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Energy & Commodities

Gold’s fate as Western society cracks apart …


Posted by Larry Edelson - Money & Markets

on Wednesday, 11 January 2017 08:24

Screen Shot 2017-01-11 at 7.12.25 AMLarry here, with an important message. Right now, gold is still caught in a trading range, but with a long-term bias toward exploding higher over the next few years to at least $5,000 an ounce.

In other words, gold is in the pressure-cooker right now, and once it blasts off, there may be no turning back.

I have another important warning for you: If you think gold’s next major move higher will be due to inflation, think again: Gold’s next leg higher will be primarily caused by Western society tearing itself apart at the seams.

Not because of inflation. Not because of a collapse in the U.S. dollar, which one well-known — but almost always wrong — analyst keeps predicting.

Just consider all the spying that’s going on which has increased, not decreased. If you haven’t already, go see the excellent documentary “Snowden.”

Where you’ll learn of how our government has a dragnet and has intruded into the privacy of not just every American citizen via electronic devices, but every individual in the world via computers and cell phones. And yes, even heads of state.

Or the moves by many developed countries to go to a digital currency. Or the many countries that are now implementing various capital controls.

Or the high-level cyber-espionage now happening.

Or, Obamacare, a disaster of epic proportions.

Then there are the new moves, behind closed doors in Washington, to make depositors in U.S. banks creditors of the bank, meaning if the bank goes under, a certain amount of your deposits is at risk of substantial loss, as if you were a shareholder in the bank.



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Asset protection

Most Overvalued Stock Market In U.S. History – Here’s Why


Posted by Dave Kranzler

on Wednesday, 11 January 2017 08:14

I find it to be mind-blowing when financial advisors and stock market gurus get in bubblevision or write Seeking Alpha articles and assert that the stock market is good “relative” value right now.   They are either dishonest, unethical or just stupid.  Likely a combination of all three in varying degrees.

Here’s a chart with which everyone is familiar:

Untitled

Based on that graphic, it looks like the current stock market is only the third most overvalued in history, right? WRONG.

The problem comparing the current p/e ratio of the S&P 500 with that of previous stock bubble tops is that the accounting used to produce the “e” is not comparable. Over time, FASB and the SEC have colluded to make it easier for companies to hide losses and report non-cash income as GAAP cash flow and earnings..

As an example, in 2010 FASB issued a bulletin which changed the way big Wall Street banks were allowed to account for bonds and other forms of debt issued by others that are held as assets. Originally, banks had to market their bond/debt/loan holdings to market and accrue any market to market gains or losses at quarter-end as either income or expense. FASB decided to let banks classify any and all debt as “hold-to-maturity,” and allowed banks to hold this debt at face (maturity) value without ever marking to market. Any debt that was marked below maturity value (par value) could be marked up to par and moved into a “held to maturity” account. By doing this, the banks created non-cash gains in these holdings that was counted as income. Banks hold $100’s of billions in bonds/loans and, starting in 2011, this rule change allowed banks to create billions in phantom, non-cash income. This of course translates into lower p/e ratios.

There’s several areas of accounting over the years that have accomplished a similar feat for all publicly traded companies. The problem is that it has rendered p/e ratios over timeincomparable. Of course, NO ONE points out this fact and certainly any Wall Street analyst would be fired if they went on a truth tirade. The bottom line is that, looking at the p/e ratio graph above, we don’t know how the current p/e ratio for the SPX compares with the p/e ratios at the market peaks in 2007 and 2000 and 1929. What we do know is that the current p/e ratio is significantly understated relative to the p/e ratios in 2007 in 2000 because earnings are overstated relative to those years because of the accounting gimmicks that enable companies to boost GAAP non-cash earnings.  It could be that the current p/e ratio is the highest on record if we could make an “apples to apple” comparison of p/e ratios across time.  In fact, I would assert that applying standardized GAAP across time would prove that the current market is more overvalued than at any time in U.S. history.

The above analysis is an excerpt from my latest issue of the Short Seller’s Journal.  In this issue I presented two retail stock ideas for shorting.   One of them was down 3.7% today and the other was down just under 1%.   In the past couple of issues I have explained in detail why the retail sector is short opportunity right now.  But that window will close quickly as more companies do what happened to Macy’s and Kohl’s last week.    You can get more details on the SSJ and subscribe clicking on this link:   Short Seller’s Journal.


....related: Marc Faber: Investors are on the Titanic but there's still a few days to travel



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Timing & trends

A Bullish Play in GDX


Posted by Rick Ackerman - Rick's Picks

on Wednesday, 11 January 2017 08:05

Upside-potential-in-GDX

Subscribers are long 400 shares from 22.61, stop 22.01, based on a real-time guidance for a ‘mechanical’ entry that was posted to chat room Scoreboard at 11:21 a.m. GDX, an ETF proxy for the gold mining sector, is having trouble getting airborne, but if the buying should catch fire, it has the potential to reach 24.58 (see inset) over the near term. For now, I’d suggest entering an order to sell half the position at p=23.30, the pattern’s ‘midpoint Hidden Pivot’ resistance. The order should be held o-c-o with a 22.01 stop-loss on the whole position. You should also offer another 100 shares at 24.58 g-t-c. If the order fills, we’d be left with 25% of the original position — or 100 shares, based on the original order. 

Click here for a no-risk, two-week trial subscription.

....related: More short term trading ideas from Victor Adair: Live From The Trading Desk: Long & Short Term Positions Now

 



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Stocks & Equities

Stock Markets: Short Sharp Pullback


Posted by Mark Leibovit - The VR Platinum Newsletter

on Wednesday, 11 January 2017 07:56

tradersJan 10th 8:45 PM

"Despite New Year bullishness from our early January indicators and our expectation for full-month January Barometer gains that will support our modestly bullish 2017 Forecast, a mid-January break in equities is looking increasingly likely. Since 1996 this January break has been more pronounced and more consistent. This trade, last featured in the Commodity Trader’s Almanac 2013, is beginning to set up nicely right now.

The stock market has demonstrated a tendency to retreat after the first of the New Year, especially when there has been a strong fourth quarter gain. Once the New Year begins we often see a profit taking correction. Investors tend to sell stocks to lock in profits in order to defer taxes from capital gains after the New Year begins. Even though the best time to be long the overall equity markets lasts from October through late April, this January break can certainly give short-term, nimble traders a nice return. With stocks struggling to move higher this week this trade is setting up a little later this year.

Also consider that since the New York Stock Exchange began observing the Martin Luther King, Jr. holiday on the third Monday in January in 1998 that the stock market has exhibited strength in the days before the market is closed on that third Monday and weakness after. This also coincides with the pattern of weakness during January’s expiration week. S&P 500 has been down 13 of the last 18 years during the week, while suffering some heavy losses on expiration Friday in 10 of the last 18 years."

Mark Leibovit

....related: Buy C-R-A-P



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Gold & Precious Metals

Gold: The Rate Hike Rally Continues


Posted by Stewart Thomson - Graceland Updates

on Wednesday, 11 January 2017 07:52

Jan 10, 2017

  1. The last two bear markets in US stocks were deflation-oriented. 
  2. The next one is likely to be inflation-themed, and could feature the US dollar and gold soaring higher at the same time.
  3. Please  click here now. Chinese producer price inflation is suddenly growing at the fastest pace in five years, and it will soon be exported to America. 
  4. Please  click here now. Double-click to enlarge. 
  5. Gold has been rallying since mid December. It may be poised to breakout to the upside from the $1170 - $1185 trading range and rise to $1200.
  6. Please  click here now. Hedge funds are holding a lot of short positions in gold on the COMEX.


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