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On Wednesday I made a post that showed the “metallic credit spread” (as coined by Bob Hoye) known as the Gold/Silver ratio (GSR) flipped on its head (to Silver/Gold) to indicate a dangerous situation for the S&P 500, if past is prologue. Here is that post and here is the Tweet that followed…
You can see the tweet and expand the chart here.
Of course there is inflation.
We see it everywhere; the Fed’s printed (funny) munny and the government’s cost-pushing into the economy. Everybody knows that inflation is here and everybody has known since March when the last guy, still sitting on his couch playing lockdown era video games, figured it out.
And then ZeroHedge called the top with an assist from Larry…
It is in essence a year ago now that Warren Buffett ill-timed his entry into the gold stock sector, unwittingly calling a top to the post-crash rally and signaling the start of the 2020 inflation trades, which did not include gold stocks (for logical reasons, as belabored in NFTRH and at NFTRH.com over the years). Increasing the view that ole’ Warren was playing contrary indicator last summer were the usual gold perma-bull suspects coming out immediately after with bullhorns a blaring as we noted in real time on August 17, 2020: Buffett Buys a Gold Stock!
In the scope of the entire correction, as the bids rotated out of the precious metals and to a lesser degree growth/tech stocks into value stocks and cyclicals (including commodities) the inflation-instigated reflation trades hit stride and gold stocks were sent on a long decline. Again, if you tune out the perma-touts and think rationally, the miners were only doing what they should do (see below).
There were two false breakdowns, the second of which sparked a strong rally. We also caught Mr. Buffett for a contrary signal to that rally on February 17, 2021: Buffett Pukes a Gold Stock!
(more…)Because this week I did the very thing that exposes my dark side by shorting leveraged mid-caps (MIDU) and this morning got long a VIX vehicle (VIXY) while it was still negative. Before that I shorted the Euro (EUO) and longed the USD (UUP), which are sort of the same thing, and raised a lot of cash. When I have anti-market or bear positions and the markets get a kick save I get disturbed. It’s a psychological vulnerability I have.
I’d rather do this the easy way instead of the usual way bearish positioning goes. I will not make money if the market crashes, but I’ll lose a lot less of it as the portfolios are constructed right now. From here I have the option to go back to bull boy or increase bearish positioning, pending setups and indicators.
So… I am ready for it. I was out for the last 1.5 hours of the day and the last thing I wanted to see when I returned was the market up and that is for two main reasons:
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