"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
Jul142016

VRA Update: US Markets HIGHLY Overbought; Headed Higher Still

Let’s get this out of the way, right away; US markets are now trading at 98% overbought (based on VRA Momentum Indicators). This is most typically when bad things happen to stock markets…but folks, this market has proven the shorts wrong time and again…and we know why: 

1) Central bank easy money…manipulation...forcing stocks higher

2) Negative interest rates (globally) have resulted in huge fund flows into the “positive rate” US…from Europe and Japan (and from China, where investors just wanted out of their own system).

3) And the story we’ve been telling for many, many months...share buybacks and M&A activity…both at record levels.

The share repurchase story got even bigger this week, as we learned that in just the S&P 500, companies bought back $161 billion in the first quarter…and have authorized $357 billion in buybacks through June.

Still, the VRA System would not allow me to recommend a major US equity index…be it the Dow, S&P 500, Nasdaq or Russell 2000…because each is trading at 97% overbought (or higher).

Rarely do we see this…and rarely does it not result in, at minimum, a decent sized pullback. But…as we know…central banks have a LOT of firepower. And boy oh boy, have they shown the world that they intend to use anything and everything at their disposal.

When you hear people say ‘Don’t fight the FED”…this exact scenario is what they had in mind.

Don’t Fight the Tape

I’ve written about this 2-3 times over the past month…but it’s significant enough to include it here, again.

Now that the market has hit a new high…after not doing so for over a year…research tells us something very interesting about what happens next:

The 21 other times in history that the S&P 500 closed at its first 52-week high in at least a year, including the times the index fell into bear market territory in between, the market was higher three months later 95% of the time, by an average of 11%, and higher a year later 95% of the time, by an average of 22%, according to data provided by MKM Partners and Krinsky.

The four previous times the S&P 500 made its first 52-week high in at least a year, without an intervening bear market—February 1995, November 1984, January 1961 and March 1954—the index was higher after three months each time, by an average of about 8%, and higher a year later each time, by an average of 28%, according to MKM data. 

As they say, history doesn’t always repeat…but it often rhymes.

I was also taught…as a young stockbroker by one of the legends in the business (his mentor was on Wall St during the ‘29 crash)…that the market anticipates 6 months out. Right now, the market is telling us that things “will” be better, in 6 months time…maybe a great deal better.

In part, I believe the markets are telling us that regardless who wins, Trump or Clinton(s), the US economy will improve...and that earnings have likely ended their 5 consectutive quarters of an earnings recession. 

BTW, if it feels like we are being whipsawed by this insane market, it’s because WE ARE. But through it all, one thing has held up…the markets internals have been very, very solid. That’s the biggest stock market “tell” that I know….

We will stay nimble…and we will stay heavily invested in PM’s and specific mining companies that will profit most from rapdily rising inflationary pressures, as we saw this morning in the Producer Price Index (which ran semi-hot in June at .5%). I have also warmed up a great deal to emerging markets...a number of painful bear markets globally have seen their lows, in my view. 

The risks to the market…heck, the risks to the world…seem to be ever present and growing. We will keep our eye on the prize…as we continue to “bash Mr. Markets head in”.

(We have some massive gains this year, with profits of more than 1200% in just two VRA Core Portfolio holdings).

Until next time, thanks again for reading…

Kip

 

 

Friday
Jul012016

VRA Update: How High Can They Go? 

Good Friday morning all. What a week! Brexit scared the sh*t out of the markets, but our friendly neighborhood central bankers were standing by to manipulate stocks AND bonds higher. 

Wow...just...wow.

Over the last 7-8 years I have said the following more times than I can remember; "financial events are occurring that no one alive (or dead) have EVER seen take place, nor would they ever believe that they could possibly take place". 

Negative interest rates in 35% of ALL global government debt. Central banks that openly admit they are buying stocks and manipulating markets on a regular basis (Japan and China). And folks, if you don't believe that the ECB and our FED are active in the equity markets, let me be the first to tell you that the word "gullible" is not in the dictionary. 

In other words, hell yes they are manipulating our stock markets!

Just like the 98% depreciation of the US dollar since the FED was first created in 1913, we continue to see absolute financial insanity from our central bankers of today. What a terrible year 1913 was...we not only got the FED but we got the IRS in 1913 as well. Woodrow Wilson...thanks for nothing.

Precious Metals and Miners at Fresh Two Year Highs

I guess we should be thanking central banks. If it wasn't for their ongoing currency destruction (and absurd decision making), we would not be sitting on massive gains in precious metals miners. Gold and silver are surging higher again this morning ($1335/oz and $19.14/oz), but again, the big gains are taking place in the miners. GDX is trading at $28.40 in the pre-market, a fresh 2 year high.

I think it's safe to say that we are killing it. Since January 20th, we have 1184% gains in just two of our mining stocks. 

Here's what I find interesting this morning. The VRA momentum indicators show GDX at just 80% overbought...once this level hits 95% we can begin to get a little concerned about short term pullbacks....but at current levels, it is common to see huge breakouts...like the one happening now.

I continue to see this as the beginning of what will be the most incredible bull market in history...and I offer this chart as my evidence.

This is a 5 year chart of GDX (below). I've featured GDX charts for a long while now, but we see something pretty amazing in this 5 year chart. First, take a look at the explosion in volume since the move higher began. Now, compare it to the volume when GDX was hitting all time highs back in 2011.

Could there be more of a stark difference?? In my 31 years I have never seen a volume expansion of this nature. And remember this...trading volumes in the broad market continue to shrink! This makes the events occurring in GDX even more impressive.

Stocks are a leading indicator....always have been...and GDX is speaking to us loud and clear. The move higher is going to be stunning (to most). 

Finally, take a look at the blue lines I have inserted. As of this morning, we have broken the first line, putting GDX at a fresh 2 year high. Now, we begin to target the top blue line...because thats where GDX is headed next. The top line sits at $37.75, meaning we have another $10/share move on the way. That's another 37% higher...obviously, my favorite miners will continue to ramp higher as well. 

Central banks may destroy the financial system as we know it...I believe they are doing this right now. But that gives the smart money investor some off the chart opportunities. Sadly, 99% of the planet will suffer a great deal from the carnage thats on the way. Just another major reason that I appreciate and respect our VRA Community. We'll be here together...surviving...and yes, prospering greatly.

Until next time, thanks again for reading...have a great July 4th all. Stay safe, stay frosty. Here's this incredible chart...

Kip

 

~In Gmail select: Always display images from kip@vraletter.com~

Tuesday
Jun282016

VRA Update: Trend Reversal. 1098% Gains in 6 Months...in Just Two Stocks

By now you've probably already heard, more than $3 trillion in global stock market losses took place over the last two trading sessions. An all time record, for back-to-back trading sessions.

This morning, let's put these global losses in perspective...but not just from the last 2 days...let's instead take a look at declines from the past 13 months. In no particular order, here goes:

Germany: -25% from the highs

Italy: -37% from the highs

China: -24% from the highs

Japan: -27% from the highs

These are brutal declines. And the economic picture that they are painting is even worse...as in, if people aren't worried about a global depression, they must be smoking crack. This may sound like I am trying to be cute...I am not. This is as real as it gets, and those that are not preparing today will almost certainly regret it tomorrow. 

What about US markets? Most will be likely surprised to see these numbers:

S&P 500: -6%

Nasdaq: -12%

Russell 2000: -16%

Bottom line on US and Global Stock Markets: Equity markets had one last shot at rekindling a bull market. US indexes needed to break out to fresh highs on the current move. Instead, following the Brexit shocker, we are even further away...and the global kicker is that leading international markets are right back into confirmed bear market, crash mode. 

US traders will be watching the markets technical levels closely. After zooming lower through the 200 day moving averages on EVERY major index, and combined with the global devastation in stocks, going forward we can expect one primary trading strategy to be employed by the smart money: sell any major rally attempt...also, short any major rally attempt. 

The trading we have seen so far is nothing close to "capitulation"...and while it's too early to say that the markets will crash in the near future, I see major short term risks in US stock prices:

1) margin calls: unless stocks rally sharply...then manage to hold those gains...selling pressure from margin calls will act as a constant weight on the markets.

2) central bank anxiety: in every country where negative interest rates have been deployed, stock markets have been destroyed...led by absolutely massive and record losses in bank stocks. In the 90's, the term was "bond market vigilantes"...this group forced Bill Clinton into cutting government spending, eventually leading to a surplus. Now, I see "bank stock vigilantes" exercising their own brand of financial justice. Here in the US, the banking index is off a huge 25% from the highs. In Europe, the losses are 50-80%...just brutal devastation in the banking world. The vigilantes are shorting every rally in bank stocks...and there is little to nothing that the powers that be can do about it.

And yes...fear and panic are quickly setting in among central bankers and their commercial banking brethren. Negative interest rates have been the disaster that everyone with half a brain knew they would be. There's blood in the water now, and if I am correct, the selling pressure is nowhere near complete. Global markets are flashing "bearish engulfing patterns", technical speak for, "holy sh*t...will the selling pressure ever end?" 

BTW, did you happen to catch Alan Greenspan, on Bloomberg or CNBC, over the last 36 hours? I'll just repeat two of his comments:

1) "This is the worst economic/financial situation that I have seen in my professional career" (and no...he was not talking about Brexit/Europe...he was talking about conditions right here in the US).

2) "This ends in inflation". Of course Greenspan is right. And there's this; Greenspan is also a huge gold bug, recommending that we should go back on the gold standard. 

Folks, there's a reason gold and silver are up 23-25% since the start of the year. And there's a reason why here at the VRA, we are making absolute fortunes, with gains of close to 1100% in our top 2 mining stocks (combined), since the bull market kicked off in PM's on 1/20/16.

Remember, the precious metals/miner bull market is just now getting underway. Before it's over, gold will break $10,000/oz and silver will break $175/oz. But the real action will continue to be in the miners, as they appreciate 3-5 x faster than the metals themselves. 

The precious metals bull market of our lifetime is upon us. If you own the right companies, a wealth affect on steroids is underway. 

Until next time, thanks again for reading...

Kip 

 

 

Friday
Jun242016

VRA FLASH: BREXIT WINS! This Is What Happens Next

As it turns out, Mohammed Ali is not the only one that can shock the world. Our faith in the "possible" has been restored...maybe the little guy DOES have a shot, after all.

As I live tweeted the emerging victory for #Leave, with each city reporting their vote totals, it began to become more and more clear that Brexit actually had a chance. Gold started to spike...then the VIX started to spike...and the British pound began to plunge (to 30 year lows). 

Then, at 10PM Houston time, it became clear. With 60% of the vote in, it became a near impossibility that "remain" could win. By then, gold was up $40/oz, the VIX was up 31% and Dow futures were off 550 points...which is essentially where we find things this morning. 

Of my roughly 30 tweets during the vote, here are the two that seemed to resonate the most:

‏‪@KHerriage

Ironic.The US fought/gained independence from Great Britain, but it took Britain leaving the EU for the US to begin regaining our freedoms 

‏‪@KHerriage

I'm feeling one emotion right now. My faith...in the "system" ...is restored. We love our mates across the pond! Now we'll do our part.

We must keep in mind that it will still take 2 years for the UK to officially leave the EU. But, at the same time, the EU and global establishment must now see huge risks that other countries in the 27 member EU block will follow the UK's lead. Already, the odds are shifting to both France and Italy departing as well.

Greece may have been the first to vote on leaving...but now that the UK has pulled it off, one most important and striking fact is clear...the European Union is dead. Just typing these words gives me a chill. I just never thought it would actually happen...turns out my son was right...the little guy can still win.

Finally for now, know this; the markets detest uncertainty...and boy oh boy, is there plenty of that now. 

Also, and this is most important...I will be watching closely...the European close. Should their markets close at the lows, with heavy selling pressure right into the bell, US traders will get very, very nervous about Monday. As in, a potential black Monday. 

In 1987, as a 2 year broker, I witnessed Black Monday first hand. I watched veteran brokers make one mistake after another. The biggest lesson that I learned? We should look to "ACT" rather than "REACT".

I will continue to do this in every update and recommendation that I make, throughout what looks to be a rough week ahead for the markets. As long as we manage our emotions we can avoid the mistakes that most will make.

Honestly, I have no idea where the markets will be in 1, 2 or 5 days. But I know this...unless central banks bail out these markets, the risk level for stocks is extraordinarily high. This could well be Europe's Lehman Brothers moment.

The VRA now has more than 900% in gains, in just 3 mining stocks, since January 20th of this year. I also had all of my Subscribers OUT of the stock market! Instead, we own the exact investments ramping 10-25% higher today.

If you would like to join us, we have a special BREXIT offer, through this coming Tuesday.

For the first time, we are able to offer the VRA as a 6-month subscription, and at just $595.

If you would like to act, simply reply back to this email with “I AM IN” in the subject line (or send to: kip@vraletter.com)

We will have your VRA Membership active ASAP. Come crush the markets with us.

Until next time, thanks again for reading...Stay Frosty

Kip

Thursday
Jun162016

VRA Update: Brexit Polls..FED Insanity...and Terrorism...Are Changing Everything

Following my "Fix is In" VRA Update from last month, along with my consistent theme over the last...however many years...that "the establishment wins...big government wins", recent events might just be forcing me to change my stance.

Two major events may be in the process of changing everything.

The first is the upcoming vote on Brexit, which takes place in just 7 days. Should Britain vote to leave the 28 member European Union, then my theory of "big government wins" will be blown completely out of the water. As our oldest son, Tyler, said yesterday morning, "dad, if Brexit actually passes, it pretty much destroys your argument...maybe the people are actually capable of rising up." 

Son, do I ever hope you are right. The message sent to the rest of the world...to the rest of the worlds people...would be incredibly empowering. I believe it would be nothing short of revolutionary. 

How ironic would it be that Great Britain...the global superpower that our founding fathers and 13 colonies defeated...might then be the first to act, in taking back power from today's megalomaniacal global rulers, along with the corporations and military madmen they answer to?

But I remain skeptical...in fact, I remain very skeptical of Brexit actually passing. The powerful simply have too much to lose. And, while the recent polls all seem to favor Brexit, the bookies of England have been far more accurate in figuring odds over the years. Where do the bookies place the odds of a Brexit today? At 2-1..."against" Brexit.

The other major event that could be changing everything...this time, in the US? Terrorism, of course. 

The moment after I heard about the Orlando attack, my next thought was "Trump's chances of winning just went up, big time". Granted, if "foot in mouth disease" was real, Mr. Trump would be on a steady course of antibiotics. Still, when watching the left and their political correctness around the most important issue of modern times, that being "We Are At War...Right Here in the US..and Our Enemy Wants Each of Us Dead", HRC and BHO look as if they are living on another planet. Out of touch...beyond tone deaf...essentially, anti-American. I know no other way to state my thoughts, following their weak, weak, weak statements of yesterday.

Bottom line: Should Brexit win....should Trump win...our big government, establishment overlords will be running for cover. In fact, many will be rightly worried about convictions for treason (with 9/11 Truth at the very top of my personal agenda).

VRA Market Update

Overseas markets are weak once again, with every country in Europe down more than 1%. Things aren't much better in Asia. 

Remember all of my updates about the US market, and its inability to hit fresh highs of late? Each failed move higher is another shot to the midsection...yes, this market could very quickly get pounded once again. Think back to January...15% losses in less than 3-4 weeks...this is what could be directly in front of us.

The VRA System still has the market at overbought...but still, we remain above the most important technical levels. So...we will wait before taking action on the downside.

But gold and the miners? I continue to believe they are ready to break out...in a very major way.

Until next time, thanks again for reading...Stay Frosty

Kip