Gold And Silver Had A Bad Week: No Big Deal

I thought I’d start out with the Dow Jones’ Bear’s Eye View (BEV) chart going back to 1885 showing every bear market decline of the past one hundred thirty-three years.  This week ended with the Dow Jones 5.73% from its last all-time high of January 26^th, which is pretty darn good from the perspective of Mr Bear’s View of the market. 

Mr Bear doesn’t care about how many points the Dow Jones Index, or anything else rises.  The only thing the big furry fellow cares about is how many percentage points he can claw back from the gains the bulls have made.  But points do matter to us, even if we don’t see them in the BEV chart below.  Knowing since 09 March 2009 the Dow Jones had advanced over 20,000 over the past nine years suggests, to suggestable minds like mine, that the stock market at current valuations is vulnerable to a significant market decline.

That’s why I posted a long term BEV chart for the Dow Jones this week to give us a clue of the possible for the next market decline; not if, but when it comes.

Here’s the latest data of the 52Wk Highs and Lows for the Dow Jones Total Market Group (DJTMG).  A 0.00% in the green 52Wk High column shows a 52Wk High, a 0.00% in the blue 52Wk Low column shows a 52Wk Low, with twelve new 52Wk Highs and no new 52Wk Lows this week.

We naturally look to the 52Wk Highs (Green Column) to see which groups are outperforming the rest.  However, data from the blue 52Wk Low column is key in understanding which groups are really leading the way upward.  For instance – which group has outperformed all others in the past 52 weeks?

The answer to that question is found at #43/Coal, which at the end of this week finds itself at a whopping 111% above its 52Wk Low, while only 7.6% below its 52Wk High.

Last week I made the case for avoiding over inflated assets at a market top, as such investments will prove to be low hanging fruit for Mr Bear when he returns to feed on Wall Street.  I recommended investments that were deflated as others inflated during the post Credit-Crisis advance – precious metals and their miners. 

But looking at the below BEV chart for the coal miners, and knowing that President Trump has taken the Federal Government’s jack boot off of the neck of the coal miners, I think coal mining can be added to this list of deflated assets to own in the coming deflation in the financial markets.

For a more complete picture of what was or not inflated since Barron’s 09 March 2009 issue (the bottom of the credit-crisis bear market), I’ve prepared the following table listing what has gone up, and what has gone down in the past nine years.  Coal finds itself at #99 on the list, dead bottom, while nothing precious metals related managed to rise above #91 on the list.  The XAU (#97) and the BGMI (#98) are actually down 30% from nine years ago.

Look at #93 (CPI).  I went grocery shopping today, and I can guarantee you that consumer prices have increased much more than 19.19% since March 2009.  Still the main-stream financial media never questions the veracity of the government’s inflation statistics.

During bear markets investors find themselves in a world where people are more concerned about the return * OF * rather than the return * ON * their money.  If you feel the need to maintain a position in the stock market, focusing one’s investments at the bottom of this list would go a long ways to minimize one’s risks in the coming bear market.

However, I’d be careful of some of these groups, such as the phone companies (#90); they’re old technology.  These companies may not even be trading in the stock market ten years from now, but I could be wrong on that.  Look at the gold miners; the XAU and BGMI are both down by double digits percentages – I love them!

Here’s the BEV chart for the BGMI going back to 1920, which we can all thank Goeff (from Down Under) for getting data on Home Stake Mining from 1920 to 1938 which made this chart possible.  In their application of Fud’s Law, where we see if one pushes hard enough it will fall down, the “policy makers” from April 2011 to December 2015 pushed the BGMI down by a historic 85% from its last all-time high.  Like coal, I don’t think Mr Bear will be very interested in the gold mining shares in the coming bear market, not when there are so many juicy capital gains to be clawed back in the table above.

Looking at the BGMI plotted in points below, the gold miners are back where they were in the mid-1970s, and during the past five decades haven’t traveled very far in the round trip seen below.  This was not so for CinC and the National Debt, whose “growth” during this time pushed the Dow Jones up from 577.60 in December 1974 to 26,616 in January 2018.

If in bear markets inflated market valuations deflate, where is the greatest risk to one’s wealth in the current market?  Certainly not in the precious metal miners.  In fact I believe the gold and silver miners in the coming bear market will once again prove to be the destination of choice for flight capital fleeing deflation in the general market.

Economic demand for electrical power (EP) is increasing, which I give full credit to President Trump.  Last September it was under -3.5%, this week it was at -1.40% from its last all-time high recorded in August 2008.  But what happens to EP when Mr Bear comes back?  It can’t be good, but I won’t blame Trump for whatever happens then.  He’s the first president the US has had since Kennedy who was ready to take the “policy makers” head on, and they hate him more than most people know for it.  Pray for our President; he needs it.

Gold had a horrible week, or so I’m told.  Strange I don’t see the collapse in the price of gold below.

Moving down to gold’s step sum chart below, I don’t see this big decline there either.

Silver too, I’m told, had a horrible week; not that one would notice this in the chart below.  What is noticeable in this long term view of silver, as is also true for gold and the BGMI, is that precious metal assets haven’t done much of anything since the summer of 2016.  The circle in chart below could also be placed in a long term chart for gold and the BGMI.

In the years to come I expect we’ll all come to understand how since the summer of 2016, the old monetary metals and their miners have been waiting for something to happen before they make their next big move.  This big move may first prove to be a 10-15% gap down thanks to our corrupt market regulators in the early phases of a major bear-market decline in the Dow Jones.  But when the decline in the broad market is perceived by all as something terminal to the advance we’ve seen since March 2009, the waiting and frustration of owning precious metals assets will prove to be more than worthwhile.

Keep in mind the current market is one that has its valuations managed, as seen in the bear box in the Dow Jones below.  This was the second largest percentage decline in the Dow Jones since 1885.  During this decline the Dow’s step sum declined by a net of only twenty-five down days during an eighteen month / 54% market crash. Yet it somehow avoided a collapse that’s so typical of a bear box in a bear market decline.

This failure to see market sentiment collapse (the step sum collapse) during the credit crisis market crash was the result of the bulls never surrendering to the overwhelming power of deflation during a bear market.  They didn’t have to as the bulls were central banks, who a decade ago issued dollars, euros and yen by the trillions to reflate market valuations.

My long-time readers will recall I had agents deep inside the Federal Reserve System at the time.  Agent Spock took the below photograph of Doctor Bernanke discussing “monetary policy’s” response to the market crash with his colleagues in the FOMC board room.

The FOMC this week once again raised their Fed Funds rate by twenty-five basis points, and long term rates have been trending upward since the summer of 2016.  At some point the current inflationary bubble in financial assets and real estate is going to enter a phase of deflation.  It always does.  Will the current crew manning the FOMC prove to be the equals of Doctor Bernanke and his colleagues seen above when it happens?  We’ll see.

But when is that going to happen?  I haven’t a clue.  It may be this October, or a year or more from now.  But the best of what the post March 2009 stock and real estate markets had to offer the bulls is now best seen in the market’s rear-view mirror, while the profit potential of investing in the precious metals and their miners lays in our not to distance future.  It makes sense that one should reduce their exposure to the financial markets while taking a good sized position in precious metals assets.

So let’s move on to gold’s and the Dow Jones’ step sum table below.  Gold saw a bad day on Friday, down $22.  However, one bad day does not a bear market make.  This is especially true when the usual suspects (the big Wall Street banks) were once again flooding the market with insincere promises-to-deliver gold by the tons sometime in the future; gold that doesn’t exist or will ever be available to these banks for delivery!  If it wasn’t for this single day loss of $22, gold would have been sitting pretty as it waits for its next big move, which I expect to be up. 

Looking at gold as it stood on Thursday this week, it was at $1301.96 with a 15-count of -3.  Meaning gold was down only $1.69 from May 24^th (15 days before), with nine of those fifteen days seeing gold close down, and then Friday happened.  So, should gold sell off some more next week I’m not going to panic.  I’m not the guy looking at a crystal ball to see the future, but I wouldn’t be surprise if next week gold is above $1300 again.

For the Dow Jones, once again it’s entering a period of selling, but I don’t expect much of a decline in the short term.  The Dow Jones, like gold, is in a hurry up and wait market, both are waiting for something big to happen before they see something significant happen to their valuations.

Former Federal Reserve Chairman, Doctor Ben Bernanke (see photo above), says the US faces a Wile E. Coyote moment in 2020; a public statement Bloomberg naturally let go with scant comment.

https://www.bloomberg.com/news/articles/2018-06-07/bernanke-says-u-s-economy-faces-wile-e-coyote-moment-in-2020

The good doctor may be correct, but he’d be the last guy I’d ask for insight on the economy unless he was giving it under oath at his trial for what he did during his administration of the Federal Reserve.  This is the academic who said he’d be willing to heave $100 bills by the pallet from helicopters if that is what it took to reverse a deflation in the market.  He then did the functional equivalent of exactly that for the benefit of Wall Street to bail them out of the fraudulent-derivative pickle they found themselves in 2007-09.

There’s something very wrong with academia; brilliant people, but the god these leftists worship is money.  Their highest achievement is never listed in their public resumes, the stunning levels of mendacity they routinely achieve, and the worst of them typically use these skills in consultation work for government.

Here’s a clip of MIT’s Jonathan Gruber boasting of lying to Congress and the American people about The Affordable Health Care Bill (Obama Care).

https://youtu.be/Adrdmmh7bMo

You may think he’d be ashamed of what he did, but neither he nor MIT are. 

What happened to the university system in the United States?  Let’s first ask why there is a university system in the United States?  During America’s pre-revolutionary colonial period, our Protestant denomination founded America’s first colleges so the colonies would have an educated clergy.  Harvard was founded by the Congregationalists, Princeton by the Presbyterians, and I recall Yale by the Anglicans.

In the century following the American Revolution two academics would revolutionize “higher education” on planet Earth:  Charles Darwin and Karl Marx, and nothing would ever be the same again. How could it be? 

Before Darwin and Marx people were created in the image of God and given free will by their creator to choose right from wrong.  Overwhelmingly people believed a day of reckoning was to come for their choices made here on Earth.

After Darwin and Marx, religion became the “opiate of the masses” and mankind had no more free will to choose good from evil than does a nest of ants in a world where one eats or is eaten.  In this brave new world academia now found itself in, there is no right or wrong, a world where seeking pleasure and avoiding pain at the expense of others is allowed for the elite.  Questions of how nice that is should be directed to our best and brightest in government, Hollywood and in the media, bipedal predators who all have one thing in common; their college education.

The world I live in today is different from the one I grew up in many years ago.  A growing number of people live their lives in quiet desperation, servicing their debts to a predatory-banking system, while seeking what pleasures they can within the confines of their consumer-credit scores.

Here is a song I’ve always liked, originally performed by a group called Kansas, though the link below goes to Melanie Safka’s version.

https://www.youtube.com/watch?v=hjTZqMZ5FJ0

Dust in the Wind

(written by Kerry Livgren)

I close my eyes, only for a moment, and the moment's gone

All my dreams, pass before my eyes, a curiosity

Dust in the wind,

all they are is dust in the wind

Same old song, just a drop of water in an endless sea

All we do, crumbles to the ground, though we refuse to see

Dust in the wind,

All we are is dust in the wind

Don't hang on, nothing lasts forever but the earth and sky

It slips away, and all your money won't another minute buy

Dust in the wind,

All we are is dust in the wind

Dust in the wind,

Everything is dust in the wind

What a beautiful but depressing song!  I have to wonder at the mental state of Mr. Livgren who wrote it.  Why even get up in the morning if this is all one’s existence means?

But it’s a lie, as we were created by a God (Jesus) who loves us, someone who has wonderful plans for those who return this love to him. 

For I know the plans I have for you,

declares the Lord,

plans to prosper you and not to harm you,

plans to give you hope and a future.

- Jeremiah 29:11

The other choice we have is to choose El Diablo, Satan himself who inspired the desperation we see in the lyrics above, as well as the corruption the United States has endured for decades and the world since the beginning of time.

I’m no better informed on the inner-workings of the Trump administration than say is CNN.  But I keep hearing about sealed indictments held at the Department of Justice, the latest number of them is 35,000.  That seems like a huge number, but then the Federal government is a huge cookie jar for its bureaucracy to stick their corrupt fingers into.  I take offence every time an elected official or member of the government bureaucracy boasts to the public they have had so many years of “public service.”  As a whole, what these people have done to this country is a crime; 35,000 sealed indictments?  That sounds like only a good start.

And then there are the acts of pure treason to deal with, such as exactly how did poverty stricken North Korea become a nuclear power in the first place?  It wasn’t the communists in China or Russia that made that possible.  Nope, it was Bill Clinton and Jimmy Carter as Congress and the media watched on and did and said nothing about it.

https://nypost.com/2016/01/06/you-can-thank-jimmy-carter-and-bill-clinton-for-north-koreas-nukes/

Obama and John Carry’s Iranian nuclear deal which wasn’t a treaty, or an agreement or anything written down and signed by either the United States or Iran is another such act of treason.  In the twilight of the Obama Administration, air freight of billions of dollars of CASH MONEY was sent over to Iran as per this non-deal deal.  How much of this cash actually made it to Iran?  There was no way for that much untraceable cash to be passed on to Iran without the Clinton Foundation and our European allies taking their share of this loot.

What is also unknown is exactly how President Trump is going to deal with all this.  The QAnon posts suggest a day is coming when the MPs will be sent out to round up these scoundrels for military transportation to Gitmo for a military tribunal to try them for treason.  I’d expect a considerable number of people responsible for manipulating the financial and precious-metals markets will be collected too, and I’d be all for that! 

Mark J. Lundeen

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