Investing

[Screwball]

26 minutes ago, Deleterious said:

Gold broke through $5,000 tonight.

As I type this at 9:03, Gold is $5072 and some change, and Silver is $107 and change. This is nuckingfuts.

[oblong]

What’s the context?  Like what do you think it means going forward?  I’m ignorant to this stuff but I saw it mentioned elsewhere too. 

[gehringer_2]

14 minutes ago, oblong said:

What’s the context?  Like what do you think it means going forward?  I’m ignorant to this stuff but I saw it mentioned elsewhere too. 

the phrase is attributed (likely wrongly) to Baron Rothschild, "when there is blood in the streets, even if it's your own  - BUY"

[Screwball]

56 minutes ago, oblong said:

What’s the context?  Like what do you think it means going forward?  I’m ignorant to this stuff but I saw it mentioned elsewhere too. 

I go by charts. It's hard to explain in a short paragraph what they mean. Using charts, known as technical analysis, is a long time science that started over in Japan many years ago. Charts are a visual history of how "things" trade - price. One of the main things they do is give the people in the market entry/exit points to trades. They talk about this every day on the business channels. It helps both institutional and retail investors. The best computer geeks on the planet who work for the pigmen of Wall Street write their HAL 9000 trading algorithms on this stuff.

My point, some charts look normal, and then there are some that don't. Gold and Silver look like hockey sticks right now - that isn't how it works. They are going up way to fast way too quick. It kind of reminds me of back in...2007 ish... crude oil did the same thing. Went from..don't remember, around a hundred maybe to $147. It looked like a hockey stick on the chart. It became exponential. Then it was 2008 and we know what happened. Some economists think the oil shock started the credit/housing mess. I think they are right.

The gold/silver thing is different. American's sucks up 20% of the worlds crude, which is our lifeblood of growth. Gold and silver isn't near as important of commodity. But a message? The gold/silver (they usually trade about the same way even though silver has industrial value) thing is about our currency. The value of the dollar trades on the world markets each and every day. Like going to Canada and the exchange rate you get. So many dollars buys so many CAD.

One might say (well, many) going long Gold is shorting the currency of the United States. This topic has been argued forever in the political realm between the Keynesian's and Von Mises wings of monetary policy. The "gold bugs." Some say this is all retail moving the price. I don't know. The old intrinsic value of an asset or "specie" as they said before that kind of thing.

What I do know, this ain't normal. 

 

 

[Deleterious]

FOMO is part of it, which is true for most trends in investing.  The weak dollar is definitely another part of it.  The dollar is off by about 10% since Trump took office.

Flight to safety is another big driving force.  People think the market is due for a downturn.  Treasuries would be a normal spot to park money coming out of the market.  But the president is on TV every other day demanding the Fed lower interest rates.  Lower rates equal lower yields on treasuries.  So some people are turning to gold.  The odds of a shutdown also went up this weekend after the shooting.  Democrats will not pass any funding bill that includes funding for ICE, where they probably were going to before this weekend's events.  

A more simple answer.  Lack of confidence in US fiscal policy.  

[gehringer_2]

11 minutes ago, Deleterious said:

FOMO is part of it, which is true for most trends in investing...

yup. Also more generally there is a lot of investable wealth chasing relatively few interesting investment opportunities - increases herd behavior and volatility in general.

[Deleterious]

Timely article from the WSJ.   Behind a paywall so I will list them.

Five Reasons Gold Prices Surged Above $5,000 an Ounce

The debasement trade - Among the most bullish gold buyers are those worried about the strength of the U.S. dollar and other major currencies. They have snapped up the precious metal as a store of value that they hope will withstand economic shocks.

Lower interest rates - The Fed’s rate cuts, which have slashed the yield on government bonds and cash, are also driving investors to gold.

Central bank buying - Central banks, which were net sellers of gold for many years, flipped to net buyers in 2010 when they reassessed their risks following the financial crisis sparked by the American mortgage meltdown. Central banks picked up the pace of their gold purchases in 2022.

That is when the West sanctioned Russia over its invasion of Ukraine. Central banks in countries that have strained relationships with the West, including China, have been shifting away from dollar-based assets into gold, which is beyond the reach of foreigners. 

Expensive stocks - Like gold prices, stock-market benchmarks have been hitting record highs. Their dizzying heights are making investors nervous.

The most common way to value stocks is as a multiple of earnings. One popular measure, a cyclically adjusted version of the price-to-earnings ratios that rely on analyst forecasts of future profits, says that stocks have been more expensive only once during the past 100 years: right before the dot-com bubble burst in 2000.

Momentum - Gold is a good bet to keep gaining, if for no other reason than gold rallies tend to be long-lasting. In five of the six years before 2025 that gold futures rose by at least 20%, they climbed again the following year. And in those five years, the average increase was more than 15%, according to Citi analysts.

The pattern held in 2025, when gold followed 2024’s 27% increase with a 65% gain.

[gehringer_2]

2 hours ago, Deleterious said:

Expensive stocks - Like gold prices, stock-market benchmarks have been hitting record highs. Their dizzying heights are making investors nervous.

The most common way to value stocks is as a multiple of earnings. One popular measure, a cyclically adjusted version of the price-to-earnings ratios that rely on analyst forecasts of future profits, says that stocks have been more expensive only once during the past 100 years: right before the dot-com bubble burst in 2000.

In addition, the bubble in stock prices is very maldistributed. We've had a huge run up in a few now huge tech stocks that are at crazy valuations and imposssible P/Es, while the rest of the market is pretty meh. Probably won't make a difference if the tech bubble pops everyone will get hammered.

[Screwball]

11 hours ago, Deleterious said:

FOMO is part of it, which is true for most trends in investing.  The weak dollar is definitely another part of it.  The dollar is off by about 10% since Trump took office.

Flight to safety is another big driving force.  People think the market is due for a downturn.  Treasuries would be a normal spot to park money coming out of the market.  But the president is on TV every other day demanding the Fed lower interest rates.  Lower rates equal lower yields on treasuries.  So some people are turning to gold.  The odds of a shutdown also went up this weekend after the shooting.  Democrats will not pass any funding bill that includes funding for ICE, where they probably were going to before this weekend's events.  

A more simple answer.  Lack of confidence in US fiscal policy.  

This is all true. Really ticks me off that yields are so low. I'm old, I don't want the risk of the market, especially as bloated as it is now, so bonds are the way to go. Short term bonds were a great play. Yields were good and you could get liquid in a short time and go into something else if you wanted. Has been getting less profitable for some time now.  Spit!

Here is Silver today once the market opened. A longer range chart to see the hockey stick. 10 year by month chart.

[gehringer_2]

3 minutes ago, Screwball said:

Really ticks me off that yields are so low. ...., so bonds are the way to go. Short term bonds were a great play

maybe the only play other than maybe investing overseas because that's the other kicker - the way they are trying to force the Fed into easier money increases the odds of losing control of inflation - if inflation goes up, higher interest rates will have to follow and any kind of long term bond gets hammered.

[Screwball]

Recent bond and T-Bill auctions from Tresury Direct - T-bills first;

 

[Deleterious]

Sell all of your gold and put it in silver

 

[Screwball]

I saw that too. Still don't know how that idiot can still be in front of a TV camera.  Well, yea, I do.

[gehringer_2]

another piece just came across my inbox about the bond markets from Axios/Bloomberg, pointing out a big shift in what is happening in Japan. Interest rates are finally starting to rise there - the long period of deflation ending. This is affecting bond markets everywhere, including the US, because the large carry trade out of Japan driven by ZIRP there was supporting bond markets everywhere, including the US.