Another 1.9 Trillion is set to be pumped into the economy. More stimulus checks, more unemployment and closing in on Universal Basic Income (UBI) may seem like a win win proposal, but is this actually a wolf in sheep’s clothing?
My grandfather used to tell me, “be careful what you wish for, as you just might get it”, and in the current circumstances this could never be more true. Sure we all want a free check, we all want to get stuff for free, but you can only print so much money before inflation raises its eerie head.
Real Estate Hot, Stocks Hot, Cryptos on Fire, Gold and Silver trading at ridiculous premiums but for how long can all this easy money last? Maybe it last 6 months, maybe it is 2 years, but eventually a great reset is going to happen and it is better to be prepared than to be reacting.
Eventually the era of easy money will end. There are only so many buyers of Treasury bonds and the more you print, the less attractive they become. This may result in the FED not only buying up the bonds, but retiring them as well. Does this lead to inflation? Who knows, but we are going to find out, as there is nothing free in life and eventually someone will pay.
This is why I like physical assets including Bitcoin. Gold Silver and Bitcoin are going to be the winners, and Real Estate somewhat. While many are chasing the GME’s and DOGE’s of the world, the frugal investor is looking at more secure holdings.
With all the new interest there is some room for equities to run higher, stocks push ATH’s, and there will surely be more GME’s over the next month, but eventually the music will stop!
Bitcoin has pushed through 38k but is far from out of the woods yet. Corrections are tricky as it is never clear whether this is the start of the next bullish cycle or we are still in a ranging or corrective cycle.
The attractive areas for aggressive buying is still below 32k and there is a possibility we retest lower levels before going higher. The market has not taken out 42k yet confirming a bullish cycle but we are also not falling apart quickly as we would expect if sellers were aggressively active.
There is also a bearish pinbar that formed yesterday, but not so fast.
The trend is still bullish so pinbars against the trend are not as heavily weighted as pinbars with the trend. Back in December we had two bullish outcomes of bearish pinbars that were bullish. Now granted, both trend and momentum was in favor of the bulls as well.
Recently we had a huge bearish pinbar evolve, and yet the market found buyers and continued higher.
In short there is no crystal ball indicator that is going to tell Bitcoin’s next move, but most of the battle between bulls and bears has taken place between 32&38k, with the upper and lower boundary at 42k and 28700 respectively.
In the near term we are looking at 36k to hold. Takes out 36k, looking for a swing back to 32k where we will see if buyers step in.
IF we take out 42k, I believe we push quickly into the 45-50k quickly, on the other hand if 36k is taken out, push back to 32k quickly. This is where placing a stop is critical and minimizing risk.
Currently we are long Bitcoin with a tight stop.
The selloff was short lived and buyers quickly stepped in pushing the market to close on the week higher.
If we are above 3900 at the cash open tomorrow, likely to see 4000 trade over the next couple weeks, but this is also an area to watch for a fake-out as well.
As long as we open strong on Monday we will continue to look for longs, but are also hedging in the event a sell comes out of nowhere.
In our portfolio, we are still maintaining a pretty hefty cash position, adding positions where opportunities provide and taking profits on big winners.
With swing trading, we continue to take trades, and have been incorporating more Long Call strategies with the market trading highs, to limit our risk yet still gain exposure if stocks rally.
Currently we are short the DIA with 1 target hit, so our risk has been reduced some and overall this was only 2% for the trade with over a 3 R:R so if stopped out our loss is limited.
In short above 3900 looking for more longs up to 4000, below 3840 will be reducing risk and looking for another short setup.
I simply like Gold and Silver long here via physical, stocks or miners. This market is one of the most manipulated in history and continues to be.
Physical Gold is trading at 10-20% over spot depending on what you are buying.
Physical Silver is trading at 20-30% or more over spot, depending on what you are buying.
There is a huge spread between futures and physical and history generally sees this spread narrow during periods of demand. So though it is possible to push back into the mid 1700’s I am a buyer of Gold below 1900 and a buyer of silver below 30.
It is really that simple, but it is getting tougher to come by as dealers want stupid money for physical due to demand. This is only going to pick up IMO over the next 2 years.
Look at the broader picture.
Gold had a broad rally prior to the stock market top in 2007 and though Gold did pullback as the market started to bottom, there was another 2 years of rally left before finally topping out in 2011.
IMO we are still in the initial stages of a multi-year rally for Gold and though I trimmed out some at 16 and 19k I am buying back in here slowly. Adding a little here and there, when I can find a deal.
If we start to see a rally back to 2100 in Gold IMO it is a sign that the Bull Market in stocks is coming to an end. Money flows ahead of the news, not trails it.
We are already seeing it in the physical markets, but it has not rolled into the futures markets because Gold is highly manipulated. Why is this vs Bitcoin, Stocks and other equities.
Well after the Hunt’s brothers cornered the silver market, the rules were changed on taking delivery on contracts. Unlike Bitcoin where spot price wags the futures prices, or the S&P futures contracts which is determined by the stock market, Gold is determined by the futures market.
You can not corner the Gold or Silver markets because there is an unlimited number of contracts and less than 0.5% of them take delivery. So the powers that be can simply sell more contracts than there are buyers keeping the price of Gold and Silver depressed as they can keep printing paper.
However this will come to an end as mining companies are not going to be delivering Gold based on the futures price if the physical price stays 10-20% higher. So eventually futures will narrow more in line with what it costs to buy gold and silver on the physical market.
Honestly the banks like JPM HSBC BoA take delivery of contracts then sell physical to their investors at a 10-20% premium is market manipulation period!
Over the next 5 years it is reasonable to see Gold push into the mid 3k’s potentially higher. Yes $5000 gold could be a thing.
So what about silver then?
When Silver runs it runs and IMO there is a lot of room to run for silver here starting with an initial target of 42.50.
There is a huge shortage of physical silver on the market right now. Going to many of the sites they are sold out of certain silver coins or bars.
Random Silver eagles which normally trade at 0.75-1.25 over spot are trading @ $12-$13 with dealers willing to pay $6 over which is a sure sign of a shortage.
Even generic silver bars are trading at $5.00 over spot which is nearly 20% over the spot price. Unheard of, as only a year ago you could get generic silver at often 29-59 cents over spot.
This and we are still in the early stages of a potential multi year bull market. People are not selling silver right now, with all the talk of Green energy and EV cars etc that will increase the industrial use for silver.
In the last run we traded nearly $50 an ounce, in this run would not be surprised to see $80 or $100 trade. Of course this is over a period of years not months.
In short I have been adding to my physical silver stack, though again I sold some over the past 6 months. Two weeks ago I thought $4 over spot for Silver Eagles was too much, this week $6-$8 is what they are bringing on the wholesale front if you can get them.
Metals are pointing to inflation but so is some other commodities like Copper.
Copper is trading at an all time high recently, and any pullback is going to be an opportunity to buy some copper stocks.
As copper prices go up, so does the cost of all goods, from cars, to houses, to electronics, just about everything.
Who would of thought with the move to Green Energy Oil would rally? Well as I spoke about back after the election, more regulations will reduce supply with an economy set to recover leading to more demand than supply and higher prices.
Gas is already flirting with $2.60 in Florida, something we have not seen in years, and it looks as if higher prices are in the works here.
Soybean futures are soaring, up 75% from the low and over 35% since the election. Strong chart, higher soybean and food prices on the horizon another sign of impending inflation.
One stock I like for positioning in copper, oil and other metals is BHP Billiton. Nice pullback and potential buying area for a swing back to 74.0 here.
Obviously as more demand for copper and other metals, along with a rise in oil prices, BHP is going to benefit, especially with any infrastructure bill in the future.
Another stock I am looking to increase my position on any pullback is John Deere. Both an infrastructure play as well as an agriculture play. Higher prices mean farmers can buy newer equipment, and this is bullish for John Deere.
Going to the software side of commodities, looking at Raven Industries. Recently we had a long call trade that doubled and we are looking for another trade in this stock.
Another stock I like, have owned before, looking to get back in is Tyson Foods. Get a re-opening of restaurants, trade deal with China, Tyson foods will prosper.
Had a few winners last week with SKLZ and APPS having huge moves, nice trade with INO (options trade) which paid of 3:1, and WKHS is going to be a nice winner here, however this is one we recently added as a Long Call going into earnings ZNGA.
Nice break of resistance at 10.00 retest and bullish reversal off the now support level.
IF we take out 11.0 looking for 13.0 to trade here, of course we have earnings on the 10th so we will monitor it and potentially take some profit off the table going in, making it a risk free trade if bullish momentum continues.
Looking for a potential continuation trade with CLSK here. The trade shown was a more aggressive trade at the behest of one of our members and is clearly working out so far.
I am not in this one, but it is looking good for a long trade this week, and will be looking at long calls.
Another on the radar and we already have a small position is Sunpower. Nice bullish structure, buyers stepping in at the 40 level, looking for a move back into the mid to high 50’s potentially a higher hihg.
Trade we took already and we are in is DOTUSD, however I am liking the setup for a continuation higher here so may issue a secondary trade on this one.
Strong chart, holding up here and consolidating for another long.
On the bio-tech front looking or a long in Editas Medicine which is showing signs a bottom may be in. Strong bullish chart here, liking the R:R on this one for a move back into the 90’s, so lots of room to run, risk is easily measured here.
There are many more long setups I am looking at, these are just a few, but the point I want to emphasize is keeping risk in check. As we close out swing trades we open another one, we are not piling one on top of another.
I want to keep accumulating Bitcoin, Gold and Silver for a broader move, buying as you know daily in Bitcoin and making purchases in Silver and Gold as well when the opportunity arises.
Multi year opportunities are scarce, but if you want to take advantage of them you have to be ahead of the game, and this implies keeping a decent cash position on hand, being patient, and ensuring stops are used for all trades.
I can not count the number of posts where someone bought GME and is now down 50% or more, and is wondering if they should blow it out. What was their thinking? Their thinking was how much they were going to make, and neglected how much they could lose, failed to place a stop and are now taking serious pain.
Keep it in check, will update in the room later.
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