues. And the percentage of revenues represented by AWS sales declined.

AMZN’s overall operating margin was 6.5% but the Products (online + WF) operating margin was just 3.1% vs 4.9% in Q2/19. This decline is attributable I believe to declining margins in the Whole Foods business. Again, AMZN offers fat discount specials to Prime members on many products at WF, which drives sales growth at the expense of profitability. Unfortunately, AMZN does not break out the sales and income attributable to the WF business – yet another layer of opacity on AMZN’s financials. I predicted when AMZN acquired WF in mid-2017 (at the time WF was 5% operating margin business being folded into a 3% operating margin business) that Bezos would drive margins lower at WF in an effort to generate revenue growth.

The cost of fulfillment rose – again – to 26% of product sales vs 25.6% last year. The Company generates sales by subsidizing the selling price of online products with 2-day free
delivery for Prime members. This is a money losing proposition and it enables predatory
pricing to drive out competition. Bezos is being grilled by Congress about the possible use of predatory pricing strategies to drive out competition, along other anti-trust issues. Rest soundly that this is nothing more than political theatre and nothing will be done to curtail AMZN’s effort to put the competition out of business.

AMZN’s debt increased again to $33 billion (41%) in Q2 but the Company is not using the funds to buyback shares. If the business really is generating free cash flow, why issue more debt? AMZN has to issue debt from time to time to fund cash needs. Without going into the complicated calculus here, AMZN’s free cash flow claim is an accounting mirage. At the end of Q2 2012, AMZN had zero debt. It had $24 billion in debt after closing the WF’s deal. Now it has $33 billion in long term debt. To my knowledge, unlike most other big companies that issue debt for the sole purpose of buying back shares, AMZN has rarely if ever repurchased shares. This is because it needs the debt funding to cover expenses.

Finally, AMZN used to disclose the amount of cash it spends every quarter for operating and finance leases plus that amount cash used to acquire PP&E under operating and finance leases at the bottom of the State of Cash Flows. No more. Now it discloses this information in the footnotes in a section titled “Supplemental Cash Flow Information.” This may sound trivial but the cash used for the PP&E purchases is not included in Bezos’ definition of free cash flow. In addition, very few analysts and investors ever bother to look at the footnotes.

Bottom line: If I gross up the the first 6 months of 2020 operating income and add a couple billion for growth, I get full-year estimated operating income of $20 billion. This stock is trading at 80x estimated operating income for a business that generates a 6.5% operating margin and said margin declines almost every quarter. 88% of the business model generates just a 3% margin and that margin is declining. Right now it doesn’t matter. The stock algos, Chinese retail gunslingers and Robinhood idiots will chase anything that moves. You make a dead skunk carcass move and the Robinhood morons will chase it.

“We Are In The Golden Age Of Fraud”

“Elon Musk has personified the hopes and dreams of this bull market; Tesla burnishes its results through aggressive accounting; it’s a culture of deception because it is selling self-driving, which doesn’t yet exist.” – Jim Chanos from “We Are In The Golden Age Of Fraud” (Financial Times)

Jim Chanos is perhaps the most well-known remaining short-seller in this market.  Don’t be fooled by his demure characterization of Elon Musk and Tesla.  It’s calculated diplomacy. The numbers are far more than just polished up to look good  – the accounting is not just “aggressive,” it’s fraudulent, and Chanos knows that as well as anyone.

Chanos describes the current environment as “a really fertile field for people to play fast and loose with the truth, and for corporate wrongdoers to get away with it for a long time”. He reels off why: a 10-year bull market driven by central bank intervention; a level of retail participation in the markets reminiscent of the end of the dotcom boom; Trumpian “post-truth in politics, where my facts are your fake news”; and Silicon Valley’s “fake it until you make it” culture, which is compounded by Fomo — the fear of missing out. All of this is exacerbated by lax oversight. Financial regulators and law enforcement, he says, “are the financial archaeologists — they will tell you after the company has collapsed what the problem was.” (Financial Times)

I have said many times that Tesla and Elon Musk embody and reflect the extreme degree to which the U.S. system has defined deviance downward into what is now a complete Banana Republic controlled by crony-capitalist elitists who are putting the screws to the middle class. The money printed by the Fed is nothing more than the thinly veiled bailout of the biggest banks – nothing more – effecting the greatest wealth transfer in history.

The fraud and corruption is blatant. And there’s nothing the masses can do about it at this point. The U.S. economic, financial, political and legal system is now amalgam of “1984” and “Atlas Shrugged.”  Eventual collapse is fait accompli.

Chanos himself burnishes the adjectives he uses to convey the degree to which the U.S. system has been engulfed in fraud, corruption and open theft.  In my opinion, Francisco D’Anconia in “Atlas Shrugged” describes the U.S. perfectly in this excerpt from the famous “Money Speech:”

Watch money. Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion–when you see that in order to produce, you need to obtain permission from men who produce nothing–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed.

The Historical Stock Bubble, Idiot Stocks And Gold

The Fed has blown the current stock bubble to an unprecedented magnitude. While the most outrageous overvaluations are concentrated in the tech sector, the valuation insanity has engulfed the entire stock market. Bubble chasers ran Hertz, a bankrupt company that will either liquidate or restructure, up to a valuation close to $1 billion after the Company filed for bankruptcy.

Perhaps the poster-child for this historic stock market Hindenburg is Tesla. Its valuation makes a mockery of our markets and shows what a complete farce the regulatory, legal and judicial systems have become in our country. It is the perfect reflection of the Banana Republic into which the U.S. has transformed over the last 10 years.

The precious metals sector is just getting warmed up. Since late March, when the Fed opened up the floodgates of its digital money printing press, gold is up 21%, the SPX is up 37%, silver is up 54% and the mining stocks are up 86%. Expect the large cap gold/silver producers to produce another round of big earnings beats for Q2 and Q3, which will drive the mining stocks even higher.

Lior Ganz invited me onto his Wealth Research Group podcast to discuss the current stock market insanity and what’s ahead for the precious metals sector:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   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.

“New subscriber here. Thank you for the Great newsletter with a very professional analysis.”

The Market Is More Dangerous Now Than Early 2000

This market reminds me of the late 1999/early 2000 tech bubble. But back then it was primarily the Nasdaq that bubbled up. This time around the absurd dislocation between value and reality is more comprehensive. It’s not just tech stocks but also non-tech related stocks like HTZ, AAL, BA etc.

Back in late 1999/early 2000, like now, newly minted retail day-trading geniuses who couldn’t explain what a p/e ratio is were piling into tech stocks with risky OTM call options and heavy use of margin.   Most were wiped out when the Nasdaq crashed just like most will be wiped out when this market has the rug pulled out from under it. The February-mid March decline was just an appetizer for patient short sellers.

Silver Liberties invited me back onto its podcast to discuss the insanity of the current stock market and, of course, to talk about gold, silver and mining stocks:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   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.

Retail Sales Headlines Are A Complete Joke

The stock market promoting mainstream media this morning reported “U.S. Retail Sales Rose Record 18% in May” (e.g. the Wall St Journal).  The S&P futures jumped from up 45 points to up 90 points.

But, as usual, the details are in the fine print of the report itself, and it’s apparent that nobody in the financial media bothered to look beyond the headlines.

In fact, the 18% rise is measured from April’s report, which was heavily depressed due to the shelter-in-place restrictions and the closure of many retail businesses. Funny thing about using the percentage change as the metric of measurement. If April had one dollar of retail sales and May had two dollars, the percentage gain would have been 100%.

Measured from May 2019,  the “seasonally adjusted” numbers show that May 2020 retail sales dropped 6.1%.  In retail sales terms, especially given the healthy rate of inflation built into the numbers, that’s a cliff-dive. If the numbers had been adjusted for price inflation, the percentage decline would have been even larger.  Here’s the report if you want to check for  yourself – Retail Sales.

Then there’s the credibility of the data collection, which is done by the notoriously unreliable Census Bureau.  The Census Bureau would have us believe that sales at restaurants (“food services and drinking places” if you bother to look at the report) gained 29% from April to May. I find this impossible to believe given that most of the country, including many restaurants, were still shut down until late May.  The gross negligence in this particular number is likely attributable to the highly opaque “seasonal adjustments.”

Same for auto sales, which the CB would have us believe increased 50% in May from April. Certainly the 23.6% drop in the Cass Freight index belies the numbers from the Census Bureau, especially for autos. I play tennis with someone who owns a trucking business that transports new vehicles from OEMs to dealers. His business completely stopped until late May.  John Williams, of Shadowstats.com, believes the May number for auto sales will be reversed in June’s report.

Keep in mind as the various economic reports for May and June hit the tape, the percentage change from April to May and from May to June will make it appear as if economic activity is bouncing back strongly. In truth, with the economy re-opening, the May and June numbers will be calculated on a percentage basis from the severely depressed level in April and an inordinately depressed level in May, while the nominal numbers will be considerably lower compared to the same month in 2019.

In fact, it’s going to take at least a few months before the real fall-out from the closure of the economy is known. As an example, commercial real estate company Cushman & Wakefield has forecast that as many as 25,000 stores will close in 2020 – mostly in malls. This not only affects directly the employees who work at those stores, but also the surrounding businesses that benefit from store employees who spend money while at work (food establishments, etc.)

Without question the economy is not even remotely close to being in the “V” recovery that is implied by the action in the stock market. The immediate economic impact of high unemployment is deferred somewhat by Government “stimulus” payments and unemployment benefits. Many of those unemployed can still pay some bills and feed their families while stimulus payments continue and unemployment benefits are not exhausted. But once those pools of assistance are tapped out, the economic impact will be severe.

Infinite QE, Bear Market Rallies, Gold, Silver And Mining Stocks

The precious metals sector continues to be glaringly ignored by the mainstream financial media and most “alternative” forms of media. This is a “loud” indicator that the fattest part of the bull move is yet to come. YTD gold is up 11.8%, GDX is up 16.4% while the SPX is down 12.6%. If the SPX were up 16% YTD, they’d be doing naked cartwheels on CNBC.Mining Stock Journal – May 14, 2020

The stock market is reflecting the expectation of a “V” recovery in the economy. The Trump Government, specifically Treasury Secretary, Steve Mnuchin, believes economic activity will be largely restored by the end of August. It’s nothing but propagandist fantasy.  I’d be stunned if he really believes that.  This bear market rally is a just that – a bear market rally. The same pattern occurred after the tech bubble popped in 2000. The Naz plunged 40% followed by a 42% rebound rally. When the bear rally ran out of steam, the Naz declined 42% over the next four months.

A lot of money is flowing into mining stocks, especially junior exploration companies. More investors are aware that the cat is out of the bag w/regard to the physical vs. paper situation in London and NYC. The money flowing into mining stocks – especially speculative juniors – is starting to go from a trickle to a heavy current.  A lot of stock deals that have been announced in the last couple of weeks have been up-sized by a considerable amount. This is highly bullish indicator for the precious metals sector.

Silver Doctors / SD Bullion invited me back to discuss the insanely overvalued stock market and the precious metals market:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

“I’ve always thought your newsletter is the best value in the junior mining world. It’s great to get your insight as things get moving here. Some of your suggestions are among my best performers.” – subscriber, “James,” to the Mining Stock Journal