With analysts at most public PM websites now turning decidedly bearish, with the summer doldrums staring us in the face, with the new rate hike raising interest rates (on paper making gold less desirable as it provides no yield), and with the gold seasonals suggesting that “sell in May and go away” was the play, there is a definite bearish tilt to the sector right now. That’s why (among other things) we have a great risk-reward setup staring us in the face. Pining thinks it’s a great place to go long (with stops)! Here’s why:
The GDXJ rebalancing will mean 2.6 billion dollars leaving small, selected companied in the junior miners. In addition, this rebalancing will mean JNUG isn't the gamblers tool it once was. If people leave JNUG, it will be felt strongly in GDXJ. The thesis of this piece is that this chain of developments has the potential to devastate the junior miners in the short run, coming on top of the effects of the GDXJ rebalancing.
We seem to have the makings of a major disconnect, and it is worth talking about: the mining indexes are raging, while the spot price "markets" are looking more and more like the ugly step-sister nobody wants to dance with. Billions of dollars are flowing into gold and silver miners, yet all the while PM "price" continues to lag, largely because it is set by the traditional flawed paper derivative dinosaurs. Regardless of how or why this is occurring (deliberate plan or free market), one thing seems evident: HUI is the new Spot Price, and Spot Price is Dead!
Turd’s famous “TEOTGKE” hypothesis is that the great seventy-year Keynesian experiment subverting free markets and the law of supply and demand through easy money creation and central bank control of the economy is grinding to an ugly and inevitable end. I find it interesting that core parts of this idea, and indeed many of the central ideas that have animated the PM community for quite some time, are now leaking out into the wider consciousness in ways that are increasingly visible.
There are a hearty few who refuse to take the easy way out, who have the courage to accept the uncomfortable truth that these falsehoods are no basis for planning their futures. Who see the lies for what they are and refuse to be lulled into a comatose acceptance of the unsustainable status quo.
Make no mistake, I read what they’re saying. I see it virtually every day, from Bloomberg to independent investment blogs to Market Watch . I see the slings and arrows in the headlines and in the comments. Dogmatic. Zealot. Goldbug. Emotionally invested beyond rationality. Bleeding cash for three years straight. Unable to admit being wrong.
One year ago, I wrote an article here titled The Paper Armageddon Portfolio outlining a rationale for investing in certain sectors from a “hard assets/tangible value” perspective that would reflect the TFMR understanding of the ongoing Keynesian process of QE, artificially low interest rates, market manipulation, and dollar devaluation.One year later, I thought it would be worthwhile to check back in on this investing thesis to see how these picks and sectors fared and to discuss what we might learn from their performance over the last year.
You should... he is now in charge of the CFTC, the government agency that "regulates" gold and silver futures trading, now that our buddy Gary Gensler has retired. His name is Tim Massad and he will do absolutely nothing to enforce the rule of law or ensure fairly traded markets.