Precious Metals and the Crash

We have  been warning our clients and readers about a likely market crash for years now.

The QEs and zero interest rate programs would not save the markets and make the economies grow again. Money printing and more credit to those who cannot afford it just do not make an economy grow. On the contrary: the economy grows thanks to savings and investments, along with a strong currency and interests rates that truly reflect the risks involved.

Those Central Banks programs and policies actually increase the speculation and debase the currencies. It’s all about a game, where the king’s friends – the ones with granted access to cheap credit – win and the others have to pay for it.

Many have heard our alerts and positioned themselves, by shorting risky assets, increasing exposure to high quality fixed income and allocating part of their portfolios into precious metals (physical gold and silver).

The portfolios we manage abroad are already up by more than 10% so far this year, with emphasis on our long positions on gold, silver and on stocks of precious metals mining companies. Moreover, our short positions are performing stunningly well, especially Deutsche Bank, Netflix, Amazon, Tesla and Under Armour. We are also short selling several banks in Europe and Texas, where the former are likely to be in jeopardy thanks to their ties to Deutsche Bank (directly or indirectly), and the latter are exposed to the falling oil prices (and consequent deterioration of local oil & gas companies).

The Central Banks have been releasing statements on a weekly basis (nearly daily actually) that should have supported the prices of risk assets, but, for the first time in a very long time, they did not succeed. That is an almost unheard-of event. And it shows us how desperate they are to prop up the markets!

The FED upheld the belief that the US economy was strong and could stand 4 rate hikes throughout the year (while we were convinced it was impossible); Mario Draghi, president of the European Central Bank, said he would do “whatever it takes “; The Bank of Japan unexpectedly introduced negative interest rates and the Bank of England introduced a relief program. None of those worked out and the markets are still peddling fiction plummeting!!!

Many criticized our call and claimed that interest rate hikes were bullish for stocks and bearish for gold and bonds. What we have seen so far is quite the opposite: gold has already risen by more than 13% since the first hike and stocks are plunging. The truth is that the king is naked and, little by little, people are accepting the reality as it is. And the truth is not pretty at all.

We believe this to be the beginning of a long rally in precious metals and the ones who position themselves now, by buying physical gold and silver, will profit from it.


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