gold bullGold stocks just surged to a major technical breakout, a very bullish omen.  Investors are actually starting to redeploy capital in this battered sector, catapulting gold stocks into the early lead as 2014’s best performers!  This year is shaping up to be the polar opposite of last year’s epic carnage, with gold stocks mean reverting back up to fundamentally-reasonable levels.
The vast majority of the buying is still yet to come.


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Submitted by Adam Hamilton, Zeal

Exiting last year, gold stocks were inarguably the most hated sector in all the stock markets.  And it is easy to understand why.  In a stupendous year when the benchmark S&P 500 stock index blasted 29.6% higher, the flagship HUI gold-stock index collapsed 55.5% lower!  It is hard to imagine a greater performance gap, which led investors to flee as gold stocks were crushed with gold.  It was a total disaster.

 

But naturally such brutal losses drove sentiment to hyper-bearish extremes.  Virtually everyone assumed gold stocks were doomed, never to rise again.  They were wholesale abandoned, there was truly blood in the streets.  Plagued by peak despair, gold-stock prices plummeted to levels that were fundamentally-absurd.  Many elite gold stocks were trading at trailing P/E ratios under 10x, radically undervalued by any standard.

 

In late December, the leading HUI gold-stock index slumped to 190.  As I was pounding the table about at the time, those levels were fundamentally absurd.  The first time the HUI traded at 190 in this secular gold bull was over a decade earlier in August 2003.  But back then gold, the dominating driver of gold-mining profits and hence gold-stock prices, was merely around $365!  In December 2014 it was $1200.

 

With gold almost 3.3x higher, did it make any sense at all for gold stocks to trade at decade-earlier prices?  Were the widespread single-digit P/Es justified?  Hell no!  Gold stocks weren’t ridiculously cheap because there was any fundamental justification for those prices, but because investors had capitulated on this sector and abandoned it.  But extreme bearishness, fear, and despair can never persist for long.

 

All anomalous sentiment extremes soon burn themselves out.  Once everyone who is susceptible to being scared into selling low has already dumped their shares, only buyers remain.  Then fundamentally-cheap abandoned sectors start rallying out of the ashes.  That’s what has happened so far this year in gold stocks.  As of its latest interim high this past Tuesday, the HUI has powered 18.8% higher in 2014.

 

This compares to the S&P 500 down 1.5%, and gold itself only up 7.1%.  Gold stocks as measured by the HUI have leveraged gold by over 2.6x in this young new year!  And the smaller high-potential gold and silver miners we prefer have seen gains far outpace the HUI’s.  Once this phenomenon of gold-stock outperformance starts, it rarely stops until gold stocks soar radically higher as investors flock back in.

 

Just this week, the HUI enjoyed a major upside technical breakout.  This is a very bullish harbinger of much more to come.  This first chart looks at this flagship gold-stock index over the past year or so, superimposed over a trading construct called the Relative HUI.  Relativity trading looks at prices as multiples of their 200-day moving averages.  They tend to form horizontal trading ranges that help time entries and exits.

 

 Zeal021414A

 

2013 was catastrophically bad for gold stocks, there’s no doubt.  The HUI started falling right out of the gates, dragged down by gold.  Gold got hit due to epic record mass liquidations from the flagship GLD gold ETF.  This flood of supply was the result of stock traders dumping their GLD shares to redeploy that capital into the Fed-driven stock-market levitation.  So gold stocks just plummeted, it was nauseating.

 

The worst of this carnage came in two specific episodes.  Last April, gold plummeted 13.8% in just 2 trading days in a panic-like selloff.  When heavy differential GLD selling pressure pushed gold under key long-term support at $1550, futures speculators were forced to dump their longs in a massive forced liquidation.  That wildly-anomalous event drove a quarter of the HUI’s 2013 losses in just 4 trading days.

 

And then in mid-June, gold plunged again after Fed chairman Ben Bernanke outlined the Fed’s best-case timeline for tapering its QE3 debt monetizations following an FOMC meeting.  Over the subsequent week, the HUI suffered another fifth of its full-year losses.  Together these massive April and June selloffs, along with early-year selling, conspired to force the HUI into the free-fall downtrend rendered above.

 

In 2013’s first half, this index had plummeted 54.1%!  That was essentially where it ended the year, so all the losses were front-loaded.  The bearishness and despair in gold and gold stocks in late June was just insanely high.  There were only a handful of hardcore contrarians bullish on this loathed sector, with the vast majority of analysts and investors predicting big additional losses.  This consensus proved dead wrong.

 

In July just when all hoped seemed lost, the HUI surged dramatically.  It soon broke out of early 2013’s free-fall downtrend on a sharp short-covering rally.  While this trend change was very welcome, like all short-covering rallies the buying was short-lived.  Short sellers buy fast and then they are all done, so if investors don’t return that momentum soon peters out.  And indeed the gold stocks started drifting lower again.

 

Investors didn’t return because gold continued to experience pressure from heavy differential GLD selling thanks to the Fed-driven stock-market levitation.  And without gold advancing, the gold stocks can almost never rally materially.  The HUI settled into a new and much-shallower consolidation downtrend.  The additional selling was marginal compared to the first half of 2013’s, but it was still relentless.

 

The HUI finally bottomed in late December, just 2 trading days after the Fed’s surprise decision to start tapering its QE3 bond monetizations at that month’s FOMC meeting.  This was very interesting.  After both gold and gold stocks plummeted in June on the mere threat of the QE3 taper, they weren’t too much lower when the actual event arrived.  Gold only fell another 0.8%, and the HUI was 8.1% lower at worst.

 

All year long the groupthink-blinded gold bears argued that gold and therefore the entire precious-metals complex would just be crushed when the Fed started slowing QE3.  A full-blown QE3-taper hysteria arose surrounding gold, it was crazy.  But once the taper arrived and gold didn’t collapse on cue, buyers started to return.  And that tentative rally has grown into the great gold-stock strength in 2014.

 

The HUI is up 23.6% in the past 1.7 months, which is the longest it has rallied in 17 months!  This new buying is gradual and sustained, the kind of advance seen when real investment capital starts returning to a sector.  This is a big contrast to the sharp short-covering rallies last summer and autumn, which quickly burned themselves out.  Slow and steady wins the race, as it gradually entices in more and more buyers.

 

The reason I’m writing this essay this week is a major technical breakout.  Note above that just in this past week, the HUI broke out decisively above its consolidation downtrend’s upper resistance line!  This zone had trapped the HUI for several weeks, but the gold stocks finally powered through.  And shortly after, this flagship gold-stock index regained its 200dma for the first time since the first trading day of 2013.

 

Crossing back over a 200dma from below after a long downtrend is a very bullish sign.  That gives sidelined investors the necessary confidence to start returning.  The HUI’s 50dma has also turned up again in February too.  As long as gold stocks keep rallying on balance, within a few months this 50dma will cross the 200dma from below.  This is the fabled “golden cross”, one of the strongest technical buy signals.

 

And the HUI still has vast room to run higher.  Merely to return to end-of-2012 levels before 2013’s once-in-a-lifetime gold anomaly, the HUI would have to soar 95% from this week’s levels!  And if the HUI doubles, the best of the smaller gold miners we own and recommend will see their stocks quadruple.  And there is little danger of the HUI getting overbought and correcting before it exceeds 1.40x its 200dma.

 

That Relative HUI metric has marked past gold-stock toppings, and is up around 327 based on today’s 200dma.  And this baseline HUI 200dma will soon start trending higher again as investors continue to gradually return to the fundamental-bargain gold stocks.  So later this year and early next, this same 1.40x rHUI overbought metric will be considerably higher in HUI-level terms than it happens to be today.

 

Within days of that HUI bottom in mid-December, I wrote an essay called contrarian gold stocks.  It explained how fundamentally absurd it was to have gold stocks trading at the same prices they were at a decade earlier when gold was just $365.  At $1200 gold and single-digit P/Es, shouldn’t they be a heck of a lot higher?  It was a no-brainer investment thesis, fighting the crowd to buy low when few others would.

 

But most traders hate to use their brains.  They desperately want to believe whatever is popular, they so fear sticking out from the herd.  They want to assume that a price move that has already run to extremes is going to continue indefinitely.  So I got a ton of criticism and flak from traders all over the world for daring to buy low in peak despair.  But when everyone believes the same thing, that trend is already ending.

 

Brave contrarians multiply their wealth dramatically by buying low when no one wants to.  In our weekly newsletter we added new gold-stock and silver-stock trades in mid-December and mid-January.  As of the middle of this week, they were already up 41%, 28%, and 29%!  In our monthly newsletter, our three newest trades launched in early November, January, and February are already up 96%, 32%, and 28%!

 

If you are not a Zeal subscriber riding this young new gold-stock upleg, you are robbing yourself.  2013’s leaders are definitely not going to lead the markets this year, the odds are radically higher it will instead be 2013’s laggards.  Sadly most investors and speculators won’t figure this out until too late, they lack the necessary contrarian background and ongoing research to discern the major trend changes in real-time.

 

Even more important than the HUI’s absolute gains are its advances relative to the primary driver of gold-mining profits, the gold price.  This next chart looks at the HUI/Gold Ratio which distills down this critical relationship over time.  With the gold stocks also climbing relative to gold in recent months, the strength and staying power of their young upleg is far more potent.  This is an even more bullish omen.

 

Zeal021414B

 

The HGR saw similar downtrends and breakouts over this past year as the raw HUI.  It not only experienced an upside breakout from its consolidation downtrend this week, but it tentatively broke out above its 200dma as well.  Its 50dma has also turned positive, setting up another golden cross in the coming months.  The gold stocks haven’t outperformed gold for this long in 17 months, which proves things are changing.

 

Back in early December when everyone had given up on and abandoned gold stocks, the HUI/Gold Ratio fell to a jaw-dropping 12.9-year low.  Gold stocks had never traded at lower prices relative to gold in their entire secular bull, not even during 2008’s brutal once-in-a-lifetime stock panic!  Gold stocks had never been so unpopular, which was a sure indicator that their popularity and hence prices had to recover.

 

While the HGR still looks low today even on this short-term chart, that certainly doesn’t tell the whole story.  In the secular 5-year span before 2008’s stock panic, the HGR averaged 0.511x.  The HUI gold-stock index tended to trade just above half the prevailing gold price.  If the HUI returned to those levels, it would trade at the yellow line rendered above.  This gives the HUI a 660 target, nearly triple today’s levels!

 

Most investors and speculators are so down on gold stocks that they believe they will never return to pre-stock-panic price levels relative to gold.  I strongly disagree, as the markets are forever cyclical and gold stocks will return to favor again.  But nevertheless, there is a much more conservative HGR target.  That is the post-stock-panic average of this ratio between 2009 and 2012, before 2013’s anomalous gold carnage.

 

That turns out to be 0.346x, which is vastly higher than this week’s still-pathetic 0.177x.  To merely regain those post-panic levels relative to gold, the HUI would have to soar 96% from here to 447!  With gold stocks still so radically undervalued relative to the metal that drives their profits, they have vast room to run higher from here.  This means the young gold-stock upleg in early 2014 is likely just the very beginning.

 

And any HGR analysis is remiss without considering gold.  As I discussed a few weeks ago in another essay, gold itself has bottomed.  It has very high odds of enjoying a massive mean-reversion recovery upleg this year.  It’s hard to believe after 2013’s slaughter, but gold actually exited 2012 way up at $1675.  There is no reason it can’t return to those levels relatively soon as the GLD capital outflows reverse into inflows in 2014.

 

At far-more-normal $1675 gold levels, the HUI mean reverting back to its post-panic-average HGR of 0.346x implies this index near 580.  That is 154% higher than today’s levels!  And if it can actually regain its secular pre-panic average relative to gold, we are looking at a staggering 856.  That is 275% above current levels, or nearly a quadruple!  Make no mistake, gold stocks have a long ways to run higher yet.

 

The new major upside technical breakouts in both HUI and HGR terms are merely the bullish vanguards of much more gold-stock buying to come.  Hedge funds are already starting to salivate at the extreme upside opportunities in gold stocks created by the hyper-bearish sentiment last year.  And since this sector remains very small relative to the broader markets, it doesn’t take a lot of new capital to catapult it higher.

 

After 2013’s epic record carnage, the odds are overwhelming that gold stocks will enjoy one of their best years ever in 2014.  The smart contrarian investors and speculators who get in early have the potential to literally double to quadruple their fortunes in a single year!  How often does that happen?  If you want to ride these mean reversions and understand what is going on in this forgotten sector, join us at Zeal.

 

We’ve been actively studying the stock markets and gold full-time, and trading gold and silver stocks, for over 14 years now.  After these countless thousands of hours on task, our expertise is unparalleled and super-valuable.  All 664 stock trades recommended in our newsletters since 2001 have averaged stellar annualized realized gains of +25.7%!  And that includes all the losses as well, even last year’s misery.

 

You ought to capitalize on the profitable fruits of our hard work!  We spend months at a time doing deep research into gold and silver stocks, and then publish comprehensive reports detailing our fundamental favorites.  These narrow hundreds of precious-metals stocks down to the elite dozen best suited to thrive fundamentally.  These fascinating reports each detailing a dozen winners are just $95 or less, buy yours today!

 

There is no better way to stay informed on the markets from a critical contrarian perspective that you won’t get in the mainstream media than through investment newsletters.  We have long published popular weekly and monthly ones.  In them I draw on our hard-won experience, knowledge, wisdom, and ongoing research to explain what is going on in the markets and why.  And we recommend specific stock trades as appropriate.  For just $10 an issue, you can’t afford not to subscribe.  Join us today and prosper!

 

The bottom line is the battered gold stocks just experienced a major upside breakout.  This is a very bullish portent that marks a radical departure from last year’s dismal carnage.  Investors are just starting to understand the extreme bargains littering this sector, and are buying low.  This has driven enough gradual and sustained buying to make gold stocks the best-performing stock-market sector of 2014 so far.

 

And these early gains are just the beginning.  Gold stocks were hammered to such fundamentally-absurd levels relative to gold that they have vast room to run from here.  The major gold stocks could double and still be cheap by all historic metrics, and the smaller high-potential ones are likely to at least quadruple in the coming year.  The brave contrarians willing to fight the crowd are going to win massive gains.

 

Adam Hamilton, CPA

 

February 14, 2014

 

So how can you profit from this information?  We publish an acclaimed monthly newsletter, Zeal Intelligence, that details exactly what we are doing in terms of actual stock and options trading based on all the lessons we have learned in our market research.  Please consider joining us each month for tactical trading details and more in our premium Zeal Intelligence service at … www.zealllc.com/subscribe.htm

 

Questions for Adam?   I would be more than happy to address them through my private consulting business.  Please visit www.zealllc.com/adam.htm for more information.

 

Thoughts, comments, or flames?  Fire away at zelotes@zealllc.com.  Due to my staggering and perpetually increasing e-mail load, I regret that I am not able to respond to comments personally.  I will read all messages though and really appreciate your feedback!

 

Copyright 2000 – 2014 Zeal Research (www.ZealLLC.com)

 

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  1. I hate to say it, (No I Don’t) LMAO
    I bought some Minors a couple of weeks back as I saw something was happening and I may buy some more if they stay up. If they start going down then I sell and take the Fiat and buy Physical. If they crash, Lesson Learned. Keep Stacking

    • There are some good miners that are worth having a position in.  But we’re starting to build some upward momentum in the physical  now and when you look at what is happening in the fundamental sphere, you can see that the system is starting to come unglued. This tide will lift all boats. Physical for security, selected miners for leveraged gains (far safer that Comex paper gold/silver futures.) But keep your seatbelts fastened tight, the volatility will try your patience and your soul!
       
      To me, the accelerating level of dead bankers is THE GREEN LIGHT that says it all.  It tells me the sailing ahead will be much more rewarding for PM’s.  The cabal has controlled the system in coordinated synch for a very long time, like a well-oiled machine.  But now that you are seeing wetwork, you know the bankers are beginning to fragment and begin eating their young as the fraud has been so rampant that it can’t be hidden any longer.  Even the masses are getting pissed which is bringing Bafin-like scrutiny to their activities.  It used to be that the elites simply had to make a phone call to make investigators vanish in thin air, but when Deutschebank’s Ackermann’s phone call didn’t work back a year or two ago, we knew a shift had taken place.  Then, when Germany’s gold failed to materialize the fraud became public and very visible.  Now, it’s raining banker carcasses and, as this story is beginning to breathe on it’s own and, even as the dead cat bounces are the result of an increase in pressure on the industry over it’s criminality and fraud, we can realize that the whole cabal system now has fatal fractures in it’s foundations.  Look for coordinated manipulation to die off in direct proportion to banker life insurance rates soaring as the banking cabal will now be forced to bunker down and lawyer up.

  2. copy that marchas45  a stock can be a good place to park fiat.  just because most of us avoid stocks of any sort due to counterparty risk etc, playing a bounce can make more FIAT which makes for more silver

    • My miner portfolio was up 20% last week.  That’s not to brag at all… but it is just to remind us that the hammering they’ve taken has pushed them so far into the ground that a reflex rally could be expected.  If we continue to see the metals rise, the momentum shift should be breathtaking.  Just remember that some juniors and many explorers haven’t been particularly hurt by the low prices as they haven’t been in production.  They were just executing on their plans and, when properly financed, they’ve weathered the storms pretty well…  Chapman’s advice was always to invest where the more seasoned managements had a good track record.

  3. …Must be a 3 day “Troll Vacation?” I notice there are few annoying posts worth contending? … Or perhaps while the pm’s soar they”ll sit quietly back and wait for some down days to tell us how well the stock market is doing etc, etc.

    • No, it’s just that when we’re in agreement with everyone you find us less annoying :). Comex is going to escape february just fine, no defaults, etc, so don’t expect a change in my opinion on that front, but i think there was a major change with the action this week that reverses a lot of the past years trend. I don’t think you go back to $50 tomorrow, it could even bounce lower, but from my view what has been major resistance is now support.

      I am well positioned, though primarily in etf *ducks*

    • Now I find that funny @mikeyj80 that I mention “trolls” and your head pops out of the woodwork! Lol 
      Look brother, I know your a “stocks” and paper game trader, and I’m not hating on you for it,everyone’s got to run a game (hopefully legal) to get up in this world. And Idon’t know why metals are rallying now during signs that SHOULD have rallied them earlier, – Gold up, Dow down, Dow up, Gold up, Dow down, Gold down, all I know is that cash is inflated away by printing, present in price inflation, noticable over an annual time period. Stocks are inflated by print-investment, same with equities, PMs are the one thing that cannot be inflated. (Discounting fractional lending which is why the real phyz is so cheap) but unlike paper fiat, paper gold is “backed” by the real deal. Albeit 1% but that 1% means that the jig will finally be up. REAL assets bring an end to manipulation at some point; which is why Nixon pulled us off the gold standard- the game reached THAT POINT.
      So make some dough Mikey, I do not hold contempt for playing the game that they’re dishin, I just hope that your learning something here. Stackers are really the most humane of people, wedon’t want to see anyone suffer. That’s why we always come off as protectionist.
      Hope everyone had a great weekend!!!

    • @Shamus001  said…”Stackers are really the most humane of people, we don’t want to see anyone suffer.”
       
      Speak for yourself, brother.  There are a LOT of people in this world whom I want to see suffer.
      (And no, I am not talking about the people who come here, whom we disagree with.)

    • Shamus, i’ve just assumed that myself and a couple others have earned that name for disagreements.  I agree with all your sentiments, i have enough nearby that would help in case bug out time comes.  Diversity has worked for me and I’ll continue that practice.
       
      As to why now vs. why then, i don’t know either, however we do know that major trends have been broken, those will now serve as support, the fundamental story is there in gold, silver still doesn’t have much but will rally in sympathy and I am betting that some users who have been sitting on the sidelines chose to enter the mkt on these reversals.  I need to do some work, but I wonder if open interest in increasing in deferred contract months which would be a sign of real demand (hedging) entering the mkt.  

    • @mikeyj80 “As to why now vs. why then, i don’t know either, however we do know that major trends have been broken”
      @Shamus001 “And Idon’t know why metals are rallying now during signs that SHOULD have rallied them earlier”
       
      We read many articles on PM manipulation here. Why won’t we consider this an influence in bullish runs. Mikey, you have shared great information on paper gold and day trading (honestly, I’m still digesting it) that refute some of the outlandish theories here. I’m curious on your opinion as I’ve accepted this price action (or manipulation as some call it) the nature of the beast and keeping big money the primary influence.
       
       
       

    • @Kintama
      I personally don’t understand how the mechanics of the price manipulation, as some suggest, can work to keep prices low, open interest studies refute this and if anyone had any evidence on who issued the “massive” sell orders we’d have seen it as globex keeps a record of each and every one attached to the party making the trade. Surely people have asked for this and we’ve never seem “customer abc sold 12,594 cnts mkt order in thin overnight trading.”. I believe there is a reason we have not seen such information, and therefore, i don’t assume anything opposite happens going up either.  
       
      Big govt and macro policies having influence, yeah i can get that but anyone with an ounce of gray matter can look at inflation in terms of core vs. john q, and jobs #s we know are flawed too… so even some of these are accounted for… Assuming there is effect from this, it is more relevant to gold vs. silver whose biggest demand is consumption by industry (not a wealth hedge).  

      Typing this comment makes me ask myself again why so many want comex to default (and now need shanghai to go too)… that way we have a really good and free mkt where the government tells us what the price of gold is.

    • @kintama
      “…We read many articles on PM manipulation here. Why won’t we consider this an influence in bullish runs”
      Manipulation can certainly happen in both directions.  But it’s the level of intention (depth of moneyed interest) that determines the degree of manipulation that’s the difference here.  If the normal supply and demand forces were allowed to manifest in the metals markets, I don’t think anyone here would argue that the prices would trend higher and no one would suggest there is manipulation.  Note, I said “trend” and not “rocket.”  You have to realize that the price suppression we’ve endured over the past two years since the 1900 highs have been undertaken with unparalled, sovereign government (US) funding by way of Exchange Stabilization Funding and PPT, courtesy of the US government.  And you have to understand that the goal of this suppression was NOT TO MAKE MONEY, so much as it was to protect the US dollar.   Yes, bullion bankers made their fortunes on the short side, but this was an artifact of the intended direction of the price intervention.  As long as the bullion bankers knew the pressure would be kept on the price forcing it downward and the regulatory bodies would not intervene in the process, they could profit on the short side. 
       
      At some point, the strategy changed and the bullion bankers were advised that the timing was now such that they needed to go long… and, some months later, they have shifted their positions, using the algo-driven hedge funds to leverage out of their short positions.  The TPTB knew there would come a day when the physical market would overrun the paper market and I think we are at that crossover about now.  In the past couple of weeks, we’ve seen attempts to cap upward movements. but you can see they do not have the effect they used to have… this trend will continue and, at some point, the bullion bankers will accelerate the upward trend but, unless the dollar falls completely out of bed, they will be constrained to a degree because their is still a need to keep the dollar propped up… at least for another few months or, until some currency reset activity.
       
      So, yes, rest assured that your US government still intends to continue to ‘manipulate’ the metals prices.  But now, this manipulation will take the form of what Jim Rickards meant when he said they would let gold rise but they wanted an “orderly” rise and not a moonshot.

      @Shamus001

      “…And Idon’t know why metals are rallying now during signs that SHOULD have rallied them earlier, – Gold up, Dow down, Dow up, Gold up, Dow down, Gold down,…”

      The reason the old indicators and relationships aren’t predictable is because ALL MARKETS ARE RIGGED!!! And rigging isn’t done with an eye on the conventional indications in the markets. Instead it’s eye is on the intended effects of that RIGGING!
       
       
       

    • @mikeyj80 Interesting…I’m not certain a Comex meltdown is a positive for PM investors either. Some argue people with phyzz will be the last man standing but I’m not so certain. I’m assuming smart money has a finger on the trigger for a wealth hedge. In moments of absolute wealth preservation on a world market scale will be beyond anything that can be controlled.
       
      @Sovereign Economist “All markets are rigged” There is some truth to this as well since most marco economists have been scratching their heads for a while now. I’d like to keep a small portion of optimism. I can’t always assume the motivation of short sellers as well as many will side with the primary trend without emotional attachment. But I do agree that this is plenty of motivation not to implode the dollar as an established balance is in the interest of most.  Your timeline speaks of months of a currency reset. This is a rather lofty call but we will see.

  4.  ” The reason I’m writing this essay this week is a major technical breakout.”
     
    Until the cartel attacks the paper market again. When silver rises to $30+ per ounce then I can get excited but for now I’m still under water on my stack.

    • “You may still be underwater, but it does not lessen the importance of the move.”
       
      Indeed not, Mike.  PMs held outside the banking system are financial insurance like no other.  If things go terribly awry, having some gold and silver could be VERY important.  It could mean the difference between losing your home vs. not… or eating vs. not… or staying warm vs. not.  
       
      Some people buy PMs, hoping to flip them and make some extra money.  There is nothing wrong with that.  I do that all the time with stocks, funds, and ETFs.  The capital that such activity throws off is just as spendable as any other kind of capital.  
       
      But I hold my PMs because they are not my investments.  They are my insurance and like any other kind of insurance I buy, they are bought, put away, and only brought out when a serious problem requires them.
       
      Lots of people in the PM camp have complained, sometimes bitterly, about PM prices in 2013.  Invariably, these are the people who are trying to flip their PMs.  Those of us who were acquiring PMs in 2013, thought that the prices were great!  Many a stack was increased in 2013.  PMs flowed from weak to strong hands with fiat flowing the other way.  :-)
       

  5. I rode gold to 1300 THEN DIVESIFIED TO SILVER @ 22.
    Then after the MF Global theft went all in au/ag physical.
    Not sure about stocks though…..( still feeling the 2008 pain )
    cheers
    ps. Any more bullish comments ( stocks ) may change my mind.

    • Bullish comments?  No, not really.  I will say, though, that my stocks, funds, and ETFs are WAY up compared to where they were as of 5 years ago.  If I had one do-over, it would be to have switched my IRA from a traditional IRA to a Roth IRA early in 2009.  That would have created a big tax bill for 2009 but it also would have made ALL of the really nice gains since then TAX FREE.  :-)
       
      That said, the market looking forward is not making me smile.  If anything, I see WAY more downside over the next year or so than I do upside.  Of course, the Fed could always do more stimulating to inflate the stock market into a bigger bubble than it already is.  One cannot know ahead of time what the Fed will do in this regard but if history is any guide, Yellen favors a more aggressive stimulus policy than Bernanke.  So far,  tapering the QE program seems to be the Fed’s current policy but that could change rather quickly if the economy slows even more.  IF they taper, then stocks will do poorly.  If they stimulate, then stocks will do well.  I tend to favor a diversified policy of investing wherein assets of various classes are owned.  I still do not like bonds or real estate at the moment, so would definitely avoid both of those asset classes.  What I do favor is physical PMs for their insurance value and big cap stocks that have increased their dividends over time.  For my more aggressive investing, I prefer the mid-cap stocks and blend funds.  As always, do your own DD and do not rely on the comments of others when making your own investment choices.  You care about your money and your financial future FAR more than anyone else does, so do your research and then make the best decision you can given the info available.  Using stops is also a good idea in case the market decides to take a big dive just when you aren’t watching it.
       

    • The general stock market, in my mind is way too risky to put a penny in.  The minute PPT stops propping the index funds, the speed of the downward pull on the market will make one think we are on Jupiter with the force of gravity which will seem to be at work.
       
      I make the exception for a small holding in miners because, as long as they aren’t held on margin, even if they go down in a general market downshock, they should recover as long as I am not forced out of them.  They are all considered ‘core holdings’ so they get taken out of street name and converted to share certificates.  That way, my counterparty is the mining company and not the brokerage.  Bail-in is a very real possibility for brokerages too, not just banks.

  6. Well, it had to come at some point. Given Eastern voraciousness in their accumulation of ‘Hard Money’ and Western abandon of its inevitable ramifications, draining its vaults of all but specious claim-tickets … now seems about the right time … to me, at least.

    • I’m sure that many of us on here are struck by the irony of the banksters doing all their machinations over “saving” their fiat paradigm when it is absolutely doomed to fail.  Not only that but they have sacrificed their only REAL money in order to make this happen… temporarily. When the fiat paradigm ends, they will then not have any real money either… just mountains of fiat and other forms of worthless debt. 

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