Best of the Week
Most Popular
1. Ray Dalio: This Debt Cycle Will End Soon - John_Mauldin
2.Stock Market Dow Plunge Following Fake US - China Trade War Truce - Nadeem_Walayat
3.UK House Prices 2019 No Deal BrExit 30% Crash Warning! - Nadeem_Walayat
4.What the Oil Short-sellers and OPEC Don’t Know about Peak Shale - Andrew_Butter
5.Stock Market Crashed While the Yield Curve Inverted - Troy_Bombardia
6.More Late-cycle Signs for the Stock Market and What’s Next - Troy_Bombardia
7.US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - Troy_Bombardia
8.TICK TOCK, Counting Down to the Next Recession - James_Quinn
9.How Theresa May Put Britain on the Path Towards BrExit Civil War - Nadeem_Walayat
10.This Is the End of Trump’s Economic Sugar High - Patrick_Watson
Last 7 days
Gold’s Not An Investment – You Won’t Get Rich - 17th Dec 18
Stock Market At Medium-Term Lows, Which Direction is Next? - 17th Dec 18
This Stock Will Drive America’s 5G Buildout - 17th Dec 18
Stock Market Turn In The Tide - Have a Happy Bear Market! - 17th Dec 18
How A NASA Scientist Could Trigger The Next Cannabis Boom - 17th Dec 18
iShares Russell 2000 IWM Leading Stock Market Decline - 17th Dec 18
Where is the Dow Stock Market Santa Rally? - 17th Dec 18
With Weaker Climate Consensus, Expect Elevated Climate Change - 16th Dec 18
SMIGGLE Advent Calendar 2018 UK Contents - What You Get Look Inside Review - 16th Dec 18
Is there a Lump of Coal in Santa's Stock Market Bag? - 16th Dec 18
This Market Will Drive Gold in 2019… - 16th Dec 18
Gerald Celente:Central Banks Can’t Stop a 2019 Debt Disaster - 16th Dec 18
Gold Stocks Triple Breakout - 15th Dec 18
The stock market fails to rally each day. What’s next for stocks - 14th Dec 18
How Low Could the S&P 500 Go? - 14th Dec 18
An Industrial to Stock Trade: Is Boeing a BUY Here? - 14th Dec 18
Will the Arrest of Huawei Executive Derail Trade War Truce? - 14th Dec 18
Trump vs the Fed: Who Wins? - 13th Dec 18
Expect Gold & Silver to Pullback Before the Next Move Higher - 13th Dec 18
Dollar Index Trends, USDJPY Setting Up - 13th Dec 18
While The Stocks Bulls Fiddle With The 'Fundamentals,' Rome Burns - 13th Dec 18
The Historic Role of Silver - 13th Dec 18
Natural Gas Price Setup for a Big Move Lower - 13th Dec 18
How to Get 20% Off Morrisons Weekly Supermarket Shopping - 13th Dec 18
Gold Price Analysis: Closer To A Significant Monetary Event - 13th Dec 18
Where is the Stock Market Santa Claus Rally? - 12th Dec 18
Politics and Economics in Times of Crisis - 12th Dec 18
Owning Precious Metals in an IRA - 12th Dec 18
Ways to Improve the Value of Your Home - 12th Dec 18
Theresa May No Confidence Vote, Next Tory Leader Betting Market Analysis and Forecasts - 12th Dec 18
Gold & Global Financial Crisis Redux - 12th Dec 18
Wow Your Neighbours With the Best Christmas Projector Lights for Holidays 2018! - 12th Dec 18
Stock Market Topping Formation as Risks Rise Around the World - 11th Dec 18
The Amazing Story of Gold to Gold Stocks Ratios - 11th Dec 18
Stock Market Medium term Bullish, But Long Term Risk:Reward is Bearish - 11th Dec 18
Is a Deleveraging Event about to Unfold in the Stock Market? - 11th Dec 18
Making Money through Property Investment - 11th Dec 18
Brexit: What Will it Mean for Exchange Rates? - 11th Dec 18
United States Facing Climate Change Severe Water Stress - 10th Dec 18
Waiting for Gold Price to Erupt - 10th Dec 18
Stock Market Key Support Being Re-Tested - 10th Dec 18
May BrExit Deal Tory MP Votes Forecast, Betting Market Analysis - 10th Dec 18
Listen to What Gold is Telling You - 10th Dec 18
The Stock Market’s Long Term Outlook is Changing - 10th Dec 18
Palladium Shortages Expose Broken Futures Markets for Precious Metals - 9th Dec 18
Is an Inverted Yield Curve Bullish for Gold? - 9th Dec 18

Market Oracle FREE Newsletter

How You Could Make £2,850 Per Month

Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners

Commodities / Gold and Silver Stocks 2018 Jun 08, 2018 - 11:55 AM GMT

By: Jeb_Handwerger

Commodities

Summary
1)2018 has seen so much volatility in the equity and bond markets after going straight up since 2009.

2)"Everything" bubble is simply the result of record low negative real rates manipulated by Central Bankers to prevent deflation by all means possible.

3)The ending of QE combined with increasingly inflationary concerns has sparked the US to start raising rates.


4)Unwinding of easy money policies could be quite painful.

5)Stay away from margin and company's with any debt on their books.

One of the most overlooked stories in 2018 has been the volatility in equity and bond markets.  The "everything" bubble is simply the result of record low negative real rates manipulated by Central Bankers to prevent deflation by all means possible.  In 2008, the US banks were on the verge of collapse, the Fed since that time has tried every effort to protect the economy with easy money policies.



The result since 2008 has been remarkably effective.  Unemployment in the USA is at record lows only ten years following the government bailouts of banks and the auto sector.  The real estate foreclosure crisis has been completely turned around.

We must not forget that for every action there is a reaction.  The unwinding of easy money policies could be quite painful.  The ending of QE combined with increasingly inflationary concerns has sparked the US to start raising rates.  Bond yields are now the highest in many years spiking higher taking the investment world by storm.  Real interest rate hikes are happening for the first time in many years.  The Fed has started warning investors about rising risks most notably recently with Deutsche Bank.



First hit is now Italy who has always lived the sweet life heavily indebted. Next will be Greece or maybe Spain or Portugal and the PIIGS as interest rates increase.  Don't worry about Spain, Greece and Italy they will be bailed out by the EU again with another lifeline.  Instead, be concerned for many young people living in debt.  They may have jobs now with record low unemployment.  Nevertheless, in many cities such as NYC, LA and Miami the average teacher can't afford a place to live.



As rates rise again to historic levels, I expect to see many more delinquencies.  The recent concerns at Deutsche Bank may be just the beginning.

I remember how fast these bank panics happen.  First it started with Bear Sterns then Lehman and then AIG in 2008.  All during that time the pundits in the mainstream media said there was nothing to worry about and that housing and the markets were booming forever and ever.

A similar phenomenon could be happening right now.  We have so many warning signs of another crash. The biggest one is the major increase in bond yields in 2018.  Not only have rates moved higher but it jumped quickly the most in many years.

I expect the recent warning signs from the Fed Reserve on Deutsche Bank to be just the beginning as debtors who became over leveraged to low rates pay the price now as rates rise quickly.  I don't believe the Fed is done raising rates until there is a severe market downturn.

There is no doubt that highly leveraged borrowers at record low interest rates will come into trouble.  This begs the question how many of the banks still have derivative exposure like AIG and Lehman.

Remember statistically we have up to 50% corrections or more once every 10 years or so.  I know you don't like to hear it but this is the second longest bull market since the 1920's which led up to a major crash and the Great Depression.  We are in the midst of trade wars not seen in 100 year since the Smoot Hawley Era which many blame as one of the accelerants in deepening the Great Depression's devastating effects.

How does one protect oneself?  Stay away from margin and company's with any debt on their books.  You might want to look at hedging against the financials, real estate and bonds (TBT).  Stick to small cap stories with no debt over large caps with debt and look to see if they have real assets preferably in the form of some sort of commodity in the ground.  The mining sector (GDX) which has been under attack by the activists and unloved for years may actually be one of the best places especially gold (GDX), silver (SIL) and copper miners (COPX).  The energy (XLE) and agriculture (DBA) sector may also be safe areas which over time could outperform during a potential bear market panic.



Conditions point to a bear market and possible flash crash this summer.  Please prepare for real estate and stock market valuation to come back to earth as rates move higher.

What is deeply discounted right now and could soar again if we see double digit inflation like in the 1970's?  The junior miners could be the best place especially right now the beaten down exploration stocks which have been brutally neglected by the major producers for years.  I recently went to a mining conference in NYC put on by 121 Mining and met with some of the top CEO's and Fund Managers.


One of my really smart professional subscribers Art pointed out Shanquan Li.  Mr. Li manages the Oppenheimer Gold and Specialty Minerals $OGPSX.  Before entering the investment sector he was a director of a think tank for the Chinese Government and then joined Brown Brothers Harriman before joining Oppenheimer where he has been for 22 years managing the precious metals fund since 1997 building it to just under $1 billion under management.  He has significantly outperformed his peers recently with picks such as Kirkland Lake $KL, Endeavour $EDV and Newmont $NEM.  The fund pays a yield of 2.99% and has four stars from Morningstar.  Over the past year Li's $OGPSX fund has stayed in positive territory while most mining funds have been down.

He mentioned to me he doesn't buy stocks until they reach a minimum market cap but he does like to follow them and start doing research at an early stage.  He comes to these shows because he realizes in his experience as a portfolio manager that big miners start out little and grow.  He is smart, humble and constantly looking as he does not want to miss some big discoveries in the junior mining sector.  This may be an actively managed fund that I may look into.  Check out this recent interview with Oppenheimer Portfolio Manager Shanquan Li by clicking here...

At the conference I had dozens of meetings with juniors.  One of the things that impacted me most was when the CEO's showed up and mentioned to me that they were recently buying their own shares.  This is a very bullish testament to me as an investor and it was nice to see two of the CEO's telling me that they are putting heavy amounts of their own net worth in recently as they believe their own stock has value and should rise.  I'm still doing due diligence to confirm what they are telling me is correct but Liberty Gold $LGD and Victoria Gold $VIT may have had some recent insider buying.  If you find insider report please email it to me.

There were a few select juniors showing some great momentum at the conference based on prior results and good discoveries this included Teranga $TGZ, Fireweed Zinc $FWZ, Corvus $KOR and Silvercrest $SIL.

Many of the companies came to the conference already well positioned financially recently raising money such as GoviEx Uranium $GXU.  Some recently announced financings like Alexco $AXU which seems to be a top takeout target for high grade silver companies.

Interestingly, many investors are still unaware of the recent investment by Eric Sprott into what could be the next Novo which went up ten fold last year.  Sprott just made a $10 million investment in a small company which is just starting to pick up.  The CEO was just interviewed and was one of the first I've seen on this rising junior in the Pilbara in Western Australia.

Also incredibly I spoke to some of the top lithium experts on the internet and they were not aware of a discovery that I was one of the first in the industry to highlight back in November last year which could be huge.  Since that time they raised $2.5 mil CAD and are advancing permitting and metallurgy.  The stock has gone from a quarter to 1+ and it could be just a start as there have recently been some major advancements with the permitting.

Make sure to stay tuned as I expect a positive turn in the mining market to be imminent.  Be careful of the overbought cannabis and cryptocurrency sector which has attracted a lot of speculative capital and tons of fraudsters.  See the recent article entitled, "Buyer Beware: Hundreds of Bitcoin Wannabes Show Hallmarks of Fraud" or "SEC Tells Investors Potential For Fraud in Companies Tied to Cannabis Industry".  Please be careful...caveat emptor!  If you have gains in cannabis or crypto, it might be prudent to rotate into cheap mining stocks.

By Jeb Handwerger

http://goldstocktrades.com

© 2018 Copyright Jeb Handwerger - All Rights Reserved

Disclosure:  Assume Author (Jeb Handwerger) owns shares in featured companies and that I want to sell them for a profit.  Sponsors are website advertisers so that means I have been compensated and have a conflict of interest to help boost awareness of this story. The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Jeb Handwerger about any company, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. Author is not responsible under any circumstances for investment actions taken by the reader. Author has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. Author is not directly employed by any company, group, organization, party or person. The shares of these companies are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed / registered financial advisors before making investment decisions. Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. Author is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. Author is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Author is not an expert in any company, industry sector or investment topic.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules