Gold Spikes Yet Again, Silver Breaks Through $21, Italian Banks in Freefall

Our model portfolio (just a game for legal reasons) is flying high. We will exit leveraged positions some time tomorrow on what looks to be something like an 80% gain in 3 weeks. I plan to convert it to unleveraged metals positions to catch any additional move but I expect the metals to go down for a few days next week. If they don’t we’ll still have regular positions in this fictional game.

There may be a big spike tomorrow morning at the bell since US traders are out of the picture today and had to watch from the sidelines. Futures traders can trade metals wherever they want 24 hours a day, but US equities traders who focus on gold stocks and ETF’s will have their first say tomorrow morning. Judging by comments I’ve read and the fact that gold is now the Yahoo Finance front feature article, it looks like retail dumb-money traders will pile in on Tuesday morning.

We will be selling right to them (in our fictional game for legal reasons), and hopefully pick our (game) leveraged positions back up when the retailers get too scared of the temporary draw down.

This is what I’ll be doing personally. Anyone who wants to follow, I do not recommend it and you do it at your own risk.

Italian banks are crashing today. The rickety financial fiat superstructure of the planet is shaking under the weight of its own printed paper.

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Model Portfolio Change, Watch CPI Numbers Today

The Fed is holding off on another rate hike, and that could be very embarrassing if the consumer price index rises faster than anticipated. The numbers will be released at 8:30am eastern, 3;30pm here. Analysts are anticipating a 0.2% rise in core CPI which is the index minus food and energy. If it rises by 0.4% or more, gold is going to go much higher quickly. I wrote about this at 247 Wall St. yesterday.

Here is the article.

I have always maintained that once inflation gets obvious, the Fed will have to start chasing inflation with higher and higher interest rates regardless of economic conditions. This is what happened in 1980 when Volcker jacked up the effective fed funds rate to 22%. That is impossible today because it would force a hard default on US Treasuries. That would be a bona fide bankruptcy. So instead the Fed will simply let inflation run away into hyperinflation because there is no other choice.

That is when gold will move higher than anyone has ever seen, faster than it did in 1980.

This will happen, guaranteed. Eventually. I don’t know if it will start tomorrow or 5 years from now, but I’m willing to risk 10% of the model portfolio on it. It’s time to use some leverage.

I’m adding a $5,000 position in the 3x leveraged gold miners fund NUGT, and $5,000 position in the 3x silver fund USLV.

I’m also adding another $500 on shorting the bond market with puts on TLT.

This is risky and could make me look like an idiot. We’ll see what happens. For legal reasons because Congress has made a law imposing on the freedom of speech, this is a game and I am not a financial adviser, and I am making no recommendations to anyone.

Check the model portfolio page at the menu bar for updated positions.

Four Blood Moons Calling? Greek Elections again, S&P Minicrash, Gold bear over?

Well, if the whole blood moons thing is correct, which I still doubt but it is possible, then the picture has to start deteriorating fast. Like now, within the next two months. According to Blood Moon Theory or whatever you want to call it, we have until Hoshanah Rabba 5776 for the world to change somehow.

Today, the S&P broke medium term support at 2040, gold is up again, miners up 20% since bottoming late July, China crashing again, VIX up 25% in one day. I’m long gold and miners (obviously), no longer short China anymore, but long the VIX expiring in November since covering the China short.

Let’s clarify this “China devaluing” mumbo jumbo for a second. China has a “peg” to the dollar. That means the PBOC doesn’t allow the Renminbi, or Yuan or whatever they call it, to trade below a certain exchange rate with the dollar. They control it by buying or selling dollars whenever it gets too close. China is not “devaluing” its currency so much as simply letting it trade below a previous peg without the PBOC selling dollars to strengthen it to within an arbitrary peg. Why are they doing this? They think they need to in order to “stimulate exports” which is a bunch of crap, like saying you need to take hit of your crackpipe to think clearly. Yeah, maybe for 3 seconds, but then you go nuts.

Now Vietnam and Kasakhstan and a whole bunch of other countries few people care about economically are doing the same thing. The peg is manipulation. Releasing that peg is allowing the free market to trade the currency.

I’m in the US now, and this is the first time in years I’ve even put on main stream financial media around market close today just to see what they say. The bullshit is so thick you can’t cut it with a chainsaw. Nobody has any clue what they’re talking about, and they all say that in different words.

Greek elections are happening again. My hope is Yanis Varoufakis will get off his butt and run for Prime Minister in a new party. He’d win hands down, I think, and send the banksters to hell. He’s the only one that would do it. September 20th apparently is the date.

Gold is on its way up past $1,150 after bottoming (hopefully) at $1,072. If this is the bottom, it’s been a long time coming.

When the S&P broke support since February when it steamrolled through 2040, it was in the last 15 minutes of trading today. If stocks don’t bounce back sharply tomorrow morning early, then the next support levels are at 1972. If that gets broken, 1820 is next. Tomorrow is a very important day for stocks. If they don’t bounce early, they probably won’t bounce.

Let’s see what happens.