Friday, January 13, 2017

Why Gold Could Soar Another 353%

By Justin Spittler

Gold is on the rise again. It’s climbed for two straight weeks, and it’s now up nearly 5% since December 15. Many precious metals investors couldn’t be happier about this. You see, gold stormed out of the gate last year. It had its strongest first quarter since 1986. By the end of June, it had risen 25%. Things were looking up. Then, the market changed course. Gold plunged 18% in just four months. Last month, it hit its lowest level since last February.

• The sharp pullback spooked precious metals investors….
But regular Dispatch readers knew that gold would rebound. After such an explosive start to 2016, it was only natural for gold to “take a breather.” We urged you to not lose sight of the big picture. As we often remind you, gold’s a safe-haven asset. Investors buy it when they’re worried about the economy, financial system, or politics. And right now, investors have plenty of reasons to be worried, even if some are still enjoying the “Trump Honeymoon” phase.

• Louis James thinks gold will keep rising….
Louis is our chief resource expert. He is the editor of International Speculator and Casey Resource Investor, our advisories dedicated to resource stocks with big upside. According to Louis, gold has struggled recently because investors expect interest rates to rise. They have good reason to think this, too. After all, the Federal Reserve just raised its key interest rate… but for only the second time since 2006. It also said that it plans to lift rates three more times this year. Conventional wisdom tells us that this is bad for gold. Since gold doesn’t pay interest like a bond, most investors don’t want to own it when rates are rising or are likely to rise.

• According to Louis, the market has already “priced in” higher interest rates….
This means gold shouldn’t fall if the Fed sticks to its plan and raises rates three more times this year. Of course, that’s a big “if.” Heading into last year, the Fed said it wanted to raise rates four times. But it only raised rates once last year, and it waited until the eleventh hour to pull the trigger. We wouldn’t be surprised if the Fed sits on its hands again. If that happens, investors will know something is very wrong with the economy. Many folks will start buying gold hand over fist.

• But that’s not the only reason Louis is bullish on gold.…
Last week, he gave his subscribers several reasons why gold should keep rising:
➢ Rumors of new gold curbs in India have not panned out.
➢ Fear of the fall of New Rome [the EU] is driving Europeans into [U.S.] dollars and gold.
➢ The escalation of the “other” Cold War with China increases uncertainty in global markets.
➢ Even Trump’s best ideas (cuts in taxes and regulations) will cause disruptions that will have to work through the economy before things can improve.
• Gold is incredibly cheap, too.…
Louis explains:
Gold needs to rise another US$900 or so to hit a new inflation-adjusted high. Given the trillions and trillions of new dollars, euros, yen, yuan, and so forth printed over the last 45 years, it should do much more than that.
Right now, gold is trading for about $1,180. In other words, it would have to climb about 75% to reach its previous inflation-adjusted high.
But Louis thinks gold could race well past that in the coming years:
Many analysts see the current market as analogous to the great gold bull of the 1970s, only bigger and longer. Adjusted for inflation, gold rose about 353% from its mid-1970s trough to its 1980 peak. If that pattern repeats itself, gold would have to rise from its December 2015 low to just above US$5,200 per ounce by October 2022.
If gold does anything close to what it did during the ’70s, precious metals investors could see explosive gains in the very near future. Just take a look at the chart below.




• Louis is so convinced that gold’s headed higher, he just made a giant bet on it…

He wrote last week:
I’m so sure, I put my money where my mouth is last week. As advised last month, I entered the market during the peak of Tax Loss Season. I’m not allowed to buy the same stocks I recommend (to avoid possible conflicts of interest), so I bought ETFs instead. In fact, I put about twice as much of my own cash into these proxies for gold stocks than I ever put into gold stocks before.
Louis also plans to buy more gold at the first chance he gets:
I think that 2016 was an overture for what’s ahead. I intend to profit from it. And I’m not worried about any fluctuations in the near term. If prices drop, I’ll hope to buy more. If prices rise, it’s off to the races.
• You, too, can make huge profits from rising gold prices.…
The key is to buy gold mining stocks. Gold miners are leveraged to the price of gold. This means gold doesn’t have to rise much for them to take off. During the 2000–2003 gold bull market, the average gold stock gained 602%. The best ones soared 1,000% or more. Of course, not every gold company is a winner. In fact, many gold stocks are total duds. That’s because gold mining is an incredibly difficult business. To protect your capital and make monster gains, you have to own the right gold stocks. Unfortunately, most folks have no clue what to look for in a gold stock.

That’s where we can help.…

You see, Louis is a true industry insider. He’s visited mining projects all around the world. He’s on a first name basis with many of the world’s top mining CEOs. And he understands the geology inside and out. Louis also has a proprietary system for finding the best gold stocks. Casey Research founder Doug Casey actually taught Louis this system… after he spent decades perfecting it.

You can learn more about Louis’ system by clicking here. As you’ll see, it’s delivered giant gains over and over again. Just don’t wait too long. Gold probably won’t stay cheap for much longer… meaning you’ll want to take action soon to have a shot at truly life changing gains. Click here to learn more.

Chart of the Day

Gold stocks are dirt cheap, too.

Today’s chart compares the NYSE Arca Gold BUGS Index (HUI), which tracks large gold stocks, with the price of gold. The lower the ratio, the cheaper gold stocks are relative to gold. According to this ratio, gold stocks are cheaper today than they ever were during the dot com bubble. They’re also cheaper than they ever were during the last housing bubble.

Keep in mind, stocks were trading near record highs during these periods. Most investors were extremely bullish. They owned too many mainstream stocks and not enough gold stocks. Right now, this key ratio is lower than it was during either period. This tells us that today could be one of the best times to buy gold stocks since the turn of the century.

If you would like to add gold stocks to your portfolio, we encourage you to sign up for International Speculator. As we said earlier, this is our publication dedicated to gold stocks with the most upside. 

Click here to begin your risk-free trial.



The article Why Gold Could Soar Another 353% was originally published at caseyresearch.com.




Stock & ETF Trading Signals

Wednesday, January 4, 2017

The Ultimate Way to Profit from Trump’s “America First” Platform

By Nick Giambruno

“It was the single most important financial event of my career.” That’s what my friend Rick Rule of Sprott Global recently told me of his experience in the uranium market. Rick was referring to Paladin Energy, a uranium company that leaped from one penny to $10 per share during uranium’s last bull market. That’s a 1,000-fold increase. In other words, a $10,000 investment could have exploded into $10 million

Even the worst-performing companies in the uranium sector delivered 20 to 1 returns. Uranium can deliver these almost unbelievable returns because of unique supply and demand quirks that create colossal bull and bear markets. Here’s a quick rundown….

The 1950s Uranium Bull Market


Uranium cycled through its first bull market in the 1950s. This bull was mainly driven by the nuclear arms race between the US and the Soviet Union. Back then, the only practical way an investor could get exposure was through uranium exploration companies trading on small regional stock exchanges, like the one in Salt Lake City (which closed in 1986). Those who did made a bundle.

The Late 1970s Uranium Bull Market


The uranium price increased more than tenfold during this bull market… from $3 to $43. Some uranium stocks shot up by a factor of 100. Greater nuclear power use was the main driver. It was a cheap alternative to high-priced oil. Disastrous power plant failures ended this bull market—first Three Mile Island and then Chernobyl, the final nail in the coffin. New production also came online and flooded the market just as demand was decreasing. The resulting bear market lasted for 20 years.

The 2001–2010 Uranium Bull Market


This bull market originated with the preceding 20 year bear market, where the uranium price decreased over 70%. It bottomed at $8 per pound in 2001. For many companies, the cost of producing uranium was higher than the spot price. Miners were producing uranium for around $18 per pound, but they could only sell it for about $9 per pound. So there was little incentive to increase or maintain production. Miners simply stopped producing. Production capacity plummeted. This sowed the seeds for another uranium bull market.

The market didn’t just settle into equilibrium. The supply destruction and increasing demand were so great that, eventually, uranium overshot the price needed to balance the market. After bottoming at $8 per pound in 2001, it skyrocketed to $130 in 2007. That alone is impressive. But uranium stocks had an even greater meteoric rise. This is when Paladin Energy, the company Rick Rule was talking about, soared from one penny to $10. A nuclear catastrophe ushered in a new bear market, just as it had with previous uranium runs. In 2011, a tsunami caused a nuclear meltdown at the Fukushima power plant in Japan. It was the worst nuclear disaster since Chernobyl. Afterward, Japan took all 52 of its nuclear power plants offline and switched to importing liquefied natural gas (LNG).

A major source of demand in the global uranium market was gone. And a global supply glut followed.
The uranium price crashed from around $85 to under $30. Then it continued sliding to around $18 per pound, where it sits today. Now, once again, the spot price of uranium is less than the cost of production. This is great news for us. The current uranium supply/demand imbalance has a lot in common with the last market cycle. It’s setting the stage for the next uranium boom. Now is the time to get positioned for the same kind of explosive returns we’ve seen in previous uranium bull markets.

The Next Uranium Bull Run


I can’t think of a commodity with more upside and less downside than uranium right now. While many commodities have bounced off their lows, uranium hasn’t. It’s still at or near the moment of maximum pessimism. The situation is screaming, “Bargain!” Psychology plays a big part here. People don’t like uranium. It’s yucky. It’s politically incorrect. Some hear “uranium” and think “cancer.” Many get emotional because of its association with Hiroshima, Nagasaki, Chernobyl, Three Mile Island, and of course Fukushima.

Besides that, investors are terrified that uranium prices have fallen over 85% from previous highs. It’s hard to think of a market where the sentiment is worse. This is why I’m excited. Crises and extreme sentiment don't scare me. They attract my interest.

The whole point of investing in crisis markets is to take advantage of the aberrations of mass psychology and pick up elite companies and assets for pennies on the dollar. This describes the current opportunity in the uranium market perfectly. Simply put, nuclear power delivers immense value to its users, there’s no substitute for uranium, and production is falling while demand rises.

This situation has only two possible outcomes….


1. Uranium prices don’t go up. Miners have no incentive to produce. Nuclear power plants run out of uranium, and the lights go out for billions of people.
2. Uranium prices go up and incentivize enough production to meet the demand.

There are no other options. Which one do you think is more likely? Then there’s the Trump factor. Trump is strongly pro-energy, and pro-nuclear in particular. He has said, “I’m in favor of nuclear energy, very strongly in favor of nuclear energy.” Nuclear energy fits right in with Trump’s “America First” platform. It’s critical for securing the country’s energy independence.

For all these reasons, uranium is my #1 investment for 2017.

Last month I recommended a “best of breed” uranium company in Crisis Investing. Subscribers are already sitting on a gain of around 17% as of this writing. Now, I can’t tell you the name of this company. That would be unfair to subscribers. But I can tell you why I’m so bullish on it.

It has the upside of a junior exploration company, think 10 bagger or better. But it’s very low risk. This is the kind of trade we look for in crisis markets, with the risk/reward skewed in our favor. In the last uranium bull market, this company’s share price rocketed 3,600%. That’s a 10 bagger almost four times over. I expect it to do at least as well in the coming one as it did in the previous one.

You’ll find all the details in Crisis InvestingClick here to learn more.




Get out latest FREE eBooK "Understanding Options"....Just Click Here

Saturday, October 15, 2016

Carley Garner's "Higher Probability Commodity Trading"

Carley Garner's new book "Higher Probability Commodity Trading" takes readers on an unprecedented journey through the treacherous commodity markets; shedding light on topics rarely discussed in trading literature from a unique perspective, with the intention of increasing the odds of success for market participants.

In its quest to guide traders through the process of commodity market analysis, strategy development, and risk management, Higher Probability Commodity Trading discusses several alternative market concepts and unconventional views such as option selling tactics, hedging futures positions with options, and combining the practice of fundamental, technical, seasonal, and sentiment analysis to gauge market price changes.

Carley, is a frequent contributor of commodity market analysis to CNBC's Mad Money TV show hosted by Jim Cramer. She has also been a futures and options broker, where for over a decade she has had a front row seat to the victories and defeats the commodity markets deal to traders.

Garner has a knack for portraying complex commodity trading concepts, in an easy-to-read and entertaining format. Readers of Higher Probability Commodity Trading are sure to walk away with a better understanding of the futures and options market, but more importantly with the benefit of years of market lessons learned without the expensive lessons.

Get Higher Probability Commodity Trading on Amazon....Get it Here!

Thursday, September 15, 2016

The Next Big Short




The "Next Big Short" is a collection of looming market risks from The Heisenberg. This 37 page special report will show you the risks in the markets. How to explain The Heisenberg?

Essentially, it's a collective brain trust of skilled traders willing to discuss markets with the freedom of anonymity. You can enjoy Heisenberg's lively market commentary in the TheoDark Report section of their public blog.

Get the "Next Big Short " free special report....Just Click Here

For more backstory, here's Heisenberg in his own words: Heisenberg spent a long time in college. Probably too long. Be that as it may, the experience afforded him extensive cross disciplinary experience. From Aristotle to Kant to Wittgenstein, from Hobbes to Locke to Rousseau, from plain vanilla equities to FX to CDS, Heisenberg is right at home. With degrees in political science and business, as well as extensive post graduate work in political science and public administration, Heisenberg is uniquely positioned to analyze markets from a holistic perspective. He also has a sense of humor, which allows him to fully appreciate how entertaining it is to talk about himself in the third person.

Heisenberg has traded pretty much everything at one time or another and if he hasn’t traded it, he’s studied it enough to drive himself just as crazy as if he had. He doesn’t sleep much because the terminal doesn’t sleep and neither, generally speaking, do currency markets.

Heisenberg once took the law school admission test (LSAT) for fun with no intention of actually going to law school. He then took it again to try and beat his first score. He paid for the second test with profits he made from long calls on a Brazilian water utility ADR that he sold to close from the first iPhone (the 2.5G version that no one remembers) in the middle of a graduate political science class. His score on the verbal section of the graduate management admission test (GMAT) was near perfect. As was his score on the analytical writing portion. Don’t ask about the math section. He got bored after two hours and didn’t care about using the Pythagorean theorem to determine how long Timmy’s shadow was when he was standing next to a 90 degree flag pole.

Professionally, Heisenberg has worked in Manhattan and many other locales and has years of experience generating and monetizing financial web content. He’s continually amused at those who make it seem hard. You provide quality content for users on a consistent basis. Everything else falls into place. Build it, and they will come.

Get the "Next Big Short " free special report....Just Click Here


See you in the markets putting the Next Big Short to work,
Ray's Stock World


Friday, September 9, 2016

Webinar Replay...Low Risk Setups For Trading Precise Turning Points in Any Market

On September 6th John Carter of Simpler Options treated us to a special online training webinar. We discovered low risk option strategies for catching "bold and beautiful" reversal trades. John also showed us how to hunt for tops and bottoms using low risk setups for trading precise turning points in any market and so much more.

Watch the FREE Replay Here

Most traders have no idea how to capture the massive profit potential from trading major reversals. These days’ markets often turn on a dime and those who wait for ‘conservative’ setups either miss out or suffer steep losses.

Here's what you can expect to learn during this webinar session....

  *  A simple 3-step process to identify major market turning points in any market

  *  How to find low risk, high probability trades in today's volatile market conditions

  *  Why it’s finally possible to catch tops and bottoms in real time on almost any chart

  *  Why these ‘Bold and Beautiful’ reversal trades can be safer than ‘comfortable’ trades

  *  How to avoid getting suckered into the costly traps that most traders fall into

  *  How to adapt your trades automatically for choppy conditions AND big trends

  *  How to know when a support or resistance level is likely to hold or not


       Watch the FREE replay Right Here


       See you in the markets,
       Ray's Stock World


Get John's latest FREE eBook "Understanding Options"....Just Click Here!




Thursday, September 1, 2016

Todd's Team Shows Us How to Profit in Booms and Busts

This week we shared four special charts with you. Those charts are at the heart of a 145 year old financial market mystery. A mystery that’s delivering stable 50.91% annual returns. It literally rotates your portfolio in the perfect asset for each market condition.

The S&P 500 is roaring. Your portfolio is up. The Brexit shocks global markets. Your portfolio is up. Stocks are flat and mostly stagnant. Your portfolio? Still up. AND it does all that without crazy leverage… hyperactive day trading… or risky securities (like penny stocks or options) which can and do regularly go to ZERO.

My friend Todd Mitchell - CEO of Trading Concepts - has put together a video series explaining exactly how this works. If you haven’t started watching it yet…

Watch it Right Now....Click Here

A handful of in the know traders are already trading the “Synergy Pattern.” Traders like Leonard Caruso who writes, “My wife and I started with a $12,000 and less than 6 months later we are up a little over $18,000, which is over 50 percent return on my investment.”

Or Kerry Chen from California who says, “I’m finally making profit and after 12 painful years of losing money or breaking even at best.”

Then there’s Daniel Fisk, who tells me, “After following the method for close to two years, I’m now about 75% invested in this and I’m talking about my IRA and my trading account.”

Martin Beane from Hawaii writes, “I’ve traded for over 15 years, and never imagined that there was a strategy to take advantage of every type of market cycle the U.S. stock market goes through. I’ve already made arrangements to allocate another 25% of my portfolio.”

Now you can find out precisely how it works….

Get the answer immediately. This video series is only going to be up for a few days. You’ll see the countdown timer when you click through to watch. So don’t hesitate or “save it for later.” You won’t get another shot at this one.

Watch it Right Now - Click Here

See you in the markets.
Ray @ the Stock Market Club



Monday, August 29, 2016

How to Adapt Your Trades Automatically for Choppy Conditions and Big Trends

Have you noticed we’re getting a lot of brutally sharp reversals in the markets lately? It’s so frustrating because most traders get caught on the wrong side over and over again. So called safe trend trades get destroyed while betting on bold reversals is working like clockwork.

What’s going on?

For years, it was possible to just buy any dip in stocks and crank out winner after winner. But those days are long gone. If you try that now, you’ll burn through your account in the blink of an eye. These days’ trends reverse on a dime, but at the same time, you can’t just blindly pick tops and bottoms either.

Anyone who was short stocks recently learned that lesson the hard way when the market rocketed to new all time highs. The bottom line is that those outdated strategies no longer work. If you want to generate consistent profits in these volatile conditions, you’ve got to adapt. And that’s why this short video by renowned trader John F. Carter is so exciting

You’ve just got to see the breakthrough strategy that allows him to catch massive price swings without breaking a sweat.

See for yourself >>> Click HERE to Watch <<<

If you haven’t heard of John before, he’s a best selling author and trader with over 25 years’ experience. He’s developed a world wide reputation for catching explosive trends in stocks, options, and even futures, too.

So I hope you attend on September 6th, 2016 at 7:00 PM Central for a special webinar called, “Hunting for Tops and Bottoms - Low Risk Setups for Trading Precise Turning Points in Any Market”.

Here’s just some of what you’ll learn....

  *  A simple 3 step process to identify major market turning points in any market

  *  How to find low risk, high probability trades in today's volatile market conditions

  *  Why it’s finally possible to catch tops and bottoms in real time on almost any chart

  *  Why these ‘Bold and Beautiful’ reversal trades can be safer than ‘comfortable’ trades

  *  How to avoid getting suckered into the costly traps that most traders fall into

  *  How to adapt your trades automatically for choppy conditions and big trends

  *  How to know when a support or resistance level is likely to hold or not

And that’s just the tip of the iceberg.

I’m looking forward to this special event and I expect I’ll be taking a lot of notes, too. There may not be a replay and this event will almost certainly fill to capacity – so register now and be sure to show up a few minutes early. Unless you’ve already mastered trading these volatile swings, this could be the most important training you attend this year.

To claim your spot just Click HERE

See you next Tuesday,
Ray's Stock World


P.S.   If you have not downloaded John's free eBook do it asap....Just Click Here



Tuesday, August 23, 2016

Will The Bubble Pop Regardless if the Fed Never Raises Rates?

The current overall SPX pattern is a broadening top, which is usually a very reliable pattern. The market continues to look as though it wants to go even lower. The momentum shift, which I have been expecting, has been slow to start, however one should be prepared for this occurrence ahead of time. Nevertheless, the large divergences which I have been viewing, in my proprietary oscillators, are most real, and, once the selling starts, the momentum should quickly move to the downside.

The current market is being supported by a lack of sellers more so than aggressive buying. With investors still thinking that there is no other place to store their money, they appear to be content with leaving their money with risk on assets within a market that is pushing to all time highs. This type of mentality usually leads to large losses rather than big gains. There isn’t any real opportunity for growth in the SPX that I can see right now.

Dow Theory: Market Indexes Must Confirm Each Other
The Dow Theory was formulated from a series of Wall Street Journal editorials which were authored by Charles H. Dow from 1900 until the time of his death in 1902. These editorials reflected Dow’s beliefs regarding how the stock market behaved and how the market could be used to measure the health of the business environment.

Dow first used his theory to create the Dow Jones Industrial Index and the Dow Jones Rail Index (now Transportation Index), which were originally compiled by Dow for TheWall Street Journal. Dow created these indexes because he felt they were an accurate reflection of the business conditions within the economy, seeing as they covered two major economic segments: industrial and rail (transportation). While these indexes have changed, over the last 100 years, the theory still applies to current market indexes.

Market indexes must confirm one another. In other words, a major reversal from a bull or bear market cannot be signaled unless both indexes (generally the Dow Industrial and Transports Averages) are in agreement. Currently, They are DIVERGING, issuing MAJOR NON-CONFIRMATION HIGH the Dow Jones Industrial average. If one couples this with the volatility index, this is a warning sign and a recipe for disaster.

chart 1


The FEDs’ monetary policy over the last eight years has led to unproductive and reckless corporate behavior. The chart below shows U.S. non financials’ year on year change in net debt versus operating cash flow as measured by earnings before interest, tax, depreciation, and amortization (EBITA).

Chart 2
The growth in operating cash flow peaked five years ago and has turned negative year over year. Net debt has continued to rise, which is not good for companies.

This has never before occurred in the post World War II period. In the cycle preceding the Great Recession, the peaks had been pretty much coincidental. Even during that cycle, they only diverged for two years, and by the time EBITA turned negative, year over year, as it has today, growth in net debt had been declining for over two years. Again, the current 5 year divergence is unprecedented in financial history. Today, most of that debt is used for financial engineering, as opposed to productive investments. In 2012, buybacks and M&A were $1.25 trillion, while all R&D and office equipment spending were $1.55 trillion. As valuations rose, since that time, R&D and office equipment grew by only $250 billion, but financial engineering grew by $750 billion, or three times this!

You can only live on your seed corn for so long. Despite there being no increase in their interest costs while growing their net borrowing by $1.7 trillion, the profit shares of the corporate sector peaked in 2012. The corporate sector, today, is stuck in a vicious cycle of earnings manipulation management, questionable allocation of capital, low productivity, declining margins and growing debt levels.

Conclusion:

In short, I continue to pound on the table to help keep you and fellow investors aware that something bad, financially, is going to take place – huge events like the tech bubble, the housing collapse a few years back, and now national financial instability. Experts saw all these events coming months and, in some cases, years in advance. Big things typically don’t happen fast, but once the momentum changes direction you better be ready for some life changing events and a change in the financial market place.

Follow my analysis in real time, swing trades, and even my long term investment positions so you can survive from the financial storm The Gold & Oil Guy.com



Stock & ETF Trading Signals

Monday, August 15, 2016

It Can’t Wait Any Longer – It's Deja Vu in the Markets

The stock market tends to repeat itself on a regular basis. Why? Because it moves mainly based on the emotions of market participants, with the exception of extreme times when the masses are moving the market with extreme fear or greed, at which point they are flooding the market with buy or sell orders to create a final pop or drop in the market just before a major market reversal.

As with everything in the universe, everything moves in cycles, periods of expansion and contraction, and there are regular wave like patterns that happen on a regular basis no matter the time frame one is reviewing on a stock chart.

Here are three charts, each showing a similar price pattern of extreme washout lows, followed by roughly a 1 1/2 month rally taking investors on a roller coaster ride from fear and complete panic to greedy "know it alls". In short [no pun intended] U.S. large cap stocks look and feel toppy here. I feel a correction is likely to take place any day now, and the big question is “how much will the stock market pullback? Will it be another 4-5% correction similar to the chart examples above? Or will it be something larger 8-15% correction?

Chris Vermeulen


Get my Daily Newsletter and Trade Signals Right Here



Stock & ETF Trading Signals

Sunday, August 14, 2016

Why Corporate America Can’t Prop Up Stocks Much Longer

By Justin Spittler

Corporate America is bracing for tough times. Since you’re reading an investment newsletter, you likely own stocks. And if you’re like most investors, you keep up with how the companies you own are performing. You might even listen to quarterly “earnings calls,” which are when CEOs present results and give their outlook on the business.

Most of the time, CEOs act as cheerleaders on these calls. If business is bad, they’ll say business is good. If business is good, they’ll say it’s great. And CEOs are notoriously optimistic about the economy. After all, thousands of investors and analysts listen to these calls. CEOs know their stock can crash if they’re pessimistic about the business or economy. Because many CEOs will say anything to make their stock go up, we don’t put much stock in their words. We pay much more attention to their actions. And right now, large U.S. companies are acting like very tough economic times are ahead.

Business investment fell 2.2% last quarter..…
This metric measures how much companies spend on property, plant, and equipment. It was the third straight quarter that business investment fell. That hasn’t happened since the 2008-2009 financial crisis. We wouldn’t see this if the economy was headed in the right direction. Companies would be building more factories. They’d be buying more machinery. They’d be spending more money on research and development.

Instead, companies have cut back on investments. This tell us they don’t see many good opportunities. That’s a bad sign for the economy, yet stocks keep rallying. The S&P 500, Dow, and NASDAQ have all recently hit new record highs. At this point, you’re probably wondering what’s keeping stocks afloat if it’s not the economy.

Companies have spent about $2.5 trillion on “share buybacks” since the financial crisis..…
A buyback is when a company buys its own stock from shareholders. This can lift a company's stock price.
According to investment bank Goldman Sachs (GS), buybacks have been the biggest driver of U.S. stock performance since the financial crisis. Buybacks also reduce the number of shares that trade on the market.

This boosts a company’s earnings per share. But buybacks don’t make a company more profitable. They only make profits look bigger “on paper.” Companies have been buying up their own stock for two reasons: 1) They don’t see many growth opportunities. And 2) it’s incredibly cheap to borrow money.

The Federal Reserve has held its key interest rate near zero since 2008..…
The Fed cut rates to encourage households and businesses to borrow and spend more money. Mainstream economists thought this would “stimulate” the economy. It didn’t work. The U.S. economy has grown at an annualized rate of just 2.1% since 2009. This makes the current “recovery” the slowest by far since World War II.

The Fed did get folks to borrow huge sums of money. U.S. corporations have borrowed more than $10 billion in the bond market since 2007. Last year, they issued a record $1.5 trillion in bonds.
Buybacks are a big reason companies borrowed so much. MarketWatch reported last week:
Companies have been taking on piles of debt to finance buybacks, leading the total debt on the S&P 500 to grow 56% during the past five years.
According to Yahoo! Finance, companies in the S&P 500 funded 22% of last year’s buybacks with debt. This year, debt paid for 39% of share buybacks.

Corporate debt is now dangerously high..… 
According to Barron’s, corporate debt now equals 45.3% of gross domestic product (GDP). The only time this key ratio has ever been higher was in 2009, when it hit 45.4%. If the economy was doing well, this wouldn’t be such a big problem. Companies would be making enough money to pay their debts.

But right now, Corporate America is struggling to make money. Profits for companies in the S&P 500 are on track to fall for the fifth straight quarter. That hasn’t happened since the 2008-2009 financial crisis.
There’s no telling when this earnings drought will end either. According to research firm FactSet, analysts expect third quarter corporate profits to fall 1.7%. The third quarter ends on September 30.

Keep in mind, the U.S. economy is technically in a “recovery” right now. Imagine what will happen to corporate profits during the next recession. The more profits fall, the less money companies will have to prop up their shares with buybacks.
  
Companies have already started to cut back on buybacks..…
According to Business Insider, buybacks fell 18% last quarter. This sharp decline in buyback activity followed a near record breaking first quarter, in which companies in the S&P 500 spent an incredible $166 billion on buybacks. That’s the second most ever, and the most in one quarter since 2007. We don’t know exactly why companies are suddenly spending less on buybacks.

Maybe it’s because corporate profits are drying up. Maybe companies are starting to realize they have too much debt. Or maybe it’s because stocks are expensive. According to the popular CAPE ratio, stocks in the S&P 500 are 62% more expensive than their historic average. Since 1881, U.S. stocks have only been more expensive three times: before the Great Depression, during the dot-com bubble, and leading up to the 2008-2009 financial crisis.

Like any investment, buybacks only make sense when stocks are a good deal. With stocks as expensive as they are today, buybacks are a terrible use of money.

Without buybacks, there won’t be much to keep U.S. stocks from falling..…
If you own stocks, take a good look at your portfolio. We recommend that you get out of any company that needs buybacks to retain shareholders. We also encourage you to put 10% to 15% of your wealth in gold. As we often say, gold is real money. It’s preserved wealth for centuries because gold is unlike any other asset. It’s durable, easy to transport, and easily divisible.

Gold is also the ultimate safe haven asset. It’s survived economic depressions, stock market crashes, and full blown currency crises. When investors are nervous about stocks or the economy, they buy gold.
The price of gold has jumped 27% this year. It’s beat the S&P 500 4-to-1.

If you don’t already own gold for protection, we encourage you to do so immediately..…
According to Casey Research founder Doug Casey, the financial system is held together by “chewing gum and bailing wire” right now. When the public wakes up and realizes this, “they’ll flock to gold… just as they’ve done for centuries.” Doug thinks this could cause the price of gold to easily soar 200% in the coming years.

You could make 2x, 5x, or 10x that much money in gold stocks..…
Yesterday, we showed you how leverage works in the resource market. As we explained, this powerful force is why gold stocks can soar even if the price of gold doesn’t rise by that much. This year, gold’s 27% jump caused the VanEck Vectors Gold Miners ETF (GDX), which tracks large gold miners, to soar 128%.

Some folks might see that and think they missed their chance to buy gold stocks. But regular readers know gold stocks can go many times higher. During the 2000-2003 bull market, the average gold stock rose 602%. The best ones returned more than 1,000%. We expect even bigger gains in the coming years. To learn why, watch this short presentation. In it, Doug explains why we’re headed for “the biggest gold mania” he’s even seen.

By the end of this video, you’ll know why there’s never been a better time to own gold stocks. You’ll also learn how to make the most of this new gold bull market. We’re talking gains of 1,000%...2,000%...even 5,000%. Those kind of returns might sound impossible. But as you’ll see, Doug's hit many “home runs” like this throughout his career. And for the first time ever, he's showing the world exactly how he did this.

To learn Doug’s SECRET to making giant gains in gold stocks, watch this free video.

How Will Negative Interest Rates, the War on Cash, and “Helicopter Money” Affect the Markets?

Today, we have something special to share with you. Instead of the usual “Chart of the Day,” you’ll find a six-minute video presentation put together by our colleagues at Palm Beach Research Group.

In the video below, Palm Beach Research Group co-founder Tom Dyson and Palm Beach Letter editor Teeka Tiwari discuss how radical government policies are affecting global financial markets. As Tom and Teeka explain, these central bank “experiments” will have severe side effects. They could even push the price of gold to $5,000. To learn why, watch the video below.



If you like what you saw from Tom and Teeka, we encourage you to sign up for their “speed round” training series. Click here to get started.


Get out latest FREE eBooK "Understanding Options"....Just Click Here

Stock & ETF Trading Signals