1426 replies to this topic

[linrom1]

 

You recently wrote a piece where you recommended buying gold and financials to prepare for this event. Why gold, and why financials?

My base case is that Treasury yields will move up to around 2%, at which point the Fed will introduce some variant of yield curve control. In this case, the Dollar would tank, real interest rates would drop and gold would thrive. But maybe I’m wrong, maybe the Fed freaks out when they see inflation rising to 4%, and maybe they decide to let yields rise. If that’s the case, then financials will rip higher, driven by a steeper yield curve. So come this spring, if the Fed caps interest rates, gold will thrive, and if it doesn’t, financials will thrive.

But you’d lean towards gold?

Yes. It’s quite possible that in the coming weeks, the Dollar will rise while Treasury yields move up. This could provoke a sell-off in gold. If that were to happen, I’d take the other side of that trade, I would buy gold. But at the same time, you can buy out of the money call options on financials. That would be the hedge for the scenario of the Fed changing its mind and letting the yield curve steepen.

https://www.zerohedg...-back-vengeance

 

This is very good

[linrom1]

 

When we see the oil price heading above $50 again, wouldn’t that cause US production to rise?

So we are moving back into a world where the U.S. is a structural oil importer and a Dollar exporter?

You can’t turn up oil production like a tap. It will take at least a couple of years to come back. Plus, shale oil production in the U.S. was hugely capital destructive. More than $350 billion was lost in the shale oil patch over the past ten years. Look at the energy sector today, it’s at 2.5% of the S&P 500. When oil was at $10 per barrel, back in 1999, energy was 5.5% of the S&P 500. So I’m going to answer your question with another question: If oil prices go up, and the U.S. could produce more oil again, it would require hundreds of billions of Dollars in capex. Who will provide that kind of capital, with an incoming Democratic Administration that has been ambivalent about fracking? I don’t see it.

When the world economy normalizes after the pandemic, where will the oil price settle?

Yes. The seeds are planted. That’s a huge shift that I don’t think people are taking into account yet.

 

Before Covid, it seemed that the oil market had found a balance between 60 and 80 $ per barrel.

Geez, this guy makes macro picture look so obvious

Edited by linrom1, 10 January 2021 - 09:42 PM.

[dougie]

Sure did not see Friday's rout coming - had added some leveraged positions, as well as, margin - which is my practice as markets move in my favor.  Now 'round-trip' back to year-end valuation - but it feels so much like a loss!  Leveraged positions and margin taken off Friday - still holding core positions from April last year - but not happy!  Should have expected this as the bullishness ramped up too quickly after the break-out - it will probably take some more pain now to flip the sentiment around toward neutral-negative.

 

I do see a January recovery toward/near the 2,000 level, then I am not sure, we will see.

 

stu

oh oh, that makes two of us. though i can easily see why Senor bailed where he did. not many can move money as fast as that wiley coyote though

[dougie]

After reviewing the charts again, I am seeing risk of a massive crash in the miners...really violent... yikes...  50% down in the XAU

 

Long DUST  and will probably add tomorrow

show us what you see if can!

[stubaby]

 

After reviewing the charts again, I am seeing risk of a massive crash in the miners...really violent... yikes...  50% down in the XAU

 

Long DUST  and will probably add tomorrow

show us what you see if can!

 

dougie to me a Head and Shoulders top is the risk - still above the neckline, but if that breaks target is 95ish, FWIW

 

https://schrts.co/IXXTYTBm

[tradesurfer]

Well the first thing is the quarterly XAU Chart:

 

https://www.tradingv...com/x/JOFwQ1yQ/

 

we are failing at 30+ year resistance line.

 

This move up in mining stocks did not confirm the breakout up move in gold price, i mean look at how low we are still in miners.

 

 

Then there is the similarity fractal to the XAU 1987 crash down leg...

 

https://www.tradingv...com/x/6n8SvAWq/

 

 

current XAU monthly looks similar... it tried too quickly to rally back up for a breakout and instead double topped...

 

and with the dollar about to skyrocket and broad market equities about to crash down really hard... one can see how an 87 repeat is on the horizon...

 

I am absolutely shocked that David Morgan is so bullish on silver and sayin it will just zoom up now in the next leg up to 30's etc...    It just goes to show how now matter how experienced one is in markets , they can do whatever the hell they want...

 

there are other techincal factors also... head and shoulders top formation in GDX with downside projection of roughly 25.

 

This whole reflation scenario I think is a bit too early... and yet everyone is banking on it.  The Fed used too many of their bullets in March April of 2020 and stalled what was probably supposed to be the final deflation wave... but now here we are again for the final one about to start now.

 

I think we are on the cusp of a fairly swift final deflationary leg down that will make the final bottom.... 

 

this guy seems to have a good read on markets and metals.. but he is looking for a really massive move down in metals (1000 or 890) which is a bit hard to believe... I am not that bearish but I am open minded...

 

https://twitter.com/HenrikZeberg

Edited by tradesurfer, 11 January 2021 - 12:07 AM.

[tradesurfer]

I am not here to promote anything but this guy does a really good summary of a 5 month deflationary meltdown case in his Video update today...

 

https://www.thezebergreport.com/

 

You can sign up for 7 bucks as a trial.

[linrom1]

I am not here to promote anything but this guy does a really good summary of a 5 month deflationary meltdown case in his Video update today...

 

https://www.thezebergreport.com/

 

You can sign up for 7 bucks as a trial.

https://www.zerohedg...-back-vengeance

 

This guy does a great job explaining why we get inflation. But what bothers me is that it seems that so many are already positioned for the inflationary trade-- but yet, when you look at the CRB index, it just made a turn. Everyone is so smart?

[linrom1]

I am not here to promote anything but this guy does a really good summary of a 5 month deflationary meltdown case in his Video update today...

 

https://www.thezebergreport.com/

 

You can sign up for 7 bucks as a trial.

It's a good site, but, this is same view that Pretcher has. It seems like since 1990s, Pretcher has been promoting strong dollar and deflation.

[senorBS]

I agree with much that has been said in previous recent posts, IMO the downside risk is now on the high side. And IMO the MINIMUM downside in most stuff is going below the Nov lows - hard to look at almost any chart and not see how obvious that is and its really difficult Ewave wise to make any case for a bottom before taking those lows out in virtually everything. And if correct just how far below those lows we might go is an interesting question. For me its a time to be very conservative and not take risks, after last years excellent gains I am not into giving them away and if one is patient there is always a next great opportunity and I do not yet see that, as always DYODD

 

Senor