What are ya? Some Kinda Martian from Pluto!? (GDX,GLD,XBI)
We get a good bit of hate mail. Some of it derides our penchant for options trades, a realm of investing that many believe too fraught with danger to enter. Others believe that options trading is only for the ultra-wealthy, as margin requirements make a good number of our trades prohibitively expensive to launch.
And we admit it’s sometimes the case.
But the hate mail that’s most venomous generally revolves around the ‘market top’ theme that we regularly write and recommend toward.
Beyond our understanding that this greatest of all bull markets is now in the process of making a final blow-off top, the heights of which no one will accurately estimate, there’s also the issue of the social, economic and political fallout that ensues from such a topping process – and the fundamental change in lifestyle that surviving that process will entail.
Lifestyle Change? No big deal…
No, we’re not talking about a little less or more meat in your diet, or going minimalist in the apartment instead of forging a “San Diego Dry” look.
Fundamental means fundamental.
And that means almost nothing you’ve considered.
To wit –
We claim that the internet, the electricity grid, the water system, including all current reservoirs and sewage infrastructures, will cease to function in the reality we foresee unfolding. Transportation options, too, will be limited to the two and four legged ‘horse-power’ varieties, while food availability, variety and quantity will also be vastly reduced.
What it comes down to – for us, here, at investment newsletter publisher Normandy – is whether long-term financial commitments to stocks such as Facebook, Google and Amazon, or even Bitcoin (and all its copycats) or even solid yielding electric, gas and water utilities, can be trusted to offer any return over the long haul.
And while the longevity of the market itself is something we also call into question, it appears to us the greatest risk will reside in equities from the sectors and type we refer to above.
What about gold and silver and the companies that mine them?
We get this question often.
It’s debatable whether a miner like Barrick Gold (NYSE:ABX), for instance, would still be operative in the reality that lies ahead, or whether those who own its shares would ever see a return on their investment. It’s extraordinarily difficult to see how that might play out.
But for the rest of those companies mentioned, we see no future whatsoever.
All of which returns us to the hard truth that investments in the above mentioned concerns will continue to offer tremendous returns – indeed, the best the market has to offer – until, of a sudden, they disappear.
And saying things like this is what gets us into trouble.
“Have you lost your bloody mind?”
“What planet do you live on?”
“The internet and our modern way of life will never disappear, but you likely will… No one’s going back to the 19th century.”
Alas, the joys of market prognostication…
So what to do?
For the better part of a decade, we’ve attempted to sell you on our Four G’s investment program, and we’re as committed today as we were in 2008 to convincing you that ‘Guns, Gold, Gas and Grub’ are the four key investments into which you should be channeling your earnings.
Without question, on these four assets you’ll most definitely see a return.
- Guns – we’re sorry to say, will be as necessary as water for keeping you safe and alive through the coming storm.
- Gold – will very likely be your principal means of trading for larger scale items, and, perhaps, securing your life or that of a loved one should the need arise, heaven forfend! It will also act as a portable means of storing your wealth.
- Gas – will emerge as a commodity as valuable as gold for small scale exchanges and for powering whatever transportation still exists after this major turning in earthly reality.
- Grub – is self-explanatory. Those who invest today in seeds and gardens and developing the know-how to successfully extract healthy, nutrient-dense food from the earth, will be able to keep on while all about them perish.
Our initiative for this week is directly related to our Four G’s theme, but first, we have a single trade to address.
It arrived on your doorstep on June 27th in a letter called Rolling Her Over, Again and Again. In that missive we recommended a four-legged trade, just one of which we are now going to close.
The trade had you purchase the XBI September 15th 85 CALL for $2.08, and today – four days from expiry – it trades for $0.29.
Take what you can get, brothers and sisters. It doesn’t look like it’ll get much better than this.
What’s the Space Alien Got for us This Week?
As mentioned above, it’s Four Gs investing time, and the focus this week returns to gold, whose latest price action, we believe, is a signal that a new bull market in the precious metals is underway.
This is the monthly chart for gold, as represented by the SPDR Gold Trust ETF (NYSE:GLD), a relatively good proxy for bullion.
Have a look –
What impresses us most is the turning that’s about to occur in the all-important RSI and MACD indicators, the first of which went convincingly bullish three months ago when it crossed above its mid-way ‘waterline’ (in green). A confirmation by the monthly MACD indicator is imminent, and when it does happen – most likely at the end of this month – a raft of technical buying will likely occur on the strength of that one signal.
Both daily and weekly RSI and MACD indications have been bullish for some months; the monthly confirmation will seal the deal.
Perhaps in anticipation of that happening, we’ve seen strong action in the gold pits of late (see chart below), signaling a likely move toward GLD 155 into the New Year.
To that end, we offer you the following action: a zero premium trade that favors the gold miners, represented by the VanEck Vectors Gold Miners ETF (NYSE:GDX) over GLD –- Content protected for Normandy Executive Lounge, Wall Street Elite, Executive Lounge members only]
With kind regards,
Hugh L’ O’Haynew