As the BLOOD continues to run on Wall Street, gold and silver were the few assets trading in the green today. As I have mentioned in past articles and interviews, investors need to get used to this sort of trading activity. Even though the Dow Jones Index ended off its lows of the day, it shed another 458 points while the Nasdaq declined 190 points and the S&P fell 60.
As the broader markets sold off, the gold price increased $15 while silver jumped by $0.25. However, if we look at these markets during their peak of trading, the contrast is even more remarkable:
At the lows of the day, the Dow Jones Index fell 730 points or 3%, while the S&P 500 fell 3.2% and the Nasdaq declined by 3.8%. Also, as I expected, the oil price fell along with the broader markets by dropping 2.7%. If individuals believe the oil price will continue towards $100, due to supply and demand fundamentals put forth by some energy analysts, you may want to consider one of the largest Commercial Net Short positions in history. Currently, the Commercial Net Short position is 738,000 contacts. When the oil price was trading at a low of $30 at the beginning of 2016, the Commercial Net Short position was only 180,000 contracts.
Furthermore, if we agree that supply and demand forces are impacting the oil price to a certain degree, does anyone truly believe oil demand won’t fall when the stock market drops by 50+%??? I forecast that as market meltdown continues, the oil price will decline as oil demand falls faster than supply.
Now, when the markets were at their lows today, gold at its peak was up $20 while silver increased by $0.44. Of course, this type of trading activity won’t happen all the time, and we could see a selloff in all assets some days. But, once the Dow Jones Index falls below 19,000, investors will likely start to move into gold and silver in a much bigger way.
If we look at the following stocks and indexes from the peaks set in 2018, clearly, there’s a long way to go before the bottom is in:
The infamous FANG stocks are down between 14-20% from their highs while the broader markets are down 10-11%. When the Dow Jones Index fell from its high of 14,100 in 2007 to its low of 6,600 in 2009, it lost 53%. However, due to a higher degree of leverage in the markets today, I wouldn’t be surprised to see the Dow Jones Index fall by 60-75%. A 60% decline in the Dow Jones Index from its peak would put it at the 10,000 level… perfectly reasonable in my opinion.
So, what would a 60% selloff in the broader markets due to the gold and silver price?? That’s a good question. If just 1% of the $400 trillion in global assets moved into the precious metals, we could see some insanely higher prices. But, I don’t like to put out price targets because analysts who have done so in the past only frustrate themselves and their followers.
The next two charts show the beginning stage of the MARKET MELTDOWN as it pertains to the grossly overvalued stock called Netflix. When I posted this stock a few weeks ago, Netflix was trading at $310 a share. I mentioned that its recent stock trend resembled the antenna on the Empire State Building in New York City:
Unfortunately, the top of Netflix’s antenna must have been chopped off by some low flying 747 jetliner over the past two weeks:
Since March 19th, when Netflix was trading at $310, it has lost $30 or nearly 10%. If investors believe Netflix is a good BUY THE DIP setup, well then I gather it’s a complete waste of time to suggest acquring some gold and silver instead. However, if you are beginning to get worried that the market has a long WAY TO GO DOWN, then you may want to consider switching from BUILDING WEALTH to PROTECTING WEALTH.
Mark my words… 2018 will be the year that investors started switching from building wealth to protecting wealth. Unfortunately, those who make this change will likely only be a small percentage of the market. Thus, we are probably going to see a lot more BLOOD IN THE STREETS.
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The Dow is not comprised of FANGs. Not a single one. Why are they conflated?
One does not represent the other.
A drop in Netflix, is a reason to sell the entire stock market and buy gold?
There are plenty of stocks in the market with reasonable PE ratios that are not Netflix.
The market action is still within a correction, not a meltdown.
Jim,
NYSE Margin Debt at $600 billion is much higher than the $450 billion at the peak in 2007 and $400 billion at the peak in 1999.
Jim… do yourself a favor and like Dorothy on Wizard of Oz, tap your shoes together three times and say… THIS TIME IS DIFFERENT.
LOL. Gosh, there are way too many FOOLS in the world today.
steve
If you want to change or redefine your story to the nyse and margin debt both of which were never mentioned in the original post, it only works further against your theory.
On a side note, the NYSE has discontinued publishing margin debt. Why aren’t you at least stating FINRA?
Heres the rub in your simplificational cherry picking. Not every stock or every sector is leveraged with that amount of debt. If they were their P/E ratio for example would not be at reasonable historics.
If all you have is redefinition, redirection, and ad hominem tactics when folks state reasonable questions you are sir losing the debate.
Jim,
I have mentioned the NYSE MARGIN DEBT and the discontinuation of the data in several articles. And yes, I have looked at the new FINRA Data. Where have you been??
LOL
steve
Hi Jim, here’s your “redefinition, redirection, and ad hominem tactics” in one beautiful chart. Your retail tactics don’t work over here. Go home and get yourself some hard assets.
http://journal.firsttuesday.us/wp-content/uploads/SP500PE-020218.png
All companies issued record debt to buy back stock. This is true of all the companies in the Dow.
Economics is the key to these FANGS stocks, and the same principle applies to oil. The demand of oil is not nearly as elastic as the price. And with stocks, the demand can be much more elastic than the price. Margin debt is obviously an independent variable related to demand. The same ideology can be related to cryptos. Did their limited supply have much effect on the latest correction? Heck no, but demand is obviously more elastic than most believed. I would say that when organizations and CFOs start to realize that income statements are getting whacked by extraordinarily liquid holdings (stocks and bonds) they will start selling in large groups. At that point, the differences between the elasticity of supply and demand may not be so clear.
Ad hominem is attacking the man’s character. What man are you saying Steve is attacking? Talk about not knowing argument. Where did you (Jim) “kind of” learn logic 101?
The rare coin market is heating up like in 2002-2006 before bullion took off. Not so much the high priced rarities but the more common collectible silver items, $25 to $300 range. $16 silver seems cheap to me.
Steve: You may not forecast but the DOW Jones Industrial we’ll be at 27,000 by year end. With all your research how can you even contemplate a 60% selloff? Again Steve, your 10 to 15 years too soon, if at all correct. If the only way silver can rise in value is for half of the people with IRAs, retirement plans, investments etc. must lose 60% of their hard earned money, then life in the USA will not be worth living.
Joe Lindell,
First, unless you think the markets go up forever, I hope you remember this thing called the BUSINESS CYCLE.
Second… the Dow Jones fell 53% from 2007-2009. So, why are you so surprised by a 60% decline? I gather you have most of your funds in the market.
Lastly, I don’t make the rules or push markets to extreme bubbles. So, please don’t blame me that 99% of investors are invested in the BIGGEST PONZI BUBBLE in history.
steve
I apologize. I forgot that you are always right? 90%
of the people in the market are in a Ponzi scheme. What may I ask has silver buyers been in these past 8 years? It may not be Ponzi but it sure is a scam. A horse by any other color is still a horse. You consistently see doom in the USA whereas I see innovation. We are resilient nation Steve.
Joe Lindell,
You stated this, “You consistently see doom in the USA whereas I see innovation. We are resilient nation Steve.”
Joe, if you don’t mind, I would like to share my new favorite saying,
Just like Dorothy in the Wizard of Oz, tap your shoes together three times and say, “THIS TIME IS DIFFERENT.”
steve
“… but the DOW Jones Industrial we’ll be at 27,000 by year end.”
I would LOVE to short that prediction with a bet in escrow.
https://www.zerohedge.com/news/2018-04-02/there-no-escaping-history-fiat-currency-eventually-fails
Read this for a hyperinflation primer, Jim. I’m not asking you to take an historical perspective. I’m not sure you’ll get there, but it’s never late
A new article positive on Pms relative to stock markets, expect Pms fall and stocks rise especially in a week of BLS report…
The Dow touched the 200 MDA (that can be viewed as touching support or test) AND we are at a bottom on the stochastics for the daily and weekly, time to move back up. My guess is that we are due for an upward movement for at least a month. However the NASDAQ on the weekly chart looks like it could forming a head and shoulders pattern.
Please remember 200 day moving averages are 100% meaningless in big stock market selloffs [crashes].
My guess is up & down sideways movements for the next month.
Nope. The metals are not a good investment, as we like to think of investments- dollar return on our dollars. That’s because they are aggressively suppressed…………and…………..here’s the key…………wait for it…………THEY WILL CONTINUE TO BE. They will only become valuable when the criminals who run the Comex are forced out. By that time, it’s anyone’s guess what will be happening in our world, but it’s real unlikely it will be anything like a cozy scene from “It’s a Great Life”
“not a good investment”…
Agree. Physical gold and silver are NOT an investment. They are wealth protection.
They are the one and ONLY true MONEY. Have been for thousands of years. While thousands of fiat currencies have come and gone in that time.
Anyone thinking that they will make a “profit” by purchasing gold and silver, then selling later at a higher rate of return and making a “profit” has mush for brains.
The ONLY reason gold and silver will sell at a higher rate, is the fact that the fiat is worth less and takes more of it to buy. Where is the “profit”? lol
Physical gold and silver purchased and taken into your physical control, are your wealth protection against economic disasters.
“Litecoin is silver to Bitcoins gold ” ( Charlie Lee, creator of Litecoin )
You want to make some money? Buy Litecoin. Simple. Just as Silver is out of whack against the gold price buy silver instead of gold.
Buy Litecoin instead of Bitcoin. Then put a % of profits into physical silver.
…or you could just wait for the entire planet to shut down for the lack of energy and do nothing………
Historical perspective . . .
https://moneyweek.com/the-brutal-global-stockmarket-crash-that-hit-britain-hardest?utm_campaign=money-morning-newsletter&utm_medium=email&utm_source=newsletter
I’m a patron the day Silver spot hits $45.
Gold and silver are not suppressed. Rather it is the the vast majority of the population that has been severely brainwashed away from gold or silver, so much so that so few people want it, the price seems low. The increase in money printed at the same time metals price is stagnant is not a show of suppression so much as a show of mind control. If you really think the price is artificially low, then why don’t you do something about it it and buy it all? Truth is, the market is legit, and there are just so few people that care about metals anymore that their collective purchasing power is not enough to push the prices any higher. Just stop complaining and keep stacking, because it cannot go on indefinitely (but it might go on longer than you’re alive). But regardless of timing, you stack because it is the right and just thing to do.
No, it is suppressed, government and CBs papers prove it. Also there have been legal suits on metals manipulation and Banks have lost and sentenced to pay fines. All Banks CEOs and directors should be in jail but that´s not like justus works.
What else explains someone selling billions of dollars PM “equivalents” at market price and at the least favourable time?
Well, there is some temporary manipulation there, but regardless of the selling of billions of equivalents, the physical market still functions with buyers and sellers at the current market price. If they really can manipulate it as much as some people say, then the gold price would still be $40 per ounce like it was in 1970. But, apparently they can’t manipulate it that low. If they manipulated gold to $40 per ounce I doubt there would be a physical market for it. Yes, you could see spot price of $40, but you would then see a $1,300 premium for physical.
More than anything it is the populations’ mindset; people’s minds that have been manipulated to not understand metals value. This has allowed the metals price to basically ride at about the same price as production cost for some time now. Demand for metals is about evenly balanced with production supply. The power’s that be have been lucky and smart in their ability to be able to increase production supply over the years, but the tide is bound to turn someday, somemonth, or someyear). While they can’t keep increasing metals production on an exponential basis forever, they will keep printing fiat on an exponential basis, forever. There in lies the rub. Printing fiat is theft of other’s capital. printing fiat is theft.
Since metals can’t be printed, it is the only protection, and only way to fulfill the commandment from God not to steal. Thou shalt not steal. The only way to obey this command/mitsvah is not denominate your wealth in fiat-linked investments.
But the majority of people are brainwashed/mind controlled to thinking in terms of fiat and fiat-linked investments, and there is the manipulation as most people are brainwashed/mind controlled into theft-based system. One way or another, most people’s wealth is taxed/tariffed/inflated away, all of which is theft. Then, most people have nothing left to even buy silver/gold, so they can’t obey God even if they wanted to. Real estate prices are leveraged up as high as possible so then you pay more in property taxes and sales taxes based on those artificially pumped up leveraged high prices, and more debt and interest to the banks.
“If they really can manipulate it as much as some people say, then the gold price would still be $40 per ounce like it was in 1970. But, apparently they can’t manipulate it that low. If they manipulated gold to $40 per ounce I doubt there would be a physical market for it….”
NONSENSE.
The price is CONSTANTLY manipulated IN A PRICE RANGE
If the price on the COMEX was below the cost of mining & refining, the demand would cause COMEX default.
For anyone to communicate this…it shows complete ignorance of the real manipulation that has gone on, and all price fundamentals, how the COMEX funtions, and on and on. It makes everything else communicated not worth reading.
Actually, if you stack for wealth protection, you are wrong. Gold and silver don’t protect wealth since fiat currency is the currency of exchange. Which means that the only value that gold and silver have is relative to fiat currency. Gold and silver down since 2011 is definitely not wealth protection, no matter what Steve or any other metal shill wants to tell you.
They are getting desparate. They can see that we are not buying their lies anymore, and have stopped stacking and moved on. Now that they can’t sell metal to us or store it for us, they are being drained of their fiat income and it drives them mad.
Stop giving these shills their fiat money. Go out there and earn fiat for yourself, and spend it and enjoy life.
dolf,
As much as I believe Steve and his ilk deserve their comeuppance because of misleading their loyal followers I have to disagree with you. Stack Silver and stack cryptos such as litecoin. The cartel cannot keep silver down forever; however, you can profit from crypto and buy silver and what ever else tickles your fancy. Steve and his buddies have to criticize crypto because they missed the big run up and their followers are nervous and depressed. This correction that the crypto space has had ( recovering now ) has happened regularly since Bitcoins inception. Though no one knows the future, I believe by December, Silver and gold and various cryptos will be higher while the fiat banksters will be feeling the pain…..if not then keep stacking….it’s only a matter of time…..( not Earth shutting down for lack of energy but the fiat system starts to die ).
The only shills are the fiat pumpers. And that they pay a salary to “writers” like you to come everyday and say the same stoopid drivel shows that they don´t have the metal to back the promise.
China, India and Russia will leave the west without nothing of value. Well at least you can use Snap to see the genitalia of your other troll coleagues but hurry, you have 3 seconds to get all excited, after that all the pictures go to your CIA overlords servers.
HEADS UP!
As of Tuesday AM April 03 2018, some one or some entity with deep pockets has made some serious silver stock buys and this is not an ETF. This is “shotgun buying” hoping that their buys are not being picked up on and forcing the price higher, before they have had a chance to have their fill.
http://www.incakolanews.blogspot.ca/2018/04/money-moving-into-silver-stocks-this.html
“As much as I believe Steve and his ilk deserve their comeuppance because of misleading their loyal followers”
How ridiculous! As if people that agree with Steve’s conclusions are some sort of lumbering fools, mindlessly following him into the abyss. Anyone with a head on their shoulder’s doesn’t have any expectation of timing. This is a macro story, it will unfold in it’s own time. We merely have to be prepared.
How about this instead – that we come here to read his work because he provides actual analysis, with fantastic charts that we can find nowhere else? Furthermore, that many of us have believed the narrative for years upon years, long before ever reading his work, and that his work is supplemental information to us rather than our manifesto?
THANKS YOU STEVE, for selflessly bringing otherwise difficult to find information, to us the masses, for doing the heavy lifting for us, for making it as easy as possible for as MANY as possible, to have access to your hard found data.
Subscribing immediately after posting this.
Nat
Nat,
“As if people that agree with Steve’s conclusions are some sort of lumbering fools, mindlessly following him into the abyss”
Yes you said it. No one knows when this all will end. Getting peoples’ hopes up that the end is near is the tragedy and those who do follow him or me or anyone else are fools. Think for yourselves. Nobody knows the future.
It’s not right to think 1% of the 400T may go into gold and silver because a lot of that 400T is margin debt. So when someone sells 100M worth of stock at a loss and they have 110M in debt actually none of that money can go into gold because all of it will go towards paying down debt.
I have been studying the charts of gold and silver. I first entered the market in 2005. Gold and silver are. Not following the same path as in the last bull market. We are entering a time of tightening not. Loose monetary policy. It’s just my opinion that the dollar will get stronger in relation ship to the other curriencies. The best actor in a bad neighborhood. Europe looks like some countries are. Leaving the union. China Russia, Iraqis and maybe the Saudis have their own agenda. The milliniols idea of hold it in your hand is an IPhone. There is too much noise out there. I’m sitting back and waiting for a true breakout or breakdown. I do believe the market is going into bear territory just because of lack of liquidity. With or without FANNG. As of now I am agnostic to either direction. Everyone is talking about inflation please show me the MV. Believe me nobody wants to see $10,000 gold.
The Fed was tightening 2004-2008 yet gold and silver rose and the USD tanked. The Fed was loosening 1981-1987 yet gold fell. There is clear empirical evidence tightening/loosening does not make gold fall/rise. If there is any correlation it’s negative. Nobody wanted to see 16% interest rates in 1981 yet it happened.