Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Stock Market Fantasy Finance: Follow the Money

Stock-Markets / Stock Markets 2020 Jul 19, 2020 - 07:11 PM GMT

By: The_Gold_Report

Stock-Markets

Sector expert Michael Ballanger takes a look at the latest moves in the financial and precious metals markets, and updates his investment strategy moving into late summer.

I've only just returned from the majesty of Georgian Bay, where the first fishing derby of the season had me summarily trounced by my female partner 12 to 5, with most of her catches in the 1- to 2-pound category and mine barely larger than the lure that attracted them.

Adding to this humiliation was that, despite that I have harangued incessantly about the urgency of "setting the hook" once you get a strike, I lost four 1-pound-plus bass within three feet of the dinghy by failing to properly execute that about which I constantly lecture.


It is like a seasoned professional investor standing at the lectern emoting and evoking on the need to "never underestimate the replacement power of equities within an inflationary spiral," after which he ignores the volcanic eruption of coordinated global stimuli, both monetary and fiscal, and tries to short the market. The phrases "practice what you preach" or "eat what you kill" might come to mind, but the phrase that aptly describes the current market absurdity is, "Follow the money!"

During a brief time at an Internet-signal-friendly anchorage just south of Parry Sound, I read the latest explanation for a 6% jump in the Shanghai market, where Chinese Communist Party (CCP) officials had been urging its 1.4 billion people to "buy stocks" because the pandemic fears were "largely overblown." Buried in the last few paragraphs was the real reason, and it was that many of the CCP billionaire supporters were feeling the pain of sagging stock prices, and the last thing the CCP bigwigs need is donor unrest.

This is a common thread around the world, where every politician finds the need to secure a larger and larger pool of re-election funding. There is no better way to do that than to hand each citizen enough government welfare cash to allow the average mask-wearing, basement-living, laptop-trading millennial to buy 100 shares of Tesla Inc. (TSLA:NASDAQ) in April under US$500. They then send out a flotilla of central bank "governors," also call "spokesmen" (but should be called "salesmen"), to actively promote the ownership of Tesla (or Amazon or Netflix) as a truly capitalist endeavor, but solidly American to the core.

Then they unleash a torrent of social media marketing gimmickry, which includes unregulated "target prices" issued by a twenty-something unemployed college grad with a math degree who has been trading since March and who has no understanding of things like "price-earnings ratios" or "yield compression" or—most importantly—"margin call." The legions of basement dwellers now totally bored with video games and sports betting, all collectively manning their day-trading cockpits as bona fide rookies in the world of high finance, decide en masse to buy Tesla with their government stimulus cash and voila! They all get a wondrous lesson in Econ 101, as the tsunami of demand dwarfs the smaller tsunami of supply—and what to their wondering eyes should appear? A US$1,544 share price!

Let there be no confusion of brains with bull markets. If you follow the money, it was precisely what Powell & Co., the White House, and of course the Wall Street bankers wanted and needed to prolong the 2009–? Ponzi-schemed bull market in overpriced, overhyped stocks.

Happily, this fiscal and monetary madness, made possible only by the arrival of a mysterious pandemic, which appeared some four months after the Fed executed their "pivot," has now been revealed for what is was—a crisis-driven excuse for flooding the debt-soaked global landscape with enough phony liquidity to allow all of those junk bonds to be removed painlessly from the portfolios of Blackrock and JP Morgan and Goldman and a plethora of submerged hedge funds in danger of insolvency.

In keeping with the timeless brilliance of Sir Winston, following the money leads us directly to that "phrase of the decade," which is, "Never let a good crisis go to waste!" And with "Waste not; want not" at the fore, the paper-conjurers have unleashed a global debt surge that is several orders of magnitude larger than 2009–2011 print-fest. And finally—finally—the gold and silver markets have started to respond, and happily, in a big way.

Since I took profits in the miners in April after loading the gun on April 16, the day the HUI bottomed at 142.51, the index has more than doubled in response to all the previously discussed nonsense. I exited in April around the 250 level, partly due to overbought conditions but more because of the seasonal weakness that normally arrives during the May–July period. I also was reluctant to tempt fate and risk giving back the 157% year-to-date portfolio return I am currently sporting.

Nevertheless, when conditions change, I change, and the breakout above US$1,800/ounce in August gold has forced me to start thinking about the GDX/GDXJ dynamic duo again. I normally wait until August (and I still may), but since we have a new high in the HUI and a new monthly high in gold, all we need is for silver to close above the September 2019 high at US$19.75/ounce for all cylinders to kick into "afterburner mode."

One indicator that could have provided a clue was a close in the gold-to-silver index (GSR) below the 50-dma (daily moving average) at 94.96, which it did on Friday. Silver prices look like they could test the highs very shortly, and since the bullion bank behemoths are still short over 350 million net ounces, they have few arrows left in their collective quivers with which to beat back the mountain of demand that is inhaling all supply in Pac-Man-like fashion.

The next chart tells the story of how traders panic into lemming-like marches to oblivion. Note how the narrative of a U.S. dollar short squeeze played out in March, despite the most dollar-bearish fiscal and monetary policies in U.S. history. After watching Powell, Mnuchin, Canadian Finance Minister Morneau, and virtually every European Central Bank spokesperson on cable every day and night since the first mention of "QE to Infinity," I now strongly object to the notion that they are "printing money" to ease the pain of their citizens. They are not printing "money;" they are printing "debt," and it is debt that will never be repaid, ever. All currency created digitally or in the U.S. Bureau of Engraving and Printing is nothing more than another person's (or entity's) obligation to repay; it is not "free." Since gold and silver are the only two items that meet the true definition of "money," and since you cannot print gold or silver, then the term "money printing" is flawed, and for now will be replaced with the term "debt printing," in reference to the counterfeiting actions of the global central banks.

The U.S. dollar initially spiked as a safe haven trade back in March, but then crashed as soon as the Fed/Treasury Keystone Kops Brigade began their hyperinflationary tap dance. Thus far, they have been successful in thwarting the forces of deflation by creating dollar-bearish policy initiatives that, at least for now, have kept the deflationary tsunami at bay.

However, the last three months have brought about a slow erosion of the dollar and a possible retest of the March 9 lows. If it breaks those lows at 94.50 basis the dollar index, then I will be expecting gold at $2,100/ounce and silver at $25/ounce quickly. However, the cretins in Washington and New York will fight it at every turn, and with all the ammunition available to them, so I must remain vigilant and cautious until they demonstrate a dedicated apathy to such an event.

I remain 69.61% long the basket of junior developers and explorers in the 2020 GGMA portfolio, while holding 30.39% cash with a 161.61% return year to date (YTD). While I have not been holding either of my two beloved miner exchange-traded funds (ETFs; GDX/GDXJ) since April, my decision to overweight the developers (such as Getchell Gold Corp. [GTCH:CSE], up 183.3% YTD), and make Getchell my #1 holding, with Aftermath Silver Ltd. (AAG:TSX.V) close behind, is now starting to yield results.

I do not need to announce to anyone that my cautiousness in the past three months was, shall we say, "unwarranted," and is a $#$%$# understatement of the highest order. However, in the middle and latter stages of precious metals bull markets, penny explorers become juniors and juniors become intermediates and intermediates become seniors. Such is the natural rotation of the miner hierarchy as investment flows fall deeper and deeper in love with them; the danger occurs when that love turns to infatuation and obsession, but we are many months and possibly years from that happening.

The most recent subscriber issue has a few additions to both the portfolio and the trading account in advance of the arrival of August. I have always used August as my "accumulation month," and while it is usually the latter part of August, events here in July might have forced me to accelerate the accumulation of more than a few possible ten- to twenty-baggers looking out to next May.

We deserve it.

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) Statements and opinions expressed are the opinions of Michael Ballanger and not of Streetwise Reports or its officers. Michael Ballanger is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Michael Ballanger was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. 2) 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. 3) 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.

Charts provided by the author.

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