When the stock market crashed in 2008, investors fled the stock market and invested in currencies and bonds. During that time the dollar gained strength along with the bond market. However, when the stock market crashed in 2015, just the opposite happened and the dollar took a nose dive and that trend continues today. As the stock market drops, so does the dollar as sovereign nations are losing confidence in the US dollar and its bankrupt government.
In the August 2015 mini-crash shown in this chart of the S&P below, compare the dollar chart during the same time period.
Bonds on the other hand are still rising as the stock market drops; the difference today is that the yield on treasuries is extremely low, around 1% - 1.5% for the 10 year treasury bond. So what happens when you invest in a bond today and then the dollar loses 20% of its value? You end up with a negative yield in the bond.
Most mom and pop investors don’t understand this concept and will be hurt by their decision to go to the bond market as a safe haven, but the smart money does know that bonds will eventually crash along with the dollar and as a result, the only safe haven investment left will be precious metals. That’s when the smart money will turn to gold and silver with extreme force. In fact, it’s already begun, although we are in the early stages of it.
This is why we gold bugs are predicting huge upside moves in the gold and silver sector and this is also what will cause the greatest transfer of wealth in history as stocks, bonds and the dollar crash; precious metals will skyrocket.
If you do not have at least a 20% position in PM stocks, you are running out of time. Stocks are going to lose big this year and gold stocks will soar.
March should be a pivotal month for gold and precious metal stocks.
On Wednesday we had a significant break of the upper trend line of the ‘cup and handle’ pattern. But it turned out to be a ‘pump and fake’ as the manipulators intervened. Wednesday was options expiration day on the Comex and Monday will be options expiration for the LBMA. The powers in control always knock the price down to cover positions during this time.
The price did however stay above the trend line as it has now become support. I expect a significant uptrend from here, but I expect the market manipulators will hold it down until after Monday. Look for March to see significant upside in gold.
Stock Market Indices: (SPY) (QQQ)
The temporary rise in the price of oil and the manufactured short squeeze designed to strip small investors out of their short positions has worked temporarily and brought stocks into overbought territory. (See stochastic oscillator below.)
I would expect stocks to lose steam into next week, unless the G20 meeting this weekend pulls something out of their hats to juice the markets, but I think it’s possible there could be an opposite reaction next week.
The G20 is being held in China and China carries a lot of weight as a major reserve currency player. Whatever decision comes out of this meeting could have a significant impact on the price of gold, which might put pressure on the stock markets.
Energy Stocks: (XLE) (UNG) (USO) (LNG)
Every time the price of oil moves up a dollar, it causes a kneejerk reaction in the stock markets, but it never gains any traction. With demand for oil at all-time lows and no cuts in production from Russia, Iran and OPEC, I don’t see any changes coming soon. In fact, I think we will see oil drop all the way down to the lower 20’s before we see a break of the upper trend line.
The only thing that might cause a reversal is war and that doesn’t appear to be too far-fetched as Saudi Arabia and Turkey amass troops along the Syrian border preparing for a ground invasion. This is the subject of another market commentary, but this could trigger the next World War and most likely a nuclear war.
Financial Stocks: (XLF) (IYF)
Same as stocks.
Commodities: (FCX) (JJG) (DBA)
No change here. Still at record lows.
US Treasury Bonds: (TLT)
This is basically a mirror image of the stock market. As stocks go up, bonds retreat, as stock go down bonds go up. This will only last until the dollar starts to crash later this year and then the whole system will come crashing down.
(SLW) January 2017 CALLS
(GDX) January 2017 CALLS
(ABX) January 2017 CALLS
(FNV) January 2017 CALLS
(RGLD) January 2017 CALLS
(SPY) December 2016 PUTS
(IYF) August 2016 PUTS
The World Is Hoarding Gold: “This Was Just A Taste Of What’s To Come”
Reports indicate the lines were literally forming around the block at gold stores throughout London and elsewhere.
Gold Could Scorch Its Way to $1400 As India May Cut Import Duties Sunday Night – Stewart Thomson
All lights for gold are green, and rather than beginning a correction, gold may be poised to intensify its rally. India may cut the import duty on Sunday night. If the dollar declines further against the yen, while an Indian duty cut occurs, gold could stage a powerful “overshoot” move, well beyond the $1310 target zone, and closer to $1400.
It is now self-evident to any sentient being (excludes CNBC shills, Wall Street shyster economists, and Keynesian loving politicians) the mountainous level of unpayable global debt is about to crash down like an avalanche upon hundreds of millions of willfully ignorant citizens who trusted their politician leaders and the central bankers who created the debt out of thin air.