The ultra inflationary policies of the FED which has created an unprecedented explosion of the money supply means that with the threat of even more funny money investors may want to consider buying metals while shorting the Nasdaq as a hedge. Certainly, the trade is not without risk. However, with a horrid economy and more printing, I would continue to think hard assets should outperform most asset classes. We like timberland and farming here, but in that respect we are outcasts in the financial world. That’s okay… we don’t want to be popular or our ideas to be well received (if agreeing with everyone is your goal you’re probably on the wrong side of trade).
Tag Archive for gld
Both gold and silver are now solidly above their 200 day moving averages and the divergence between stocks and metals may be reversing a bit with stocks falling and metals rising. Certainly, metals are the better inflationary hedge as evidenced by currency collapses throughout history, but in today’s technologically advanced stock market focused society anything can happen so long as the puppett masters can still control their Frankenstein-like creation of bubbles and super-bubbles.
Do we need more regulation? Against monopoly and those who seek to end competition, yes. Against mom and pop farmers and the chick who owns a small shoe store in Albuquerque? Hell No. Leave the small business owners and Dairy Farmers alone.
Were traders really expecting more QE today? Seems pretty bizarre and more likely the work of some HFT BS than anything else.
Silver dropped by 5% erasing all of yesterday’s gains and threatening to reverse below important support/resistance lines. While the breakout is not completely negated, traders will likely play it safe in Silver until the highly volatile trading picks one direction or another. For now, I would hold all physical and buy more on days like today. That said, Silver has come pretty far over the past few years so investors may want to put money into hard assets than have not risen so much like housing, farmland, timberland, etc…
The national debt would expand under three of the four GOP presidential candidates, according to an analysis of the candidates’ proposals, The Washington Post reported.
The debt would grow by about $4.5 trillion by 2012 under former Pennsylvania senator Rick Santorum and by about $7 trillion under former House speaker Newt Gingrich, reaching a level greater than 100 percent of the nation’s economy, according to a report to be released on Thursday by U.S. Budget Watch, a project of the bipartisan Committee for a Responsible Federal Budget.
Former Massachusetts governor Mitt Romney’s proposals would pair $1.35 trillion in tax cuts with $1.2 trillion in spending reductions, setting the debt to rise “on a trajectory that closely tracks current policies,” The Post reported. But the 20 percent, across-the-board federal income tax cut proposed by Romney on Wednesday could reduce revenues by an additional $3.5 trillion over the next decade, The Post reported.
Only Texas Rep. Ron Paul’s plans would reduce the national debt—by about $2 trillion—thanks to huge promised spending cuts he would combine with proposed tax cuts.
The group plans to analyze Obama’s budget request in a future report.
From www.GovExec.com here is the link: http://www.govexec.com/oversight/2012/02/report-debt-would-grow-under-all-one-gop-contender/41271/
Gold held its 200 Day MA while stocks are getting nailed due to their overbought technical condition — IE another “BAD SANTA” rally as long time hedgephone readers already understand and have sold into…
Either way, one thing is clear — Gold’s 200 day moving average at $1638 an ounce has held and the shiny yellow metal is likely going to continue its upward trajectory for the foreseeable future.
Still, our 100% short stock market model is on right here and after ten years of refinement this signal is proving resilient and accurate! Staying short stocks and long gold is (YET AGAIN) proving itself to be the trade of the decade…
By Peter Schiff, CEO of Euro Pacific Precious Metals
For such a wonderful year for precious metals investors, the final calendar quarter left little to celebrate. Just as people now take for granted that their phones will also take pictures, play music, and surf the internet, many investors have come to expect gold and silver to move up in a straight line.
In fact, in a recent CNBC interview one analyst claimed that gold’s recent correction proves that it is not really a safe haven. In truth, such a statement merely proves how little some analysts know about markets.
However much the fundamentals may be on your side, there are always mitigating factors that affect price movement. In the case of gold and silver, the temporary resurgence of the dollar versus other fiat currencies alternatives has been the dominant factor – but even that isn’t the whole story.
STAMPEDE OUT OF EUROS
The critical factor that has been in play the past few months has been the European debt crisis going critical. I have said all along that the US is in worse shape than the EU overall because the EU has less will and capacity to resolve – or even temporarily paper over – its problems. The flip side is that, absent the massive stimulus the US has received, Europe has been forced to deal with its sovereign debt problems first.
Global investors have been spooked since the credit crunch of 2008. That means they are more likely to follow the herd rather than stick to the fundamentals. It takes a certain firmness of character to watch your investments sell off by double digits and not have a moment of self-doubt.
So, what we’re seeing is big moves into and out of asset classes. But what is important to understand about these circumstances is not the scale of the moves but the direction of the trend.
Read the rest of this article here: http://seekingalpha.com/article/317560-was-2011-the-end-of-the-gold-rush
And it may happen where we have a financial/banking collapse first and hyperinflation second. Either way gold, silver, color diamonds, and farmland make a lot of sense as a hedge against paper money and the people who love to print and spend it. The governments of the world seem to have bizarre agendas to create inflation at any cost. The result is that gold and silver will likely trade at much higher prices in the coming months.
I am pleased to say that I have struck a fantastic deal on color diamonds at below wholesale prices. If you are interested in the best deal on color diamonds, contact me directly at
I am looking to supply jewelry stores, individuals, business owners, etc… with solid inflation hedges.
Diamonds have historically outperformed most asset classes and under hyperinflation and chaos, portable wealth makes a ton of sense. When people think diamonds are worthless, look at a piece of paper money and think long and hard about what the value of a dollar really is….
Check out our site: www.usdiamonds.net
Tuesday’s sell off, which was predicted overnight by our proprietary market model is based, in my view, on rational fears over the disintegration of the drive toward “global governance” which relies on a central bank of the world to mop up the current economic and financial crisis instead of a more straight forward debt deleveraging approach. This drive toward “fiscal integration” is also heralded by none other than the Pope himself, and what is clear is that nobody wants to talk debt jubilee/forgiveness and breaking up the TBTF banks right now except for the people who are protesting over austerity and corruption across the globe. As Don Corleone put it in the Godfather Part 3, “Finance is the gun and politics is the trigger.”
Europe’s debt issues are clearly too large to be solved by any type of bailout or ESFS 200 to 1 leverage scheme and the only real solution is to instill democracy in those debt zombie nations which should not be controlled by corporate lobbyists or banking interests but their people. In effect, the only way out of this will be some type of debt jubilee mixed with the either the dissolution of the Euro as a currency or a replacement of the current Euro scheme with a silver backed currency system and a massive right down and nationalization of investment banks. Glass Steagall must be reinstated around the globe and investment bankers should be treated like utility workers. Politicians need to be civil servants and should have to agree to work for free and also run an election based solely on civilian, not corporate, fundraising.
Many people argue that gold is too scarce to be a practical medium of exchange in a gold backed monetry system, but what is utterly clear to most people with eyes and ears is that the current FIAT money and the fractional reserve banking systems are not working anymore and need to be replaced or at least drastically overhauled.
The current leverage in the system is also too large and onerous to actually be paid back and it seems as though the balance sheets of world nations need to be cleansed via a global debt forgiveness or reset mechanism. While such a “reset button” type default scheme seems drastic, the alternative looks to be the slow destruction of the global economy which at first will involve significant deflationary pressures as the Euro crumbles followed by hyperinflation as the U.S. Dollar is devalued along with paper money in general. This trend is already well in place.
While I am clearly not advocating an overnight return to the gold standard, I am not able to turn a blind eye towards the macro-economic reality of the banking/FIAT/federal reserve system which sets a value to paper at some arbitrary price. Money needs some type of reality based valuation and by allowing private central banks to have any involvement in the creation and contraction of the money supply we will always have a degree of corruption/fascism/totalitarianism underlying the global financial system. Isn’t that what our forefathers battled tirelessy against when founding this great nation?
What all of this sovereign debt means to savers and investors is that now is the time to buy hard assets in the form of gold, silver, color diamonds, raw land, farm land, and other commodity linked investments while staying short the Nasdaq bubble names via put spreads like CRM, AMZN, LNKD, and the QQQ. Of course, such a “short innovation” and long hard currency pairs trade will have huge short term risks for investors, but over the longer term this trade has been incredibly profitable all the way back to 2001 and should continue to make money over the longer term — just take a look at a one year chart of Netflix versus the price of gold.
When looking at the debt to GDP ratios of the US (101%) it’s pretty easy to see that unless we find a way to cut spending and grow the economy we could very well end up in an economic debt driven feudalistic zombie scenario like the following nations: (% debt to GDP)
As you can see, lending money to these countries looks to be about as sound of an investment as buying a share of the Brooklyn Bridge. These countries are all broke.
So where are the wise investors putting their hard earned money now? My best idea for long term capital preservation is the gold, silver, and fancy color diamond markets because hard assets cannot be printed like paper money and should continue to rise with the increasing sovereign risk in European and other nations.
Visit www.usdiamonds.net to learn more about color diamonds
I really had to laugh at this one… Can’t see this guys business model really taking off anytime soon which clearly makes this launch a venture of the not for profit persuasion. Definitely a usefull resource for a little bit of humor and the latest releases from Goldman Analysts.
It’s pretty funny that the gold bugs, silver longs, stock market bears, etc.. are constantly riduled on a regular basis while everyone on CNBC is bullish and also all of the street analysts are bullish in the press. Meanwhile, Goldman has apparently told their pension clients that the markets are heading lower in the next 3-6 months and gold is going higher over the longer term.
In fact, Deutche Bank’s CEO called this a crisis last night which is what was blamed by the media as the reason for the overnight futures gap down, which incidently was a “gap n crap” in reverse, as the gap was filled in short order with the QQQ actually finishing higher. Not suprisingly, our market model remains “cashy an trashy” — while we are 100% in cash in the model we think their are many undervalued shares around thrown out with the trash. This includes some life insurance companies, Berkshire Hathaway, etc… but not the banks!
Meanwhile DB shares were crushed by the overnight “truth” about the mark to market banking system and the crisis that wasn’t really fixed.
Ackermann’s diss of the “Recovery Summer” rhetoric is quite perplexing indeed:
“It has been a mere three years since the collapse of the investment bank Lehman Brothers plunged the world into a deep financial crisis. But now, with economic indicators offering little room for optimism, a new crisis may be on the horizon.
That, at least, was the message offered by Deutsche Bank CEO Josef Ackermann on Monday in comments delivered at a conference in Frankfurt. “We should resign ourselves to the fact that the ‘new normality’ is characterized by volatility and uncertainty,” Ackermann said. “All this reminds one of the autumn of 2008.”
The volatility was on full display on Monday as the leading German market index, the DAX, plunged to a two-year low and stocks of European banks , including Ackermann’s Deutsche Bank, lost value. The price of gold once again spiked upwards as investors sought security.
In addition, the European Central Bank reported that European banks on Friday parked €151 billion ($213.3 billion) overnight with the ECB, the highest total in more than a year. The increase reflects growing distrust on the financial markets, with banks shunning the higher interest rates they would earn by depositing money with each other.”
Hedgephone readers know we have been in cash for most of August, but they also know that we are scared for the US Dollar here and define our portfolio position in cash a bit differently than most people. To us, cash is a concept that includes foreign currencies, gold and silver, US Dollars, etc…
When we say cash in our market model we mean something along the lines of this:
10% Canadian Dollars
10% Australian Dollars
10% British Pound
10% Swiss Franc
20-40% US Dollars
Right now we feel that equities are fully valued and that liquidity risk factors including margin debt and low mutual fund cash levels could see near term pain ahead for stocks. Over the longer term many names are beginning to look cheap at current valuations and many others appear overvalued. The use of diversification can help long short equity investors profit in down markets as well as up markets.