The World is accelerating. It is clear especially when you look at the amount of bad news we are being fed. Markets react violently – we saw that during Brexit vote. Aside from more remarkable events, the rest is only the white noise of information which makes it harder, not easier, to invest. Despite tough circumstances of the market, there is still a possibility to find companies with healthy fundamentals and good perspectives for growth. Much easier it is to find firms hiding their own problems with accounting tricks.
The first half of 2016 was definitely good for those who invested in precious metals. However, great results of gold and silver are nothing to compare to the equity of miners. Since the bottom of 18 January index of small miners (with a capitalisation of 5 bn USD or below) nearly tripled.
I have a lot of reasons to be glad because of this. My ‘Intelligent Investor’ students were given GDXJ buy recommendation when its price was 19 USD. Today it is 49 USD. After such a great race to the top should we start looking for cheaper assets?
Revolution on the horizon in the US
During the last decade, we witnessed militarisation of the police force in the United States. All those measures are in line with optional introduction of martial law during next crisis – which will be worse than this from 2008. Police training to pacify violent rioters yields unexpected results.
Since the 2008 crisis, PIIGS’ financial problems are getting worse. I want to highlight that the banking sector is the one with the biggest risk of insolvency. During recent months I wrote few times about bad situation of Italian banks. While mainstream media focus on everything but the facts the situation doesn’t improve – a few days ago strictly financial matter evolved into a political quarrel. Matteo Renzi – Italy’s PM – accused the head of the ECB Mario Draghi of not doing enough for his country with regard to collapsing banking sector. This is how one man can be publicly blamed for the crisis felt by the whole nation.
Since the end of Second World War the whole world could observe the process of unification of Europe. For several decades it was limited by existence of the USSR but Western Europe developed fast and significantly raised standard of living thanks to Europeans coming together. After the Soviet Union collapse the only logical way to expand was east.
Prices of gold and silver now relive their renaissance. Growing uncertainty in the market due to the ever more probable interest rate increase by the FED and another round of global QE made sure that investors turned to metals. Generally, during those uncertain times and an environment of negative real interest rates (when even interest on deposits or bonds cannot catch up with inflation) precious metals record their great surges.
After recent lecture for ASBIRO University, many people started asking me about investing in stocks. Ultimately, it is the main group of assets for 90% of investors. In my opinion, the best question was about investing in emerging markets in the light of the huge wave of QE. It touched the official increase of money supply by central banks and also financial tricks enabling destruction of currencies through the Exchange Stabilization Fund.
Brexit referendum pushed financial markets into turmoil. Even if this is only the beginning of tough times the main reason behind this is definitely not the result of the UK referendum. What we see today is merely a result of financial markets being disconnected from the real condition of the global economy. The red flags signalling overpriced markets (especially in the case of the US) now are raised not only from statistical data but also from experienced investors having a good forecasting record.
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- Permanent portfolio models and their long-term ROI
- The Madness of the ECB
- Trader21 - lecture presented at Fx Cuffs
- Are we waiting for another ‘2008’?
- Why Brexit is sending seismic quakes all over the world?
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- 2016 Forecast - Checked!
- Bond market crash – an accident or a new trend?
- War on cash gains fresh impetus
- The world of gold is about to change
- Independent Trader News – summary of December 2016, part 1
- The Prophecy of Ben Bernanke
- Will FED initiate a (mini)crisis?
- FANG - stocks the street buys
- How to conjure results better than expected?
- How bankers created National Socialism – a history lesson