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 SLV
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.
Like clockwork we had our great and stoic hero threaten the tape with more money printing and that seems to have shored things up. All the better for me, as I moved around half of my trading account (Jaguar Alpha) into Silver the other day after I wrote that I would rather be in silver than in stock for my anticipated Bernanke bounce.
I once actually received a nasty comment from an IP address listed in the home town that Dr. B. comes from in GA… That commenter called me a racist, which is not true. Thankfully, my comment box is so jammed up with spam that I had to disable comments at hedgephone regardless for the time being.
Other issues: I had a face to face with a 6 foot brown bear and had to hike out 15 miles because my car broke down — remember when making timber investments to have a solid, running work truck and also that mother nature rules in the wilderness!!!
I am working on some formatting issues with Apple — I know in Apple’s browser that Hedgephone looks strange and I’m on it!
In any event, we asked Dr. B to print it up and he delivered on Q — I do think it’s better to stop the slides before they violate the 200 day moving averages… Even though I hate it that our economy is now solely based on the stock market, that the stock market is almost completely corrupt thanks to bad INSIDERS in CORPORATE AMERICA and not bad stock brokers or traders as much as BOOK COOKERS, I do recognize that Americans have much of their net savings in the stock market and that many companies are ethically run despite the fact that the SEC is watching porn and not busting scam companies from stealing their shareholders’ money!
In any event, we hope that things turn around and that the SEC starts investigating public corporations, their corrupt board of directors and officers, and the supply chaain and middle management teams that suck these companies dry and leave shareholders flat broke. Just because laziness isn’t a crime does not mean that the SEC should stop investigating corporations which lose 90% of their shareholders’ capital!
THE INTERNET BUBBLE: So I have been arguing at Hedgephone that once Facebook went public the investment bankers would get their huge fees and would stop needing to use the media to pump up the equity bubble that is going on with web 2.0… Sure there is a ton of value in the new media space but that value is not being purchased by today’s equity investor on the Nasdaq — the money was already made by the venture capital and private equity investors… Now, all that buyers of many of these stocks are getting is an empty bag of permanent capital loss. Anyway, we were pretty spot on with our web 2.0 call but made some mistakes recommending AMZN as short versus directly shorting FraudBook (I mean Facebook!). AMZN is more overvalued, but the suckers like it better and the suckers are hard to bet against right now!
Because the tape is starting to look downright scary. 2.5% down days are things of the past because this is a new bull market!!! Lol… remember all of the talking head shills on CNBS that said that stocks were heading to the moon? I do, and it’s always a good excersize to study the cold hard reality of just how awefull the investment “community” is at actually performing their day to day jobs, but I digress…
The Bernankenstein Pump is finally getting dumped and the ponzi-tape painting-manipulation game that went on daily for the past few years (remember all of those QE days where ALL of the banks made money every single day?) is finally ending and ending badly…
Just when you thought things would turn around (even I sort of did or at least considered it a possibility) the market takes another nosedive because the Fed is no where to be found.
In another 10%, Ben better start printing and printing fast or we are heading for the really, really big iceberg for the banking sector. Europe’s financial banking oligopoly is bigger, less organized, and lazier than even our own investment banking cheese-opoly and it’s starting to crumble in rapid fashion.
I am hoping that stocks rise, but I ended up buying some silver instead for a Bernanke put trade.
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…
Also, our friends at www.bboldjewelry.com has great ideas for Christmas grifts of handmade artisan jewelry…
As readers know, I am a long term bull on commodities and silver is still undervalued by historical standards in my view. Speaking of silver, the price of the poor man’s gold has consolidated around $32 an ounce for a long time now and the metal looks poised to break out one way or another. While I am a believer in the long term fundamentals behind the bull market (IE the long term fundamental problems with paper money backed by, well, absolutely nothing) there is no gaurantee that in these heavily manipulated financial markets true price discovery for the metal will ever occur.
That’s why I like the strategy of owning farmland, silver, commodity index funds like RJI and RJA, and other hard asset investments which can gain in value regardless of the stock market, the economy, etc…
While commodities are certainly much more popular than they used to be, silver as and investment has not become wildly popular among the masses. Stocks are still the investment of choice for most people. Even though silver is up a great deal, the investment community has yet to embrace the bull market which from a contrarian perspective means that the run may continue in the coming years.
Investors have pushed silver above the recent channel high at around $39 or so per ounce and I fully expect a retest of $50 if any more talk is given about QE3 — Silver rises because of the rising digital money supply, not from speculation. Owning cash is speculative whereas owning metals is conservative or a safe haven at current prices.
Many people will tell you that silver and gold are in a bubble but the fact is that commodities in general are one of the only asset classes that work here because the consolidated banking system is holding our economy hostage and Bernanke is solely focused on saving the banks. Right now, shorting European banks and going long silver and gold looks to be about as good of a “trade” as possible — investors are essentially betting that Europe will face massive credit problems because of the obvious insolvency of Greece, italy, Portugal, Spain, and Ireland.
The next shoe to drop is the US… We are facing the exact same issues as Greece. Japan is also a debt zombie and has been for years now. There deflationary spiral is confusing to say the least, but they are essentially bankrupt as well in my view.
Low global interest rates are the only thing holding the current order afloat, but any hike in interest rates could derail the system and for that reason owning real assets outside of the financial system makes a good deal of sense.
Hope that helps, Gold is a little overbought but it’s in a long term bull market. Silver is looking solid here.
So, many readers here know that I have been a raging silver bull for a full year, and have watched quietly as Silver has skyrocketed from $17 an ounce to $36 where it currently sits, which is $1 away from a doubling in price. I’m a little pissed at myself, of course, because everyone thought I was crazy (and yes, using the past tense here intentionally is a form of denial) for recommending the poor man’s gold (or middle-upper man’s copper) that Humans have placed some type of arbitrary value upon for the last 10,000 years or so — after all, it is shiny and quite heavy and it’s not made out of paper. I did own calls on the metals, but I never can come to terms with parabolic price charts so I made considerably less on the trade than I would have liked and therefore have sellers remorse to some degree after unloading it around $28 or so per ounce (ahhh… the alegory of the cave and commodities trading actually do have something in common!)
My rationale behind favoring silver to gold over this time period was quite simply a study of history, as the feudal systems of Europe and the Kingdoms across the globe have traditionally set Silver’s value at 1/16 that of Gold when it came to coining hard currency (for centuries Silver and Gold were considered real money by many nations; not paper currency backed by, well, nothing at all). Silver has traded at around 1/40 or so the value of gold for the past 100 years, however, and many feel that this 1/40 ratio is what is more likely going forward.
It is my humble and hopefully undervalued opinion that Silver will likely trade for a much higher price even if Gold declines somewhat in the near future because of the metals scarcity, industrial use, supply and demand, and the ending of the cartel short selling of the metal with the current price manipulation schemes via JPM et all (Blythe) under investigation. Furthermore, some people have stated that due to the fact that all gold above ground has remained in savings or in jewelry, Silver keeps getting used up in industrial goods so that in the long run the world may actually run out of Silver at some point whereas gold will likely continue becoming more and more abundant.
All in all, the argument for higher Silver looks quite strong. I still like the metal and view recent weakness as a buying opportunity as I had to sell into the extreme strength last time we hit $40 an ounce due to the parabolic, manic nature of the price chart in this commodity.
I also view wheat, soybeans, and other agricultural commodities as possibly better values at these prices, however I recognize the monetary function that Silver holds as well as the fact that GMO can significantly reduce crop prices, thx MON!!!
If you listened to yours truly you are long silver and gold and short stocks, and making money AGAIN today! Keep an eye on the $40 level on Silver as support and resistance, but the metal is a long term buy and hold (at least until it isn’t — setting stop loss orders is always a good rule)… I am less confident that stocks are going to trade lower tomorrow and friday because they are starting to look oversold on the RSI and Stochastics as well as MACD… will update with a Chart study tonight…
Listened to a good interview by eric Sprott on why silver is underowned as nearly zero institutional investors own the metal. Additionally, most fund managers can’t buy silver without using am SLV or paper silver type of product which many are skeptical of as the comex is running low on the metal… We may see another huge squeeze and a move to $50 again, but I am actually becoming a bit less uber bullish on the short term price run after the 1 week 6.5% gain the metal has given investors… $40 is resistance so watch and study the charts as well as the news surrounding the poor man’s gold… (Middle Class Man’s Copper?)