PM Weekly Market Commentary – 03/26/2021
Beautiful Sand Puppy. Thank you.
Lagarde made a statement a couple of days ago that European Union will be rolling out a digital currency within 3 or 4 years.
China is likely working on it now and the U.S and other nations sure to follow.
I watched several Raoul Pal videos on Real Vision, just to see if I could spot errors in his logic and a few really stuck out to me. Like glaring, plus omissions.
I think that a lot of economic experts tend to focus on the economy more and politics less, thinking one leads the other. And they are often correct. But when push comes to shove, governments have the power to tax and the military to back them up.
You posted a link to the topic of privacy in a BTC world. I forgot to copy it and would really like to read it again.
Can you repost it, please?
[Ok, so I already posted this twice, but both times it disappeared after I made/submitted minor edits. So let’s try again….]
I stumbled on this old Greenspan quote from 1966 on gold and other stores of value. I think it provides valuable insight into what we are up against (bold mine). And while his quote (since from 1966) only addresses gold, I think the implication for bitcoin and other cryptos, as stores of value, is also worth considering. I’m not saying don’t use them, but I am saying consider that this is likely the attitude/intent we are up against.
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
[written in 1966]
Armstrong also sees Biden Administration tax plans on things like capital gains causing problems in the not-too-distant future. Armstrong says, “If they eliminate capital gains, I don’t care if you are Republican or Democrat, you are going to have to sell. Your accountant is going to say if you don’t sell, you going to pay twice or three times as much in taxes next year. So, they can create a serious, serious collapse in the world economy. This is in addition to all this Covid nonsense that they have created.”
Armstrong has been saying for months that deflation would be the overarching theme in the economy. Is that going to continue or has there been a change? Armstrong says, “Deflation is now over. People have to understand. It has nothing to do with the supply of money. . . . If you don’t see a bright rosy future, what do you do? You save your money. . . . One of the number one selling objects in Europe is a safe. People are storing cash. Biden was the straw that broke the camel’s back. People are now seeing that things are going to cost more in the future than they do today. They have also created shortages because of these lockdowns. The inflation is just beginning to start now. It’s based on shortages, and it will continue going into about 2024.”
The bottom line on the cause of inflation, according to Armstrong, is “a loss of confidence in government.”
Armstrong also predicts, “We are looking at the prospect of a serious war between 2025 and 2027. All this is completely because of this great reset nonsense. They have been using the Corona Virus as an excuse to try and shut down the economy. If you look at rents in New York City, they are in a freefall. Real estate is going crazy outside of the urban centers. In Florida, what was a $500,000 house last year is now more than $1 million.”
Nate: That interview was pure torture. Thanks buddy 🙂
Yesterday we saw a huge move in the gold/silver miners. It looks like we could possibly see some follow-thru today.
I started following a guy that I haven’t read in a decade: Gary of Notes From the Rabbit Hole fame.
He was looking for a bounce in the HUI at 273 and I think we got it on May 2nd.
So we have talked a lot about the sector funda and macro funda which, with stocks and commodities out performing gold and long-term interest rates rising with inflation, are not good. We have also looked at an inkling of what will be needed to reverse that.
But since other men (and of course ladies) who stare at charts manage only by technicals, we can take a big picture review of the situation using nothing but a GDX monthly chart. It is just so simple as to be stupidly simple, which is why I like these monthly views (ref. the HUI monthly we usually stare at).
GDX monthly says that should the fundamentals come in line then this thing is set up to run to around 55 (HUI’s next target is the oft-noted 500 area). Should the fundamentals not come in line it’s still a technical bounce that began off of a very bleak sentiment backdrop and it is breaking the Handle so far in May. Just an FYI from another angle.
To review for those with questions, why do I even participate with gold stocks when the fundamentals stink? Because a) sentiment, b) technicals and c) most importantly, they are counter to the high risk cyclical world right now. It doesn’t mean that they will not get dinged when broad markets do, but it does mean that will be the time that gold mining fundamentals get another positive infusion.
I have very small options positions in the miners that I kept because they are 2022 expirations. If we do see a continuation of the move from yesterday, I think I will buy some more.
Hopefully I will make a killing on these options so that I can give it all to Biden (long-term capital gain taxes) and he can distribute it to someone more worthy.
It seems Sam Zell knows what to do. Who is Sam Zell? Rubino says, “Well, Sam Zell is one of the biggest real estate investors in the world. The guy has a history of being right at the big turning points. He will build a massive commercial real estate empire with billions and billions of dollars of offices and shopping malls and stuff like that. Then towards the end of the cycle, he will start selling. He will basically get out at the peak of the market. Then the market tanks, and he buys back in. So, he’s a really good indicator of where the economy is going because he has such a history of being right. So, now, the guy is buying gold. I think this is the first time I have ever heard of him doing that. He usually just sells his real estate and goes to cash. Now, he’s selling out of some of his real estate, and instead of putting it into a bank, he’s buying gold with it. This is a good sign from a smart guy. . . . This guy is right so frequently, the fact that he is buying gold is a really good gold buying signal.”
Dave, missing your weekly pm commentary I imagine your thoughts would be very positive at this time
Pan American Silver took a hit today:
The second-largest primary silver mining company in the world reported first-quarter earnings today, and the market didn’t get what it expected. Shares of Pan American Silver (NASDAQ:PAAS) dropped almost 12% early Thursday, and remained down 10% as of 11:20 a.m. EDT. Fool.com
They are basically claiming COVID put the whammy on production at their Mexico and Argentina mines.
I took the opportunity to buy a 2023 option at a decent price.
I just wanted to give a heads-up to the miner-minded folk here.
Thanks for the heads up JAG – appreciate it. Added some more shares