Podcast: Precious Metals & Falling Paper Prices – 12.15.2016

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After the election of Donald Trump and more recently after the Fed decision to raise rates, we’ve seen gold and silver brought back down to almost flat for 2016 after being up significantly earlier in the year. This carnage in the paper value can be emotionally taxing for precious metals investors. Join Steven as he investigates the validity of the precious metals thesis and discusses how decision theory and a cool head must prevail in order to profit from the seemingly limitless manipulation.

Listen to “The Amateur Society – Precious Metals & Falling Paper Prices – 12.15.2016” on Spreaker.

Trump’s Great Rotation – Patiently Accumulating Gold Without Losing Your Mind

Ladies and gentlemen, it’s been quite a week for asset classes around the globe. Various sharp reactions have rippled across several continents. Severe reversals in equities, bonds, currencies, and precious metals stumped forecasters and created dislocations even more vast than the prior teetering imbalances.

Here’s the current narrative: after plummeting overnight as Trump’s election became reality and the futures went limit down, a dramatic rush higher occurred as everyone suddenly realized that in order to rebuild American infrastructure, cut taxes, and expand the military we would have to have fiscal stimulus and the issuance of massive quantities of new debt. A rotation took place out of technology, healthcare, and other sectors that had led the way in recent years and went into utilities, industrials, and financials.

So why was the market reaction to a rising probability of a Trump victory so negative?
What changed?
Was it really his victory speech?
Is it really chatter about deregulating Dodd-Frank?
Wasn’t the world supposed to end?
Did everyone all at once decide to jettison the corporate media narrative?
What about all the supposed instability?

While this can be extremely confusing, if you know what to look for you can come up with a much simpler, more cohesive narrative that accurately captures recent dynamics. First, let’s take a look at gold from election night until now:

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Quite the set of waterfalls! So how does gold go from $1270 to $1340 and back to $1220 in 72 hours? Taking a step back and a more macro view we can see a couple things taking place. Trump’s election has caused absolute havoc in foreign currencies. This has made the dollar look stronger on a relative basis. Remember, the value of the dollar isn’t measured against anything tangible, but rather against other fiat currencies. With our current, insane monetary structure still operating in the background, when a foreign currency depreciates the value of gold in dollars tends to go down. Go figure.

Continue reading “Trump’s Great Rotation – Patiently Accumulating Gold Without Losing Your Mind”

A Last Gasp

Ladies and gentlemen, I present to you a picture of asset price manipulation overnight. Here’s the scoop: artificial ramp up in stocks and smack in gold in order to give any institutions who were caught offsides one last chance to flip their positions. If this opportunity didn’t arise then they would have been forced to take losses and margin calls could have developed.

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Wait until the real institutional selling. Get out now if you have the opportunity.

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Buy the dip.

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Really? Either this is the last line of defense or the markets don’t think that President Trump will be bad for the markets. Pardon me if I default to the former.

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Can you see the absurdity here? It’s the Fed giving the systemically important fraud factories a chance to jump ship because they weren’t positioned properly.