Why I'm bullish on gold

One outcome I have believed was possible is for deflation to take over and cause the price of gold to crash but I have kept my bullish views on the precious metals sector for a really good reason. Mining company's have been cutting cost to try to reduce loses or become profitable since the price slipped in 2011. This has caused a lack of new money going towards exploration. This is great news since the demand is so high for the metals and mines have a limited life time. If a mine has a million ounces of gold and its mined up in a lets say a year as an easy number, but they only discover 500,000 ounces that year of in ground supply for future mining potential, that will throw off future supply. So future supply looks like it could be less. That is exactly what is happening right now, as well as high grading, which is mining only the highest grade spots of a mine leaving only grades that are not economical at these prices. Also there are not very many huge deposits being discovered. All of these are reasons why supply will shrink in the future.

What about demand?
I previously was worried about what if a deflationary environment  was to come, and that would drop demand. That could be true, as 2008 showed gold dropped (physical metal seemed to be selling at high volumes though). Even if this is the case though, What has me bullish is the middle class in china and India is growing greatly and they are big buyers of gold! This is what Frank Holmes calls the love trade. This is new demand coming to the market as they have more cash to spend in the future! This will help drift the price of gold upwards, and if another harsh bear market was to hit gold, that would hurt future supply from even less funding for exploration, so the future bull market will just be that much greater. The demand will grow and supply for the time being will shrink until the price drifts upwards enough.

Like Rick Rule says, the cure for low prices is low prices. I cant promise this is the bottom in the metals, but if its not, it will make the bull market so much great due to even less supply.

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A great opportunity setting up: Uranium

As of today, the price of Uranium is going for 18 dollars a pound. This will result in a huge opportunity in the next couple of years. The average cost to product Uranium is about 31 dollars on average. The numbers present a huge loss for producers, and I believe the lowest cost Uranium producer in north america can produce it for about 22 dollars so everyone is taking a loss at these levels. This will cause mine closures which will cause the supply coming to the market to shrink. This will not have immediate effect because there is still an over supply on the market which is the reason for the price falling in the first place. Marin Katusa, who is a very smart guy in the resource sector when it comes to investments, says the over supply will last 6-18 months. I haven't done the math on this myself but I trust his is accurate. What this means when the over supply has been used up, we will see a nice rally in the price of uranium. I'm not sure what it will go to, but I know that the beat up companies in this sector will rally greatly. Profits will be made if you put your money in the right companies. I have not yet invested, but I will be entering a position starting in 2017 so I can position myself for possible gains. My belief is you could see 200% gains or more if your in the right company's. I personally am looking at UEC at the moment, but do your on research because these are risky plays and you can lose a huge amount, or all of your investment. There is great risk involved in these trades always.

  

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Update on the markets

Last week, gold had a nice drop. It broke its support line of the 1305 area which triggers the stop loss which is the reason for such a dramatic fall in price. I was being careful of this level being broken, and as I saw it break, I was hitting the sell button on all my mining shares. I sold them for a loss compared to the day before, but still closed profits about 150% roughly year to date. I managed to buy back the majority of them all below what I sold them for, and now I currently wait to see how this will play out. The support of 1305 range will become a resistance now, so we could see gold go up as high as that on a bounce. The bottom is 1242, so that level will be support, if it breaks that level, Ill most likely sell my shares again, On the shorter term, it is a bit more trickier to predict where the markets go, but on a longer term, I could imagine silver and gold go up. I am still cautious about the precious metals though. Deflation is overpowering inflation it would seem, which could bring down the metals. This would provide a fantastic buying opportunity, but perhaps if this plays out, wait for the massive printing to be started as a central bank guarantee to make gold prices higher.

The stock market is hovering still near all time highs, which is a bit of a surprise to me. I expected the markets to crash this year, which is still possible but I did not think about it being election year. I strongly believe shortly after the election, the stock market is going to plunge, but until then, the plunge protection team I'm sure is hard at work. That could be the reason for such the tight trading range lately. If Hillary wins, the market could have one last rally after the elections. If Trump wins, I'd imagine the market drops sharply on the day. It would seem more likely Hillary will win, but It seems like the media is trying to deny how big of a group trumps followers are. I do not know who will win, but I assure you the market will tank by the end of there term, and money printing never seen before will be started, unless the winner is Trump. I'd imagine he would not allow the money printing to happen. It would make me unsure of my metals position. If the metals break past its current support, I will wait on the stock market to drop so I can make money shorting that with my profits from the metals. When the trading range stocks are currently trading in break out, you will be able to tell if you should go long or to short.

Crude oil today looks like its breaking out of the 50 dollar level. This could be a false break out in the end, but it could be a good long position instead. I am not risking my money on this trade. I would feel much more better shorting it if it broke past the 40 level which will happen most likely if this is a false break out. Oil supply and demand are bad and will get worse, as we are most likely in a recession if not heading for one. This has been the third longest economic expansion (and the weakest one) and it is heading towards the second longest expansion quickly. A recession is right around the corner if we are not yet in one. This recession could plunge the price of everything causing deflation if quick action is not taken. If Deutsche bank fails, this could also cause a deflation crash since it would bring down other banks with it. I would imagine world leaders are not dumb enough to let this happen so I would expect them to be bailed out. 

Thanks everyone for reading, these are my thoughts on the market. At a time like this, we have to be careful with our money and our investments. The future will be rocky and if the next recession is a crash like 08, these times will most likely be considered the second depression. Good luck to all in the investing field.

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Where the markets are heading

Last week, gold had a nice drop. It broke its support line of the 1305 area which triggers the stop loss which is the reason for such a dramatic fall in price. I was being careful of this level being broken, and as I saw it break, I was hitting the sell button on all my mining shares. I sold them for a loss compared to the day before, but still closed profits about 150% roughly year to date. I managed to buy back the majority of them all below what I sold them for, and now I currently wait to see how this will play out. The support of 1305 range will become a resistance now, so we could see gold go up as high as that on a bounce. The bottom is 1242, so that level will be support, if it breaks that level, Ill most likely sell my shares again, On the shorter term, it is a bit more trickier to predict where the markets go, but on a longer term, I could imagine silver and gold go up. I am still cautious about the precious metals though. Deflation is overpowering inflation it would seem, which could bring down the metals. This would provide a fantastic buying opportunity, but perhaps if this plays out, wait for the massive printing to be started as a central bank guarantee to make gold prices higher.

The stock market is hovering still near all time highs, which is a bit of a surprise to me. I expected the markets to crash this year, which is still possible but I did not think about it being election year. I strongly believe shortly after the election, the stock market is going to plunge, but until then, the plunge protection team I'm sure is hard at work. That could be the reason for such the tight trading range lately. If Hillary wins, the market could have one last rally after the elections. If Trump wins, I'd imagine the market drops sharply on the day. It would seem more likely Hillary will win, but It seems like the media is trying to deny how big of a group trumps followers are. I do not know who will win, but I assure you the market will tank by the end of there term, and money printing never seen before will be started, unless the winner is Trump. I'd imagine he would not allow the money printing to happen. It would make me unsure of my metals position. If the metals break past its current support, I will wait on the stock market to drop so I can make money shorting that with my profits from the metals. When the trading range stocks are currently trading in break out, you will be able to tell if you should go long or to short.

Crude oil today looks like its breaking out of the 50 dollar level. This could be a false break out in the end, but it could be a good long position instead. I am not risking my money on this trade. I would feel much more better shorting it if it broke past the 40 level which will happen most likely if this is a false break out. Oil supply and demand are bad and will get worse, as we are most likely in a recession if not heading for one. This has been the third longest economic expansion (and the weakest one) and it is heading towards the second longest expansion quickly. A recession is right around the corner if we are not yet in one. This recession could plunge the price of everything causing deflation if quick action is not taken. If Deutsche bank fails, this could also cause a deflation crash since it would bring down other banks with it. I would imagine world leaders are not dumb enough to let this happen so I would expect them to be bailed out. 

Thanks everyone for reading, these are my thoughts on the market. At a time like this, we have to be careful with our money and our investments. The future will be rocky and if the next recession is a crash like 08, these times will most likely be considered the second depression. Good luck to all in the investing field.

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Is gold a better investment than silver?

The gold bull market of this year, has brought a lot of attention to the sector. If you are new to this sector, you may be wondering which metal to buy, silver or gold? It is good to own both in my opinion, but I believe it makes more sense to have more silver than gold by a lot. Perhaps every 8 dollars you have in silver, you should have 2 in gold or around that range. The reason why I believe this is because the silver price moves a higher percentage than gold. If you like safety more, and don't need the extra reward, than gold is a better play. There is risk with owning more silver than gold. When silver goes up, it out performs gold in percentage but also when it drops, it also drops a bigger percentage so it all depends on if you believe this gold and silver bull market is here to stay or if its just a bear market rally. Both are possible, and both you can profit from. I myself like high risk, especially in this sector where its been beaten up so bad. Silver has gone up around 44% YTD while gold is up around 27% YTD roughly. There is one example of how silver out performs gold. If you want to take a look at the risk of a down fall, from the 2011 top to 2015 bottom, silver dropped about 70% while gold dropped closer to 45%, doing the numbers in my head so they may not be exact but close to. That is the extra risk involved in silver. It is possible the metals could drop lower, but assuming this happens, I would have to bet real estate would drop by 50-80% and so would the stock market. If this happens, the only safe play is physical cash since banks would be going under. This would offer tremendous opportunity though as well so be prepared if that does happen but my belief is the federal reserve and all the other central banks will print trillions to stop this. The government would go bankrupt if this were to happen since they would receive less tax dollars, they would default on the debt. They have to inflate rather than deflate in order to keep our current system going, which should change sometime in the coming years. When, I do not know but it is coming one day. You now know the leverage you can use through silver, there is even greater leverage using the mining shares, which of course come with an even greater risk since an individual company can go bankrupt at any time for a number of reasons which we can't predict. While silver is up 44% YTD, mining companies are up in between 100% and 500%! Thats incredible leverage, but of course that's not for everyone. The current pull back in the mining shares sector almost scared me enough to get me out of my positions watching my portfolio go down 37% roughly from its peak. It offers incredible leverage but its hard to be at peace every second the market is opened. You have to have a strong stomach for this leverage. They also dropped about 90% or more from there 2011 peaks. A lot of companies went bankrupt.

I would not recommend buying or selling, as the future is still unpredictable, but get educated so you can take advantage on upcoming opportunities. Thank you for reading, and wish you the best investing.

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Is it time to buy gold?

Gold has shown great returns leaving everyone with a great question. Is it time to buy or time to sell. Daily, I have been getting worried and ready to press the sell button watching gold go near its support level down around 1305. I probably would of hit sell if it had gone to 1304! Luckily I didn't and japans central bank was a positive for gold, as well as the fed. No interest rate hike! That is only a short term move for the market I believe though. In order for me to be bullish on gold, we are going to have to get higher in the 1350s level and then break through that high around 1380. This could still be a bear market, and we could be experiencing a bear market rally. Thats what Harry Dent believes, who is a smart guy. He could prove to be incorrect with his deflation theory assuming that the fed printing trillions will not stop this when it comes. He could be right or someone like Jim Rickards could be right with their 10,000 dollar gold which seems more likely but only time will tell. I am still very skeptical of this bull market in gold, but I am heavily positioned to profit from it while being prepared to leave the market the second I believe it is going to reverse its trend to its bear market. I do believe much higher gold prices are going to come possibly up to 2500-3000 range, or higher. Yes higher, it is very likely considering we already know the reaction that central banks will do if they see any signs of deflation, which could be close considering America looks like its already in recession. They will print again and possibly go negative interest rates. I cant imagine gold going down in a negative interest rate environment. The way I view the gold sector is if your in the right stocks, you can only lose 100% of your investment, but there is potential to make 50x your money. Those odds, I like alot. I do believe gold has more room to go but we have a lot of walls to break before its in the clear bullish view so be careful and ready to sell if the market changes.

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The big crash

As of today, the major stock indices are close to highs. It must be time to celebrate and buy more for the breakout levels, right? I would disagree. The higher these markets go, the worse the reward to risk ratio gets for investors. I'd be selling into these rallies but I would not suggest to short sell it because there are ways to manipulate the markets upwards as it has been already in my opinion. The earnings for the majority of the stock market has been declining for about a year-two, but stocks have been rising, does that make any sense? The only reason for the prices of these stocks to continue going up is because of the companies buying back stock. These causes the Earnings Per Share to look attractive evening though the actual earnings are decreasing. If earnings are decreasing, they can only continue buying back shares for a limited time which. Mutual funds and hedge funds have been selling more than buying recently, so this should cause the market to go down when these buy backs slow down or stop. Once the previous lows made recently on the stock market get taken out, stocks will only have further to drop. This is when you will know its safe to short sell or buy an inverse ETF to profit from the downfall of the S&P and Dow jones.

Global economies are currently showing weakness, and this is dangerous for investors. China is still in a rut and the U.S looks like it could be following. Europe has negative rates and is printing like crazy to fight deflation. This will be what the U.S will most likely do as well if we start seeing deflationary symptoms pop up again. This is a reason why gold should be a strong buy, the fundamentals for gold are strong, and it would appear an uptrend has start in the gold market. There has been a shift with money flowing into the gold sectors at a very fast pace. Look at the mining shares, all mine have gone up 100-300 percent, and thats from me buying when i noticed the trends were starting. Right now, gold is having a pull back, which is why I am making this blog, to hopefully convince people to decide to get into gold/silver and possibly mining shares as well. Gold is a currency, while mining shares are an investment, and have more risk but even more reward.

If global economies are weakening, we can expect oil to go down lower. Oil is currently at 50, and it can go up still, but I believe this rally is fake. They have shipping large amounts of oil to china to be stored, which takes the concern away from U.S storages being almost full. If U.S storages were to be completely full, imagine how fast the price of oil would drop. Oil is being produced faster then consumed, and thats what spells disaster for the oil prices. This trend has to change before oil can make a bottom. The dollar could get weaker though preventing oil from breaking its low around the 26.50 range. If the dollar gets weaker though, it would create a higher gold price. If you look at gold and the dollar, you can see how one goes up and the other goes down. My thoughts are its more profitable to short the dollar by buying gold then to short oil, and most likely a lot safer. Oil is something I will be investing in when I notice the trends changing for supply and demand. 

Real estate value could decline, and most likely will, but this will be a buying opportunity for anyone who is a POSITIVE cash flow investor. Chances are any strong deflation in the economy will be tackled with inflation from helicopter money. I would not buy and hold to flip. My suggestions for anyone who is in mutual funds should sell right away, the risk to reward is terrible. I would also consider holding cash for upcoming opportunities, but Id keep a good position in gold to profit. U.S treasury bonds will most likely go up as a rush of money flies to what people believe is a safe haven, but I would not trust this investment long term. I hope you all take action to profit and be in a position to acquire any opportunities that come up in the future years. We could be seeing something similar to the great depression, but we will see currencies destroyed trying to fight this if this happens, and this is what I believe will be the big crash, and these are my opinions of what asset classes will do.

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