Since entering the hallowed halls of that venerable, old
private Jesuit university, Saint Louis University, that sits near the banks
of the equally-venerable-and-old man river, the "Mighty
Mississippi," I have kept a number of books in my library that shall
remain as "life textbooks," tomes upon which to refer in times of
confusion, despair, joy and victory. Because of my background in hockey as a
(much) younger man, I have always enjoyed re-reading sports books and one of
my favorites was Ken Dryden's "The Game" because he described a
team and league that had many members familiar to me in the 1970s. Thomas
Hauser's "Muhammad Ali: His Life and Times" was another superb book
about the singular, most-globally-recognized athlete of all time and, again,
an athlete from the era in which I was raised.
However, the REAL text books were books like "The
Four Agreements" by Don Miguel Ruiz, "The Power of Now" by
Eckhart Tolle, and "Conversations with God, Book 1" by Neale Donald
Walsch, all of which dealt with the human spirit and personal struggle.
However, in the world of business and markets, the books which are always
within arm reach are, in order of least-to-most importance, "The Battle
for Investment Survival" by Gerald M. Loeb (1935), "Reminiscences
of a Stock Operator" by Lefevre and Lowenstein (1923), "Boomerang:
Travels in the New Third World" by Michael Lewis (2011), "Atlas
Shrugged" by Ayn Rand (1957) and finally "When Money Dies: The
Nightmare of the Weimar Collapse" by Adam Fergusson (1975).
As a snapshot of the societal impact of the Great
Keynesian Experiment through which are currently traversing, "Atlas
Shrugged" tells you EXACTLY where we are today complete with gutted-out
American manufacturing and massive corruption, intervention, and interference
brought about by the odious partnership between government and the elite 1%.
The one book that describes the probable outcome of all of the money-printing
($57 trillion) of the post-2008-meltdown era is "When Money Dies: The
Nightmare of the Weimar Collapse" and it is this book that is sitting
under the desk phone in my office. The last paragraph sums it all up with the
following ghastly summary: "In hyperinflation, a kilo of potatoes was
worth, to some, more than the family silver; a side of pork more than a grand
piano. A prostitute in the family was better than an infant corpse; theft was
preferable to starvation; warmth was finer than honour; clothing more
essential than democracy, food more needed than freedom." THAT paragraph
is like "The Ghost of Christmas Yet-To-Come" in Lewis Carroll's
"A Christmas Carol," and it is truly frightening.
The use of history books is, for me, a necessity and the
following two quotes are the reasons why:
"History never repeats itself but it rhymes." �
Mark Twain .
and,
"Those who cannot remember the past doomed to repeat
it." � George Santayana
In the bigger picture concerning the global capital
markets, I see enormous changes coming and it is all laid out in front of us
like those little solar lights that illuminate the path from my deck down to
the water on a very dark night. In "Atlas Shrugged," Ayn Rand
describes what America would look like when the business "elite"
finally own the government and legislature and the justice system. Nothing is
more relevant than looking at the events that have transpired since the Financial
Crisis of 2008 that didn't "nearly" take down the financial system;
it DID take it down but criminal collusion manufactured the bail-out
mechanism that allowed it to continue to function in "Walking Dead"
fashion.
All you need to do is look at Deutsche Bank to witness
all of the same insanity, greed and aberrant behaviors that were so very
prominent among the bankster crowd of 2004�2008 being replayed here in 2016
by the German's beloved DB. In "Boomerang", Michael Lewis walks us
through the mindsets of the European bankers and politicians and especially
the citizenry, whose contempt for the former two is most acute in Ireland,
where one might have thought a few of them might have been carted off to
jail.
However, nothing can send chills up and down your spine
more than the last of my list, "When Money Dies." We have all heard
stories about the Weimar hyperinflation and how the indiscriminate albeit
well-intended printing of "Reich marks" sent post WWI Germany into
chaos and bedlam and unimaginable human suffering.
"Atlas Shrugged" describes the environment
created BY the crime; Michael Lewis walks us through the incredible sense of
entitlement among the populist movement responding TO the crime; but Adam
Fergusson paints a horrific portrait of the outcome OF the crime. It is a
"must-read" for everyone that is playing around with stocks and
bonds or trying to manage "Cash" these days. Can't happen here in
"the modern world"? Well, it is happening right now as we speak in
Venezuela where prison inmates have been resorting to cannibalism due to dire
food shortages and government corruption.
I write all of this nonsense because as a former resident
of the U.S., I was there for the Watergate hearings; I watched Nixon resign;
I watched Jimmy Carter have his legacy tarnished by an Arab oil embargo, 12%
inflation, massive line-ups at the gas pumps and a hostage crisis. I watched
Presidential campaigns in 1972 and 1976 first-hand and have always paid a
great deal of attention since. The bare facts behind this year's race are
ugly; you have two candidates that are equally annoying, unequivocally flawed
and universally repulsed by the vast majority of voters. What hits me between
the eyes is that for the first time in history, we are witnessing a race so
thoroughly "un-presidential" that it resembles a WWF wrestling
match complete with enough "smackdowns" and "whup-ass"
remarks to put Vince McMahon to shame. The global champion of democracy and
capitalism, apple pie and Apple Computer now has the entire world looking on
in fear and disbelief that either one of these two candidates could have
access to the launch codes that could vaporize the entire planet in a
heartbeat all because of a bad meal or a particularly stressful day. The days
of Ronald Reagan running the country as Chairman of the Board are now over.
And that, my friends, is not only sad; it is outright disturbing.
So the U.S. dollar continues to roll higher and the gold
market struggles to right itself against FOREX headwinds. The U.S. dollar
responds to the pre-election tape-painting and the broadly-based consensus
that once the election is over that the Fed will hike rates and send the USD
index to 105. However, given that I don't care a great deal for technical
analysis, here is a Wiki snapshot of a classic "Gravestone Doji"
that indicates that a trend may be coming to an end.
Now take a look at the chart of the U.S. dollar index
($USD) that has finally turned up with a big Gravestone Doji to cap the
current rally off the May, June and August lows, setting things up for
another metals advance into year-end. Now, we saw a Gravestone Doji a few
months back in the HUI (NYSE Arca Gold BUGS Index) around 175 but it decided
to advance another 100 points before correcting, so don't get too excited (or
committed) with this one for the USD. I only mention it because the USD is
not as illiquid as the global gold market because the Americans have printed
TRILLIONS of USDs since 2008 so it is not nearly as easy to manipulate FOREX
as it is gold. Ergo, technical analysis works for the USD and it is useless
for gold�period.
I reported to you all that I had re-entered the GDXJ
(VanEck Vectors Junior Gold Miners ETF) position on October 13th
and added more on Friday the 14th when I suddenly realized that I
was far too complacent with the decaying currency sitting in my trading
account. I was growing miserable, snarly, inattentive, and argumentative
without my beloved GDXJ position and it was truly difficult to function.
Those around me were so happy to see me take my enormous profit on GDXJ and
were more than happy with the new drapes and the new leash and the Gourmet
Alpo and the "designer doggie bags," but I now know that they
thought of me as "seriously depressed." I am now no longer upset
and I am no longer depressed as I now own every single wonderfully decadent
share of the GDXJ that I owned back in late 2015 when the junior miners were
being shorted and sold by every HFT algorithm and every desk trader and every
CNBC-following doorknob on the planet.
Now, for the traders out there? I have a sell order in
for 50% of the GDXJ position at $45.00. If filled, we will own the remaining
50% at new breakeven cost of $32.20 at which point I sit back and chill. No
reason to particularly worry with such a wonderful adjusted cost.
Now, most of you are dying to know how a) Stakeholder Gold Corp.'s (SRC:TSX.V)
Ballarat RAB drilling program is progressing and b) when the Canuc Resources Ltd. (CDA:TSX.V)/Santa
Rosa RTO will be completed. Last update for the Yukon was yesterday and the
first seven RAB holes are now en route to the assay lab in Whitehorse where
the turnaround should be 10-14 days. SRC CEO Chris Berlet and V.P.
Exploration John Nebocat are in Dawson City today travelling to the property
for a day full of comprehensive interpretation and analysis. I would expect a
drilling update upon their return. I could talk all day about the large
intercepts of quartz sericite alteration and the density of the rock they are
encountering but until the assays are back from Whitehorse, it is pretty much
meaningless.
I have been asked about the seasonality effect and the
lack of news flow during the long Yukon winter and whether or not it will
affect the stock price performance. The fact that SRC will have a full
treasury after all 2016 exploration bills are paid allows a generous amount
of working capital to be allocated to marketing. Since getting the story
"out" is crucial to the survival of all junior miners, SRC has
already secured a booth at the January 2017 Vancouver Resource Investment
Conference and will be doing the same for PDAC in Toronto in March. While
that is all fine and dandy, it is obviously imperative that SRC has a decent
tailwind from positive assay results coming off the 2016 program.
As for the Canuc/Santa Rosa RTO, all I can say is that
every RTO to which I have been privy over the years takes longer than first
thought and this one is no different. Between the lawyers and the regulators,
it seems that just when you think you are getting the green light, they come
up with something ridiculous like translating a document that is 15 years old
from Spanish to English "in order to protect the poor minority
shareholders of Canuc Resources." In reality, all that needs to happen
is for Canuc shareholders to vote on the transaction. It is they that are
getting absorbed by the private company (Santa Rosa Silver Mining Corp.) so
why not just ask them if they are OK with the terms of the deal and drive on?
Alas, despite the delay, I simply cannot stand the wait as the Santa Rosa
project will be a beauty. (If anyone wants to have a look at the old
PowerPoint presentation that was used back in 2015, email me at mballanger@rogers.com.)
Only two more weeks until the elections are over and then
it should be a "Sell the news" scenario for the USD and that should
provide the impetus for a sizzling year-end rally in the metals. Then, as
2016 ticks down, and with so many money managers having missed the gold
rally, it wouldn't surprise me if there is a mid-December scramble for the
mining shares and/or physical gold and silver as year-end window dressing is
applied to "modern portfolio management."
Right. . .
