And price points to watch.... I think the $1,341 resistance level mentioned in the below will be breached.
Friday, June 20, 2014
A Quick Note On Gold and Precious Metal Performance
Hopefully you had added to and started positions in the precious metal space as gold, silver and the precious metal stocks are all heading higher. Although I would not be surprised to see some draw down after yesterday's explosion to the upside (on heavy volume across the spectrum), I would use pull backs to add to positions. At the very least, we are likely to see the yellow metal test the area in the range of $1,400 and silver may head to a price point between $22 to $25 in the near-term.
I could offer up many charts and analyses to support this claim but lets look at the price chart of Royal Gold (ticker:RGLD), the gold broker and one of the equities most leveraged to the delta in precious metal prices.
RGLD broke out to the upside of it's 52-week trading range on accelerated volume. As I have mentioned before, the precious metal stocks usually lead the price of the metals. RGLD breaking out above the yearly range not only suggests the price of the stock is heading higher but that price of the metals will follow.
I could offer up many charts and analyses to support this claim but lets look at the price chart of Royal Gold (ticker:RGLD), the gold broker and one of the equities most leveraged to the delta in precious metal prices.
RGLD broke out to the upside of it's 52-week trading range on accelerated volume. As I have mentioned before, the precious metal stocks usually lead the price of the metals. RGLD breaking out above the yearly range not only suggests the price of the stock is heading higher but that price of the metals will follow.
Tuesday, June 17, 2014
Fed Mandated Exit Fees Coming to Your Bond Funds
How safe is your bond fund? If this another move to push funds out further on the risk curve?
From David Stockman's Contra Corner......
In short, in its mindless drive to manipulate financial markets and generate artificial demand for credit, the Fed has created the potential for a massive run on bond funds should a new financial crisis be triggered by one black swan or another. And once again it is evident that the market’s natural process of “price discovery” has been destroyed in favor of ham-handed “price administration” by our monetary central planners.
Yet the monster they have already created—-a massive log-jam at the bond fund exit gates—-would pale compared to the deformations and anomalies that would result from the imposition of a government dictated exist fee on unsuspecting investors. Even the announcement of a rule-making would potentially trigger the very kind of sell-off that it would be designed to prevent. And if corporate bond prices took a tumble, it would not take long for equity markets to recognize that the massive flow of new debt capital which has been used to fund record stock buybacks could suddenly dry up.
Not surprisingly, the big bond houses are lining up in favor of government imposed exits fees and gates. They would like nothing better than to keep investors captive, collect the fees and blame Washington for the inconvenience to investors.
The next round of crony capitalism is already underway.
The remainder of the article can be found here.
From David Stockman's Contra Corner......
In short, in its mindless drive to manipulate financial markets and generate artificial demand for credit, the Fed has created the potential for a massive run on bond funds should a new financial crisis be triggered by one black swan or another. And once again it is evident that the market’s natural process of “price discovery” has been destroyed in favor of ham-handed “price administration” by our monetary central planners.
Yet the monster they have already created—-a massive log-jam at the bond fund exit gates—-would pale compared to the deformations and anomalies that would result from the imposition of a government dictated exist fee on unsuspecting investors. Even the announcement of a rule-making would potentially trigger the very kind of sell-off that it would be designed to prevent. And if corporate bond prices took a tumble, it would not take long for equity markets to recognize that the massive flow of new debt capital which has been used to fund record stock buybacks could suddenly dry up.
Not surprisingly, the big bond houses are lining up in favor of government imposed exits fees and gates. They would like nothing better than to keep investors captive, collect the fees and blame Washington for the inconvenience to investors.
The next round of crony capitalism is already underway.
Exit fees would seek to discourage retail investors from withdrawing funds, thereby making their claims less liquid and making a fire sale of the assets more unlikely.
Such fees could be highly unpopular with retail investors unable to access funds without paying a fee. But some in the industry would welcome them; BlackRock, the world’s largest asset manager, has called for international rules setting exit fees on some funds.
The remainder of the article can be found here.
Monday, June 16, 2014
Gold Stocks Performing Better than the Metals
Schiff, in the interview at Gold Seek Radio, highlights one of the better bullish (in my mind and others) signals in the precious metal space- the equities performing better than the metal.
Just look at the performance figures for the Phily Gold/Silver Index (green), Gold (red), Silver(purple), with the Gold/Silver Index generally performing better than the metals through 2014.
Further still, take a look at the performance of the gold/silver brokers, Royal Gold (RGLD) and Silver Wheaton (SLW). In the below chart RGLD (pink) and SLW (green) have outpaced both gold (red) and silver (purple). The brokers have some of highest leverage to changes in the precious metal prices and their outperformance suggests that equity investors are lining up for an improvement in the metal prices.
Just look at the performance figures for the Phily Gold/Silver Index (green), Gold (red), Silver(purple), with the Gold/Silver Index generally performing better than the metals through 2014.
Further still, take a look at the performance of the gold/silver brokers, Royal Gold (RGLD) and Silver Wheaton (SLW). In the below chart RGLD (pink) and SLW (green) have outpaced both gold (red) and silver (purple). The brokers have some of highest leverage to changes in the precious metal prices and their outperformance suggests that equity investors are lining up for an improvement in the metal prices.
Precious Metal Market Machinations and the Potential Long-Term Buying Opportunity
It has been a while since I updated the following publicly, but if you follow the precious metal markets you have undoubtedly noticed interesting dynamics going on the trading of gold, silver and the related equity names. Aside from rehashing commentary you can read elsewhere, lets jump in to the timing models and what they telling us here.
6- month model: current reading -0.7, last month 0.2, three months ago 1.2
1-year model: -1, -0.6, -0.1
Long-term model: -1.1, -1.1, -1.2
Currently, the 6-month, 1-year, and long-term timing model calculations are firmly in the negative. This is after the 6-month model flirted with positive indicators a few months back. Remember, negative results in these models indicate a more positive climate for buying opportunities and the more the negative the results the better opportunity. To me, the models (with the differences between them being timing diffrentials from more short-term to more long-term) suggest a cautious buying opportunity exists in the precious metal space at current prices. I say cautious as the risk models I also employ (not shown) suggest downside risks do remain- more so in the short-term than the long-term. That said, as long the money supply continues to expand, any pull back in the precious metal space should probably be viewed as an opportunity to add to long-term positions.
6- month model: current reading -0.7, last month 0.2, three months ago 1.2
1-year model: -1, -0.6, -0.1
Long-term model: -1.1, -1.1, -1.2
Currently, the 6-month, 1-year, and long-term timing model calculations are firmly in the negative. This is after the 6-month model flirted with positive indicators a few months back. Remember, negative results in these models indicate a more positive climate for buying opportunities and the more the negative the results the better opportunity. To me, the models (with the differences between them being timing diffrentials from more short-term to more long-term) suggest a cautious buying opportunity exists in the precious metal space at current prices. I say cautious as the risk models I also employ (not shown) suggest downside risks do remain- more so in the short-term than the long-term. That said, as long the money supply continues to expand, any pull back in the precious metal space should probably be viewed as an opportunity to add to long-term positions.
Friday, June 13, 2014
The Fuzzy Math of GDP
By John Tammy at Forbes
It’s not a widely known, but in gross domestic product (GDP) terms, President Jimmy Carter presided over one of the longest and most expansive periods of economic growth in postwar history. Most readers would say the latter can’t be, that the ‘malaise’ president delivered only contraction and misery, but GDP said otherwise.
Of course, the fact that GDP registered growth is the first clue that it’s a more-than-worthless number. Diane Coyle, author of a new book GDP: A Brief But Affectionate History, wouldn’t agree that the number is worthless, but she does acknowledge that it does not measure human wellbeing or welfare. No it doesn’t, and while Coyle doesn’t hide her bias in favor of the hubristic conceit that says economists can credibly measure country economic activity, her book is still an important read for, if nothing else, revealing to readers just how unwittingly fraudulent the practice of economics is.
For those who don’t already know, gross domestic product (GDP) is the standard measure of the size of a country’s economy, and depending on whom you speak to, it carries with it great importance. When a growth deficit called into question the ability of Greece’s government to pay its debts, the country’s GDP loomed large according to Coyle; the irony there that Greece’s borrowing capacity was allegedly decided by a “handful of people” in a “dusty room” in the suburbs of Athens attempting to divine its output. You can’t make this up.
Yes, it’s true, the economics profession believes that country economies comprised of millions, and sometimes billions of individuals, can be measured. No doubt GDP in the U.S. is calculated with quite a bit more sophistication than in Greece, but the naive arrogance underlying the statistic remains for all to see. A profession that was largely blind to the economic crack-up taking place inside Iron Curtain countries back in the ‘70s (GDP signaled actual growth) still thinks unimaginative office drones in Washington, D.C. can divine the dynamism – or lack thereof – taking place in the real world.
While Coyle concludes early on that GDP “is a measure designed for the twentieth-century economy of physical mass production,” and “not for the modern economy of rapid innovation,” her book, as the title indicates, is a somewhat fawning history of the number. It says here that Coyle’s love has blinded her. GDP has never made sense as its makeup makes plain. More on its makeup in a bit.
Concluded after the jump
It’s not a widely known, but in gross domestic product (GDP) terms, President Jimmy Carter presided over one of the longest and most expansive periods of economic growth in postwar history. Most readers would say the latter can’t be, that the ‘malaise’ president delivered only contraction and misery, but GDP said otherwise.
Of course, the fact that GDP registered growth is the first clue that it’s a more-than-worthless number. Diane Coyle, author of a new book GDP: A Brief But Affectionate History, wouldn’t agree that the number is worthless, but she does acknowledge that it does not measure human wellbeing or welfare. No it doesn’t, and while Coyle doesn’t hide her bias in favor of the hubristic conceit that says economists can credibly measure country economic activity, her book is still an important read for, if nothing else, revealing to readers just how unwittingly fraudulent the practice of economics is.
For those who don’t already know, gross domestic product (GDP) is the standard measure of the size of a country’s economy, and depending on whom you speak to, it carries with it great importance. When a growth deficit called into question the ability of Greece’s government to pay its debts, the country’s GDP loomed large according to Coyle; the irony there that Greece’s borrowing capacity was allegedly decided by a “handful of people” in a “dusty room” in the suburbs of Athens attempting to divine its output. You can’t make this up.
Yes, it’s true, the economics profession believes that country economies comprised of millions, and sometimes billions of individuals, can be measured. No doubt GDP in the U.S. is calculated with quite a bit more sophistication than in Greece, but the naive arrogance underlying the statistic remains for all to see. A profession that was largely blind to the economic crack-up taking place inside Iron Curtain countries back in the ‘70s (GDP signaled actual growth) still thinks unimaginative office drones in Washington, D.C. can divine the dynamism – or lack thereof – taking place in the real world.
While Coyle concludes early on that GDP “is a measure designed for the twentieth-century economy of physical mass production,” and “not for the modern economy of rapid innovation,” her book, as the title indicates, is a somewhat fawning history of the number. It says here that Coyle’s love has blinded her. GDP has never made sense as its makeup makes plain. More on its makeup in a bit.
Concluded after the jump
The Golden Nails in the Dollar's Coffin
Mike Maloney places context around the current environment of monetary policy via the lens of history.
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