Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Free Market Capitalism: Laughably Predictable

Stock-Markets / Financial Markets 2019 Oct 07, 2019 - 02:38 PM GMT

By: The_Gold_Report

Stock-Markets

Sector expert Michael Ballanger offers his observations on recent market fluctuations.

On Wednesday, as the kiddies were upset over a swooning S&P, then trading a paltry 5% from the all-time high of 3,027, I tweeted out this graphic that perfectly describes my cynical view of the paper markets around the world.


What prompted me to exercise my artistic flair was that the screams were loudest in the world of social media where the Millennial Horde had leveraged Mommy's 2018 BMW Roadster convertible in order to trade S&P futures from the long side. "Cut rates!" they type-screamed using CTRL-B,U,I for emphasis; "Do the China Deal, Donald!" as margin calls came flooding into their inboxes. And as surely as the sun rises and gold gets hammered on an NFP Friday, the invisible hand reached out and rescued them with mercurial deft and timely precision. All is now right with the world, and stocks are charging back toward the highs with a 57-point turnaround in the S&P in less than two trading sessions. As I tweeted out [yesterday], it was (and is) laughingly predictable.

Now, to underscore the absurdity of this obsession with rising stock markets, take a peak at the next graphic courtesy of Bianco Research. The pink section is all bonds trading at a negative yield, while the green is what would be historically "normal"—you know, a bond that pays the holder that is taking all of the risk a positive return. Is it any wonder that money managers around the world are all flooding into stocks, when over 50% of sovereign (not corporate) bonds are penalizing their owners?

Do any of you recall the term "lender of last resort?" That term refers to the reason why sovereign bonds and bills are assigned a heavenly credit rating, which assumes that, because they own and control the power of taxation, there will always be a working population upon which governments can rely for interest coverage. Where corporations and individuals can file for bankruptcy protection in favor of the bondholder, sovereign nations enjoy the realm of privilege and are blindly obeyed until exogenous shocks to the status quo occur, which place a sovereign nation in default.

The last two countries to default on debt were Greece and Venezuela, and while Greece has had its standard of living stabilized under the shelter of the ECB (European Central Bank) umbrella, Venezuela has no such safety net and its citizens are suffering a malaise not unlike Wiemar Germany 1921–1923 or Zimbabwe post-1986. Now look at this list of countries on "credit default watch," as measured by spreads on credit default swaps.

  1. Ukraine
  2. Pakistan
  3. Egypt
  4. Brazil
  5. South Africa
  6. Russia
  7. Portugal
  8. Kazakhstan
  9. Turkey
  10. Vietnam

Around the turn of the century, there was an acronym that combined four countries believed to be global growth drivers for the new millennium, then known as BRIC (Brazil, Russia, India and China). They were the darlings of the Wall Street analytical community for years until quite recently. For reasons beyond all logic, two out of four of them are now on the "watch list" (Brazil and Russia), with China's current trade war with the West and its suspect shadow banking system making them a soon-to-be-added member. South Africa used to be one of the most dependable and credit-worthy countries on the planet until a socialist thug took over (sharing a common history with Venezuela), and Brazil was once lauded and applauded for its thriving mining and agricultural foundations. Even Germany, the industrial and political backbone of the ECB, has not one bond or bill yielding positive returns.

I submit to you, my friends, that the malaise to which I refer, starting with the blatant control of all markets (bonds, stocks, Forex and commodities) by government interference is symptomatic of the accelerating early stages of a massive global debt disease. You have read my thoughts on "mistrust"; now you actually can quantify it in the chart shown above. Those negative yields are a wailing air-raid siren, just like 1941 London, and the 2019 version of the Luftwaffe is debt, pure and simple.

The best and only real defense against a debt implosion is to have your wealth held outside of the traditional banking system, because as we have seen in the countries over time that have defaulted, governments, aided and abetted by their police and armed forces, think nothing of confiscating your wealth "for the common good," meaning, for their "job security." They cannot confiscate that which they don't see, which is precisely why they are jamming the notion of a "cashless society" down your throat. However, this is a very well-trodden path of discussion and debate that you have all heard and read before, so I shall move along.

Nothing new to be seen here:

The gold miners, as represented by the HUI (ARCA Gold Bugs Index), have treated me very well thus far in 2019, and while I lament the early exit from the leveraged ETFs (NUGT/JNUG), I did make decent money on both. But where I made "the cut" was on the exits of GDX, GDXJ, GBR.V., and the SLV calls, all in that topping window from Aug. 28 until Sept. 5.

The hate mail I received was nothing short of profane, and in some cases threatening. While I looked on dispassionately, I dumped all of my precious metals paper holdings while retaining all physical positions in gold and silver. I have now started accumulating from the long side of the paper markets (miner ETFs), and have initiated a small position in the SLV December $18 calls, with two purchases in the past two weeks at $0.23 and $0.47, for an average price of $0.35. I look for a retest of the $18.35 high before year-end. As I stated a few missives ago, I feel far more comfortable owning these positions, with small losses or break-evens, than being on the sidelines with a pile of rotting cash, just sitting there in the full envious view of bankers and government bureaucrats.

As to gold and silver, my only point of concern is the gap shown above in the HUI chart. There is an old saw —all gaps must be closed—and whether or not this one proves to be true shall remain to be seen. I have chosen to disregard it because the cause of the gap was a runaway up-thrust in gold after the $1,375/ounce breakout. Like so many other "rules" that gold and silver have tossed aside since June, I am aware of the gap but simply not acting upon it.

As I am writing this on Friday morning due to an afternoon engagement, I will not be able to comment on the COT until Monday. But suffice it to say that I expect a massive reduction in the aggregate shorts in gold held by Commercials, offset by a similar reduction in longs held by Large Speculators. Watching the plunge in open interest and the sudden and very mysterious halt in the declines of the precious metals, it is eerily reminiscent of the same "mysterious" action when it topped on Sept. 4. It is the Commercial Cretins at work doing exactly what they have been doing for ages because it is obvious that the RICO action brought against JP Morgan has done squat to deter their criminal behaviors.

I urge you all to follow me on Twitter (@Miningjunkie ) in order to get all of the intraday musings (and trading suggestions) that pertain to this abomination called the stock "market." The month of October is hard upon us and as the intraday events happen too fast for e-mail, Twitter notifies followers of opportunities within seconds. In this world of algobots and managed prices, speed is a tactical advantage and Twitter is one application that delivers.

Follow Michael Ballanger on Twitter ;@MiningJunkie.

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger's adherence to the concept of "Hard Assets" allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

Disclosure: 1) Michael J. Ballanger: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Aftermath Silver Ltd., Great Bear Resources, Western Uranium, Stakeholder Gold, Getchell Gold. My company has a financial relationship with the following companies referred to in this article: Getchell Gold Corp. and Western Uranium & Vanadium Corp. My firm no longer does consulting work for Stakeholder Gold.. I determined which companies would be included in this article based on my research and understanding of the sector. Additional disclosures are below. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Great Bear Resources. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Western Uranium and Vanadium and Aftermath. Please click here for more information. 3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. 4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports (including members of their household) own securities of Getchell Gold, Western Uranium and Stakeholder Gold and Aftermath, companies mentioned in this article.

Charts courtesy of Michael Ballanger.

Michael Ballanger Disclaimer: This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.


© 2005-2019 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