Supply: Michael Ballanger for Streetwise Experiences 06/25/2019
Valuable metals skilled Michael Ballanger appears on the latest run-up in gold and divulges his latest trades.
I’m so confused tonight that I needed to crowbar the booze cupboard with a purpose to calm my scrambled soul and ease the ache in my pseudo-analytical chest. That is proper. “PSEUDO” versus “QUASI” and versus “FAUX.” The latter two adjectives suggest vagueness and deceit and I’d anticipate that my ramblings are a far cry away from imprecise and, even if I spent thirty-seven years employed peddling securities to individuals, actually not with “deceit.” Effectively, possibly a tad of deceit however by no means of my making and all the time with honorable intent. Then once more, deceit is deceit and it’d take a tough look into the inside workings of the mirror to actually decipher “intent.” End result and impression are much better circumstances to look at with a purpose to make any semblance of “ethical judgement” so I encourage you all to be the ultimate arbiters of this tripe.
What despatched me into veritable agony was the benefit with which the surgeons of market operations have been in a position to pivot from “fiscal integrity” to “financial irresponsibility” with nothing greater than a “written assertion” and a “rehearsed press convention.” Each single Federal Reserve Board “occasion” is rife with drama, suspense and the inevitability of shock, however not this one. It was fastidiously scripted, cautiously crafted, and magnificently delivered by a person who claims that the present POTUS has no authority to “hearth” him. The result’s that now we have simply entered into the Twilight Zone of pre-election politics with the “mightily revered inventory market” because the scorecard from which the U.S. voting public will resolve. You’ll recall that in all elections previous to the Millennium, GDP and employment numbers have been all that mattered whereas the inventory market averages have been a mere yawn on the face of John Q. Effectively, welcome to the world of instantaneous satisfaction, delivered by others and appreciated by none. The scorecard has been now formally rendered: Speculators 10, Savers zero (as in a terrific massive fats ZERO). No must ever once more store the oh-so-trustworthy banks for a “aggressive fee”; they’ve been ordered to screw you by taking your financial savings with a positive-return “teaser” with the complete information that in the end, you may be paying THEM for the privilege of utilizing their “providers,” which is capsulized by the time period “usury,” which is a felony in most international locations.
We, as a worldwide money-changing populace, are actually formally embarked upon the last word fiscal and financial voyage of “Spin ’til you Win” processing; it’s authorities officers telling you upon which horse to wager, which lottery ticket to personal, which roll of bathroom paper to purchase. It’s about every part about to which Ayn Rand objected; she wrote “Atlas Shrugged” in 1957 and spoke of “totalitarian capitalism” the place residents have been not assisted by authorities however the place authorities DEMANDED the help (obedience) of its residents, leading to a complete and full breakdown in cause-effect outcomes. Anybody who has by no means learn the e-book has zero information of the importance of what this Russian Jew advised us. Her father, well-trained in free market capitalism till 1917, had his enterprise taken from him by the Bolsheviks within the yr after the revolution, the impression of which prompted his daughter’s masterful work. It’s now far past the time that residents of North America demand that our elected and non-elected “officers” step as much as the plate of fiscal integrity and swing the bat versus hiding from TV cameras and radio microphones and each different sort and kind of digital sound byte audit path. Elected officers completely MUST defer from any particular person representing the banks as a result of the Canadian banks are the monetary valets for the federal government; bankers and authorities paperwork are like moss and lichens: they’re utterly dependent upon each other and characterize the true and closing definition of the “symbiotic relationship,” the place each events are completely reliant upon each other for survival.
Talking of co-dependence, gold and uncertainty used to take pleasure in an exquisite symbiosis; within the 20th century, each time a saber rattled, the gold value shot up and took gold miners and gold explorers alongside for an exquisite journey, and each time that peace was celebrated, it declined. It was solely within the 1970s with the oil shock that individuals truly started to grasp the connection between oil and cost-push inflation. The next gasoline value was the first part of shopper inflation and when the provision of gasoline on the pumps in Des Moines, Iowa, and Little Rock, Arkansas, and Stockton, California, turned non-existent, creating large traces of automobiles ready for fill-ups, then and solely then did the American public come up from the post-WWII slumber upon which the media and politicians dwelled till the Vietnam Warfare defeat cemented the definition of failure, so alienated from the American conscience till then.
Right here within the very early days of summer season 2019, now we have a rocketing gold value and an elevated inventory market. We have now commerce wars and partisan battles and those who would have us eagerly consider that every one is nicely on this planet of “Progress” and “Productiveness” and “American Capitalism” have pulled out all of the stops to make sure that shares proceed to gas the life-style necessities of the elite courses. As a lot as I detest the strategies used to create asymmetrical wealth by the use of rising fairness values, I sit again in awe of the sheer genius behind the execution whether or not from the central banker information cycle administration to the FOMC drumrolls to the monetary media protection lastly resting with the futures markets interventions which conveniently and collusively verify that each bullish murmur uttered by POTUS, Mnuchin, Jay Powell, Mario Draghi, Kuroda, Leishman, Santelli, and at last, Jim “BUY,BUY,BUY” Cramer should completely be true.
Because of this, I current the primary of a collection of charts. In the beginning resides the reigning heavyweight champion of the monetary world, the mighty NASDAQ, replete with each wild-eyed IPO-runner on the planet and the birthplace of each nice expertise firm of the previous fifty years. Beside it’s the chart of the S&P 500, the index most consultant of the broad market and its efficiency has been completely magnificent. The final bastion of conservative firms is the Dow Jones Industrials and one glimpse in any respect three as they’re introduced under offers you all that want; they’re all ruled by the identical grasp and that’s the reason all of them look a lot alike. These three charts are the hideous horns of “managed capital markets” the place solely the privileged few are allowed unblemished entry into “the membership.”
Women and gents, the charts posted above are 20-year charts that clearly present how efficient the value administration docs have been in guaranteeing the affected person’s well being. Simply as an getting older famous person is compelled to take heed to his docs, these getting older bull markets have been attended to raised than Bobby Orr’s knees, Whitey Ford’s elbow or Mickey Mantle’s liver. These are masterfully painted charts and so they embody the best order of excellence and vigor in each their type and their symmetry, and it’s the phrase “symmetry” that has, over time, sidled me with Bobby Orr’s knees (from kicking the canine), Whitey Ford’s elbow (from throwing far too many quote displays from the ninth flooring window), and Mickey’s eviscerated liver (from over-medication caused by maniacal frustration) all the results of authorities intervention in our once-sacred FREE capital markets. Now, does ANYONE, ANYWHERE, for as a lot as a New York minute, consider that the charts proven above characterize “FREE” capital markets? It’s as if we’re three sisters, all lower than a yr aside, and all daughters of the best plastic surgeon in world historical past. All of them seem youthful and spry with vivacious smiles when in actuality they’re outdated and saggy and really frail, crammed with steroids and opioids and sedatives and tranquilizers all designed to make throughout them really feel completely happy and SAFE of their presence. In actuality, they’re clinging to life as a result of their bankster docs haven’t any different recourse than to manage meds they absolutely know shall kill the affected person.
Now, the charts posted under are of a shorter-term period than the fairness charts proven above however the intent is to outline the place we’re in entry-point evaluation. As I’ve boasted about since late 2015, the beginning of the “New Bull Market in Gold” occurred in early December 2015 with the miners following in January 2016. You possibly can see most clearly the unmistakeable backside within the steel however you actually do not see the underside within the miners till a month later. Importantly, these traders (like me) that have been lengthy (and levered as much as the small gut) have been in a position to get that first double off the lows in unimaginable velocity. It was on April 25th of this yr that I posted a chart of the JNUG at $6.35 with the annotation that it “could possibly be the underside” solely to observe it shut on Friday at $12.70. Nevertheless, of utmost significance to all is a) what to do with the basket of gold shares we owned BEFORE the rally and b) what to do if we had NONE and wish to personal SOME. Effectively, flip off your TVs and block your gold bull Twitter feeds and attempt to assume and course of the charts by yourself and by your self.
Earlier than I clarify the apparent warning I’m advocating within the arrow and dotted traces in these charts, be it identified that the explosion in RSI ranges, which has taken my beloved gold and gold miners to document RSI ranges, is emphatically bullish from each sentiment and technical views. Huge adjustments in DESI (not proven right here) and RSI are extremely bullish inputs to the month-to-month charts and to the weekly charts BUT (and I shout “BUT BUT!”) they’re NOT telling you to load the gun tomorrow. I’ve liquidated all of my late-April leveraged gold positions (GLD calls, NUGT, JNUG) whereas retaining all non-leveraged ETF positions (GDX, GDXJ) and getting whacked for a zero.1% portfolio hit on DUST and a zero.07% hit on the GLD places. Make NO mistake; when the RSI went into the 70s 10 days in the past, I used to be taking income like a drunken sailor with 40% good points throughout the board on the leveraged gold miner ETF’s and as I look again, I used to be in error. I THOUGHT I used to be going to be a “legendary timer” within the name however you simply know that simply if you assume you’re the subsequent coming of Nostradamus, you wind up as “The Simpleton of Saint Pierre” and wind up in nicely off the overwhelmed monitor, a minimum of for some time. The impression of the soar from RSI 72 to RSI 85 was important in that it took most of the positions up one other 30% from my exit stage. AS a lot a bummer because it was, you’ll recall that the one purpose the GGMA portfolio outperformed the S&P up to now 24 months is that I used RSI and the COT report back to keep away from the drawdowns which were horrific for long-term portfolio managers dealing particularly in gold and gold miners.
Hear fastidiously: Gold has been in a bull market since December 2015. It has been experiencing a collection of upper lows and better highs since 2016 and has slowly decoupled from the development of the U.S. Greenback Index. It’s now unarguably in a MASSIVE bull uptrend referred to as to the precise DAY by this publication three.45 years in the past; it’s in the present day in a feeding frenzy mania of shopping for from generalist portfolio managers following the likes of Paul Tudor Jones, Ray Dalio and Stanley Druckenmiller. Regardless of all of that, I urge you all have a look at the charts posted above and ignore all the “I advised you so” rhetoric you are now listening to from the gold e-newsletter crowd. The steel (which I like) and the miners (which I am keen on) are within the singular most overbought place EVER. I counsel that you simply take income on 50% of your holdings NOW whereas on the brink of promote the steadiness at HUI 205 (now 195). I swore I’d by no means promote my bodily metals again in 2009 and I cannot; I’ll nonetheless put up 50% of the GDX @ $27 (value $20.27) and 50% of the GDXJ (value $30.22) @ $37.
These markets have now develop into unglued with the unbridled thirst for gold publicity and when you’ve got by no means been uncovered to “gold fever,” you will have zero clue to which I refer. RSI readings above 80 are massively bullish when accompanied by sustained above-average volumes and there’s no query that some very massive unencumbered swimming pools of capital have determined to descend upon our market like terminal predators, therein creating the issue for us all. Have these monstrous swimming pools of capital lastly determined to tackle the bullion banks? IF (and that may be a very massive “IF”) they’ve, then now we have an issue in that it’s a drawback based mostly upon the definition of “infinity.” Since central financial institution liquidity has been confirmed to increase into “infinity,” the place is the purpose the place they’re incapable of being issued a margin name? Higher nonetheless, does the Fed “ever” get a “margin name” that requires a money injection? We completely KNOW from expertise that the typical investor and the standard fund all get “calls” but when the bullion banks are brief 500,000 August gold futures contracts, are they obligated to ship if referred to as? Or is it a “supply discover” introduced to the U.S. Treasury? That is what will emerge now that the CNBC mega-Titans have determined to interact. Whether or not or not you resolve to take a position, we’re in a continuation stage of an enormous bull market that started on December four, 2015, and acquired validation when Jay Powell advised the world that “Trump cannot hearth me” in June 2019.
You all know the place I sit on gold and silver; there may be nothing extra I can write that might persuade you.
Initially educated in the course of the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis College the place he earned a Bachelor of Science in finance and a Bachelor of Artwork in advertising and marketing earlier than finishing post-graduate work on the Wharton College of Finance. With greater than 30 years of expertise as a junior mining and exploration specialist, in addition to a strong background in company finance, Ballanger’s adherence to the idea of “Arduous Belongings” permits him to focus the observe on choosing alternatives within the world useful resource sector with emphasis on the dear metals exploration and growth sector. Ballanger takes nice pleasure in visiting mineral properties across the globe within the unending hunt for early-stage alternatives.
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Charts offered by the writer.
Michael Ballanger Disclaimer:
This letter makes no assure or guarantee on the accuracy or completeness of the info offered. Nothing contained herein is meant or shall be deemed to be funding recommendation, implied or in any other case. This letter represents my views and replicates trades that I’m making however nothing greater than that. At all times seek the advice of your registered advisor to help you together with your investments. I settle for no legal responsibility for any loss arising from using the info contained on this letter. Choices and junior mining shares comprise a excessive stage of threat that will consequence within the lack of half or all invested capital and subsequently are appropriate for skilled and professional traders and merchants solely. One needs to be conversant in the dangers concerned in junior mining and choices buying and selling and we advocate consulting a monetary adviser in case you really feel you don’t perceive the dangers concerned.
Article initially written on June 20.