"Kip's VRA financial newsletter is a MUST read for every saavy investor in this country. Disregard it at your own peril. His mantra is my mantra: Buy Gold and China. Sell short on pretty much everything else. Kip Herriage's newsletter is my financial Bible."

--Wayne Allyn Root
2008 Libertarian Vice Presidential candidate
Author, "The Conscience of a Libertarian"

Twitter: @kherriage

Karl Bessey

Mary Dee

Mike Budny 
Twitter: @kherriage

Thursday
Aug102017

VRA Update: The Stars Are Lining up Perfectly for Precious Metals and Miners

VRA Update: The Stars Are Lining up Perfectly for Precious Metals and Miners.
Aug 10, 2017

Good Thursday morning all. First this morning, a couple of important VRA reminders...for both our LT Subscribers and especially our newbies. My investing style is hyper aggressive...if you're looking for safe, mutual fund type returns, I am probably not your guy. I have one primary goal...to make my members wealthy. In order to do this, we must crush Mr. Market. Because, he certainly enjoys doing the same to us. 
As a rule, I never recommend more than 10 stocks at a time. I believe in building a diversified portfolio, but not overly so. It's hard to make huge returns if you own a portfolio of 50 stocks. I am from the Peter Lynch school of investing. I buy a stock...or an asset...and I continue to dollar cost average into it as long as the story continues to hold up. I believe that without a good management team, the company...regardless of the quality of their product or potential...has very, very little chance of succeeding, long term. 
My VRA Trading & Investing System combines fundamental and technical analysis. Roughly 70% fundamental and 30% technical. I study global trends and macroeconomics and long term cycle analysis. Please make sure and login to your VRA Members Site to ensure that you are positioned properly. 
Today, something most significant looks to be occurring. As we've been covering, the global reflation trade is picking up serious steam. Many/most of the most important base metals...used in manufacturing and construction all over the world...are soaring in price. We're now seeing 2 year to all-time highs in the prices of copper, aluminum, lead and zinc, to name just a few. These highly inflationary advances come at a time when global stock markets are soaring as well. Make no mistake about it, global growth is back. It will be followed by global inflation. 
Now, as of this morning, gold, silver and GDX (mining ETF) look very much like they are ready to go on a serious tear. The stars looks to be perfectly aligned. As I write, gold is up another $10/oz to $1289, a more than two month high. Silver has been ramping even further higher, as its doing again this morning, with a last price here of $17.16, +1.8%. GDX is showing gains of 1.3% this am, approaching the all-important $23/share.
From a technical point of view, here's the most important event occurring this am. For the first time in months, gold, silver and GDX are each trading above their highly important 200 day moving averages (dma). Combined with the fundamental reasons that I love precious metals and the miners, should these technical breakouts hold up, a flood of buying will begin to pour into this asset class. 
In yesterdays update I shared the cup and handle formation for gold. Here it is again. I repeat, this is a highly bullish technical formation. Here's what we want to see next; a move through $1300/oz...on heavy volume...followed by a move through the 52 week high of $1360/oz. Then the floodgates open. 
This morning, lets also take a look at the cup and handle formation in GDX (below). Frankly, this chart looks even better than the chart of gold. And remember, the miners move 3-5 x faster than the underlying commodity. 
Now, here's what we want to see happen next...and folks, what I'm about to say here is super important. GDX must break through the $23 level and it must hold over its 200 dma, currently sitting at $22.57. I also want to see the breakout occur on heavy volume, preferably back to back days of 100 million shares traded. These are our bogeys...they are most important. Should these events "not" take place, it will constitute a technical breakdown. Or should I say, another technical breakdown. Precious metals and miners went through a BRUTAL bear market of 3.5 years, from 2012 to late 2015. Following the lows of 2015, the move higher has been semi-consistent, but spotty and frankly, boring. 
This has resulted in the cup and handle formation we see today...a coiled spring of significant proportion. Just one event is left...the breakouts I've detailed in this update. Gold through $1300/oz and GDX through $23...on heavy volumes. All of the corroborating evidence that I see...both fundamental and technical...says that this breakout should occur now.
Until next time, thanks again for reading...
Kip

 

Thursday
Jul272017

VRA Update: Something Big is Brewing in Precious Metals and Miners

My love affair with gold and silver...precious metals...goes back to when I was about 16. I listened in on a meeting with my father and a financial advisor as the advisor convinced my father to buy gold at $800/ounce. As you can see in the chart below, gold then proceeded to drop to $290/ounce over just the next couple of years.  

While serving as bad financial news for the Herriage family, the life experience was important for me. One, my love affair with gold was born and two, I was introduced to the importance of being an investment contrarian. When everyone is head over hills in love with an investment, as they loved gold back in 1980, that's almost always the time to consider selling that investment. 

Today, gold is rarely talked about, certainly not on Wall Street. The manipulators have suppressed the price of gold, while at the same time, global governments have printed money and issued debt like they were Weimer, Germany. From 1921 - 1924 (following the devastation of WWI), the German economy experienced a level of hyperinflation that the modern world had never seen. Before it was over, one gold mark would buy you 1 billion paper marks. By the end of 1923, $1 USD would buy you 4,210,500,000,000 German marks.  

 

 

And here's what it meant for gold investors in Germany. By November 1923, it took $87 trillion German marks to buy a single ounce of gold. #hyperinflation 

 

No...we're nowhere near this level of financial inanity/insolvency today. But then again, in 1919, how many Germans thought this could possibly be their future? Much less, within just 4 short years...?

The fear of the financial unknown...this is why we must own gold and silver today. Gold has served as the ultimate store of value for the last 5000 years. Gold remains as the only true currency on the planet. A planet that, historically speaking, has never seen a single fiat currency that has remained standing. Today, 1 ounce of gold will buy you the same high quality, tailored mens suit/womens dress that it would have purchased you 100 years ago. Since the creation of the Federal Reserve in 1913, the US dollar has lost 97% of its purchasing power, while gold has soared in value (most certainly after it was removed from the dollar peg in 1971. Thanks again Nixon).

But precious metals are more than just gold & silver. I believe that we must own the shares of the companies that produce them as well...the gold/silver miners. Remember, during the Great Depression, the single best stock to own was Homestake Mines. During the 1930's, $1000 invested into Homestake would have turned into $6,760 (by 1938), a return of roughly 600% (close to 800% with dividends)...as the rest of the stock market plunged in value. 

 

It's with this historical backdrop that I make the case again for mining stocks, particularly after the events and results we've just witnessed. I believe they are forecasting a most significant breakout that's just around the corner. This week, two global mining stock leaders, Freeport McMoran and Newmont Mines, reported earnings. Yes, their earnings reports were solid...but as always, it's the markets "reaction to the news" that I believe we should be paying the most serious attention to.   

First up, Freeport-McMoran (FCX). FCX was up a huge 15% on their earnings beat. Again, their earnings might have surprised Wall Street, but anytime a stock surges 15% it tells us that something else is likely going on. As the chart below makes clear, this ramp took FCX convincingly back above both its 50 & 200 dma and a clear break of the bearish downtrend line. This kind of one day move is rarely a one-off, particularly when it comes on the heaviest volume in more than 6 months. In gamblers parlance, this kind of move is a "big tell". I believe its telling us that the bull market for the miners is back.    

 

But FCX was not alone....Newmont Mines (NEM) ramped a big 7% as well. NEM is the worlds largest miner and as a market leader, their earnings and stock action are followed very closely. We see very similar chart action to the move in FCX, with a clear break of a bearish trend line and a breakout of both its 50/200 dma. Again, I see this as highly bullish for the entire sector. 

 

Finally for now, lets take a fresh look at GDX (miner ETF). This is where the move MUST play out for us to officially become wildly bullish again. GDX may have been up less than 1% (.91%), but gold was down .41%, making GDX's gain more impressive. 

What must we see? I want to see GDX close convincingly above both its 50/200 dma. But again, I said "convincingly", meaning that I want to see GDX close above $23/share...and yes, I prefer that it happens on strong volume (as we saw in both NEM and FCX). 

I believe that it's very possible that we get a big move higher for GDX. I can tell you that LOTS of traders are watching for exactly this. 

I first recommended gold and silver in my second-ever VRA Update (in 2003). Gold was trading at less than $400/ounce and silver was just under $5. Combined, VRA PM & mining stock related profits have topped 3000%, since inception. 

It's my belief that the coming bull market in PM's and miners will be nothing short of extraordinary. We'll soon know if the rest of the investing world feels the same way... 

Until then, thanks again for reading...

Kip

Friday
Jul142017

VRA Update: Dow Theory BIG Buy Signal. Investor Sentiment Buy Signals Continue. 

VRA Update: Dow Theory BIG Buy Signal. Investor Sentiment Buy Signals Continue. 

The markets continue to flash buy signal after buy signal as FED Chair Yellen hints loudly that we may see only modest rate hikes going forward...looks like someone is trying to keep their job (her term ends early 2018 and the inside word is that Trump is looking to replace her). There can be zero question that the president...regardless of who that person may be...wants interest rates to stay low for as long as possible. Near zero percent interest rates over the last decade have propelled stock markets higher around the world and have made the acronym TINA (There is No Alternative) the go-to investment theme of our time.
As tens of millions of retirees have learned the hard way, the days of putting your lifelong savings into CD's and bank savings accounts and expecting a decent retirement income are GONE. Of course, this was the FED's intention all along; force rates down to nothingness...which then forces investors into the stock market. Stocks of course are a far riskier proposition for investors but it's also forced trillions into the stock market (which then trickles into the economy), helping to propel price to earnings multiples into the stratosphere. 
Yes, QE (quantitative easing)...which totals $4.5 trillion in the US alone...is the ultimate in trickle-down economics, an economic concept first made popular by Ronald Reagan. Regan believed that by lowering tax rates (on both individuals and corporations) that the resulting prosperity would then "trickle down" throughout the system. The end result was the greatest bull market is US history. 
Today, the FED's QE represents a new breed of trickle down economics...but you'll hear NO ONE talk about it on TV or in MSM. Negative conversations about the FED are simply not allowed. If you think I'm kidding...I am not. Ask yourself this question; when is the last time you've heard...anywhere in the MSM...about the risks that out of control, money printing central banks are creating? 
I rest my case...
But folks, fighting the FED makes little investment sense...central banks are the investment "gods" (little g) of our time.
This is when I am forced to return to the wisdom of my early mentors...Michael Metz of Oppenheimer and Ted Parsons of Underwood Neuhaus (my first investment firm). Both of these investment giants have since passed away, but not a day goes by that I don't recall their wisdom. Both men taught me that "fighting the tape and fighting the FED" is the quickest way to the poor house. Today, with markets at all-time highs, it mights ZERO sense to "fight the tape". Secondly, and equally as important, with central banks determined to keep rates low while themselves buying stocks hand over fist, it's clear that "fighting the FED" is even more dangerous. 
Bottom line; regardless of the nosebleed territory we find the markets in, as smart money investors, we must continue to look for opportunities to make money on the upside. Perma-bears will ultimately turn bullish as well...and then...this is when the VRA will recommend getting out of the markets and going short. 
We have a big week in front of us with second quarter earnings fast approaching. Beginning tomorrow, the big banks start reporting...then next week, its really on. Here are the most important earnings reports of the coming week:
Friday:
 
JPM
Citi
PNC
Wells
Next Week:
Netflix
BofA
Goldman
J&J
UNH
Harley
IBM
CSX
MStanley
Amex
Qualcomm
eBay
Microsoft
Visa
GE
--
Next up, the weekly AAII Investor Sentiment readings were released and it's almost hard to believe what we see here. Bulls are at just 28.2% (down 1.3%), bears are at 29.6% and a BIG 42.1% of investors are neutral. 
Sure, lots of complacency...which is always a concern...but I'll repeat, until the bullish percentage breaks 50%, and then stays over 50% for multiple weeks, any kind of serious market top is HIGHLY unlikely. Incredibly, bears still outnumber the bulls. And, because we know that investor sentiment is one of the best gauges of where stocks are headed, we must continue to bet on higher prices...as in MUCH higher prices. BTW, this is the 19th consecutive week that optimism is below its long term average of 38.5%. Wow.... 
AAII Investor Sentiment Survey
Since 1987, AAII members have been answering the same simple question each week:
[Do you feel the direction of the market over the next six months will be up (bullish), no change (neutral) or down (bearish)?]
The results are compiled into the AAII Investor Sentiment Survey,
which offers insight into the mood of individual investors.
Survey Results for Week Ending 7/12/2017
Data represents what direction members feel the
stock market will be in next 6 months.
The AAII Investor Sentiment Survey has become a widely followed measure of the mood of individual investors. The weekly survey results are published in financial publications including Barron's and Bloomberg and are widely followed by market strategists, investment newsletter writers and other financial professionals.
Next up, and I remain amazed that so few are talking about this, both the Dow Jones and the transports hit an all-time high on the same day. Again, my mentors were BIG on something called the "Dow Theory Buy Signal" (with thanks to Richard Russell, a major adapter of this concept, who has also since passed away). Russell and I used to speak 1-2 times a year, having first met him when I was in my late 20's, and his research when like this; when both the Dow and Transports are in confirmed bull markets, we MUST be bullish. Not many refer to the Dow Theory today, but again, with combined fresh all time highs on the same day, this confirms for us exactly how positive the markets remain. 
Here's the 1 year chart of the trannies. Big, beautiful breakout higher....it tells us that LOTS of economic growth is taking place because LOTS of stuff is getting transported.  
The VRA will continue to look for opportunities on the long side of the equation. Companies that will be major beneficiaries of the continuation of the global reflation trade.

--
Until next time, thanks again for reading....
Kip

 

Wednesday
Jul122017

VRA Update: Housing is Rocking. Perma-Bears Continue to Amaze.

The Trump-mania bull market continues with no signs of slowing down. The VRA has been bullish on US markets since early 2013 and my LT targets remain in place...Dow Jones 25,000 on the low side...but what's more likely is a massive blow-off rally phase that sees the DJ top 30,000. All before the end of Trumps (first) term.

First up today, the broad market and some VRA Analysis. It never ceases to amaze me how the perma-bears come out of the woodwork each time we have a modest correction. I've fallen into this trap a time or two along the way, but only from the position of short term, massively overbought market trades designed to make short term profits as the markets corrected. However, longer term, the VRA has been bullish since 2013 and I see no reason to deviate from this view today. This is when I have to post a fresh housing chart, to make my case as clear as possible.

Below is a 15 year chart of HGX (housing index). I've included two blue circles. The first represents the 2005 highs in housing. Once the highs were in place, the bottom really began to fall out in early 2006. This is when I began to post warnings to VRA Subscribers that something big was coming and that it almost cleanly would not end well. I was a bit early...the stock market would hold up until 2007...but then the bottom fell out and we all remember the end result; the worst economic crisis since the Great Depression (while the VRA booked 630% in net profts during the worst 6 months of the decline). 

That horizontal blue line you see below tells us something very interesting, namely that HGX is just now approaching a new all-time high for housing stocks. Let me repeat; in my now 32 years in the investment business there has never been a significant market top when the housing market was performing this well. This is a point that perma-bears cannot argue...which is why they almost never discuss it.  

Two final points on housing. One; Donald Trump is one of the most successful real estate investors in all of history. As president, he knows that solid real estate/housing markets are the underpinning of a strong economy. He also knows that bank lending and money flows hold the key to expanding said economic growth. Hence, it's highly unlikely that this pattern of a strong housing market will reverse anytime soon. Add to this, the FED....even as they slowly raise rates....has made it very clear that they are more than willing to let the economy run hot before worrying about inflationary pressures building. Yellen and team have one primary job...protect their banking brethren...and they do this by insuring that the growth of debt markets is allowed to continue, without friction. I see nothing that says this commitment is about to change. NO broad market top is likely until housing reverses...

Next up, take a look at this 3 year chart of QQQ (Nasdaq 100). Recently, the QQQ fell below its 50 dma and is fighting to regain this important moving average. While not yet at extreme oversold levels that we've seen on the 3 occasions marked by the vertical blue lines below, QQQ is beginning to approach the same oversold levels that have marked moves higher of 20% plus. The bears that have come out of hibernation recently and are boldly predicting that the top is in place and that the next crash is directly in our path. 

Highly unlikely. Don't fight the tape...don't fight the FED (especially when central banks globally are aggressively buying both debt AND equities).

Yes, I continue to believe that FANG stocks are ridiculously overpriced...this certainly applies to Netflix (NFLX), which I see as the next company to be steamrolled by Amazon (and a myriad of fresh competition), but it's highly unlikely that the Nasdaq/QQQ will see a final top until we have that blow-off mania phase that marks the top of every major bull market. 

Let me also repeat; the Dow Jones will likely reach 25-30k before any final top is in place (barring the always possible black swan surprise). 

Next up, precious metals and the miners. I'm posting just one chart here below....its of GDX (miner ETF). This chart is not my handiwork but its making the rounds online and we see some most important developments in it. What you see below is GDX trading back towards the $21 level, a triple bottom going back to March. This level has served as a springboard for sharp moves higher each time and with GDX hitting 85% oversold, I look for exactly the same this time. 

As tempted as I am to aggressively recommend additional purchases of my favorite miners, I must also stick with the VRA System. This group (including gold and silver) MUST regain their primary trend bull markets (50 and 200 dma). Until this happens, caution is warranted. But remember, these are technical indicators only....the fundamental story of PM's and the miners could hardly be more positive. Massive global debt and bubbling currency inflation tells us that we MUST own this group for the long term. 

HT @bamabroker

Until next time, thanks again for reading...

Kip

Wednesday
Jun072017

VRA Update: The Next Big Move. Gold and Bitcoin.

As our bubble bull market continues, we see some incredibly interesting chart developments for gold/miners and the continued rollover in the reflation trade, as this time evidenced by the mini-crash that's occurring in the financials. Also, I highly encourage you to read the article at the end. It's from one of my most trusted and long term experts, Paul Craig Roberts. If you want to understand cryptocurrencies a bit better, along with the tie-in to precious metals and their continued manipulation, I think you'll enjoy this piece.  I sure did.

But first, lets take a look at the chart of gold that everyones talking about right now...I must have seen this weekly chart of gold re-tweeted several hundred times in just the last few days (rare for any chart of gold...likely because gold does not have .com at the end of it). 

In this weekly chart, from the highs of 2012 ($1900/oz) we see that gold has been in a downtrend. That blue trend line that you see has served as resistance on every rally attempt since. It's almost as if some mystical force has kept this chart in front of them and waved their magic wand, sending gold lower on each occasion it dared to cross this line. Of course the wizard I hint at is the FED and her sister criminal central banks globally. 

Here's what we need to see; should gold trade through $1300/oz ($1297 this am) this will be the definitive break higher that will tell the traders of the world that gold is about to have a rocketship-like move higher. The next chart might just give us the ammo to make this prediction...

This is the GDX (miner ETF) chart. Here, we see each instance that the FED has raised rates. The first hike was in December 2015...we were ALL over this in the VRA and made serious money as the gold/silver and the miners ramped 152% higher over the next 9 months (our profits were 3x).

The second hike was December of 2016. Again, we called that move higher, and it produced a GDX gain of 44%. The last hike was in March of this year and we saw a much more compressed move higher (though also very short term) of just 19%.

But looking at this chart tells us two things clearly; 1) GDX sells off into rate hikes and 2) GDX then rallies sharply after a rate hike. Folks, this is what we must be ready for.

The FED decision is just 1 week away....we'll focus on our specific game plan going forward.  

 

Here's the chart of BKX (bank index), showing the big reversal lower, since the March highs. The big banks announced that trading revenues are slowing...of course we know that loan growth is doing the same. This is a big pattern change...we'll soon know if it signals a reversal in the US economy or merely a slowdown. But yes, what you see below is a head and shoulders pattern...if that right shoulder breaks down, look out below.

 

And this chart (courtesy of Sentiment Trader) might just be the market tell that we needed to see to make sense of the disconnects occurring in the market. 

As you'll see, each time (since 2007) that the Nasdaq has hit a new 52 week high, while at the same time less than 55% of small caps were above their 50 dma, a sharp sell-off has occurred.   

Heres the article from PCR on gold and bitcoin. PCR is the man...plain and simple. I write about him at least 1-2 times a year. He worked as the #2 man at the Treasury under Reagan and then was top editor at the WSJ. But his honesty banished him to journalist wilderness. PCR is a friend of mine....he's a friend of ours...I highly encourage you to register at his site and support/follow his work. This piece is spot on. 

BTW, if bitcoin can soar 600% in less than a year, what do you think gold might be abe to do? My target remains $2000/oz within 9 months. 

Until next time, thanks again for reading...

Kip

 

Is Bitcoin Standing In For Gold?

Is Bitcoin Standing In For Gold?

Paul Craig Roberts and Dave Kranzler

In a series of articles posted on www.paulcraigroberts.org, we have proven to our satisfaction that the prices of gold and silver are manipulated by the bullion banks acting as agents for the Federal Reserve.

The bullion prices are manipulated down in order to protect the value of the US dollar from the extraordinary increase in supply resulting from the Federal Reserve’s quantitative easing (QE) and low interest rate policies. 

The Federal Reserve is able to protect the dollar’s exchange value vis-a-via the other reserve currencies—yen, euro, and UK pound—by having those central banks also create money in profusion with QE policies of their own.

The impact of fiat money creation on bullion, however, must be controlled by price suppression. It is possible to suppress the prices of gold and silver, because bullion prices are established not in physical markets but in futures markets in which short-selling does not have to be covered and in which contracts are settled in cash, not in bullion.

Since gold and silver shorts can be naked, future contracts in gold and silver can be printed in profusion, just as the Federal Reserve prints fiat currency in profusion, and dumped into the futures market. In other words, as the bullion futures market is a paper market, it is possible to create enormous quantities of paper gold that can suddenly be dumped in order to drive down prices. Everytime gold starts to move up, enormous quantities of future contracts are suddenly dumped, and the gold price is driven down. The same for silver.

Rigging the bullion price prevents gold and silver from transmitting to the currency market the devaluation of the dollar that the Federal Reserve’s money creation is causing. It is the ability to rig the bullion price that protects the dollar’s value from being destroyed by the Federal Reserve’s printing press.

Recently, the price of a Bitcoin has skyrocketed, rising in a few weeks from $1,000 to $2,200. Two explanations suggest themselves. One is that the Federal Reserve has decided to rid itself of a competing currency and is driving up the price with purchases while accumulating a large position, which then will be suddenly dumped in order to crash the market and scare away potential users from Bitcoins. Remember, the Fed can create all the money it wishes and, thereby, doesn’t have to worry about losses.

Another explanation is that people concerned about the fiat currencies but frustrated in their attempts to take refuge in bullion have recognized that the supply of Bitcoin is fixed and Bitcoin futures must be covered. It is strictly impossible for any central bank to increase the supply of Bitcoins. Thus Bitcoin is standing in for the suppressed function of gold and silver.

The problem with cryptocurrencies is that whereas Bitcoin cannot increase in supply, other cryptocurrencies can be created. In order to be trusted, each cryptocurrency would have to have a limited supply. However, an endless number of cryptocurrencies could be created that would greatly increase the supply of cryptocurrencies. If entrepreneurs don’t bring about this result, the Federal Reserve itself could organize it. 

Therefore, cryptocurrency might be only a temporary refuge from fiat money creation. This would leave gold and silver, whose supply can only gradually be increased via mining, as the only refuge from wealth-destroying fiat money creation.

For as long as the Federal Reserve can protect the dollar by bullion price suppression and money creation by other reserve currency central banks, and as long as the Federal Reserve can keep the influx of new dollars out of the general economy, the Federal Reserve’s policy adds to the wealth of those who are already rich. This is because instead of driving up consumer prices, thus threatening the US dollar’s exchange value with a rising rate of inflation, the Fed’s largess has flowed into the prices of financial assets, such as stocks and bonds. Bond prices are high, because the Fed forced up the price by purchasing bonds. Stock prices are high, because the abundance of money bid prices higher than profits justify. As the US government measures inflation in ways designed to understate it, the consumer price index and producer price index do not send alarm systems into the markets.

Thus, we have a situation in which the Fed’s policy has done nothing for the American population, but has driven up the values of the financial portofilios of the rich. This is the explanation why the rich are becoming more rich while the rest of America becomes poorer. 

The Fed has rigged the system for the rich, and the whores in the financial media and among the neoliberal economists have covered it up.

http://www.paulcraigroberts.org/2017/05/31/bitcoin-standing-gold/