Category Archives: Past Posts of Interest

Previous articles and posts of interest.

3D Printing; no Barrier to Future Losses for Investors

[edit]  Immediately after publishing this post I noticed DDD down nearly 6% this morning due to a downgrade by Merrill Lynch. 

Valuation – Tech, 1999?

At a current price to sales ratio of 17.99 and a forward PE ratio of 93.88 (according to Yahoo Finance), we’ll let the individual reader decide what represents value when talking about 3D Systems (DDD).  Similar lofty valuations are present in competitors like Stratasys (SSYS) and ExOne (XONE).  But we will make a case that these companies should be valued closer to traditional automated manufacturing equipment makers than some sort of first mover in a transformative and disruptive technology.  Or at least that this is going to be their eventual destiny.

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Precious Metals Grind Out a New Trend

Gold is Monetary Value

We preface the post with a statement that has not changed since I began public writing nearly 10 years ago:  Gold is not about price; gold is about value.  This point was hammered home to me 11 years ago by a person who had much influence upon my viewpoint toward the financial system and its various diseased components at a time when I was ready to listen and understand.

So whether we are talking about 2013′s epic price crash or a new bull trend in 2014, the simple fact is that physical gold itself is a store of monetary value.  That applied last year as the value was marked down by greed and confidence and it will apply this year as it is marked up in the face of a likely unwinding of those things.  Humans, what funny and hyper kinetic animals.

Precious Metals Speculation

Ah, but this post is about the fun part, the speculative part where we humans can make gains from gaming the simple store of value and its wild little brother, silver.  As asset market speculators we care about prices, right?  How about the share prices of the completely blown to bits miners that dig the stuff out of the ground?

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NFTRH Update, Q&A on US Stocks & Precious Metals, pre-Jobs

Yesterday’s bull fest seems to have quickly brought on thoughts of ‘here we go again’ if anecdotal evidence is any guide (referencing people’s comments at bearish sites like Slope of Hope among others).  There were also a couple of emails from NFTRH subscribers putting forth thoughts on a near term bullish case for US stocks.  One of those emails is copied here at the author’s suggestion.  I will answer as best I can, point by point…

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Gold Mining is Counter Cyclical

The following is the opening segment of this week’s Notes From the Rabbit Hole, NFTRH 276:

Somewhere along the road from the 2000 bottom in gold stocks to the 2008 flame out of inflationary hysteria, the gold stock sector went from counter cyclical first mover to ‘inflation trade’ also ran.  Gold stocks put in a secular bear market bottom in 2000 just as the US and many global economies were topping out.

Then came the era that NFTRH has labeled ‘Inflation onDemand’ (IoD).  The economy was successfully* inflated by Alan Greenspan early in the decade as easy monetary policy fomented an epic credit bubble, which took over and did the heavy lifting for a cyclical bull market and buoyant economy that terminated hard in 2007/2008.

During this time of IoD ‘inflation bulls’ and commodity bulls who had all the answers for a newly inflation-phobic public emerged and took center stage.  Misperceptions were formed, cemented and driven home.  Nowhere were the misperceptions more intensely and dangerously embedded than the gold stock sector, which at its core is different than most commodity sectors and indeed, most stock sectors.  Introducing another one of our ‘busy’ charts to illustrate…

hui.mo

Okay, article over… the chart says it all.  No more words necessary!  :-)

The chart is a confusing jumble you say?  Okay then, let’s take it point by point.

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How [They] Learned to Stop Worrying and Love the [Market]

How I [they] Learned to Stop Worrying and Love the Bomb [Market]  paraphrasing Stanley Kubrick’s great cold war/nuclear paranoia film Dr. Strangelove (1964).

riding.bomb

The USA thrived during a 20th century rife with war, famine and depression.  This was a wealthy country however, founded on principles of self-reliance and valuing  thrift, saving and honest work for an honest return.  Add in unparalleled productivity and economically at least, the positives more than outpaced the negatives.

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Precious Metals: Risk Management to Opportunity

What Has Been

A solid 2.5 years of risk management (to varying degrees) has been required of precious metals investors.  It was most intensely required after the announcement of QE3, when the net commercial short position in silver began a relentless march toward a very bearish alignment in late 2012 and then the HUI Gold Bugs index lost an important support level at around 460.  Here is the chart of silver with a heavy commercial net short position from NFTRH 215, dated 12.2.12:

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Party Today, Macro Market Changes Ahead

The following is an excerpt from NFTRH 270, dated 12.22.13:

Now What?  This is What

From NFTRH 269’s opening segment ‘Market Correction on Cue, Now What?’:

“The question now is whether or not this is the start of a larger topping scenario and the answer to that question is for now at least, no, not by evidence showing up in our indicators like junk bond (risk on) speculation and sentiment, which was dialed back from heartily over bullish to neutral by the correction of the last couple of weeks.”

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Enjoy the Punch Holiday Revelers

Party goers are gathered around the punch bowl as expected after the FOMC’s token move on QE.  Jeff Lacker is jawboning additional tapers in $10b chunks and all seems right, except… the ‘continuum’ (AKA the 100 month EMA on the 30 year bond yield chart).

tyx

Let me ask you Beuller, what happened at the red arrow in 2000?  What happened after the red arrow in 2007?  What happened after the plunge in 2008?  What happened after the red arrow in 2011?  What happened after the most recent bottom in 2012?  The answers are 1) the end of a secular bull market in stocks, 2) the end of the last cyclical bull market in stocks, 3) the birth of the current cyclical bull market in stocks, 4) the end of the big cyclical commodities rally and 5) the launch of this most powerful leg of the cyclical stock bull market.

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They Are Tapering QE! Get Out of Gold!!

This is perfect… Gold falls to June lows as Fed plan to taper sinks in and I thought I’d put up my own sensational headline since the MW headline is so understated.

headline

I was actually a little surprised when the precious metals turned up after the taper news because that is not what I had been planning for.  Well, sure it was a possibility but the preferred plan was for the Fed to come with the goods and for the precious metals to get clobbered – and if it came with a spike upward in the stock market, so much the better.

We are in the process of eliminating all of the 2001-2011 geniuses.  Ref. Scary Gold Bug Article on Cue, as the gold luminaries trotted themselves out to take a bow before the ink had even dried on the Fed’s September statement in which they rolled over and held full QE intact.

At the bottom there will be no gold generals spewing the dogma that worked in 2001-2011.  There will only be survivors sitting in their bunkers sucking their thumbs, and predators.  If pre-market today is any indication, the final phase – finally initiated by the Fed – could be kicking in.

There are targets to the downside and there are upside targets in the S&P 500 vs. gold.  There is also a target for gold bug sentiment and it is not its current ’0′.  That is too bullish so the target is not shown on this graphic because it is going to blast right out the left side like a bullet through a window… or a looking glass.

sentiment

Sentiment graphic courtesy of Sentimentrader.com

This looks like the final phase where the last inflationists who have a fetish for a ‘dollar collapse’ and hyperinflation are going to be compelled to reevaluate (and come up with a new sales pitch).

Gold is going to bottom somewhere.  I think it will be soon and I think gold’s bottom will start the clock ticking on the next phase of economic failure (which could be many months yet, not for gold’s bottom but for the Fed’s policy of the last year to prove to have been a reckless failure).

As I wrote in a post yesterday, things are making sense and changes are coming.  The sooner the Fed came with the ‘taper’ token, the sooner gold could get on with its search for an important bottom.  It is time for people who are prepared to be getting bullish.

We are currently offering a free 30 day trial to NFTRH with no strings attached.  Check out the market management service that has managed risk during every step of the cyclical bear market in gold and remained ready to capitalize on the events that now appear to be shaping up.

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