Today’s home sales crash confirms the ongoing real estate implosion, but the gold sector is getting very hot…
We recently reported on Eric Sprott’s active sale of his position in commercial real estate.
This liquidation presents an interesting problem: When something is sold, what do you do with the proceeds? Many analysts and advisers recommend going to cash and “sitting on the sidelines”. It is as if somehow holding a fiat currency that the Fed is publicly stating they intend to devalue by 2% per year is a smart move. Perhaps they were referring to keeping it safe in some savings account in a TBTF bank?
One thing for certain is that the money must go somewhere. The stock market hasn’t had a meaningful correction since 2009, however, and nobody can argue against the passing of time, and the fact that this stock market bull run is “long in the tooth” by any measure.
Which brings us to every goldbug’s favorite Canadian, Eric Sprott. When the MSM looks to investment, they look to the common names in the states, like Warren Buffet, who contrary to popular belief, is in-fact a hard asset guy himself. However, in our community, we understand, that when somebody as influential and deep-pocketed as Mr Sprott makes a move, it might behoove even the person holding the shortest stack to stop for a moment and look into the significance.
Well, this month, we have been seeing what Eric has been doing with his money, and he is not just saying it, but showing it with his wallet, Eric is VERY bullish on gold. Here is an excerpt from Reuters:
Eric Sprott says purchased 600,000 common shares of Kirkland Lake Gold Ltd
Eric Sprott – Prior to purchase, Sprott directly, indirectly controlled 20.9 million shares representing about 9.9% of outstanding shares of Kirkland
The chart action in Kirkland Gold shows that technical analysis does matter, and as shown on Valentine’s Day this year when the 50-day moving average crossed the 200-day in what is known as a “golden cross”, we can see the company has since performed rather well:
This brings us to the broader picture on the economy:
- The stock market has been on a tear since March 9, 2009
- Housing in the United States and Canada have overtaken their highs before the last financial crisis
- Bitcoin is going parabolic
- The maestro is warning of a bond market crash
The gold miners and silver miners reported mixed results for Q2 just a few weeks ago. If there is truth to the saying “a rising tide lifts all boats”, we have not seen the tide come in, though we have been in low tide for so long, it might just catch everybody by surprise when the waves get rough.