From the S&P bottom in February of 2009 to the top in May 2015, the stock market had an incredible run. But I encourage you to ask yourself, was that 6 year bull market due to an incredibly good economy?
For the majority who are financially illiterate, the answer would be yes. The masses listen to mainstream media propaganda and blindly believe everything they read or listen to without any effort to vet out the truth, but if you look at the actual financial indicators; you will see that just the opposite is true.
This last great bull market in stocks was the result of the Fed’s massive money printing (QE) and zero interest rate policy (ZIRP). This policy did nothing to improve the economy, but did a great deal for Wall Street and the crony banks.
This allowed the banks and Wall Street investment firms to trade the stock market with virtually no skin in the game, free money, causing a huge bull market in stocks, but it did nothing to improve the economy or create new jobs.
It’s now a proven fact, that without the Fed, there is no market. The current downtrend in the stock market is a prime example. As soon as the Fed changed direction and stopped QE and then raised interest rates, the markets started to stumble.
US GDP has been below 2% for most of the last 6 years, the Baltic Dry index is at record lows, and money velocity which is the measure at which people spend money, is at all-time lows. In fact, money velocity is currently lower than during the Great Depression. (See below.)
Now the Fed and global central banks are in panic mode because they know that they have no other choice but to continue to offer zero interest rates or even negative interest rates in order to keep the charade going.
That’s why the Fed didn’t raise rates in March and although they are threatening to raise rates in April or June, they will probably do just the opposite and maybe even introduce another stealth form of QE.
Money printing is the only thing the Fed has left in their bag of tricks and eventually, they will have to launch a massive money printing program to keep the whole financial system from crashing down. But I’m not so sure that will work this time as investors lose confidence in the Fed shenanigans.
The problem is that investors and sovereign countries holding US dollar reserves are beginning to realize the charade and are losing confidence in the US Dollar. Once confidence is lost, its game over for the entire global economic system.
The BRICS countries are leading the way by selling their US reserves by the $ trillions and beginning to trade in alternative currencies, yet no one is reporting these stealth transactions for fear of a snowball effect in the loss of confidence for the US Dollar.
A reset is coming, but in the meantime, gold and silver will be your best insurance against the inevitable collapse.
How to Protect Yourself from the Coming Reset
For years the paper derivative futures market of the COMEX and LBMA has controlled the precious metals market. But now due to the massive manipulation and price suppression schemes of those exchanges, the ratio of paper contracts to physical bullion available for delivery is running as high as 600 paper contracts for every 1 ounce of deliverable metal.
This is a ridiculous spread and one that just cannot last. At some point in the very near future, this paper market will default. The catalysts for this default will be the increasing demand for physical gold and silver and the new physical exchanges that are coming online to replace the fraudulent paper markets.
The ABX – Allocated Bullion Exchange, which came online in February, and the SGE – Shanghai Gold Exchange which begins trading only in Yuan this April, completely bypassing the US Dollar.
I expect some major moves in the gold and silver markets this year and these upward moves could happen at any time.
Holding physical gold and silver is recommended, however, you can also hold mining stocks for impressive gains in this sector. Stocks like GDX, SLW, ABX, FNV and RGLD.
Holding physical metal or precious metal stocks will make you whole when the system really begins to implode.
There is a battle going on in the gold and silver sectors between the physical buyer’s and the paper manipulators. The physical buying is overpowering the paper markets and the commercial shorts are going to be forced to capitulate.
Once the commercials give in, they will have to cover their short positions and a huge short squeeze will ensue sending the price of both gold and silver to explosive new highs.
Gold has been trading in a channel for the past couple of weeks, but the stochastic oscillator is finally showing it in oversold territory. (See above.)
In the chart below, a Golden Cross is when the 50 DMA crosses the 100 DMA. Today in gold, the 50 DMA has crossed the 100, 200, 300 and 400 DMA. This is an indication that a major bull market is underway. I think an epic move in gold and silver will begin as early as next week.
The bear market in stocks continues as represented by lower highs and lower lows. (See chart below). The recent bull trap in the stock market has all the perma-bulls giddy, but the energy in this rally is already faltering and the charts are rolling over to head back down to lower lows again.
In the chart below, you can see that a wedge pattern has formed that looks just like the last rally of hope and it’s already broken the trend line to the downside. This should gain some serious momentum to the downside over the next few weeks, which should cause an opposite reaction in the gold sector.
The chart patterns are obvious and undeniable, but investors tend to put their trust and hope in the Fed and the mainstream media, rather than logic or the blatantly obvious financial indicators.
If you want to position yourself for the downside move, I would look at 2017 Put Options in (SPY) or the much less expensive, (IYF) (CRUS) (NXPI) (SWKS). Like all ships that drop with a receding tide, these stocks are poised for a huge decline as they follow the stock markets down.
Energy Stocks: (XLE) (UNG) (USO) (LNG)
Just like the stock market, a wedge pattern has occurred in the oil markets. This rally was mostly driven by speculative traders. There are plenty of fundamentals that point to a lower price in oil and now that the rally has rolled over, it should break the lower trend line soon and I expect it to gain downward momentum from there.
Commodities: (FCX) (JJG) (DBA)
Just like oil, commodities are overbought and appear to have peaked and started their down cycle.
US Treasury Bonds: (TLT)
I mentioned last week that I thought treasuries were telegraphing the stock market rollover. We now have confirmation with a break of the down trend line in the 10 year treasury and the break of the uptrend line in stocks.
(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
Global Economy Dying Pig-No More Rate Hikes-Rob Kirby
There are some revelations that are going to be coming regarding precious metals price suppression, which is going to make the deniers, that this has been occurring, look very silly. This is going to occur in the very, very near future. . . . The reaction to this news is going to be a very, very strong pop in the price of precious metals. . . .
Jim Rickards believes a cocktail of factors makes it more critical than ever for investors to protect their portfolios with gold, and in the interview below, explains why the royal metal is going to $10,000/oz…