The gold miners have seen impressive investor interest in their beaten-down stocks in this young new year, with capital inflows fueling a sharp rally. And this buying is likely just beginning, as major market changes are afoot that should catapult gold much higher. With gold stocks trading at fundamentally-absurd price levels relative to prevailing gold prices, this sector’s upside potential is vast and unequalled.
But after the gold miners suffered a miserable couple of years, it sure takes a contrarian to understand that. The leading gold-stock investment vehicle and metric is Van Eck Global’s Gold Miners ETF, which trades under the symbol GDX. It is an excellent well-constructed gold-stock benchmark that matches the traditional HUI gold-stock index very well. So it naturally reflected the extreme carnage ravaging this sector.
SPX is on confirmed sell signal, since it has declined beneath the 50-day at 2042.43 it will be on a confirmed sell signal through the end of the decline.
â€™Tis the season for making forecasts. I will be sending my own five-year projections this weekend, but today for your Outside the Box reading pleasure we look at some similarly longer-term prognostications from the newest member of the Mauldin Economics writing team, Jawad Mian. Jawad writes a monthly global macro advisory publication called Stray Reflections, which is read by some of the world’s largest hedge funds, family offices, and asset managers. I and my team have become fascinated with his work. Jawad is not, in my opinion, non-consensus or even contrarian, but seemingly comes at macroeconomic issues from right angles, offering a viewpoint far different from almost anything else I read.
Born and raised in the UAE, educated in Canada, and now based in Dubai, Jawad views the world differently from the vast majority of Western-born and -trained analysts. A thoughtful and clear communicator, he is a rising star in the macroeconomic space, and I am glad to have him with us at Mauldin Economics.
George Leong writes: It’s that time again; another quarter has come to an end. The fourth-quarter earnings season numbers will officially start flooding in for the S&P 500 on Monday, with Alcoa Inc. (NYSE/AA) the first to report. However, the stock market is currently in a funk, beginning 2015 with weakening oil prices and continued concerns over the global economy. The problem: as the stock market searches for a reason to buy, several segments are suffering from the selling pressure. There is, however, one segment expected to look up heading into 1Q15 and that’s the healthcare sector. But more on that potential investment opportunity in a moment…
Gold and silver started the year at a muted point, with gold at $1168 and silver at $15.50, from which modest rallies have developed, with gold up 4% and silver 6%. These rises were against a background of high volatility in equity markets, a strong US dollar and very weak oil prices.
The firmly entrenched bearish opinions in recent months for the outlook for gold and silver have backed off from recent extremes. There is confusion in dealers’ minds, brought about by the threat of deflation and the collapse in oil prices.
2014 ended with two ominous developments: the strength of the US dollar and a collapse in key commodity prices. It is tempting to view both events as one, but the continuing fall in oil prices through December reveals they are sequential: first there was a greater preference for dollars compared with other currencies and this still persists, followed by a developing preference for all but the weakest currencies at the expense of raw materials and energy. These are two steps on a path that should logically lead to a global slump.
A subscriber sent me the following note recently:
You know I was driving home tonight and was observing all the cars building etc. I thought maybe I am nuts this can’t all stop. Then I also said to myself this is an illusion that massive un-payable debt has created. I hope for all of our sakes the former wins because the latter would be unbearable. Do you honestly believe a collapse war and poverty is truly going to happen? What’s the difference even if you have a ton of silver people just would take it. No law cops etc. everything would be vaporized!
The latest Paris Murder at the office of Charlie Hebdo was a strategic and well-articulated move to give lasting lessons to the enemies of Islam or the Non-believers by the Islamic Terrorist outfit so as to mobilize the sympathy or support of the Muslims all over the world. It has got wide coverage in all medias, Islamic, Anti-Islamic and Secular. Undoubtedly, it has great propaganda value for the Muslim Fundamentalists to create fear in the mind of the people, especially intellectuals and media persons who are criticizing Islam. They are in shock. But it is only a beginning of a new dreadful chapter with greater intensity and impacts.
The current trendy reason for the mainstream to dislike Gold is strength in the US Dollar. On the surface it makes quite a bit of sense. Gold is priced in dollars. Dollar strength automatically pressures the Gold price. However, this popular view reveals a total lack of introspection. Since the end of 2013 Gold is essentially flat (positive by a fraction) while the greenback has gained a whopping 14.9%. Better yet, since Gold’s early November low it has gained 6.0% even while the US$ is up 5.8%. This type of relative strength within the context of an aging bear market may be another sign of a major trend change brewing under the surface.
If Americans were honest with themselves they would acknowledge that the Republic is no more. We now live in a police state. If we do not recognize and resist this development, freedom and prosperity for all Americans will continue to deteriorate. All liberties in America today are under siege.
It didn’t happen overnight. It took many years of neglect for our liberties to be given away so casually for a promise of security from the politicians. The tragic part is that the more security was promised — physical and economic — the less liberty was protected.
With all the conspiracy theories surrounding OPEC’s November decision not cut production, is it really not just a case of simple economics? The U.S. shale boom has seen huge hype but the numbers speak for themselves and such overflowing optimism may have been unwarranted. When discussing harsh truths in energy, no sector is in greater need of a reality check than renewable energy.
Antonius Aquinas writes: A recently released Pew Research Center study confirms what every thinking American has understood for quite some time: the wealth gap between rich and poor has widened considerably since the onset of the financial crisis in 2008. The study’s statistics probably underestimate the plight of struggling families and individuals compared to upper-income groups as the median wealth of upper- income families totaled $639,000 in 2013, 6.6 times the median wealth of middle- income families of $96,000. This compares with 4.5 times the gap In 2007 between the two groups.
Part 1: If you are at all inclined to agree with the largely defensive and reflexive concept that paper-prices (i.e. dollar-values) for all products, commodities, and services are virtually meaningless, you’re going to want to read this.
If you are especially quick in holding to the notion that the paper-price valuations of gold and silver simply don’t matter, read on – we’re going to share some opinions as to why all of these paper-prices do matter.
The terrorist attack on the offices of the satirical magazine Charlie Hebdo that left 12 dead in an apparently well organised assault by subsequently identified as French born brothers, an attack that was said to be conducted in the name of God as an act of vengeance against a series of offensive cartoons depicting Islam published by the French magazine over a number of years that to be frank were just as extreme in their ideology of ‘Freedom to Offend’ as the muslims that attacked them are in terms of Islamic extremist ideology.
Shah Gilani writes: Dear Wall Street Insights & Indictments Reader,
Just look at the market today, any market, anywhere in the world. They’re all higher.
That’s what happens when the true Masters of the Universe, the puppet masters at the U.S. Federal Reserve, twiddle the strings to manipulate markets for their purposes.
Pretend you are a corn trader. As such, you have two choices: have a position in corn futures or own physical corn. It may seem silly to even consider owning physical corn, because corn futures are easy to tradeâ€”just click a button on your screen. But assume you have a grain elevator, and whether you own futures or physical corn is all the same to you. How do you decide which you prefer?
With commodities now moving down into their three year cycle low I’m hearing more and more talk about deflation. This is complete nonsense. Bernanke had it exactly right when he pointed out that any determined government could halt deflation at will with a printing press. As a matter of fact the only mildly deflationary event we’ve seen since 1932 was a brief period during 2008 and early 2009. Bernanke succeeded in stopping it in its tracks almost immediately with QE1.