The Three Themes of 2018

Thu, Jan 4, 2018 - 10:44am

Beginning in late 2016, we began to question what we termed The Generally Accepted Narrative of 2017. This allowed us to accurately forecast rising precious metal prices last year. For 2018, we will generally rely upon three, overriding themes and we discuss them in detail today.

As a recap, what was GAN2017? We first spelled it out in a formal post on January 17, 2017. You can read it here:

From that post, the five primary tenets of GAN2017 were:

  1. Major US deficit spending will promote economic growth
  2. This economic growth will allow The Fed to hike the Fed Funds rate 3-4 times
  3. Rates on the long end will rise, too, as "the bond bubble bursts"
  4. All of this growth and higher rates will prompt a huge rally in the dollar
  5. And the US stock market will charge toward 25,000 on the Dow.

So, how did this turn out?

  1. Economic growth as measured by GDP looks to come in at around 2%. Trump's only political win came with the tax cuts of late December. Nothing done on infrastructure or healthcare.
  2. The Fed did, in fact hike the FF rate 3 times.
  3. Long rates fell and the bond bubble definitely did NOT burst.
  4. "King Dollar" did NOT return and the POSX fell by over 10%.
  5. The Dow topped 25,000 for the first time in history just this morning.

For the purposes of this site and precious metal investing, points number 3 and 4 were the most important and, by having rates and the dollar fall, Comex gold rose over 13% on the year...its best annual gain since 2010.

So, what's next for 2018?

As you've already heard me mention, 2018 will be defined by three general risks. How these play out will dramatically impact the dollar, the bond market and the precious metals. The three risks are:

  1. Political Risk -- By late summer of this year, attention will turn to the coming mid-term elections in the US. If the Democrats are poised to regain control of Congress, speculation regarding a move to impeach President Trump will rapidly intensify.
  2. Geo-Political Risk -- If you're paying any attention at all to global events, then this needs no further explanation. Whether it's the possibility of renewed war on the Korean Peninsula, conflagration in the Middle East or actual Hot War between NATO and Russia, geo-politics have the potential to greatly unsettle global markets in 2018.
  3. De-Dollarization Risk -- The global pace of de-dollarization is clearly quickening. Later this month, a yuan-denominated crude oil contract will begin trading in Shanghai. Later this year, a ruble-denominated gold contract will begin trading in Moscow. These and other events will provide a clear challenge to US dollar hegemony in 2018.

In 2017, the mainstream financial press blindly pumped GAN2017 without any regard to other possible outcomes. We here at TFMR were first to proclaim GAN2017 a sham and we were all rewarded with gains in gold and silver. Now in 2018, where in the media do you see ANYONE discussing the three risks laid out above? Instead, it's all about the cryptos and Dow 25,000. Well, I can assure you that just as we were generally correct about GAN2017, we're going to be correct about the Three Themes of 2018, too. Just give it a while to play out.

To that end, the Comex metals have charged back overnight as the POSX has resumed its fall. Though the FOMC was able to talk up the USDJPY and thus pump the Dow to 25,000, the broad-based POSX has given back all of its gains and now resides again under 92. As it breaks down further next week and falls to and through the 2017 lows near 91, maybe some folks on CNBS and BBG will start to notice?

This dollar weakness has pushed the CRB commodity index to the 195 breakout point. Commodity prices are going to be a BIG story in 2018 and these rising prices will add spillover support to gold, silver and the mining shares throughout the year.

For CDG and CDS today, the good news is the overnight rebound after the thrashing they took post FOMC yesterday. CDG fell all the way to $1307 last evening while CDS hit $17.02. The fact that I currently have $1318 and $17.24 should not be written off as a simple bounce. The underlying trend, technical and CoT structure certainly argues for higher prices in this initial phase of 2018. I was hoping to do some buying on a pullback to $16.80 but, unless there's some sort of BLSBS-related bloodbath tomorrow, I'm not sure I'm going to get it.

As I close, I see that we have further extended to $1319 and $17.26. This is great news so go have a great day!


About the Author

turd [at] tfmetalsreport [dot] com ()


Jan 4, 2018 - 10:48am

check this

How many times have we mentioned that The Fed and Trump both want a lower dollar? Well, here's some mainstream coverage of that general idea:

Jan 4, 2018 - 10:52am
Jan 4, 2018 - 10:56am


Thanks, Turd. Geo-political may be the #1 risk.

Jan 4, 2018 - 11:06am

Reno Turdite Lunch Invite Tues. 9th

Please join local Reno NV Turdites and friends for lunch at the Manhattan Deli in the Atlantis Casino in Reno, NV. This coming Tuesday the 9th at 11:30 AM. The Atlantis is a big casino on Virginia St. at Peckham Drive. The Manhattan Deli is on the main floor- easy to find.

I'll wear a black SF Giants baseball cap. Usually about 3 to 8 of us.

We meet about once a month. This is very free form and informal. We talk Turdite topics: TFMR, stacking, the markets, miners, numismatics, show and tell, local resources, you name it ...

Feel free to PM/ e-mail me if you have questions.

Dennis Travers - renozep

Jan 4, 2018 - 11:12am

Yuan oil contract

If the mideast oil producers are willing to supply the oil, we may see some significant changes. The US would be stretched to the limit start new wars in all mideast countries. And if hte Saudis sign up with China (did they do this already), US motives would be quite clear if our friend suddenly becomes our enemy.

This will be an interesting year. Thanks for the thumbnail summary, Turd. This may be a good article to post on my wall and re-read regularly, comparing it notable to world events each month.

Jan 4, 2018 - 11:30am


Yeah, baby. That's what I'm talkin' about!

Think I'll take the celebrating on down to my LCS, since silver seems to still be on sale today . . .

Jan 4, 2018 - 11:35am

James Bullard speaks at 1:30 PM EST

St. Louis Federal Reserve Bank President James Bullard to give presentation on the "U.S. Economy and Monetary Policy" at "Meltzer's Contributions to Monetary Economics and Public Policy" in Philadelphia, with audience Q&A.

Jan 4, 2018 - 11:56am


Thanks for the fuel pump tip. I usually keep a minimum of 1/4 tank, but that is a helpful reminder. Thank You smiley

US Debt Clock now at $ 20,600,075,979 21 trillion here we come

Also shows paper to Silver ratio as 179 to 1

shows paper to Gold ratio as 75 to 1

Sorry could not copy & paste here.

Jan 4, 2018 - 12:19pm



Take a look at the last months performance and do some due diligence. It appears to be moving sonewhat ahead of most of the pack. Not investment advice...just own it and it is doing better than most of my others.

Jan 4, 2018 - 12:22pm

Hopefully you didn't begin or add to a portfolio

of Canadian pot stocks yesterday. After weeks of stellar performance, the best of the best pot stocks decided to take a rest and puked out average losses of 15% at one point. Now recovered about 10% of that.

In retrospect, we were overdue for some profit taking. It is a volatile sector but I wouldn't trade it for silver at the moment (and that's saying a lot!).

Angry Chef
Jan 4, 2018 - 12:34pm
Jan 4, 2018 - 12:46pm

pot stocks

maybe 10 days ago an etf opened and thats when the pot stocks really started rallying. Perhaps Sessions triggered the selloff but things were ripe for a selloff.

overall this market is highly speculative. Not just pot stocks .

Amazon-nearly a 600 billion market cap-it had earned, in dollars, 1.6 billion thru end of 3rd qtr--call it 3 bil for the year, heck make it 5 billion.

If you buy the company at todays 600 bil market cap you are buying 5 billion of income-that is .8% roi and you get a company with debt to tangible net worth of 30:1 ratio (WMT is 0.8:1) and you are getting a company with neg cash flow.

Or you can buy netflix and its multi billion cash burn after 15 years if being a public company.

Or Tesla which is having problems producing cars, paying back deposits from prospective customers wanting a model x, has a benefit of a 7500 govt tax credit and cannot sell cars, just when Toyota and Lexus are about to introduce electric vehicles along with GM, Ford, MB, Audi, BMW.

Musks batteries are not even as good as the new stuff being developed.

Apple is cutting production of its "iconic" IPhone x or 10 and the 8 is not selling all that well either. After all, how many people want to or can buy a new $1,000 Phone every 2 years. Apple PE is 20.

Facebook is great if you want to know when someone you know went to the bathroom or went to a restaurant.Twitter too. I took my 3 grandsons to a family pancake house recently--the place was jammed but My eldest grandson asked me why everybody is using their phones and lo and behold, I look around and tables of 2,3,4 5,6 etc, they are all on their smartphones doing something--now I am glad I am an old fart.

now look at Cisco-one of if not the top stock of year 2000, up till August that year. I sold it at 80 ish and got back in at 50 thinking the decline was over but sold it at 40 on the way down. Still not back to 2000 hgh and if not for stock buybacks nor would IBM, INTL, et al.

Corporate tax revenues were down before the tax law--thats because in a rapidly rising market, companies are reporting much lower profits to IRS than they report to shareholders: reserves, GAAP non GAAP,

if we wanted to simplify stuff, then a company would have one income--an dits the same thing reported to shareholders and IRS.

Jan 4, 2018 - 12:51pm

WTI Crude Oil

Up 20% in three months . . .

Any ideas how this might potentially affect the other markets? (I don't follow oil.)

Jan 4, 2018 - 1:06pm

Mickey - you're entitled

to your opinion on where pot stocks are going but I just don't see it. The projected market currently surpasses supply! Frankly, I don't know where they're going to find it, especially with such short notice and with the potential for other states coming on board vis a vis recreational marijuana. There's a lot of money to be made at all levels (including government) and the ball hasn't really begun to roll.

You can ignore the elephant in the room here but it ain't going away. That's not saying my portfolio won't get smacked either but the industry as a whole - growers and distributors, are only starting and I base this by looking at nothing more than demand for the product. Sessions is the little dutch boy with his pinky in the dike (....uhh, such an image), but there is an ocean of people looking for an ocean of pot out there and they will not be denied.

Gentlemen, start your engines.

ps. any response or further comment on this topic - please use personal mail. I welcome it and don't want to inconvenience fellow turdites who are interested in following the commodities that interest them most..... and this ain't one of them. ooo

Jan 4, 2018 - 1:06pm

oil up

airlines, uber, trucking, on line business (delivery cost higher),

of course overall consumers drive cars, if they use 1000 gallons a year (20k miles at 20 mpg) thats costing the consumer $400 bucks a month per car. Thats a big drag on discretionary spending.

Its also why retail sales were up the second half of year contributing to the "great" economy.

teh funny thing is it appears that demand is not higher, supply is lower.

Jan 4, 2018 - 1:20pm

Sure looks like someone

Sure looks like someone doesn't want Gold beyond 1320 today. Seems to me they are jamming Yen down and selling Gold at cme. Tomorrow should be interesting.

Jan 4, 2018 - 1:21pm


I said its price now is speculative, Overbought: because the etf opened and stock buyers are rushing in. I bet a lot of these buyers are the millenials. The price of Canopy nearly doubled in a month. I know cause it's in my portfolio. I cut half the position yesterday when it reached a double so now I am playing with OPM. Or so I thought as I might buy back the shares which are only down 5% now vs down 7% earlier.

I think when this overall speculative bubble ends we se people a hell of a lot more cautious with the money they have left.

I also think Pensions wil be SOL if we have a significant correction which endures. They will burn thru their asset base paying benefits and voila, they have no asset base to grow during the next up market and the states do not have the money to fund the plans.Then a lot of tax receipts have been based on capital gains and that tax revenue would disappear in a down market.

How about thi- I think the Calif Corp tax rate is 8%-watch more companies like Toyota move their headquarters from CA to further save on income taxes anf help their executives too on teh high property and income tax non deductible issue.

Thats all why Stateline, NV became so popular. (for you guys in Reno, is that still true-I have not been there in 6-7 years)

Jan 4, 2018 - 1:26pm

gold 1320

the real test on resistance comes IMO at about 1370. that was September 2017 hi and the summer 2016 high

but then for metals bulls everything is a battle. when fed minutes came out yesterday only metals sold off. Good news it totally reversed yesterday and then this mornings selloff reversed.

Jobs tomorrow-probably see a dip this afternoon or evening into the morning if history repeats. Then there should be bias to upside, should be. I have learned that in metals there is no should be.

Jan 4, 2018 - 1:30pm

@silverfox43: Sure looks like someone

Yen is doing nothing since 8:45 am but gold is slowly climbing up. What is your take for tomorrow?

Jan 4, 2018 - 1:37pm

Regardless of the blsbs I

Regardless of the blsbs I expect dip buyers to show up in high quality gold stocks. Cot structure is still bullish and weekly charts are no where near overbought yet on gold stocks.

Jan 4, 2018 - 1:40pm


is down around 5% today, like most of the MJ stocks, but is still ahead 10% on the week. The talking heads are blaming the decline on Jeff Sessions comments.

I thought of buying into this sector over the holiday but when I checked the charts it looked like the train left mid-December. Looking at options I found they have incredibly bloated premiums, consistent with the highly volatile sector. While some MSM's have been saying it's legal in Canada that is not true since legalization is set for July 1, 2018 (Canada Day). There might be opportunities later.

Meanwhile the daily chart on KL shows a 45 degree slope and it's now well over $20 while NVO has declined below my buy at CAD$4. I was thinking of buying KL call Leaps for Jan '19 but the options only run until July '18; I guess Oct will be added when Jan '18 expires in two weeks.

Jan 4, 2018 - 1:44pm

Buying gold....

Chuck Butler: " The Asians are doing it, the Indian people are doing it, the Russians are doing it, the Germans are doing it, but we are not doing it, and that is buying Gold as an store of wealth... ".

Joseph Warren
Jan 4, 2018 - 1:54pm

Theft System

TPTB don’t give a rat’s ass about what happens to the general economy. As Gerald Celente has pointed out, the meshing of government & corporate power is fascism - - and that’s what we have in America today. It is a system that robs the general population. Profits are privatized - grabbed by billionaire rentiers. Losses are socialized -put on the backs of the general population who are nothing but tax & debt slaves. (As long as they have bread & circuses, they seem not to care.)

It would be quite fine by the oligarchs if the serfs were given a ‘universal living wage’. Of course, the long term result would devastate the general population in the same way that American Indians living on reservations and black families in the grip of the 1960s ‘Great Society’ programs were devastated. The best way to destroy a people is with a smile on your face.

One could see the money junkies raising interest rates till they killed what little is remaining of a productive economy. What do they care ? Any losses will be put on the serfs backs, even if they go directly into their accounts to pull it off. (Negative rates). Poor serfs are very compliant.

Jan 4, 2018 - 1:57pm

PM Stocks

Can someone go and wake up the PM Stocks. They need to get off their ass and do something before I go and jump overboard. Metals up but stocks reverse?..

Jan 4, 2018 - 1:59pm

re: PM stocks

Tax loss selling for 2018. May as well sell your losers and don't wait unit December cheeky

RW happycamper515
Jan 4, 2018 - 2:05pm

PM Stocks

I think you are on to something there. That must be it!

Jan 4, 2018 - 2:07pm

More de-dollarization

The entire world is quickly not wanting anything to do with the U.S. military empire, or the dollar, and in this latest example, this time it’s different

First, President Trump fired off this tweet on New Year’s Day:

Donald J. Trump@realDonaldTrump

The United States has foolishly given Pakistan more than 33 billion dollars in aid over the last 15 years, and they have given us nothing but lies & deceit, thinking of our leaders as fools. They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!

2:12 AM - Jan 1, 2018

Twitter Ads info and privacy

Then the next day, the President singles out the Palestinians (but informs anybody who missed the prior day’s Tweet that Pakistan is on the hot seat):

Donald J. Trump@realDonaldTrump

It's not only Pakistan that we pay billions of dollars to for nothing, but also many other countries, and others. As an example, we pay the Palestinians HUNDRED OF MILLIONS OF DOLLARS a year and get no appreciation or respect. They don’t even want to negotiate a long overdue...

12:37 PM - Jan 2, 2018

Twitter Ads info and privacy

The word making the rounds in the MSM is that President Trump will cut off or restrict U.S. aid to Pakistan.

According to multiple news agencies, an announcement is expected today.

Not waiting for specific announcements or actions from the U.S., Pakistan is taking matters into their own hands in what can only be summed up as “ditching the dollar for the Chinese Yuan”.

Here’s MSM outlet CNBC:

  • A day after President Donald Trump slammed Pakistan on Twitter, the South Asian nation announced it will replace the dollar with yuan for bilateral trade with Beijing

Jan 4, 2018 - 2:14pm

Palladium just keeps going.

Look I am really heavy Silver...and pretty good in Gold.

But Palladium has been a blast. It seems like the bankers are out of this space.

Scratching my head on Platinum...I go back and forth on this one. I see opportunity but what about the timing?

Jan 4, 2018 - 2:17pm


Silver holding/fighting really well yet again, anyone else sitting and waiting for...

FYI..I suck at pasting clips, so if it doesn’t work, c’est la vi

Jan 4, 2018 - 2:17pm

Aussie Weed Stocks

Reading some of the weed comments...thought I throw in this re Aussie weed stocks yesterday:

Auscann up 53%

Cresco up 21%

MMJ Phytotech up 12%

We'll see how much they give back today after the new Aussie export licence euphoria loses steam.

On to more important topics, gold is up $10 and I wake up to find the HUI in the red. WTF ? Miners asleep at the wheel again

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