Gold and silver have more or less confirmed they have bottomed and are ready for a multi-year rally. Their trend has not fully ‘reversed’ to the upside yet but the market breadth and internals for the precious metals sector are very bullish. My subscribers know that I am ‘bullish’ on precious metals and believe that they will be the best performing ‘asset class’ within the next three to five years for those who can only buy long (profit from rising prices). There are a few more big opportunities unfolding in other assets also but that is not what this article focuses on.

There are more than enough signs which indicate that a looming ‘financial crisis’ is impending and will last longer than the Great Financial Crisis (2008-2009) did and will test the values of our society.

During the ‘Great Depression’, although gold was not traded freely, the gold mining stocks made a ‘killing’ while the rest of the stocks were plummeting into a bottomless pit.

During the ‘Great Depression’, Homestake Mining, which was the largest US gold miner, at that time, outperformed the Dow Jones Index by a huge margin; the chart shown below clearly illustrates that while the other investors were monitoring their stocks which plummeted at close to zero valuations, the investors of the leading gold miner, Homestake Mining, incredulously multiplied their investment!

During the period that the Dow Jones Index crashed, Homestake mining returned more than 1100% profits to its’ investors.

Fast forward to the ‘Great Financial Crisis’ of 2007- 2008, when the stock markets and commodities plunged, however, gold and silver entered into a strong ‘bullish’ trend as seen in the chart below.

The historical references indicate that during a financial crisis traders tend to flock towards gold which outperforms the markets by a huge margin!

Gold has lost its’ luster, in the past five years, after topping out in 2011 when the FED and other Central Banks embarked on a money printing spree. However, for the first time in six years, gold returned with a massive 17% rally in 2016.

Despite announcements of further QE made by the ECB as well as negative interest rates which were announced by the BOJ, gold has ‘held its’ own’. This indicates that the traders are not buying the current upward move in the SPX, but rather, are accumulating gold at every dip.

The ‘smart money’ enters the ‘asset class’ at an early stage of the new bullish trend, hence, it is important to follow the ‘smart money’ so as to verify if they too believe in my hypothesis that we are about to witness a ‘massive financial crisis’ unfold!

Chart Shows the Number of Contracts Owned by Large Investors

The ‘smart money’ continue to invest in gold.   They have increased their holdings to 184,218 contracts (according to the latest Commodity Futures Trading Commission data) which represents double their holdings of two months earlier. This is also the highest holdings since 2012.

Is the ‘smart money’ favoring only gold? No, they are also loading up on silver. Professionals have increased their net-long positions by 54,885 contracts which is a 30% increase; the highest percent reached since 2006, according to CFTC data.

The data (in the chart below) clearly points to the investment preferences of the Money Managers. They are utilizing the current dips in order to add to their positions in gold and silver.

I have talked about how gold and silver will be the ‘asset class’ to invest in, for the future for many years, but we have been waiting for them to bottom first before getting positioned. The current accumulation in both suggests that gold and silver have put in their long-term bottoms.  This will be an uptrend for several years if my analysis is correct.

Due to monetary policies, enacted by the FED and the other central banks, I expect that the SPX is now completing its’ ‘topping formation’.  The retail traders and others may dump their gold and silver because they believe that the stock market is starting a new ‘bullish’ trend.

I expect that there will be an exceptional opportunity to buy soon in metals. I want to maximize the gains of each and every dollar that is invested, therefore, I will advise my subscribers when it is the most optimum entry point.

Continue to follow my analysis and trades so you will know when the optimum time to enter into gold and silver is and then watch your investments grow exponentially.

Chris Vermeulen – www.TheGoldAndOilGuy.com

The Charts show and explain what happened and how you could have traded it with us!

Trade With Me At: www.TheGoldAndOilGuy.com

Chris Vermeulen

Metals and mining stocks continue to rock higher decoupling from our cycle analysis to create a strong impulse wave higher. This is what I feared last week and talked about happening and is the reason we had our protective stop for our short gold trade so we would keep that trade as a winner. Also, my gut was warning that this cycle break and emotional rally was trying to happen, and that is why we did not re-enter a short position in this sector.

The last two weeks this sector has been moving fairly sporadically and out of sync. Because of this, I have not covered it in much detail. Yesterday Obama announced an unexpected and expedited closed door meeting with the FED for today. I think this may have everyone worried and buying metals today.

Today’s massive gap and rally actually have me very interested in a short trade for gold. With the chart forming a balance head and shoulders pattern, price trading at resistance, a news/fear based rally, along with a short-term cycle topping today, this could be a great low-risk trade and price may fade back down over the next 1-3 days.

See chart below or login to view:

Couple things to touch on here:

First, I would like to mention and be clear that while I share some spike alert setups here and there with you, those trades are not the main focus of this newsletter and my trading. This year the way the markets have been gyrating spike trades have definitely filled the void for a lack of swing trades and long-term investment positions.

We will sooner than later start building some new long term positions and have swing trades. But it is difficult because so many markets are all trying to change directions and chopping around. I don’t want us holding onto trades that will be all over the place for several weeks before moving in our favor. We don’t need that stress. Rather, I’m trying to hold off as long as I can before getting positioned. Don’t worry, they are coming!

Second, I know many of you love the price spikes as they provide a steady stream of winning trades each week. Friday morning was a quick $900 profit, and this morning in the video I shared with you the SPY price spike that took place in pre-market today. I traded it also for a quick day trade pocketing $400.00 in less than 1 hour to kick start the week.

You can see my trade today with my Interactive Brokers account. I waited to enter this trade until I felt the market shook out the short positions and got everyone bullish for the day. Then I sold short 1 the ES mini futures contract at 10:01am.

I have explained the market shakeout move before. How we see a price spike and the market, but the price will first move in the opposite direction to get everyone on the wrong side of the trade before it makes its move to reach the spike target.

Then 59 minutes later at 11:00am I bought back my short position and locked in 8 points ($50 per point x 8 = $400). Then another short position in the afternoon as the market started to breakdown again to fill the morning spike for another 11.5 points ($50 per point x $11.5 = $575).

Just these three trades you were able to pocket $1,8670.00 which is more than enough to cover 4 years of me sharing analysis and trades with you… not too shabby!

I will be creating a mini course/guide on how to trade Spike Alerts soon because there is an art to doing it well. Plus, I am working on a solution so those of you who want to keep rocking with the price spikes can do so without me bombarding every member with all this day trading/momentum analysis and updates.

I totally understand and feel for those who just want long term and swing trades and not intraday updates all the time. So, I’m working to satisfy both groups.

Chris Vermeulen

The Federal Debt:

The current amount The U.S. Government owes is over $19 trillion and therefore it is mathematically impossible to pay back. They will never be able to pay this back.  Central bankers are in uncharted waters. They do not know how to create economic growth and fight deflation in some areas of the market.  They do not know how to even return to a time of “normal” monetary policy.   Their pretense of knowledge, of being able to effectively control currencies used by billions of people, is coming to an end.

The amount of debt only continues to grow and people think that somehow, governments are beyond the laws of mathematics.  Things are fine until they are not.  This is not an issue that will just go away   or disappear, but rather continue to build until it reaches a breaking point.

Labor Force Participation:

We have close to 10’s of millions of Americans that are flat out not part of the labor force (not including children). The argument that this is only being made up of recent retirees is not true.  First, many cannot retire because they need to work until they die.  Another point is the rate is going up much faster than the number of people hitting old age.

Homeownership:

The homeownership rate has fully collapsed.  Since the Great Recession hit, a large part of buying came from Wall Street and institutional investors.  They bought homes to convert into rentals since this was how they used their bailout savior money.  The money kept them afloat and what do they do?  Buy up homes in a tight market and drive prices higher when working Americans already have declining incomes.  The net result is that fewer people/families own their property and owning your home has always been traditionally viewed as the American dream.  This has been the one vehicle where most Americans build wealth and equity and it’s not happening at nearly the same rate as it one was.

The problem is that people do not have $20,000 or $30,000 to make a down payment. I see a smaller number of Americans making their home the ultimate financial goal which is a good thing. It forces saving via having equity in their home. Let’s face it, you don’t hear all the retired and wealthy people saying they made their big money in a retirement account. In almost every case they earned their wealth through real estate investments in their own home and/or rental properties over time.

There are currently signs of another new housing bubble emerging.  The current home price data shows that across the country we have now surpassed the last bubble peak. Incomes are not keeping up with wild movements in home prices.  The end result is that the work force incomes are decreasing so creative financing is necessary to buy more expensive homes.

Homes homeownership rate has collapsed because of the higher priced housing market.  How can prices go up with fewer families buying homes?  Easy, since the bailout funds allowed banks, hedge funds, and investors to pick up foreclosed homes from families and then turned them into rental income properties.  Today, we have many more people living in rental apartment and rental homes accumulating no equity and barely scraping by.  Yet somehow housing prices soaring, college tuition at crazy levels, all while we have lower incomes. The current model of the American Dream involves no homeownership for the already shrinking middle class.

 The upper-income, educated, married with children class are still not buying!

A strong middle class has been at the core of what has been promoted as the American Dream.  How would America look like if the middle class simply vanished?  We may not need to wait too long at the current rate since we are quickly siphoning people off the middle class and throwing them into lower Income brackets. The vast majority of Americans do not buy into the propaganda promoted on the mainstream media.

Housing prices have now reached an all-time peak.  This is worth noting because the last peak was clearly at a point where we were massively overpriced, as seen in the chart below, and the entire world economy came close to experiencing the next Great Depression.  There is nothing remotely “normal” about the current housing bubble’s rise and we can anticipate that its deflation could be equally abnormal and abrupt if the financial markets start to implode.

Homes were being bought by large investors to convert into rentals because money is almost FREE with rates so low, and the return on capital with rental properties is more than you will get anywhere else, plus you have a real asset, not paper money. This is where the bulk of the price increase occurred.  This is why while net household’s information for owners is neutral, the country added 10,000,000 more reenter since 2004:

In short, real estate continues to provide the best return on investment. I recently purchased a large property, demolished the house, and am in the process of building a multi-family high-end retirement four-plex. I believe my area which is the www.CollingwoodRealEstate.net market will generate the best return on investment (cost of one property paying 4 rental income).

With low-interest rate it can make a business venture like this very profitable and is a solid long term strategy. The key with real estate though is to not get over extended with borrowed money. Own properties well within your financing capabilities factoring some worst case scenarios.

Eventually, certain areas of the financial system will crumble while others become favorable from stocks, bonds, currencies, to real estate. Each of these provide great opportunities to profit from through various investment vehicles like Exchange Traded Funds.

Follow my lead as I navigate the financial market and profit using ETF’s at TheGoldAndOilGuy newsletter.

Chris Vermeulen

The article and charts display why silver is a neglected asset.  Since the beginning of the year, gold has returned handsome gains for its investors. However, during this same period of time, the returns from silver have been lackluster, as indicated and why you need to know why…

READ FULL ARTICLE: CLICK HERE