Stock Market Highs Make Strong Case for Precious Metal Buys

Dow 20,000 was ushered in with great fanfare. Traders on the New York Stock Exchange sported “Dow 20,000” hats. Even President Donald Trump joined the celebration.

Trump told ABC News he was “very honored” that the stock market gave his presidency a symbolic vote of confidence. He said,

Now we have to go up, up, up. We don’t want it to stay there.

Everyone loves a bull market. Expecting stocks to go up forever, however, is a dangerous mindset to have as an investor. Recent history suggests that major milestones for the Dow should be viewed less as cause for celebration and more as warning signs.

What 1999 Can Teach Us About 2017

A case in point: Dow 10,000. On March 29, 1999, the Dow Jones Industrials closed above 10,000 for the first time ever.

The financial media, of course, cheered the milestone, feeding the public Wall Street propaganda rather than healthy skepticism.

Sure, the perma-bulls will always concede, there might be a pullback at some point. But books like Dow 36,000, released in 1999, bolstered the conventional wisdom that stocks were destined march higher over the next decade.

In fact, stocks went nowhere for 11 long years. The Dow suffered two crashes – one in 2002 and a bigger one in 2008.

In mid 2010, the blue chip average was right back where it was on March 29, 1999. The Dow crossed back above 10,000, as it had dozens of times before, to little fanfare.

It turned out to be the 10,000 cross that mattered. Finally, more than 11 years after the Dow first hit 10,000, stocks were in a new bull market. The Dow was on its way to 20,000.

Anyone thinking of buying stocks at today’s lofty valuations would be well advised to take heed of what happened to investors who bought at Dow 10,000 in 1999 and held on through today.

Yes, they did double their money (before dividends) in nominal terms.

But in real terms, the Dow hasn’t made any progress.

Investors would have been better off selling stocks when the Dow hit 10,000 and using the proceeds to purchase gold bullion.

Back in March 1999, silver sold for $5.20/oz and gold prices traded at a mere $285/oz. Gold values got as high as $1,900/oz in mid 2011 and today come in at $1,200/oz – still more than four times their 1999 levels.

That puts the Dow’s nominal rise from 10,000 to 20,000 in perspective. The index has merely flat-lined, at best, in real terms since 1999. Going forward, it may not even manage to do that.

Trump Knows He Inherited a Bubble

The price/earnings ratio on the Dow is now arguably in bubble territory. Valuations have been artificially inflated in no small part by the Federal Reserve. Last September, candidate Donald Trump called the Fed-fueled market “a big, fat, ugly bubble.”

President Donald Trump no longer sees it that way. Dow 36,000 here we come!

It will come eventually – even if only because of currency debasement. That doesn’t necessarily mean the next 5,000 point move in the Dow will be to the upside.

History suggests that investors will have better odds of making real gains in stocks by waiting to buy at lower valuations. A bear market in equities could commence at any time, and a final bottom could be years away. In the meantime, stocking up on alternative assets including precious metals will give you other opportunities to make real gains regardless of where the Dow heads over the next few years.

Will Trumpflation Be to Metals What Stagflation Was in the 1970s?

Gold and silver markets have posted some of their biggest up moves when the stock market has been down or flat. The stagflationary late 1970s weren’t kind to stocks, but they gave rise to a spectacular bull market in precious metals. It culminated in January 1980 with the price of an ounce of gold briefly equaling the quote on the Dow Jones Industrials.

From 1980 – 2000, Dow to gold ratio moved from as low as 1:1 to as high as 43:1. From 2000 – 2011, it fell to as low 6:1. The Dow to gold ratio now stands at around 17:1. Should it ultimately revisit the 1:1 ratio, we’d be looking at a massive stock market crash, an explosive move higher in precious metals prices, or some combination of both.

Could gold prices one day meet the Dow at 20,000 or some other number? A return to the 1:1 ratio is an extreme scenario, to be sure. But it’s not far-fetched at all to suppose that history might repeat itself.

Even if Dow to gold only got back to a 4:1 ratio, moving out of stocks and into precious metals at current levels would be the trade of a lifetime. It would imply a potential $5,000 gold price to a 20,000 Dow – a 317% return on gold versus a 0% return on stocks in this hypothetical scenario.

In any major bull market for precious metals, the more volatile metal – silver – can be expected to post the bigger returns. Silver, being both a precious metal and an industrial metal, may also be well suited to benefit from Donald Trump’s pro-industrial policies. Silver is essential in many areas of manufacturing, especially electronic and high-tech products.

Silver is also one of the world’s most enduring forms of money. Along with gold, silver stands as a “hard” alternative to depreciating fiat currencies and bubbly financial assets.

Stock Market Warnings From Bonds and the Dollar

While I still believe the stock market has a date with higher prices this year, the past few days have shown that the path is not likely to be smooth. Just a few days after the Dow Jones Industrial Average topped 20,000 for the first time, news from Washington cast a fearful shadow over the market.

The news changes hourly and can trigger emotional responses that end up being very wrong. The markets themselves offer more objective evidence, and right now I see a few items that investors should monitor.

The first is interest rates. In December I took a look at long-dated Treasury yields and concluded they had topped out for the time being. The iShares 20+ Year Treasury Bond exchange-traded fund (ticker: TLT), which tracks long bond prices and moves inversely to interest rates, landed in a very major support zone (see Chart 1 below).

It was a combination of a six-year rising trendline and “regular” chart support from the major low set in 2015. Indeed, a few days later, the ETF bounced off that zone on its way to recapture 50% of the losses it suffered after the election. Unfortunately, it stalled there and headed back down to once again sit in that major support zone.

The inability for any market to move significantly higher after reaching a major support area is a bearish warning. Should the bond ETF break down, it would push long-term interest rates higher, and I suspect that would be a negative event for the stock market. This, despite market expectations for only two quarter-point federal-fund rate hikes this year.

The opposite end of the quality scale in the bond market also has a potential breakdown in play. Whereas Treasury bonds are considered to be default risk-free, high-yielding “junk” bonds do carry significant risk. Major ETFs tracking junk bonds, such as iShares iBoxx $ High Yield Corporate Bond (HYG), have already seen arguable breakdowns from the postelection rally (see Chart 2 below).

I say “arguable” because it is difficult to draw a clean trendline in the classical sense. But one look at the chart and it is easy to spot that a change has occurred. Plus, the current rally ran into resistance at the same level that stopped the previous rally in October. And now the ETF is just pennies away from breaking down below its January trading range.

All told, this is not a positive for stocks as it tells us that investors may be fleeing riskier assets. Junk bonds can be the canary in the coal mine for the stock market.

The next market to watch is the U.S. dollar. The greenback has been in decline since the start of the year and took a hit this week on comments from one of the president’s advisors that the euro was undervalued. The U.S. dollar index, which measures the dollar against a basket of currencies and is about half-weighted in the euro, set its lowest level since December.

Technically, the dollar is now testing the long-term upside breakout it made last November (see Chart 3). But there is very little room for error by dollar bulls here. Unless the market can stabilize here and bounce at least a little, we will have to conclude that the breakout failed. Failed bullish breakouts are another bearish sign.

The connection between the dollar and the stock market is not direct. A weak dollar does benefit exporters, but at some point it will reflect a general lack of demand for domestic assets, whether they are stocks, bonds, or products.

Again, I still believe stocks will be higher at some point this year, but the disruptive nature of current politics can easily spook investors and provide the excuse some need for a stock-market correction to begin. Technical evidence, such as market breadth, is still good, but the warnings coming from bonds and the dollar should not be ignored.

You Don’t Miss this Greatest Sports Moments of All Time

Great Moment: Diego Maradona’s goals for Argentina against England in the 1986 FIFA World Cup

AKA The Hand of God and the Goal of the Century. The Hand of God, one of the most controversial goals, was scored as the result of an illegal (but unpenalised) handball by Diego Maradona in the quarter-final match of the 1986 FIFA World Cup between England and Argentina. Five minutes later, Maradona scored another goal, the Goal of the Century, also known as “Greatest Goal in FIFA World Cup History”, was an award given for the greatest goal ever scored in a FIFA World Cup tournament. Maradona then began his 60-metre, 10-second dash towards the English goal, leaving behind five English outfield players (Hodge, Beardsley, Reid, Butcher and Fenwick) as well as goalkeeper Peter Shilton to make the score 2–0 to Argentina.


Rocky Marciano

Great Moment: Rocky Marciano Retires As Heavyweight Champ Undefeated at 49-0

was the heavyweight champion of the world from 1952 to 1956. Marciano, with forty-three knockouts to his credit (87.8% knockout rate), remains the only heavyweight champion in boxing history to retire having won every fight in his professional career.


Kerri Strug

Great Moment: Kerri Strug’s one footed Vault

Was an gymnast for the 1996 Olympics, upon her first attempt Strug under-rotated the landing of her first attempt, causing her to fall and damage her ankle. Strug thus limped slightly to the end of the runway for her second attempt. She landed the vault briefly on both feet, almost instantly hopping onto only her good foot. Strug raised her arms after her vault, saluting the judges. She then needed assistance off the landing platform due to the injury. The completed vault received score of 9.712, which ended all doubt about whether the Americans would receive the gold.


Jackie Robinson

Great Moment: Jackie Robinson Signs a Major League Contract with the Brooklyn Dodgers

He was the first African-American major league baseball player of the modern era in 1947. his Major League debut with the Brooklyn Dodgers ended approximately eighty years of baseball segregation. In the United States at this time, many white people believed that blacks and whites should be segregated or kept apart in many aspects of life, including sports.


Bob Beamon

Great Moment: Bob Beamon long jumps 29′ 2 1/2 inches to shatter the world record by more than two feet

On October 18, 1968 at Summer Olympics in Mexico City, Beamon set a World record for the Long jump with a jump of 8.90 m (29 ft. 2½ in.). Destroying the last record by about 2 ft. Sports journalist Dick Schaap wrote a book about the leap, called The Perfect Jump. The record stood for 23 years until Mike Powell broke it by only 2 inches in 1991.


Lou Gehrig

Great Moment: Lou Gehrig’s “Luckiest Man” speech

A native of New York City, he played for the New York Yankees until his career was cut short by amyotrophic lateral sclerosis (ALS), now commonly referred to in the United States as Lou Gehrig’s Disease. Over a 15-season span between 1925 and 1939, he played in 2,130 consecutive games. On July 4, 1939, a dying man stood before over 60,000 people and told them he was the “luckiest man on the face of the earth” for being able to play in ballparks for 17 years, and recieve nothing but kindness and encouragement from his fans. Lou Gehrig became a symbol of what sports, and maybe life is all about. accepting your destiny, giving it your all, and enjoying every moment, good or ill.


Mark McGwire

Great Moment: Mark McGwire over Sammy Sosa, 70-66, for the new home-run crown

There was much media speculation as to where Maris’ HR record would be broken in 1998, and a debate as to who would break it, Ken Griffey, Jr. or McGwire. As the 1998 season progressed, it became clear that McGwire, Griffey, and Chicago Cubs outfielder Sammy Sosa were all on track to break Roger Maris’ single-season home run record. The race to break the record first became a media spectacle as the lead swung back and forth. On September 8, 1998 at 8:18 p.m. et, McGwire hit a pitch by the Chicago Cubs’ Steve Trachsel over the left field wall for his record-breaking 62nd home run, setting off huge celebrations at Busch Stadium. McGwire finished the 1998 season with 70 home runs, four ahead of Sosa’s 66.


Michael Phelps

Great Moment: Michael Phelps wins 8 Gold Medals at the Olympics

In the 2008 Summer Olympics, Michael Phelps won 8 gold medals, the record for the most medals won at a single olympics. With this record, he surpassed Mark Spitz, who had held the previous gold medal total with the seven. In the 2008 Olympics Michael Phelps set 7 new world records, only missing the 100 m Butterfly, where he beat Milorad ?avic by 0.01 seconds.






Muguruza canters

French Open PHOTOS: Halep survives Osaka scare; Muguruza canters

Simona Halep avoided the embarrassment of falling victim to a teenager who calls herself “a child of the internet” as she huffed and puffed her way into the fourth round of the French Open with a 4-6, 6-2, 6-3 win over Naomi Osaka on Friday.

It seemed as if the Romanian’s name would be splashed across the World Wide Web as the latest high-profile casualty in the French capital. She was totally bamboozled in the opening set by a Japanese opponent ranked 101st in the world.

However, the sixth seed made sure she did not suffer the same fate as Australian Open champion Angelique Kerber or fifth seed Victoria Azarenka. She kept her wits about her despite a barrage of winners flying off Osaka’s racket.

The 18-year-old’s winning groundstrokes in the opening set drove Halep to take out her frustration on her racket as she went set point down. She earned a code violation from the umpire for turning her racket into a mangled mess after repeatedly hammering the frame against the red dirt.

It was too late to save the first set, but releasing her anger certainly produced the desired result in the second set. The 2014 Roland Garros finalist saved a break point in the opening game before levelling the match.

Naomi Osaka reacts

However, by this stage, Halep had had her fill of close calls for the day. She ran off with the last three games to wrap up victory.

Spain's Garbine Muguruza hits a forehand against France's Myrtille Georges during their French Open second round match

Muguruza converted all of her six break points to set up a meeting with either Russian 24th seed Anastasia Pavlyuchenkova 2009 champion Svetlana Kuznetsova

Garbine Muguruza greets Yanina Wickmayer at the net after the win



some positive news about F1 legend

Finally, some positive news about F1 legend Schumacher’s health

Former Ferrari president Luca di Montezemolo has given positive news about Schumacher’s recovery, saying that the 47-year-old legend is ‘reacting’.

Montezemolo further insisted that the F1 legend’s determination would surely bring him out of his dreadful situation.

But the former F1 boss did not elaborate on what he meant by “reacting”.

Meanwhile, Schumacher will be awarded with the inaugural ‘Nurburgring Award’ for winning at the fabled circuit for a record five times in Germany.

The gong, which will be given at an award ceremony later in May, will be collected by former Ferrari and Mercedes driver’s manager Sabine Kehm, Sport24 reported.

Reflecting on Schumacher’s achievement, former Mercedes director Norbert Haug said that no one deserves the award better than the German, insisting that the award for his life’s work would provide him a lot of strength on his road to recovery.


The saddest moment of Nadal’s career was…

Rafael Nadal knows only too well what it’s like to miss out on playing at the Olympics, hence he does not understand why so many of his fellow tennis professionals are turning their backs on the Rio Games in August.

When injury forced the 2008 Beijing gold medallist to withdraw from the 2012 London Games, he described it as ‘one of the saddest moments of my career’.

As a result he finds it baffling that players such as American John Isner, Australian Bernard Tomic, rising Austrian Dominic Thiem, and fellow Spaniard Feliciano Lopez have chosen to be absent.

“The experience of competing in an Olympic Games is completely different than any other event. The Olympics is the most important event in the world of sport,” the nine-time French Open champion said on Thursday.

“If you don’t want to be in the most important event in the world of sport, then is difficult to understand what’s the motivation for the rest of the things.”

World No 1 Novak Djokovic had some sympathy for players such as Isner and thought ranking points should have been awarded in Rio like they had been in London — where up to 750 points were on offer.

“Everybody’s free to do whatever but I know how tough it was for me when I had to miss the 2012 Olympics in London,” added Nadal, the only active men’s player who has won every major singles title tennis has to offer.

“I cannot understand people who don’t want to go to Olympics. It’s something that is not every year. It’s an event that you can compete only once, twice, or maybe three times in your career, if you are lucky.


Muirfield member rips Rory McIlroy, defends the club’s ban on women

Last week, the R&A announced it was pulling Muirfield out of the British Open rotation after the private golf club upheld its ban on women.

After two years of consultation, Muirfield took a vote on whether female members should be allowed, and while a majority of the club’s 750 members voted yes, the vote fell 14 short from the two-thirds majority required to change the rules.

This, obviously, was not a good look for anyone involved in golf, and Muirfield’s decision frustrated some of the game’s most high-profile stars. Rory McIlroyhad this to say.

“It’s not right to host the biggest golf tournament at a club where women are not allowed,” McIlroy said. “Hopefully, Muirfield will see some sense and we can get it back on the rota.

“When we are trying to break out of this stuffy old image, this is not what we need. We are trying to move with the times and do things to make golf faster, make golf cooler and include more people. This wasn’t a great day.”

“It wasn’t so much a vote against the ladies as a vote against the media and the press telling us what to do. No-one likes being hammered all the time.


Tiger reportedly enters the British Open ahead of deadline

Tiger Woods officially put his name in for The Open Championship ahead of Thursday’s deadline for entries, ESPN reported.

According to the report, Woods’ said agent said the entry was completed so that the 14-time major winner is eligible for the tournament in July.

Woods, who has had multiple surgeries on his back, said in March that there’s still no timetable for his return to the PGA Tour, but that his health is improving.

“What I tried to explain is that a lot of times you don’t have the same rhythm of playing like you do in a PGA Tour event,” Tiger said on his official website at that time. “You don’t know how much you’re going to play, and that uncertainty requires an adjustment. In the Presidents Cup, you play in every match.”

Woods finished tied for ninth in 2004 at Royal Tyroon, which will host this year’s British Open.



Warriors stave off elimination, force Game 6 against Thunder

OAKLAND, Calif. — “We’re not going home! We’re not going home!” Stephen Curry screamed at the top of his lungs.

No, his Golden State Warriors are going back to Oklahoma City, after keeping their title reign and the winningest season in NBA history alive for at least one more game.

Curry scored 31 points, raising his arms in the early moments to awaken Golden State’s raucous crowd, and the defending champions staved off elimination with a 120-111 victory over the Thunder on Thursday night in Game 5 of the Western Conference finals.

For all the speculation about the current state of Curry’s beat-up body — that troublesome ankle, sore knee or tender elbow — he did it all.
“I thought he looked like 91 percent,” coach Steve Kerr cracked. “He came out and played a really good game. That’s all I can tell you. He’s going to compete every night. He had an excellent night and helped us get it done.”

The MVP made a snazzy layup late and dished out six assists, while Klay Thompson added 27 points as Golden State sent the best the best-of-seven series back to Oklahoma City for Game 6 on Saturday night. Golden State trails 3-2 and is trying to become just the 10th team to rally from a 3-1 deficit.


Peyton Manning says he won’t coach Volunteers, will let his son play football

Peyton Manning seems to be settling into life as a retired two-time Super Bowl-winning quarterback. And that doesn’t include donning a headset on the sideline for his alma mater.

Silencing speculation that he has his sights set on the head coaching job at Tennessee, Manning told the crowd at the Middle Tennessee Sports Awards in Nashville on Thursday that he has no aspirations to coach the Volunteers at this time.

Asked whether he would allow his 5-year-old son to play football amid the concussion concerns surrounding the game, Manning acknowledged the dangers but said he’ll allow it.

And as for a potential NFL comeback, don’t count on it.

For now, the 40-year-old five-time NFL MVP will be busy watching football, doing speaking engagements and coming up with new Nationwide jingles.