Loading ...Stocks versus Gold January 2015 until Current
Now we take a look at the same chart only with a term of “Year to date” and we see just how URGENT it is for the banks to find a way to force profit-taking in the metals and speaking of that, just HOW does a Central Planner accomplish that? Well, you know that many of the “Large Speculators” are playing the “Long gold/Short S&P500” pair and based on the massive increases in open interest, they are now massively long with the bullion bank buffoons matching up with an equally-massive short position. Thus far, the banks have thrown the proverbial kitchen sink at the Large Specs to try to create a liquidation panic in order to cover but have as of yet been unsuccessful. Furthermore, since Brexit, they doubled down on the trade highlighting the “Long Gold/Short Eurozone stocks” and as of this morning are drastically under water thanks to the interventions designed to keep the Eurozone banks (think Deutsche Bank) afloat. Now, all they have to do is keep this perpetual bid into the S&P, the FTSE, and the DAX and the margin pressure is going to build against the “Long Gold/Short SPY” trade until finally the Large Spec hedgies are forced to hit the UNWIND button. The chart below displays an enormous outperformance for gold since the beginning of 2016 but you have to remember that any portfolio manager who fails to nail down a 21% advantage over the competition (and in fact lets it slide away) will find himself out of a job in very short order. This is precisely the Achilles Heel of the current gold rally; it’s success year-to-date could quite conceivably be its own downfall.
Stocks versus Gold 2016 Year-to-Date
The set-up is like something out of a Hollywood movie only this time it isn’t “Mr. Deeds Goes to Washington” but rather “Mr. Barnancke Goes to Tokyo” where the mere mention of that 10 TRILLION YEN stimulus takes the dollar-yen screaming higher and stocks dutifully follow. The 2016 golden screenplay should be following “The Treasure of the Sierra Madres” format but instead it is more like “One Flew Over the Cuckoo’s Nest” with every Champagne Socialist politician in the world clamoring to get us back to the “good ol’ days” of galloping stock prices and deflating metals prices amidst this plethora of central bank cheerleading and price management. It is dead wrong and is starting to be seen for what it is – monetary policy designed for the exclusive benefit if the Super Elite in ALL countries around the globe the result of which will be an ever-increasing volley of Brexit-style anti-establishment referendums and populist revolts.
Final note: Amidst the current pullback in gold (of which I spoke and acted on last week), it is noteworthy that the Gold-To-Silver-Ratio (“GTSR”) which I shorted in very late March above 82 has made a new low for the move at 65.76 generating a 19.80% profit in 112 days. Additionally, the 357 Magnum Portfolio, introduced on April 30th in this humble missive is now up 30.62% since April 30th.
I am also looking to short the S&P500 and add to the UVXY under $7 perhaps as early as this afternoon. The CNBC crowd are now chortling over the Dow’s record high today thinking, of course, that it is the “masterful handling of the Brexit Crisis” that has allowed markets to levitate but if they took the time to remove their rose-coloured Raybans, they would see the criminal interventions and manipulations for what they are – a travesty of free market principles. Despite the smiling faces of Simon Knobs or Jim Cramer, we had the same amount of glee in May of 2015 when the S&P hit all-time highs only to get smoked in the late summer of that year.
Protect your precious metals profits as best you can; it is back to the dartboard for me.
MJB