Wednesday, January 27, 2016

Investors portfolio allocation to Gold

Investors should rarely have more than 20% of their portfolios in gold and/or gold-related ETFs, and perhaps now they should have at least 10% in gold, with the intention of increasing that exposure when, and only when, they find that their positions are insulated from random market noise and are tidily profitable.

That, of course, shall take time, but the great truth of the markets is simple: "To do more of that which is working and less of that which is not."

So adding to the gold position when it is 7% to 12% profitable seems reasonable and wise to me, for by that point the initial positions will indeed be insulated.

via IBD

Monday, January 25, 2016

Yen is going higher because of selling of long equity positions

Simply put, the equity markets in Asia have come apart at their very seams, and as they plunge the funding currencies, primarily the yen, are being repurchased as these equity positions are closed out. This is not a run to quality that is driving the yen higher, and it is not the result of better economic data out of Japan either.

This is simply the massive, and sometimes seemingly forced, unwinding of long positions in the world’s equity markets by hedge funds and other institutional investors. It will stop when it stops and there is nothing more that one can say that shall be of greater merit, nor wiser.

How to invest in Gold

Owning Gold physical vs ETF

Some actual gold in the form of easily saleable coins is, of course, sensible. Then, it seems to me that ETFs make the best investment position given the liquidity.

Given that gold in euro- and yen-funded terms has very seriously outperformed gold in U.S. dollar terms, I would continue to advocate owning gold funded in those currencies, which are likely to devalue relative to the dollar and are thus most likely to devalue relative to gold.

Of the total gold ETF position one might wish to have, 40% should be in euro-funded gold; 40% should be in yen-funded gold; and the remainder should be in dollar-funded gold; so AdvisorShares Gartman Gold/Euro (ARCA:GEUR), AdvisorShares Gartman Gold/Yen (ARCA:GYEN) and SPDR Gold Shares (ARCA:GLD) are the preferred positions.

I have a direct interest in GEUR and GYEN, but I also have my largest position in my personal retirement fund in both.

via IBD

Tuesday, January 19, 2016

Adjusted Monetary Base dropped off the cliff

I don't think anyone would want to step in the midst of this. I think any strength that you get in the stock market is probably going to be very short lived.

One of the things I take a look at more than anything is the decline that's taking place in the Adjusted Monetary Base. The base has fallen off the cliff. That's the real money supply. That's the stock from which other soups of monetary aggregates are derived and it has plummeted. Now that's just the Fed perhaps rolling off securities, but nonetheless it is falling. And if the economy is demanding more money, it has to come from someplace, it  has to come out of equities.

Monday, January 18, 2016

Gold may get stronger even in US Dollar terms

Gold is set up positively for the new year, with gold already having been strong relative to the euro and yen over the course of the past several years and now showing very real signs of support at $1,045/ounce to $1,065/ounce for the past two months. 

The world needs to lose more faith in the Euro and Yen, and eventually in the U.S. dollar for gold to trade much stronger. That shall apply obviously, too, to the gold-related ETFs. The world has already begun to lose faith in the euro; its faith in the yen is unwinding; faith in the dollar remains intact at the moment. And, quite honestly, I remain bullish of the dollar relative to most other currencies, but even the dollar may begin to lose luster relative to gold.

via IBD

Thursday, January 14, 2016

Crude Oil may have made its lows

Crude oil prices, finally have stabilized and we shall go our far upon a limb here this morning suggesting very strongly that when nearby February WTI traded to $29.93 at its low yesterday amidst a great deal of very vocal consternation on the national business television channels that crude had “TRADED BELOW $30 PER BARRELL” that that was what we in the past had referred to as the “obscene number” and may well have been the low.

Victory usually goes to the patient

Our International Index has risen 89 “points” in the past twenty four hours, taking it 1% higher in the process and reviving hopes on the part of the equity market bulls that the weakness has run its course. It has not and we wish to be quite clear about that. 

For the year-to-date, our International Index is down nearly 750 “points and from its high last May it is down nearly 2350 “points” or 7.8% and 21.0% respectively. These are not insignificant numbers. Indeed they are manifestly bearish numbers and we must trade bearishly as a result, and for now we await the rise toward 1985 for the S&P as noted just above into which we have every intention of becoming rather aggressively net short of the market. We have the ability… and the opportunity… at this point to be patient, awaiting our target and waiting for the proper time.  


Tuesday, January 12, 2016

Market has forced us to move to net Short positions

SHARE PRICE CONTINUE THEIR PARLOUS, GLOBAL WEAKNESS as all ten of the markets comprising our International Index have fallen since we marked things on Friday morning, with several markets down more than 1% and with one market… that in mainland China… down by more than 3% and with several others down by more than 1%, sufficient to take our index down another 1.3%. It is  now down 684 “points” for the year-to-date or a stunning 7.2% and it is now down 2,359 “points” or 21.1% from its high made in late May.

We believe we’ve been rather clear about our view of the equity markets here in the US and abroad: this is a bear market and it began, with the benefit of retrospect, back when our International index made its high May 25th at 11,186. One only knows the high of a bull market and the low of a bar market in retrospect, but the important thing is finally to recognize that fact and when recognized to trade effectively. As we have said here for years, during a bull market there are only three positions that one can have: aggressively long; modestly long or neutral. In a bear market, one can have only one of three positions also: aggressively short; modestly short or neutral. 

In our retirement funds here at TGL we began last week and indeed we began the year modestly long but by the weeks’ end we had shifted to modestly net short. We have had no choice. The market’s voice was loud and very clear.

Monday, January 11, 2016

Its not too late to sell stocks

This opening rout in the opening several days of the year has broken whatever last residual hope the bulls might have had. So I really do think we started upon a Bear Market. These things can last for 6, 7, 8, 9, 12 months. Already from the highs in my International Index we are down 16 percent. We are only Five or Six percent in the US, we probably have another 10 or 15 percent to go on the downside.

All markets, all economics is a study of peoples propensity to do something. I think after what's happened in this opening week, the propensity of people to step up and buy has reduced. The propensity to step up and sell has increased. I think you err on the side of being Bearish for a while. I think this could last another Six to Seven months on the downside.

Wednesday, January 6, 2016

Gartman issues BEAR MARKET warning

Yesterday stock prices here in the States did little other than mark time, and following the material selling earlier this week the fact that the best that the market could do was this is ominous indeed. We used the term “bear market” yesterday in our commentary for the first time in a very, very long while and we used it with intent, for in the past we’ve often said that we had turned “neutral” of stocks noting that in a bull market the most bearish position one can have is neutral.

This stems from our simple, but effective, notion that in a bull market there are only three positions one can and should have: Aggressively long; modestly long or neutral. But this is no longer a bull market. This is now a fully-fledged bear market and we do not say that readily, nor lightly. Nonetheless, given that our International Index made its high late last May at 11,186 and is now 1,888 points or 16.9% below that level and has been down for just over seven months, it is time to face this harsh reality.

This is a bear market. Trend lines that have held in the past are  failing. Lower lows and lower highs are more and more common. Fewer and fewer stocks are trading within 2-5% of their highs and  more are trading 15-20% below those highs and the Advance/Decline lines here and abroad are collectively weak and weakening.
We are for the first time in years suggesting, indeed, we are stating it rather clearly… our belief that the global bull market that began in the spring of ’09 ended, in retrospect, in the very first days of summer of last year. We shall, henceforth, look to err bearishly of equities, holding long positions in some equities, but erring on balance to the short side of the global equity market.


Monday, January 4, 2016

Gold prices face strong resistance at $1080

Gold is weaker, and where $1,055-$1,065 has proven to be strong support in US dollar terms, $1,075-$1,080 is proving equally formidable resistance.

We are certain that gold is forging long term support that can and should hold, but until such time as the resistance noted here is taken out handily to the upside we will sit tight with what we already own and do nothing more.