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The New Year is one full of economic, political, and war threats.
Among the economic threats are stock, bond, and real estate markets artificially pumped up by years of central bank money creation and by false reports of full employment. It is an open question whether participants in these markets are aware that underlying reality does not support the asset values. Central banks support stock markets not only with abundant liquidity but also with direct stock purchases. The Japanese central bank is now one of the largest owners of Japanese equities. Central banks, which are supposed to provide economic stability, have created a massive fraud.
Throughout the Western world politics has degenerated into fraud. No government serves the public’s interest. (See: ) Except for some former Soviet satellites in Eastern Europe, European governments have defied the will of the people by admitting vast numbers of refugees from Washington’s wars and others pretending to be refugees. The European governments further imperil their citizens with their support for Washington’s rising aggression toward Russia. The universal failure of democratic politics is leading directly to war.
This post was published at Paul Craig Roberts on December 30, 2017.
As we pointed out a few weeks ago, we’ve now entered the prime time to buy Christmas cards, decorations, and wrapping paper. Why? Because with Christmas in the rearview mirror, Christmas stuff is all on sale.
There are a lot of reasons to believe gold is also on sale right now.
The investment world has focused most of its attention on stock markets and cryptocurrencies over the last few months. But as an article recently published in Forbes points out, there are at least 10 good reasons to believe now is the time to buy gold.
1. Gold has outperformed the S&P 500 this century. Stock market mania is in the air, but investors seem to have forgotten that the S&P 500 has undergone two 40% corrections this century. If we index both gold and the S&P 500 to 100 as of Dec. 31, 1999, gold has returned better than 80% more than the market.
2. Supply is shrinking and miners are slashing exploration budgets. A number of analysts have predicted a significant drop in gold production is on the horizon. Mining companies have slashed exploration budgets and they are uncovering fewer and fewer large deposits.
3. Gold is a bargain compared to stocks. The gold to S&P 500 ratio stands at its lowest point in 10 years. In other words, the stock market is overvalued compared to gold.
This post was published at Schiffgold on DECEMBER 27, 2017.
With the year quickly coming to a close, it might be time to start thinking about rebalancing the gold holdings in your portfolio. That includes bullion, jewelry, gold stocks and well-managed gold funds – all of which I recommend giving a collective 10 percent weighting. Because it’s been such a strong year for stocks – they’ve advanced more than 20 percent as of today – it’s likely that most investors will need to add to their gold exposure to meet that 10 percent weighting as we head into 2018.
Some investors might wonder why they need gold in their portfolios right now. The stock market is still chugging along, and the just-passed tax reform bill is likely to help ratchet up share prices even more. Cryptocurrencies have been hogging the spotlight lately, especially after bitcoin tumbled nearly 30 percent last Friday morning.
While I’m on the subject, inflows into cryptocurrencies have totaled more than $500 billion this year alone. To put that in perspective, the total sum of global equity mutual fund and ETF inflows were around $411 billion as of November 29. What’s more, cryptocurrencies are now doing as much daily trading as the New York Stock Exchange (NYSE), according toBusiness Insider.
Just think on that. Something is happening here that cannot be ignored or dismissed.
This post was published at GoldSeek on Wednesday, 27 December 2017.
Back in early 2016 as precious metals rebounded, our work showed that gold stocks were arguably the cheapest they had ever been. They had the worst 5-year and 10-year rolling performance ever, they were trading at potentially 40-year lows on a price to cash flow basis, they were the cheapest ever relative to the stock market and Gold and most notably, the Barron’s Gold Mining Index was trading at the same level as 42 years ago! The gold stocks enjoyed a massive recovery in 2016 but it was short lived as the sector corrected and then consolidated (far from the highs) for over a year. Although we have a tendency to be too conservative at times, over a month ago we noted a historical pattern that bodes extremely well for gold stocks over the next few years. That outlook is reinforced by the continued historic value in the gold stocks as exhibited by the following charts.
First, we focus on the long-term rolling performance in the gold stocks. The chart below plots the S&P TSX Gold Index (data obtained from Global Financial Data) along with its rolling 5-year and 10-year performance. By that metric, the gold stocks (going back +80 years) were the most oversold in late 2000 and early 2016. If we were to run a 15-year and 20-year rolling performance then the three most oversold periods would be late 2000, early 2016 and the late 1950s. The gold stocks enjoyed massive long-term returns from the late 1950s and the year 2000.
This post was published at GoldSeek on 22 December 2017.
The gold miners’ stocks largely ground sideways in 2017, lagging gold’s solid rally. Being trapped in this vexing consolidation has decimated sentiment, leaving a bearish wasteland bereft of hope. But contrary to perceptions, this deeply-out-of-favor sector is actually a coiled spring today. Gold stocks are ready to surge dramatically higher as psychology inevitably shifts, pointing to much higher prices coming in 2018.
The main appeal of gold-mining stocks is their underlying profits’ leverage to gold. The gold miners are much riskier than gold itself, facing many operational, geological, and geopolitical challenges that the metal doesn’t share. Thus investors and speculators alike must be compensated for these large added risks with superior returns to gold. That didn’t happen in 2017, which is why gold stocks are so widely despised.
All year long, the extreme stock-market rally driven by hopes for big tax cuts soon stole the limelight from gold. The flagship S&P 500 stock index has blasted 19.7% higher year-to-date, stoking incredible levels of euphoria. That sucked all the oxygen out of the investment world, overshadowing everything else. So investors have largely shunned gold this year, since it is normally the anti-stock trade moving counter to stocks.
Usually soaring stock markets crush gold, like back in 2013. That year the Fed’s new third quantitative-easing campaign conjured $1020b out of thin air to monetize bonds. The resulting artificially-low interest rates fueled a stock-buyback boom, catapulting the S&P 500 29.6% higher. So investors felt no need to prudently diversify their stock-heavy portfolios with gold, thus this metal plummeted 27.9% lower that year!
This post was published at ZEAL LLC on December 22, 2017.
Everyone who believes risk has disappeared has fallen for the con.
One of the maxims of this site is: risk cannot be made to disappear, it can only be cloaked, hedged or offloaded onto others. In other words, when the magician makes the white rabbit disappear, the physical rabbit does not in fact vanish; it is merely transported out of sight of the enthralled audience. Judging by this year’s version of Santa Claus’s reliable year-end stock market rally, risk has vanished, not just in stocks but in bonds, junk bonds, housing, commercial real estate, collectible art–just about the entire spectrum of tradable assets (with precious metals and agricultural commodities among the few receiving coals rather than rallies). And so it is with risk in markets. Risk is now viewed as something that can be reliably sold as a more or less guaranteed source of easy profits. In the present-day perception that risk has been eradicated from the markets, it makes little sense to hedge against risk; hedging is a waste of capital when there’s no risk in sight.
This post was published at Charles Hugh Smith on WEDNESDAY, DECEMBER 20, 2017.
The European central bank meeting was a dud. I do not believe in their inflation targets. The trend for the US dollar is still bearish. Gold and silver can see small periods of big one way rises followed by long periods of consolidation. Copper is bullish. I will prefer to use a buy on dips strategy as long as crude oil trades over $55 for the rest of the day. Global year end travel season will begin from tomorrow. Travel related energy demand will rise for a month.
‘Wolf cry’ this year was the fall in stock markets. ‘Wolf’ never came. When the actual wolf in the form of a bearish trend in global stock markets comes next year, most of the retail investors will be heavily invested in stock markets. Do not sleep on your short term stock investments next year.
This post was published at GoldSeek on 15 December 2017.