Loading ...I Have To Hand It To Plunger – This Is A Very Dangerous Phase
Echoing what Fully said in a recent post, Plungers ‘Post-Bubble Contraction’ work has been superb. If I’m reading it right, commodities and general stocks are screwed, the Dollar is heading to new highs and gold/gold stocks are set to out-perform (please correct me if I’m wrong). I’m not sure where Silver fits into his thoughts, as it’s part commodity, part monetary (on occasions), but if it starts to take on it’s monetary persona instead of its industrial one, it could do very well.
Where I’ve always agreed with Plunger is that Gold is in the early stages of its new bull market. Although my ‘Domed Dollar’ chart hasn’t broken yet, I now expect it to.
Earnings/revenue for so many of the companies that make up the main stock indices are going to fall off a cliff. Global trade is decimated. Travel, tourism and hospitality destroyed. Not just in a few countries, but everywhere. Not just for a 2 or 3 weeks, but many months. It’s the worst case scenario. Shutdowns, lockdowns, borders shut, curfews everywhere. Social unrest is a very real possibility. This is not to mention the enormous cost in human life which is at risk of unfolding/already unfolding.
There are very few places to protect wealth in such times, but you can look at the great depression where gold more than doubled between 1929 and 1934 and gold miners went up by hundreds of percent. The 1920’s and 30’s were a long time ago, but I do think gold will reflect the monetary debasement we’re about to see in a very big way.
It’s going to be a dangerous and rocky road ahead. The world has become so intricately interconnected in a way that just wasn’t the case 100 years ago. The dominoes are going to start falling soon, companies cutting back, scaling back, laying off workers. It’ll gather pace and risks turning into Lehman x 1000. Organisations collapse, default, then bigger organisations, connected companies, global companies, financial institutions, banks, the banking system and sovereign states. It’s no exaggeration to say, that unless this passes by April/May and we can all get back to ‘normal’, the damage will be too big to repair. A complete, and total write-down. I have no more idea than you do about the detail of how it will play out, but the big picture is coming into clear view and it’s ugly, very ugly.
The value of gold and silver could end up being the last thing on any of our minds.
The stock market bottom is probably in (at least for the Dow and S&P). Yes, that sounds ridiculous, but the last half hour of trading was most definitely central banks stepping in and telling us whose boss in the clearest of ways. There is no other explanation for the utter ridiculousness of this weeks action in the markets.
A 1000 pt ramp into the close on Friday, a similar ramp in USD to create a massive outside week up, and a similar in magnitude crushing of GDX into the close (which was down almost 25% until a minute before the close). Next week the market gets an afterbooster in the FOMC. Watch the US indexes crush the performance of everything else.
Yep. Could get an actual meltup… to who knows where…
Short Covering Rally
They are short and sharp as Shorts Panic easily …they are on margin !
Yep. We have to be patient with gold… shorting a commodity proxy like copper could be the way to pass some time until the bust completes…
North star – glad to see you are reading Plunger’s PBC series. I have brought them up to you a number of times over the last year or two. Glad to see you are finally getting on board.
Hi Ken. I always have an open mind 🙂
Northstar and others,
Unfortunately I am caught in the middle of a work rotation and can’t spend much time on commentary.
But I will say this. My work on the PBC remains as stands and it is now playing out.
The one area that myself and Peter Schiff were not able to accurately predict was the initial response of the gold stocks. We didn’t really know if they would hold up initially or not. Gold has but the stocks haven’t. It is because they are after all…. stocks.
Regarding silver… it is fulfilling the roll of an industrial metal NOT a monetary metal. It will do that for some time. Silver I recall bottomed in Dec 1930. over a year after th crash. Perhaps we have to suffer through a similar drawdown.
But this is actually playing out faster than the 1929 crash so we will see.