Soundbites and Headlines According David Schectman
Soundbites and Headlines According David Schectman by
This morning I was reading the paper, and asked myself why? Apart from my beloved sports page, it’s full of the same old meaningless crap. I turned toward Susan and asked her, “Is there anything in today’s paper that’s fundamentally different from yesterday or tomorrow? “Nothing that I can see,” she replied. Yup, that’s what I think too. We live in a world of soundbites and headlines that have little if any significance beyond the moment.
Take the stock market as an example: On Dec. 3 the Dow shot up 400 to 500 points. Then one day later, Dec. 4, the Dow is down 800 points. How can that be? What happened that would cause a swing of 1,300 points? Hell if I know. It’s all a short-term trader market now. A tweet from Trump or an innuendo from a Fed governor and it’s up or down – for a day or two. Meaningful long-term trends, like the direction of interest rates or the increase in the budget deficit because of Trump’s tax cuts do not seem to matter.
I’ve been following the precious metals market, the stock market and the economy since 1983. I’m always looking for trends and events that will make an actual difference. But lately, regardless of the news, the markets are all focused only on short-term investing. The markets are all under the firm control of hedge fund traders (with an occasional bump form the PPT). The buy/sell decisions are made by computer algorithms, not real people. The traders at JPMorgan and the other bullion banks are long gone. Momentum and moving averages are the rule of the day. This works for the hedge funds and big banks. They make money on small moves both up and down. It’s a trader’s market (the big boys, not the average Joe). The average investor has no chance to compete. The hedge funds and the banks have the capital, they have the information before we do. Think of this: JPMorgan has won on virtually every trade this year. Actually, this goes back for the last 10-years where their trading on COMEX gold and silver always shows a profit. Is that luck? Do you believe in the tooth fairy? Gold, silver, the dollar, the stock market – they bounce around going up, then down, then up and end up going nowhere. It’s been a while since gold has moved below $1,200 or above $1,260 (5%) and the stock market is stuck around 25,000 points (where a move of 1,000 points represents only some 4%). Everything is in lockdown. One day Trump says he’s implementing tariffs, the next day he’s holding off. Then he’ll wait for 90 days. There’s lots of “noise” and the markets react by moving up or down for a day or two, but then they go back to where they were before the “news.” The reason is because the “news” really isn’t news. It’s just fill for a dulled-down readership.
There is one thing that does make sense. It’s a comment that Chris Powel (GATA) made: “There are no markets anymore, just interventions.” That explains what is happening. There are so many land mines to avoid, one wonders how can Wall Street and our government continue to hold things together? Real estate is already falling and so is the bond market. That’s what happens when interest rates rise. Tariffs are inflationary and bad for the economy. So, what’s holding things together? How long will they hold up? It’s, as Chris Powell says, it’s all about market manipulation, and it will continue, until it can’t.
I can give you many reasons why 2019 should be a great year for precious metals. I fully expect it to happen. But first, gold and silver have to break out to the upside. What the metals market needs is a real event; a major bank failure or another war in the middle east or a move to impeach the President, etc.
Lately I have been asking myself, what should I do with extra income, funds that I do not need to continue my lifestyle? The stock market is way too old in the tooth. You make money early in a cycle, not late, when assets are over-valued. (read the article at the end of today’s daily by Steve Sjuggerud). Bonds and real estate do not perform well when interest rates are rising, and that is plain to see. The Fed says they will continue to tighten in 2019 and the bond market and real estate markets are listening. But the stock market shrugs it off. At this point, I like cash and more silver. There is nowhere else for the average guy to go. The trouble is, most American’s under the age of 50 don’t know a thing about gold and silver – except that they haven’t done well in years. They have no concept of what money is, of the role of gold, of the dangers of way too much debt and money creation. All they know is that the stock market is the place to be. For many, this will not end well.
There will come a time (starting in 2019?) when everyone will wish they had more gold and silver, and not just because the price is rising, but because everything else is in the dumpster and, just as we have said for years, gold and silver are the ultimate asset to own in very tough times. I know, you get tired of hearing the same thing over and over, but it is still true. The only thing missing is “the hard times.” If you seriously believe that Trump will “make America great again,” and will grow the economy and the stock market then you do not need gold or silver. When I look at the numbers, I say that is wishful thinking.
Silver is back above its 50-day moving average ($14.50). That is positive. The bottom for silver was $13.50 nearly three years ago. Gold is well above its moving average ($1,233.90) and is looking strong. It has moved up $200 from its bottom three years ago. Looking ahead, gold has to clear $1,240 (currently $1,237.50) and silver has to clear $14.70 (currently $14.50) as a first step toward much higher prices. We’re getting close…