“… this contempt for the public underpins the progressive left’s policy in virtually every area. In a nutshell, people can’t be trusted to do the right thing, hence the need for ever increasing government intervention..”

{mp3}grant/notrust{/mp3}

Patrick examines some of the risk / reward trading opportunities he sees upcoming for the reat of the spring and into the summer.

Over the last several weeks, in both the daily blog and weekly newsletter, I have been laying out the technical case for a breakout above the downtrend. As I stated, while such a breakout would demand a subsequent increase in equity risk in portfolios, I didn’t like it. To wit:

“First, let’s remember that the current advance is not built on improving economic or fundamental data. It is built simply on ‘hope.’

With valuations expensive, markets overbought, volatility low, and sentiment pushing back into more extreme territory, there are a lot of things that can go wrong.

As shown in the following chart, the recent surge in asset prices has also turned the 50-dma sharply higher and is in the position of crossing back above the 200-dma. It is worth noting that the last time this occurred, it did fail shortly thereafter.“

…..read more HERE

….also:

Connecting the Dots

Faber expects the Fed to backpedal with the new rate hike policy, with the announcement of a new wave of monetary expansion this year, QE 4.

Policymakers are pushing on a string – monetary expansion is far less affective with each installment. Although the equities indexes are being buoyed by a few key shares, the majority of stocks are in bear market territory.

Dr. Faber questions the veracity of official US economic figures, noting a high likelihood of a recession in early 2016 despite official indications to the contrary.

After years of stagnation, gold shares are outperforming most sectors, as their relative value encourages wise investors to allocate funds into the XAU. Dr. Faber recently added to his gold position, using weakness as an opportunity to procure sound money at a discount. The storage cost for physical gold bullion is low making the yellow metal an ideal asset to outperform other commodities amid a 2016 rebound rally. 

This and more in this 1 hour 18 minute interview.

also:

Silver is on Fire

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.

For as long as most gold and silver investors can remember, the paper markets — that is, banks and speculators placing bets with futures contracts — have set the price of those metals. And within the paper markets, “the commercials” — fabricators and big banks — have time-and-gain fooled speculators like hedge funds into piling in (both long and short) at exactly the wrong time.

The data series that tracks this relationship is known as the commitment of traders report (COT), and it’s been a pretty reliable indicator of precious metals’ short-term trajectory.

Right now that’s bad news for gold and especially for silver, because the speculators — who, remember, are usually wrong at the extremes — are exuberantly long the latter, implying that the silver recovery is due for a correction. Here’s a recent piece from well-known metals trader Dan Norcini:

Silver Commitments of Traders – Halloween is Arriving Early This Year

By that I mean, it just keeps getting scarier and scarier.

My guess is that every speculator on the planet is long silver/short gold or outright long silver.

That of course is an exaggeration but I am not exaggerating when I categorically state that the silver market is a train wreck just waiting to happen. As I have said before, and will say so again – I would rather miss any more upside in this market than get long now, not with a trade so lopsidedly jammed with speculators on the long side. I will leave that for the daredevils and others who like driving the stagecoach as close to the edge of the mountain pass road as they possibly can.

Here is a look at the hedge fund outrights:

Larger Image

Yet another all time record high! Tell me we do not have a buying frenzy taking place in the silver market! I suppose it can keep going higher and the specs can keep piling on more and more longs but when it breaks, it is going to be ugly – unless you are short and then it will be a thing of beauty to behold a mass exodus of hapless specs who ended up buying the top in this thing.

Commercial interests and Swap Dealers have been more than happy to offload silver into the hands of speculators at these prices. If I were long this market, and I am not, I would get some downside protection through the use of options at the very least.

On the other side of this argument is London metals trader Andrew Maguire, who in his latest interview on King World News interview asserts that gold and silver are entering new, post-paper age in which physical demand sets prices:

Western central planners have finally lost control of the gold market. There is an unprecedented liquidity drain out of London markets into physical markets in the East. It’s flowing out of the paper market into the physical exchanges. These events are unprecedented, forcing changes in the behavior of paper markets that are not comprehended by paper-centric analysts who are puzzling over outdated chart patterns and synthetically extracted data.

Just this week things came to a head. An overwhelming number of bearish observations appeared in the blogosphere. I see a lot of hand wringing about open interest structure which historically at these levels has resulted in a major rinse lower. But the gold market is increasingly driven by global physical benchmarks. The physical market dog is starting to wag the paper market tail. Anyone trading paper-centric historical patters is driving forward while looking in the rear view mirror.

Maguire goes on to say that if this is indeed the long-awaited physical take-over of the precious metals markets silver will not only fail to correct, it will go up faster than gold, brining the gold/silver ratio down to more historically normal levels.

For those getting back into precious metals after the brutal bear market of the past few years, the prospect of the Eastern physical markets taking over from the Western paper markets is welcome. But it adds another layer of complexity to an already opaque market.

So here again, the only rational response is to embrace the short-term uncertainty and dollar-cost average. Since both camps in the above debate see precious metals much higher a few years hence, just buy a little at a time and don’t try to play the squiggles. Leave that to the pros.