PM Weekly Market Commentary – 06/19/2020

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  • Sat, Jun 20, 2020 - 05:17am

    #1

    davefairtex

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    PM Weekly Market Commentary – 06/19/2020

On Friday, gold rallied +25.77 [+1.48%] to 1762.82 on moderate volume, and silver rallied +0.36 [+2.04%] to 17.99 on moderate volume. The buck moved higher [+0.18%] as did crude [+1.26%], SPX fell [-0.56%], while bonds were mostly unchanged [the 10-Year yield fell -1.0 bp].

For the week, gold climbed +19.39 [+1.11%] to 1762.82 on moderate volume. The spinning top candle was a bullish continuation, forecaster climbed, moving higher into its uptrend. Gold is in an uptrend in all three timeframes.

Gold/euros shot up +26.03 [+1.68%] to 1575.33 on moderate volume. The spinning top candle was a bullish continuation, forecaster climbed, rising into an uptrend. Gold/euros is in an uptrend in all three timeframes.

COMEX GC open interest rose +24K contracts on Friday, and rose +33K contracts this week. That was 11 days of global annual production in new paper added to the market. Current open interest for GC: 48% of global annual production, up +3.04% this week.

The shorts piled into gold this week, and especially on Friday. That said – and I’ve noted this before, but for some reason it is getting my attention again – the strong drop in commercial shorts over the last 18 weeks (roughly 550k down to 350k) is much more consistent with a low forming, than a high. This, while gold has risen more than $100 during that time. This is very unusual. Is it an artifact of the crash? Or are the banksters blowing out of their shorts and abandoning the usual “wash & rinse cycle” because they know where things are headed?

It is also interesting to note that the trading volumes for GC at COMEX are about half what they were prior to the pandemic crash. This supports the thesis that some number of banksters have left this particular game.

Friday saw gold break above the recent 1-month trading range and close convincingly above the 1750 resistance level. I believe this to be a strongly bullish sign. I know this is a weekly report – but the fun stuff happened on Friday, so I’m going to give you a daily chart for gold.

Silver rose +0.29 [+1.64%] to 17.99 on moderate volume. The spinning top candle was a reasonably strong bullish reversal (42%), forecaster climbed, rising into an uptrend. Silver is back in an uptrend in all three timeframes.

COMEX SI open interest rose +4.8K contracts on Friday, and rose +2.8K contracts this week. That was 5 days of global annual production in new paper added to the market. Current open interest for SI: 105% of global annual production, up +1.63% this week.

Silver commercial net rose +1.1K contracts, which was -529 fewer shorts and +612 new longs. Silver managed money net rose +4.2K contracts, which was -1.0K fewer shorts, and +3.2K new longs.

The gold/silver ratio dropped -0.51 to 97.99. That’s bullish.

Silver appears to have reversed this week, first bouncing fairly dramatically off the 200 MA on Monday, then by Friday, closing back above the 9 MA, moving back into a dailly uptrend. The weekly bullish reversal candle print was reasonably strong. I’m cautiously optimistic about silver.

GDX rallied +2.79% on moderately heavy volume, and GDXJ moved up +2.17% on moderately heavy volume. XAU climbed +1.98%, the long white candle was a bearish continuation, but forecaster climbed, rising into an uptrend. XAU is now back in an uptrend in all three timeframes.

The GDX:gold ratio climbed +1.63%, and the GDXJ:GDX ratio dropped -0.61%. That’s somewhat bullish.

Looking at the charts, the miner chart is the weakest of the 3. However by the numbers, the mining shares ended the week back above both the 9 and 50 MA lines – by a whisker – and back in a forecaster uptrend too. However, the weekly candle print wasn’t a bullish reversal. We’ll have to see how things go.

Platinum rose +1.89 [+0.23%], while palladium fell -24.83 [-1.30%]. Platinum is just slowly moving lower (it remains below both the 9 and 200 MA lines), and palladium looks worse – it has fallen below all 9 moving averages. Neither appear in a big hurry to plunge, they are – both – just slowly heading south. Volume in palladium has all but vanished. Perhaps – nobody cares anymore.

Copper was unchanged, at 2.62 on moderate volume. The spinning top candle was unrated, forecaster dropped, but remains in an uptrend. Copper is still in an uptrend in all three timeframes.

Friday’s high wave/shooting star print (a failed rally for copper) was a possible bearish reversal (40%). This could be a top for copper, but it requires confirmation. Weekly uptrend for copper still remains intact.

The buck climbed +0.25 [+0.26%] to 97.57 on moderate volume. The swing low candle was a likely bullish reversal (61%), forecaster climbed, but remains in a downtrend. The buck is still in a downtrend in both the weekly and monthly timeframes.

Major currency moves included: EUR [-0.56%], GBP [-1.36%], JPY [+0.47%].

The swing low print was a little bit weak; normally swing lows for weekly patterns are quite strong. Forecaster has yet to reverse too. The buck is not yet out of the woods, it would seem.

Crude climbed +2.75 [+7.48%] to 39.50 on moderately heavy volume. The long white candle was a bullish continuation, forecaster dropped, but remains in an uptrend. Crude is still in an uptrend in all three timeframes.

EIA report was reasonably bullish: crude +1.2m, gasoline: -1.7m, distillates: -1.4m.

Crude rallied 4 days out of 5 this week, moving back above the 9 MA. Friday looked like a failed rally, but the candle print was only slightly bearish (29%), and crude is knocking on the door of round number 40 once more. 40 has acted as resistance now for the past two weeks. If crude can close convincingly above 40, the next stop: 200 MA at roughly 45 and change. Crude’s uptrend remains relatively strong.

SPX climbed +56.43 [+1.86%] to 3097.74 on heavy volume. The long white candle was a bearish continuation, but forecaster climbed, moving higher into its uptrend. SPX ended the week in an uptrend in all three timeframes.

Sickcare [+3.13%] led, along with tech [+2.77%], while utilities [-2.05%] and energy [-0.63%] did worst. This was a bullish sector map.

The VIX fell -0.97 to 35.12.

This week was “the bounce” following last week’s big smash. Summarized: the bounce was anemic, and Friday’s close looked pretty ugly; SPX rallied hard in the futures markets overnight (i.e. Thursday evening), but spent the day Friday selling off, with a particularly ugly performance into the close. Even after the close, the futures continued dropping. It all looked bearish to me. So while “by the numbers” SPX is back in an uptrend, it sure looks as though traders sold this week’s “bounce.”

That could be why the miners aren’t doing so well also.

TLT climbed +0.06%. The short black candle was unrated, forecaster dropped, moving deeper into its downtrend. TLT is in an uptrend in the daily timeframe. The 30-Year yield rose +2.0 bp to +1.47%.

TY inched up +0.06%. The doji candle was unrated, forecaster dropped, moving deeper into its downtrend. TY is in a downtrend in both the weekly and monthly timeframes. The 10-Year yield fell -1.0 bp to +0.70%.

The 10-year moved back above the 50 MA this week; that’s a positive sign. It was probably helped by the fact that the Fed bought $26 billion in treasury bonds this week.

JNK rose +0.76%. The short white candle was unrated, forecaster dropped, but remains in an uptrend. JNK is in an uptrend in the daily and weekly timeframes.

Crappy debt remains in an uptrend. It bounced Monday and Tuesday, but then spent the rest of the week moving slowly lower. It ended the week below the 9 MA. This wasn’t a bullish look, but prices haven’t collapsed. I think this is all about Fed jawboning about buying crappy debt, which has caused traders to rush in, trying to front-run the Fed. Front-running the Fed has been a good trade for 10 years now. But the Fed has grown crafty – they realize: “no need to actually buy, all we have to do is talk”, and Pavlov’s Dog will salivate at the ringing of the bell even though no food is offered, and the Fed will accomplish their mission with no risk.

Well, no risk except to the front-runners, who might well end up being bagholders once the bankruptcies start to happen.

But note – this is about as far from “market forces” as we can get; it has become entirely about what the Fed will buy, and now, about what the market *thinks* that the Fed *might* buy, because the Fed deliberately talks about *maybe* buying such things. This, then, is “the market.” We are quite a distance down the rabbit hole at this point, far from “capitalism”, deep into game theory mixed in with “socialism for the rich.”

“We had to destroy the village in order to save it.”

Physical Supply

The GLD ETF tonnage on hand climbed +23.09 tons, with 1159 tons remaining in inventory. That’s a new 7-year high.

ETF Discount to NAV:
* CEF -0.87%
* PHYS -0.68%
* PSLV -1.18%
Bullion Vault Premiums:
* gold: -2.85
* silver: -0.00
Gold dealer big bar premiums:
* gold [1kg]: gone
* silver [100 oz]: 11.39%

Physical ETFs are in discount, BV is in a slight discount. Kilo gold bars are gone, but silver bar premiums continue to fall.

Grey Swans and Geopolitics

China & Decoupling: This week, Lighthizer said to Congress that, “I don’t think [decoupling is] a policy or reasonable policy option at this point.” Trump then tweeted: “It was not Ambassador Lighthizer’s fault (yesterday in Committee) in that perhaps I didn’t make myself clear, but the U.S. certainly does maintain a policy option, under various conditions, of a complete decoupling from China. Thank you!”

Second Wave: Nationally, deaths continue to fall (now: 658, down from 763 last week), while cases are spiking higher (now: 23.9k, up from 20.7k last week). To me, it looks as though the virus is simply spreading into new areas. There is no “second wave” in New York, for instance, where cases and deaths continue to fall, in spite of a wave of protests, looting, and the reopening of the economy. I believe New York now has effective herd immunity, while the new places do not.

Treatment: Deaths are dropping, while cases are spiking. Either better treatments, or weakening virus, or more testing catches people earlier. The more time passes, the lower the case fatality rate becomes.

Second Stimulus: a lot of talk, but no action. Trump said: “I think we’re working on something that’s going to be very dramatic, very good. I think we are looking at a Phase 4.” No details were provided.
https://www.cnet.com/personal-finance/second-stimulus-check-update-is-a-dramatic-second-round-coming-todays-status/

Eurozone Breakup: On Hold. The EU member nations have yet to vote on the 750 billion Euro rescue package. The vote must be unanimous. With that requirement, small wonder those involved in the project want everything to be done behind closed doors, in a smoke-filled room, with only the bureaucrats involved in the process.

Hong Kong: Hong Kongers are rushing to secure a limited supply of British National Overseas passports. Anyone born before the 1997 handover can apply. In reaction to Beijing’s de facto seizure of the city via the new security law, the UK has said it will look into extending immigration rights of those with BNO passports, including a possible path to citizenship. Beijing, reportedly, is not happy with this announcement. My guess: the best and the brightest will end up emigrating.
https://hongkongfp.com/2020/06/16/fearful-hongkongers-rush-to-secure-limited-british-passports/

US-Iran: No news.

North Korea: blew up a 4-story building which was used as a meeting place for talks between North and South Korea, just north of the DMZ. As in, they literally destroyed the building with explosives. It was paid for by South Korea, but it sat on North Korean territory. This was in retaliation for propaganda-laden balloons sent by defectors from South Korea to the North, which the North finds to be disagreeable. If the hermit kingdom didn’t have nukes, I’d call them a bunch of Drama Queens.
https://www.cnn.com/2020/06/16/asia/north-korea-explosion-intl-hnk/index.html

Economic Reports

Yield Curve Inversion: the 1-10 spread fell -1 bp to +52 bp this week. 1Y: 0.18% (+0 bp), 10Y: 0.70% (-1 bp).

Fed Balance Sheet: headline $7,094B, -74.2B (-1.05% w/w) (prior +0.05% w/w). A drop in the balance sheet; mostly this was about a plunge in repos, and loans to foreign central banks.

Retail Sales: headline +14.38% m/m (prior -14.52% m/m), ex-autos: +11.05% m/m (prior -17.96% m/m). This was a huge rebound in sales, and it wildly exceeded expectations, which were for a 7.5% rebound.

Industrial Production: headline +1.37% m/m (prior -14.32% m/m) manufacturing: +3.69% m/m (prior -18.56% m/m). This move higher was miniscule compared with the near-collapse that happened last month.

Summary

So this week’s bounce in equities and crappy debt that followed last week’s plunge was a bit feeble, even with the surprisingly strong Retail Sales report, which dramatically exceeded expectations. When the market fails to rally on good news, that’s bearish.

Gold managed to close above 1750, well above its recent trading range. The COT report is hinting that this could actually be the low for gold for a while. 1750, the low. Silver doesn’t look nearly as good, and the miners are lagging both silver and gold.

Copper and crude gave hints of topping out on Friday, although as of right now, these are just hints rather than actual signals. Remember that silver sometimes likes to follow copper. If copper reverses, silver might just follow. Equities have also recently been led by crude.

Bonds were basically unchanged. $26 billion in new Fed money printing went right into Treasury bonds.

Ok, two other items:

1) There is a concept on Wall Street of “paying for order flow.” That is, your broker takes your order, executes it, and then “sells” the details of your order to anyone who will pay. Paying for order flow. That’s how they can have “commission-free trading.” They do scalp you, but just not the way you think.

So according to a former insider I trust, the Robinhood platform (which allows brand-new traders to trade options, on margin) sells its order flow (as does E*Trade, and TD Ameritrade) for about 10x what the big firms get. Robinhood is “free”, of course, and a ton of very young traders have enthusiastically adopted it.

Of course, the newer the trader, the “dumber” the money. So the order flow of “the dumbest of dumb money” is apparently a rich vein to be mined by – presumably – automated trading firms who most likely train up algorithms to relieve the brand new traders of their account balances in record time. Just so you know.

2) Wolf Richter has just gone short. Why?

https://wolfstreet.com/2020/06/19/i-who-hates-shorting-just-shorted-the-entire-stock-market-heres-why/

[The Fed is] shifting its lending and asset purchases away from propping up financial markets toward propping up consumption by states and businesses, and ultimately spending by workers/consumers via its municipal lending facility, its PPP loan facility, and its main-street lending facility. These funds are finally flowing into consumption and not asset prices.

So the superpower that created $2.8 trillion and threw it at this market, and that everyone was riding along with, has stopped propping up asset prices.

And now the market, immensely bloated and overweight after its greatest 50-day rally ever, has to stand on its own feet, during the worst economy in my lifetime, amid some of the worst corporate earnings approaching the light of the day, while over 30 million people lost their jobs.

And that’s why he went short.

Equities are starting to look a bit iffy. If they correct, naturally things won’t go to heck in a straight line – you can be sure that the Robinhood traders will be scalped out of far more than the decline in SPX by the time it is all over. By painting the tape in just the right way, the bots will “encourage” them to sell the interim lows, and buy the interim highs, rinse-repeat, all the way down.

Assuming we go down, of course.

These bots, and all that tape-painting, is why I trade as little as possible. I’m certainly not immune. They really know how to mess with your head. Less interaction is definitely better.

  • Sat, Jun 20, 2020 - 10:59pm

    #2
    jmone

    jmone

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    PM Weekly Market Commentary – 06/19/2020

Aussie Perspective:  At the end of equities trading on Friday  the ASX was up for he week but it did not look convincing with plenty of volitility… and Gold, Sliver and the AUD was flat…. then came the bounce in PM / slide in the AUD in the following 12 hours.  The end results was ASX, Gold, Silver were all up and the AUD down.

On the News side we had:

– The PM did a Stand Up about Australia being targeted by a state actor on cyber hacking.  He refused to name the country but did stress the size and sophistication narrowed the field to only a few potentials.  We all know the inference.

– He also did a Stand Up about the seriousness of the Jobs Losses (we are keeping most off the books with a “Job Keeper” payments to employers)

– Our government does not expect International Travel to start till next year.  Qantas cancelled all OS flights for now with the exception of some services to NZ.

– An article in the Chinese Press said they could crush Australia Economically if we did not behave

– On wilder ideas, one suggestion was to have a suspension of selling of existing houses to prevent a self fulfilling prophecy of lower prices.  I can’t see this getting legs but they had suspended for a while some data reporting on home sales.

– On the weekend, one of our states (Victoria) had an unexpected jump in cases.  The state has now rolled back some of the recent easing of restrictions for the next couple of weeks.  Hammer and dance.

At present, our markets don’t seem to be reacting to local events so much as mirroring what is happening in the OS Markets (mostly the US).

 

Going Forward?  I still see the long grind down (but I’ve been wrong on this for the last 6 weeks so who knows!).  Can’t help to feel that the Day Traders picking stocks from random scrabble letters are going to be milked for all they are worth.

  • Sun, Jun 21, 2020 - 01:28am

    #3

    davefairtex

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    crushing AU economically – Armstrong & the Great Reset

You guys have a really unpleasant bully to the north who is not shy about pushing around countries that they believe are weaker than they are.  “Accept our college students and don’t question our pandemic narrative or else we’ll destroy you!”  I mean – really?

How far will the bully go?  Hopefully the Five Eyes are working together on this issue.  We need to stick together.

Speaking of the market – I suspect that Armstrong’s “retest of the lows” is about to commence.  The technicals may be starting to break down.   And a cause might be, the Fed is – apparently – shifting its money flow into municipalities and companies rather than asset prices.

Here is a (45-minute) interview he did recently.

https://static.financialsense.com/audio/2020-06/financial-sense-20200616-armstrong-great-reset-24c786.mp3

1) June high: July may start to move down.

2) Trend is towards more destabilization into the election.

3) Forces will argue for another lockdown – focused on the elections

4) Europe: “stay in your own country – don’t go south” – Spain, Italy, Greece: serious depression.

5) food supplies declining: migrant workers can’t move around to pick crops; food prices are rising.

6) Market moving down to test; if Trump looks like he’s losing, stock market will tank

7) Trump will probably win

8) 2020-2022 chaos outside the US; “perpetual bonds” in Europe (i.e. you never get repaid), digital currencies = they know everything you have, and can tax it all, at whatever rates they decide.  Basically, confiscation at will.

9) Strong US stock market; not because of earnings, but a place for capital to hide: from govt bonds & digital currencies.  real estate: dodgy.  borrowing requirements much stricter.  Gold also a haven.

10) We are seeing patterns that we have not seen for 300 years.

 

  • Sun, Jun 21, 2020 - 01:58am

    #4
    Nate

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    CAF podcast

Investment advisor and former Assistant Secretary of Housing Catherine Austin Fitts says you are going to have just two choices in the future.  Fitts explains, “Unfortunately, you have a lot of people who say ‘oh dear God, if I am just good, they will leave me alone.’  The reality is, and many people don’t understand, the middle of the road is going away. . . . You have two choices:    One is freedom, one is slavery, and everybody is going to have to choose.  There is no kind of navigating around it.  One subscriber asked me, should I do real estate or precious metals?  I said if you don’t have an army, it doesn’t matter where your assets are.  You are going to lose them.”

Fitts goes on to say, “They want to go to a new currency system.  They want to go to a new system where 7 billion people around the planet are literally integrated into the cloud and can operate with an all-digital system that is the equivalent to a credit on the company store.  It’s a control system, and if you look at what they are talking about putting into these injections or doing with them, you are basically talking about a slavery system.  You are talking about integrating this into your body.  I always tell people Bill Gates put an operating system on your computer that gave somebody a back door and made you update it constantly, and the excuse was there’s a new virus.  Well, they are going to play the same game with your body. . . . You are talking about an all-digital system where they can turn your money off and on.  You know what this is called if you are a Christian.  It’s called ‘Mark of the Beast.’  That’s what they are trying to do here.  They are trying to extend the life of the dollar . . . and hook everybody up into the cloud.”

Fitts says the Covid-19 crisis is really more of a so-called “Plandemic.”  Fitts says, “What we are seeing is a reengineering of the global financial system on the just-do-it method.  We saw a lot of smart money get out of the market at the top in January and February.  Then, we saw a push to use police powers in the healthcare system to shut down a huge part of the independent economy globally.  So, small business and small farms shut down across the board throwing the emerging markets and many small businesses into debt traps.  So, we are watching the mother of all debt entrapments going on globally, and that means we are in for a radical reengineering.  That’s what we are seeing in the U.S.”

Fitts also says, “Gold is going to have a very good year.”

  • Sun, Jun 21, 2020 - 07:46am

    #5

    JAG

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    PM Weekly Market Commentary – 06/19/2020

Geezus, that was the best report ever DF. You are on a roll!

I particularly liked this paragraph:

Equities are starting to look a bit iffy. If they correct, naturally things won’t go to heck in a straight line – you can be sure that the Robinhood traders will be scalped out of far more than the decline in SPX by the time it is all over. By painting the tape in just the right way, the bots will “encourage” them to sell the interim lows, and buy the interim highs, rinse-repeat, all the way down.

Look at this spike in Inverse ETF volume over the last week from Sentimentrader.com:

That was the “dumbest of the dumb money” and the reason that I speculated last week that the market would go sideways this week. It does look like it’s rolling off, however. The Wolf may be right about a July dump.

On the other hand, the big money managers are finally buying into the market. They are now overweight in equities for the first time in 3 months. Historical studies show that this should send the stock market much higher in about 2-3 months, just in time for the election.

And here is another reason I read you faithfully:

These bots, and all that tape-painting, is why I trade as little as possible. I’m certainly not immune. They really know how to mess with your head. Less interaction is definitely better.

Amen brother. Since the Fed jumped in talking sh*t last week to reverse that pullback, I decided to take 90% percent of the money out of my brokerage account and move it into crypto Stablecoins where it’s making 10%APR on a 1 month term. I like getting paid to wait for the lower bitcoin/altcoin prices that I think are coming.

With the remaining 10% of my brokerage account, I’m hoping for an opportunity to invest in VIX calls again, if the VIX can ever get into  the 15-20 range again, lol.

I’m quickly learning that patience (doing nothing most of the time) is most important factor in successful trading/investing. Thanks brother.

  • Sun, Jun 21, 2020 - 08:19am

    #6
    MGRS

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    Crypto and stablecoins with a return

I decided to take 90% percent of the money out of my brokerage account and move it into crypto Stablecoins where it’s making 10%APR on a 1 month term.

JAG – since crypto has mostly fallen off the site’s radar (and my own personal radar, I’ve just hodled) for the past few years, can you fill us in on how that works?  Like which coins aren’t trash, and how you get that return?

Just looking for some research starting points.

  • Sun, Jun 21, 2020 - 03:18pm

    #7

    Eannao

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    Armstrong executive summary

Dave, thanks for the summary of the Armstrong interview. I find him too hard to listen to, but when I see your cliff notes he seems to make sense. How good have you found his predictions to be in the past? Thanks!

  • Sun, Jun 21, 2020 - 05:18pm

    #8
    hammer6166

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    PM Weekly Market Commentary – 06/19/2020

Hi Dave,

While taking the member survey, I mentioned the Gold Silver group as a reason I’m a member. Thanks again for all your hard work analyzing the data and creating great content.

Hammer

  • Sun, Jun 21, 2020 - 05:35pm

    #9

    JAG

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    Re: Crypto and stablecoins with a return

MGRS,

I’m pretty new to the space and don’t know sh*t yet but here is what I’m doing:

  1. I use two different crypto exchanges to buy crypto, Coinbase.com and Uphold.com. Connecting them to a bank account is rather easy.
  2. Once you buy the crypto you need to get it off the exchange’s wallet and into a hardware wallet for safe keeping. I’m using the Nano Ledger X for my hardware wallet.
  3. You then stake or loan your crypto from your hardware wallet to a crypto bank/broker to earn interest on it. The rates seem to change often and vary significantly between brokers. BlockFi, Crypto.com, and CredEarn seem the most trustworthy (they are insured) from what I can tell, but there is definitely some risk.

BlockFi seems the most legit to me. They currently pay 6% APR on bitcoin, 4.5% on Ethereum, and 8.6% on USD Stablecoins USDC, GUSD, and Pax Standard. This interest is compounded and paid monthly to you and you can withdraw your crypto at any time. You can have your interest paid to you in the crypto that you are lending or in a USD stable coin.

Crypto.com pays the most interest on USD Stablecoins but there is a catch: you have to buy their utility tokens to get the best deals. They offer different rates for flexible, 1 month, and 3 month terms. They have an impressive platform and offer many alt coins and rewards. Another thing that is interesting about crypto.com is they pay interest on tokenized gold (PaxG), anywhere from 2-6%.

CredEarn is similar to Crypto.com in that you have to buy their utility token to get the best deals. Initially you have to do a 6 month term with them, with 3 month terms available after that. They have a decent selection of alt coins to work with.

There are many other options available too, but these are the three I have worked with. Here is a link to a google doc spreadsheet that gives a lot more detail on the current offerings: https://docs.google.com/spreadsheets/d/1Y5HONAIHQs2ZlliF-MCkIfdeRhzOu6ZSWJov0NjmhSo/edit#gid=1786645455

It is maintained by a YouTuber named CryptoOneStop who writes a newsletter that I like.

Hope this helps….Jeff

  • Mon, Jun 22, 2020 - 01:07am

    #10

    davefairtex

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    PM Weekly Market Commentary – 06/19/2020

hammer-

Thanks!  I’ll just put you into my “silent majority”, kinda like Nixon.  That way I can feel good about having tens of thousands of (largely silent) readers who all just totally love what I write.  As opposed to – “mostly nobody cares” – which is the other possibility!  🙂

Eannao-

A single factor attracted to me to Armstrong at the start: currency flows.  The goldbugs just kept preaching “the dollar will turn into confetti.”  Has this happened?  No.  In fact, HELL NO.  In practice, the goldbugs (and – these are smart people, these goldbugs) were terrible predictors of what currencies ended up doing.  That’s because their models were – basically – crap, because they only looked at things domestically.   Armstrong nailed currencies because he saw the world, not just one country, and by doing so, he just kept nailing currency outcomes.  He continues to be (largely) right about them.  Armstrong = “international capital flows”, because of his extensive experience dealing with clients around the world.

I’m also adding in some of his techniques in my own models.  I dug up an old paper he wrote in prison and I’m trying it out.  Early signs: looks promising.  And I’m only using a fraction of his stuff.

And, of course, he was right about equities.  They rallied.  Literally everyone else I respect “knew” they were going to crash, because of “fundamentals.”  When people are correct, I pay attention.  (I too like fundamentals.  And yet…it turns out, capital flows trump fundamentals)

JAG-

Jesse Livermore talked about “sitting” as being one of the secrets to his success, which he discovered after much pain.  When he had a good trade on: sit on it.  When nothing was going on: do nothing.  There isn’t always a trade out there.  Trading when there is no trade saps your energy, makes you feel like a failure.  And that makes things worse.

Me and my miners – I’m just sitting.  Getting in and out: stressful.  Sitting = less stressful.  Market is about emotion – controlling your own, primarily.  Sitting helps that, for me; it probably did for Livermore, too.  I think the miners will eventually do well.  Even though they look weak right now.  If gold pops through 1900, which I think is likely – the “reverse H&S pattern” that appeared in the last few weeks suggests at least an 1800 breakout in the near future – some miners will make an embarrassingly large amount of money each quarter.  (PE ratio of KGC: 10.  That’s today.  “Not everything in the market is overpriced.”).   I’m also looking at PSLV/PHYS as “cash”.  The PSLV I picked up at silver=12.50 looks pretty good.  Why sell?  Its cash.  (That’s how I “sit” – I tell myself stories like this).  As always with the good trades, “I wish I got more of it at that price.”

So, sitting.  Controlling emotion.  Not exactly “control”, just – setting the situation up so my emotions play me less.  I.e., less beating myself up for bad entry points, or for premature exit points – the more I trade, the more this happens.  So…less trading = less beating myself up = I can see things more clearly, I have a more relaxing life.

And better trades too, usually.

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