May 2018 Investor Letter

Strategy Performance

 
performance table.jpg
 

Investment Philosophy and Approach

The Active Asset Allocator investment strategy is designed to deliver a consistent level of positive returns over time with a strong focus on capital preservation. I follow a multi-asset investment approach, actively allocating between global equities, bonds, precious metals, currencies and cash. I always invest with the primary trend of the market and do not follow a benchmark. Instead, I manage the market risk for clients. This strategy has returned +10% per annum net of fees since inception with a lower level of risk than the average multi-asset fund. My active asset allocation approach is best illustrated in the following chart.

 
AAA Asset Mix.jpg
 

Gold Trader focuses on capturing the strongest and weakest parts of gold's daily cycle, buying daily cycle lows, selling daily cycle highs and holding for 10-20 trading days, depending on the cycle count. This approach allows me to effectively manage risk. The strategy aims to capture +5%-6% profit per trade while risking 2%-3% each time, has a win rate in excess of 70% and is structured so that profits are TAX FREE for investors.

Executive Summary

This month, I examine a potential buying opportunity for the Active Asset Allocator in European equities and explain how the German stock market will likely trigger a move. I highlight the ongoing dominance of the FAANG stocks, which continue to drive the broad market averages higher and will likely continue to do so for the remainder of this bull market. I also discuss current stock market valuations and some technical indicators that are breaking down. These include an increasing number of stocks making new lows vs those making new highs and an increasing number of stocks trading below their long-term moving averages. 

In bonds, I cover the outlook for government bond yields in the US and Europe, while also discussing the possibility that the Federal Reserve in the US is potentially trapped and unable to raise short-term interest rates without popping the stock and bond market bubbles. I argue there is still some room for EU government bonds to rally in a risk-off move in the stock market, which is why the Active Asset Allocator currently holds a mix of cash, bonds and gold for capital preservation. On to gold, I highlight an upcoming investment opportunity for precious metals and also discuss an excellent research report from the folks at GaveKal - "The Upcoming Monetary War, with Gold as an Arbiter". 

Stock Market Update

Let's start this month's Investor Update with some potentially positive news. European stocks, as measured by the Eurostoxx 600 Index, have traded in very broad range for the last 20 years. The Eurostoxx 600 Index hit a resistance zone of 400-415 in 2000, 2007 and again in 2015, failing to break out on each occasion. We are still below that resistance line today but getting close again. The Index traded at 403 in January 2018 and is back at 392 this week. While there is a negative divergence appearing on the Relative Strength and Momentum indicators, suggesting that the current rally is losing strength, if the Eurostoxx 600 can break out and hold above 405-415, that would be a significant bullish development. In that instance, the Active Asset Allocator would take a long position in European shares, with a closing stop below resistance.

 
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If the Eurostoxx 600 is going to break out to new all-time highs, it will likely be led higher by Germany, the strongest market in the region. The German economy grew by +2.2% in 2017, its fastest pace in over five years while its fiscal surplus reached 1.2 percent of GDP, the most since the country’s reunification. Despite momentum slowing somewhat in the first quarter of 2018 due to a contraction in manufacturing output, expectations for another year of solid growth remain on track. All of this positive news has not been lost on the German stock market, which has already more than doubled since 2012. The Dax could be setting up to break out to new all-time highs, or a head and shoulders topping pattern may be in the process of forming. We will know soon enough. If the Dax can break and hold above 13,597 it will likely coincide with a break out to new all time highs in the Eurostoxx 600 Index. The Active Asset Allocator is on watch.

 
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In another positive for the stock market, the tech giants, which have led from the front for the last 9 years, continue to charge. Apple($985BN), Amazon ($775BN), Microsoft ($760BN), Google ($770BN) and Facebook ($550BN) are the five largest companies by market capitalisation trading on the New York Stock Exchange. Together, they are valued in excess of $3.8 trillion. They are the generals of Wall Street, have led from the front and their performance will drive this bull market until its conclusion. While a few of them stumbled following their 1Q 2018 earnings reports last month, they rallied hard last week and have continued to outperform the S&P 500 to varying degrees. The equity bull market will continue until these giants reverse lower. The FAANG stocks are a very crowded trade, but so far, the longs have been rewarded.

 
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Despite the good news and the appearance of relative strength of the broad market indices, a closer inspection reveals some potential signs of weakness. In a healthy bull market, the majority of stocks rise in a bullish trend, with the majority making new 52-week highs compared to those making new lows. As a bull market ages, the rising trend loses momentum and fewer stocks participate until the end, when the market runs out of steam and new lows start outpacing new highs and the market rolls over. You can see this trend in play in the chart below, which captures the number of stocks on the New York Stock Exchange, making new highs minus those making new lows.

As we turned from bull market to bear market in 2007/2008, the trend in stocks making new highs deteriorated versus those making making new lows. The same pattern was evident before the sharp stock market corrections in 2011 and 2015 and the same pattern is evident again today. We do not have to see a stock market collapse from here, but we could. Unless new highs start outpacing new lows again, I expect at least a sharp correction to unfold shortly. I lowered the equity allocation in my Active Asset Allocator strategy from 20% to 0% on 2nd March 2018 and am patiently waiting before I make my next move.

 
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On a similar note, the following chart measures the percentage of stocks in the S&P 100 Index trading above their 200 day moving average. In a bull market, you should expect to see the majority of stocks participate in the advance, but today, just over half the market is in rally mode. This can change. The stock market could simply be pausing for breath before the next move higher, but the weakness is concerning. We are in year ten of this bull market. The previous few ended with a similar drop off in market breadth before price gave way and the broader indices followed lower.

 
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Regular readers will know of my concerns for the stock market given where we are in the current cycle. John Hussman of the Hussman Funds articulates these concerns much better than I ever could and has the data to support his bearish leanings. Hussman has not played the bull market in stocks at all well in recent years, but his analysis is well worth reading. In his latest market comment - Comfort is Not Your Friend - Hussman imparts the following words of wisdom.

Markets peak when investors feel confidence about the economy, are impressed by recent market gains, and are comforted by the perception of safety and resilience that follows an extended market advance. So several features generally go together: 1) extreme optimism about the economy and corporate earnings, 2) depressed risk-premiums, and 3) steep market valuations. Poor subsequent market returns ultimately follow, though not always immediately.

In contrast, markets trough when investors are frightened about the economy, are terrified by recent market losses, and are paralyzed by the perception of risk and fragility that follows an extended market decline. So several features generally go together: 1) extreme pessimism about the economy and corporate earnings, 2) steep risk-premiums, and 3) depressed market valuations. Strong subsequent market returns ultimately follow, though not always immediately.

The chart below illustrates this regularity. The areas shaded in red are rather comfortable periods, featuring an unemployment rate below 5% and within 1% of a 3-year low, an S&P 500 price/revenue ratio above 1.15, typically reflecting a period of strong recent market gains, and an ISM purchasing managers index above 50, reflecting expectations for an expanding economy. Notably these periods of comfort were followed by S&P 500 total returns averaging zero over the following 3-year period, with deep interim losses more often than not.

In contrast, the areas shaded in green are rather uncomfortable periods, featuring an unemployment rate above 5% and within 1% of a 3-year high, an S&P 500 price/revenue ratio below 1.15, typically reflecting a recent period of dull returns or market losses, and an ISM purchasing managers index below 50, reflecting expectations of a contracting economy. Notably, these periods of discomfort were followed by S&P 500 total returns averaging 15.3% annually over the following 3-year period.
— John Hussman, Hussman Funds
 
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I think we've got some green bars to look forward to in the next three years when the US unemployment rate crosses back above 5% (and within 1% of a 3-year high), the S&P 500 Price/Sales ratio falls below 1.15 (from 2.16 times currently) and the ISM Purchasing Managers Index declines to below 50. For the full Hussman Market Comment, please follow the link. However, the stock market has to top first, before those green bars come in to view.

For more information on my stock market analysis, please get in touch. You can reach me at brian@secureinvestments.ie or at 086 821 5911.

Bond Market Update

 
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A chart comparing the relative performance of the S&P 500 to the US 10-year government bond yield suggests that the trend of falling equity prices and rising government bond yields is set to continue (in the US). If the blue support line gives way, this head-and-shoulders top formation should break down and the trend lower should accelerate. This is a significant problem for folks investing in and managing balanced portfolios. Historically, government bonds have acted as a shock absorber whenever stock markets have taken a plunge. With bond yields already on the floor, there is less room for them to fall (and bond prices to rise) when capital flows out of riskier assets. I still think there is some room for EU government bonds to rally in a risk-off move in the stock market, which is why the Active Asset Allocator currently holds a mix of cash, bonds and gold for capital preservation.

 
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The US Federal Reserve Chairman, Jerome Powell, would desperately like to raise short-term interest rates to provide a cushion for the 'next time down'. He can't raise rates too quickly or he will prick the debt and equity bubbles and lead the US economy into recession. He is also hesitant to boost short-term interest rates faster than the market has already discounted because he will invert the yield curve. Inverted yield curves (when 2 year yields > 10 year yields) ALWAYS signal a recession is not far away. If long-term yields continue to rise, Powell has a little more room to raise short-term rates, but not much. Today, 2 year yields in the US have surged to 2.6%, up from just 0.6% 12 months ago, while 10-year yields have reached 3.0%. The spread between 2 and 10-year yields has narrowed to just 43 basis points. Once the yield curve starts to steepen again, recession will be upon us.

 
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Unlike fixed interest rate government bonds where price moves inversely to changes in nominal interest rates, inflation-linked bond (ILB) prices are sensitive to changes in real interest rates, rather than nominal interest rates. This means that inflation linked bonds will rise in price and provide a hedge for investors against unexpected increases in inflation. Interest rates and government bond yields can rise, but as long as inflation rises at a faster rate, inflation linked bonds will increase in value. ILB's are under-owned, yet well placed to protect investors in a rising interest rate and rising inflationary environment. ILB's are playing an increasingly important role in the Active Asset Allocator.

 
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For more information on my bond market analysis, please get in touch. You can reach me at brian@secureinvestments.ie or at 086 821 5911.

Gold Market Update

Medium-term investor cycles (IC's) in the gold market generally last 6 months, though they can run a little shorter (July-December 2017) or a little longer (December 2016-July 2017). Today, gold is approaching the end of its current IC. Investor cycle lows (ICL's) are usually accompanied by heavy selling in the gold market. However, during bull markets, the selling does not have to be that strong. We are approaching a time now where gold should be seeking out a low and if its the start of a new IC, strong gains lie directly ahead. If gold tops early and fails to rally, then the ICL will likely be postponed to early June. The second half of 2018 should be a lucrative time for precious metals investors.

 
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I came across an interesting article from the folks at GaveKal Research entitled "The Upcoming Monetary War, with Gold as an Arbiter". (I posted another article from GaveKal Research last week. Special thanks to Charles Gave who gave permission to share). This is the second article and it is well worth a read. Charles Gave discusses the potential for conflict between the US and China, but he cogently argues that the fight will be less about trade and more about the struggle for dominance between the US dollar and the renmimbi. 

Any currency has three basic functions: it should be a medium of exchange, a unit of account and a store of value. To be elevated to reserve currency status it must also be fully convertible and accessible at any time without constraint. The nation controlling such a currency should control the sea lanes and have the largest financial market, such that in times of stress it can lend money to others. It should be technologically dominant, so that it has the best weapons and runs the highest margin businesses. It should also be a cultural power, such that it educates the children of the global elites. It also helps to be dominant in agriculture. On this score card, the US dollar is starting to face certain problems...
— Charles Gave, GaveKal Research

Gave argues that since the 9/11 attacks, the US has pulled back on allowing unconstrained global access to the USD. The US is exerting its power to freeze assets of certain misbehaving countries (Iran, Russia), while only allowing the well-behaved access to USD reserves. This is a dangerous game the US is playing, particularly given the trajectory of ever-increasing US budget deficits in the years ahead, which will need to be financed. China seems set on de-dollarizing the world according to Gave. China has recently offered renmimbi swap lines to multiple central banks, so as to provide emergency lending in times of crisis. China has also recently launched crude oil (and gold) futures contracts traded in renmimbi. Gave notes that China is planning to become the world's biggest financial market by 2047, when Hong Kong reverts to mainland control, with Singapore playing a complimentary role, just as London has in recent decades to New York.

 
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The punchline to the article: 

Now, most people tell me that the renminbi cannot become a global currency as it has a closed capital account. The answer to that objection is simple: China has just to offer a conversion in gold to anybody who has too many renminbi. And indeed it is headed in that direction. In recent years the Chinese have bought all the gold they can lay their hands on, as have the Russians. So, the real economic struggle between the US and China may not be fought out over trade or technology, but end up as a monetary war. In this regard, watch gold as any significant rise in its price versus the US bond market will be a defeat for Washington; any fall in this ratio should be seen as a victory. In recent years we have been in a stalemate. I doubt that this situation will last.
— Charles Gave, GaveKal Research

The performance of gold priced in USD versus US long duration zero coupon bonds suddenly became a lot more interesting. As Charles notes, in recent years, we have been in a stalemate, but he doubts that situation will last much longer. I hold a similar view.

 
Gold vs Zeros.jpg
 

For more information on my gold market analysis, please get in touch. You can reach me at brian@secureinvestments.ie or at 086 821 5911.

At Secure Investments, I advise individual clients on their pension and non-pension fund investment portfolios. To learn more about my Active Asset Allocator and Gold Trader investment strategies, please get in touch at brian@secureinvestments.ie or 086 821 5911. If you are reading this via LinkedIn, why not visit Secure Investments and subscribe to get exclusive content for free. No spam, ever. Just great stuff.

Disclaimer

The information contained herein should not be taken as an offer of investment advice or encourage the purchase or sale of of any particular security or investment. It is provided for information purposes only. Secure Investments and its content providers makes no representation or warranty of any kind with respect to the services described, analysis or information obtained arising from use of the pages on this website. Information provided is obtained from sources deemed to be reliable and is provided solely on a best efforts basis. Secure Investments and its content providers do not guarantee the completeness or accuracy of such information and do not accept any liability for any loss or damage arising out of negligence or otherwise as a result of use or reliance on this information, whether authorised or not. The use of the website is at the user's sole risk. Not all recommendations are necessarily suitable for all investors and investment policy must be tailored to suit the circumstances of the individual. We recommend that readers consult their professional adviser before acting on any advice or recommendation on this website. The value of any investment may fall as well as rise and you may not recover the full amount originally invested. Past performance or simulated performance is no guarantee of future investment returns. The value of your investment may be subject to exchange rate fluctuations which may have a positive or adverse effect on the price or income or the securities.

May 2017 Investor Letter

Strategy Performance

performance table.jpg

Investment Philosophy and Approach

The Active Asset Allocator investment strategy is designed to deliver a consistent level of positive returns over time with a strong focus on capital preservation. I follow a multi-asset investment approach, actively allocating between global equities, bonds, precious metals, currencies and cash. I always invest with the primary trend of the market and do not follow a benchmark. Instead, I manage the market risk for clients. This strategy has returned +11% per annum net of fees since inception with a lower level of risk than the average multi-asset fund. My active asset allocation approach is best illustrated in the following chart.

 
AAA Asset Mix.jpg
 

Gold Trader focuses on capturing the strongest and weakest parts of gold's daily cycle, buying daily cycle lows, selling daily cycle highs and holding for 10-20 trading days, depending on the cycle count. This approach allows me to effectively manage risk. The strategy aims to capture +5%-6% profit per trade while risking 2%-3% each time and has a win rate in excess of 70%.

Executive Summary

Over the last couple of months, Facebook, Apple, Amazon, Netflix and Google together have added $260 billion in market capitalisation. Meanwhile, the other 495 companies in the S&P 500 have lost a similar amount. Market leadership is narrowing to just a handful of names, a trend that often occurs at the tail end of a bull market. Smart investors are taking note. Paul Singer recently raised $5 billion to take advantage of opportunities when investor confidence becomes impaired and volatility spikes. Warren Buffett is sitting on 22% cash in his investment company Berkshire Hathaway. We are getting close.

Bonds have had a quiet couple of months but as long as 3% on the 10-year US Treasury and 1% on the 10-year German Bund hold, I continue to believe that the final low in yields of this multi-decade bull market lies somewhere in our future. The price action in gold could provide the clue to the timing of the turn (lower in stocks, higher in bonds and gold). Gold Trader is looking to catch the top of gold's fourth daily cycle before the final descent into a medium-term low in June. Once next month's low is in place, I expect a powerful move higher over the Summer, possibly to $1,500, as the stock market finally rolls over.

Stock Market Update

Paul Singer's hedge fund Elliott Management raised $5 billion in 24 hours last week to take advantage of a potential major investment opportunity set that could emerge "when investor confidence is impaired, recent correlations and assumptions don't work and prices are changing rapidly". Singer, one of the most successful hedge fund managers of all time, is expecting a sharp rise in volatility and some unpleasant consequences for investors in the not too distant future. He is not the only one. Warren Buffett is currently holding 22% cash - nearly $100 billion - in his investment company Berkshire Hathaway. Two titans of the investment industry are on edge and concerned about the outlook for global markets.

Back in May 2013, Paul Singer penned an excellent article describing the moral hazard that has been created by the Federal Reserve. (The full article is available in the Research section of my website at the following link: In the Wilderness). In the article, Singer lambastes the Federal Reserve for the dangerous policies they have pursued and the unintended consequences that have yet to be felt from their reckless and irresponsible actions.

If you look at the history of Fed policy from Greenspan to Bernanke, you see two broad and destructive paths quite clearly. One path is the cult of central banking, in which the central bank gradually acquired the mantle of all-knowing guru and maestro, capable of fine-tuning the global economy and financial system, despite their infinite complexity. On this path traveled arrogance, carelessness and a rigid and narrow orthodoxy substituting for an open-minded quest to understand exactly what the modern financial system actually is and how it really works. The second path is one of lower and lower discipline, less and less conservative stewardship of the precious confidence that is all that stands between fiat currency and monetary ruin. Monetary debasement in its chronic form erodes people’s savings. In its acute and later stages, it can destroy the social cohesion of a society as wealth is stolen and/or created not by ideas, effort and leadership, but rather by the wild swings of asset prices engendered by the loss of any anchor to enduring value. In that phase, wealth and credit assets (debt) are confiscated or devalued by various means, including inflation and taxation, or by changes to laws relating to the rights of asset holders. Speculators win, savers are destroyed, and the ties that bind either fray or rip. We see no signs that our leaders possess the understanding, courage or discipline to avoid this.
— Paul Singer, Elliott Management, May 2013.

One of the consequences of continuous central bank intervention in capital markets has been the emergence of the short volatility trade as investor confidence levels ratchet up once again. A tremendous amount of capital has been placed on bets that volatility will remain suppressed for the foreseeable future. This, at a time when the Vix Index (below) is trading at multi-decade lows. Over the past 13 trading days, the S&P 500 has traded within a range of 1.01%, the least volatile 13 days in history! Volatility spikes and rapid changes in price are what Paul Singer is preparing for.

 
The Vix Index is a measure of the volatility of S&P 500 index options and is considered a prescient gauge of investor confidence (when the Vix is low) and fear (when the Vix spikes higher).

The Vix Index is a measure of the volatility of S&P 500 index options and is considered a prescient gauge of investor confidence (when the Vix is low) and fear (when the Vix spikes higher).

 

Another direct consequence of continuous central bank intervention has been the reach for yield as investors are forced out of low risk cash and into higher risk investments in the search for income and a reasonable investment return. Total assets in Rydex Money Market Funds have now also fallen to multi-decade lows.....

 
 

.... at a time when stock market valuations and margin debt as a percentage of nominal GDP have rarely been higher.

There is also a potential negative divergence now appearing in the S&P 500 where price is breaking out to new all-time highs but relative strength and momentum indicators are failing to confirm the move. This signals that the rally could be nearing its final stages.

 
 

In his 1st May Weekly Market Comment, John Hussman showed a simple chart of the S&P 500, marking all days since 1960 where the opening level of the Index was 0.5% above the prior day's closing price and the Index was within 2% of an all-time high. On some occasions, these conditions occurred shortly before the final bull market high, while on others (August 1987 and October 2007), they occurred just a few days before or after the final market top. Food for thought.

 
 

Stock markets have enjoyed a very strong multi-year rally since 2009, and since bottoming versus gold in 2011. The S&P has handily outperformed precious metals over the last six years, following gold's strong relative performance versus US equities from 2000 until 2011.  I believe the trend is now turning once again in favour of gold. I think gold will put in a meaningful low over the next 4-6 weeks (see Gold Market Update for more information), which I expect will coincide with a top in the stock market. After that, things should start to get interesting.

 
 

European stocks (lower left chart) trade at a valuation discount relative to US stocks and the market is pricing in quite a depressed level of earnings growth for EU companies. So, there is a margin of safety priced in to EU stock markets. Chinese stocks (lower right chart) continue to face significant headwinds and the chart of the Shanghai Stock Exchange Composite Index suggests that the downward trend will persist for some time yet. I will be tilting the regional equity bias in the Active Asset Allocator towards Europe following the next meaningful correction, but for now, I continue to recommend caution and maintain a defensive position in the Active Asset Allocator of 20% equities / 40% bonds / 30% precious metals / 10% cash. 

Eurostoxx 600.jpg

For more information on my stock market analysis, please get in touch. You can reach me at brian@secureinvestments.ie or at 086 821 5911.

Bond Market Update

The trend remains down for government bond yields across the world. Inflationary pressures are probably greatest in the United States and eventually that will be reflected in the US Treasury market. However, as long as the US 10-year yield remains below 3.0%, I think the final low in yields of this multi-decade bull market lies somewhere in our future. 

 
 

Debt, demographics and delusional central banks are combining to perpetuate this bull market in bonds. Despite the recent rise in yields, Eurozone government bond yields also remain in a multi-year downward trend. As long as 10-year German bund yields remain below 1.0%, the bond bull market remains intact.

 
 

It has been a quiet couple of months for inflation-linked bonds but the longer-term trend remains up for this under-owned asset class. Inflation-linked bonds offer attractive diversification benefits for multi-asset portfolios and perform well at times when equities and fixed interest rate bonds are struggling. I will likely increase the allocation to ILB's in the Active Asset Allocator over the course of the next 12 months.

 
 

For more information on my bond market analysis, please get in touch. You can reach me at brian@secureinvestments.ie or at 086 821 5911.

Gold Market Update

I closed Trade 12 of the Gold Trader strategy last week for a 2% gain (+4.4%YTD). I am looking to place another short position for Gold Trader to catch the top of gold's fourth daily cycle before the final descent into a medium-term low in June. Once next month's low is in place, I am expecting a powerful move higher over the Summer, coinciding with a top and decline in the stock market.

 
 

I am pretty excited about the prospects for Gold Trader. The strategy looks to capture 5-6% per trade while risking just 2-3% each time and has a win rate in excess of 70% based on over 10 years of data. Profits are tax-free to the client and fees are performance based. No gain, no fee. Please get in touch if you are interested in learning more.

I expect gold to bottom next month near $1,170. The possibility remains for a fast and sharp drop below the December 2016 low of $1,124 to shake out the bulls, which would provide the fuel for the next rally. Either way, once gold gets going, I expect a strong move higher towards $1,500. Gold Trader will be searching for a long position next month to get on board the move. 

 
 

For more information on my gold market analysis, please get in touch. You can reach me at brian@secureinvestments.ie or at 086 821 5911.

March 2017 Investor Letter

Strategy Performance

 
 

Investment Philosophy and Approach

The Active Asset Allocator investment strategy is designed to deliver a consistent level of positive returns over time with a strong focus on capital preservation. I follow a multi-asset investment approach, actively allocating between global equities, bonds, precious metals, currencies and cash. I always invest with the primary trend of the market and do not follow a benchmark. Instead, I manage the market risk for clients. This strategy has returned +11% per annum net of fees since inception with a lower level of risk than the average multi-asset fund. My active asset allocation approach is best illustrated in the following chart.

 
 

Gold Trader focuses on capturing the strongest and weakest parts of gold's daily cycle, buying daily cycle lows, selling daily cycle highs and holding for 10-15 trading days, depending on the cycle count. This approach allows me to effectively manage risk. The strategy aims to capture +5% to 6% profit per trade while risking 2% each time and has a win rate in excess of 70%.

Executive Summary

The strong rally in growth assets and sharp decline in interest rates have pulled forward future expected returns to such a degree that a passive portfolio of stocks and bonds is now priced to deliver little more than 2% per annum over the next decade, down from 9% per annum in 2009. Despite this prognosis, many are bullish on the outlook for stocks this year. The USD also looks vulnerable. The US Dollar Index peaked in 1985 and 16 years later in 2001. Prior declines in the USD Index have coincided with bear markets in stocks. 16 years later in 2017, are we about to see currency and equity cycles turn lower again?

Inflation-linked bonds have quite attractive risk and return characteristics and often perform well at times when equities and fixed interest rate bonds are struggling; namely during periods when inflation is rising and/or economic growth is falling. Inflation-linked bonds can therefore provide attractive diversification benefits for multi-asset portfolios without impacting expected returns. The Active Asset Allocator currently holds a 15% allocation to inflation-linked bonds. Meanwhile on gold, this month I look at some of the developing bullish trends for precious metals in 2017. I remain defensively positioned for now with 20% equities / 40% bonds / 30% precious metals / 10% cash.

Gold Trader closed Trade 11 for a win and is now looking to enter Trade 12, a short position to catch the top of daily cycle 3 and the drop into the next daily cycle low. 

Stock Market Update

While historical returns on a traditional portfolio of 60% equities / 40% bonds are near all-time highs, forward-looking expected returns are near all-time lows. The strong rally in growth assets in recent years and sharp decline in interest rates have pulled forward future expected returns to such a degree that a passive portfolio of stocks and bonds is now priced to deliver little more than 2% per annum over the next decade, down from 9% per annum in 2009. Active asset allocation will become a key driver in delivering attractive returns for investors and the Active Asset Allocator is well positioned in this regard. Two asset classes which remain significantly under-owned that should outperform in a rising inflationary world are inflation-linked bonds and precious metals, discussed in more detail later in this report.

For now, the stock market continues its ascent, still untroubled by the many potential time-bombs ticking quietly away in the background. The Sell-signal triggered by my technical studies last October, shortly before the US election result, was negated in December, so the bullish trend continues for now. An ageing bull market, now the third longest in history, and record overvaluation in stocks however are holding me back from moving to a fully invested position at this time. The risks are just too high and I think the current rally is running on fumes. A couple more weeks of additional selling in the stock market will tip the scales once again back to full defensive mode. 

 
 

John Hussman of Hussman Funds provides an excellent weekly analysis of trends in the stock market and captures the extent of the current overvaluation in equities better than anyone else. His chart (below left) measures the market value of equity plus book value of debt (enterprise value) of US companies relative to their gross value-added; a variation on the price/earnings multiple. His chart shows that valuations today are more expensive than in 2007 and within a hair's breath of their all-time extremes in 2000. The percentage of bullish newsletter writers from the latest Investors Intelligence Survey is also back near all-time highs.

Newsletter writers at optimistic extreme.

US corporate earnings have stopped falling in the short-term, perhaps on the back of expectations that Donald Trump will get his tax reform and infrastructure spending plans approved. However, US earnings are still at the same level as they were in 2007 when the S&P 500 was trading in the 1,500's, 33% below yesterday's closing price. At current prices, the stock market is all risk, no reward.

 
 

A bell doesn't ring at the top, but Trump's recent failure to get his healthcare reform legislation through the House of Representatives could mark an important tipping point. The Trump rally may have finally ended and if that proves to be the case, stock market volatility should start to accelerate. The Vix Index, a measure of volatility in the stock market,  appears to confirm this view, bottoming at 9.97 on 1st February 2017 and has been creeping higher in recent weeks. 

 
 

The performance of the US dollar has also caught my attention. US dollar bulls are ten-a-penny these days and the long dollar trade is quite lopsided. You have to buy US dollars before you can buy US equities and money has been piling into both markets in recent years. If we are close to the end of the bull run in equities, money will flow out of US stock markets and US dollars at the same time. While euro-based investors have enjoyed the double benefit of rallying US stock markets and a rising USD versus EUR, the trend in both looks set to change. The US Dollar Index peaked in 1985 and 16 years later in 2001. Prior declines in the USD Index have coincided with bear markets in stocks. 16 years later in 2017, are we about to see currency and equity cycles turn lower again?

 
 

For now, I continue to maintain a defensive position in the Active Asset Allocator of 20% equities / 40% bonds / 30% precious metals / 10% cash. 

For more information on my stock market analysis, please get in touch. You can reach me at brian@secureinvestments.ie or at 086 821 5911.

Bond Market Update

 
 

Inflation-linked bonds have quite attractive risk and return characteristics and often perform well at times when equities and fixed interest rate bonds are struggling; namely during periods when inflation is rising and/or economic growth is falling. Inflation-linked bonds can therefore provide attractive diversification benefits for multi-asset portfolios without impacting expected returns. Inflation-linked bonds tend to perform well when rising interest rates are driven by rising inflation expectations. They also represent quite an attractive alternative to fixed interest rate bonds in the current environment when nominal bond yields have already plunged to zero or below. While investors require nominal bond yields to fall deeper into negative territory to generate a positive return, inflation-linked bond returns, as the name suggests, are linked to the prevailing rates of inflation of countries issuing the bonds. If inflation happens to be higher than the nominal bond yield, then the real yield (nominal bond yield minus inflation) will simply be negative. Real yields can move to a negative extreme in a world of high inflation. The Active Asset Allocator currently holds a 15% allocation to inflation-linked bonds.

 
 

For more information on my bond market analysis, please get in touch. You can reach me at brian@secureinvestments.ie or at 086 821 5911.

Gold Market Update

According to the World Gold Council, overall demand for gold increased +2% in 2016 from 4,216 tonnes to 4,309 tonnes. ETF inflows accounted for the majority of the growth, offset by jewellery demand and a reduction in central bank purchases. Demand for physical bars and coins was relatively stable over the calendar year. Gold prices ended the year +8% in USD and +12% in EUR having been +25% in USD for the year to 30th September 2016. Investment demand increased +70% to its highest level since 2012, while annual ETF inflows were the highest since 2009. 

Investment demand soared +70% in 2016. Global gold bar and coin demand was broadly stable. China increased demand by +25% while the demonetisation experiment in India led to a -17% reduction in the demand for gold.

Central banks bought 384 tonnes of gold in 2016, a third less than in 2015 and 32% below their average purchases of the past five years. Mounting pressure on central bank currency reserves was the culprit for the reduced demand. Russia, China and Kazakhstan were the main buyers in the market.

After a five year bear market, the gold bull looks like it has turned the corner. Gold has been in a declining trend relative to the S&P 500 since 2011. The double bottom over the last 12 months could signal the tide is turning in favour of gold relative to US stocks. The pattern is similar to that formed in 1999-2000, shortly before an epic bull run began.

 
 

The monthly gold chart looks bullish. Gold traded above the 20 month moving average for the majority of the bull run from $250 in 2001 to $1,923 in 2011. Today gold is trading at $1,255, above the 20MMA of $1,212. Gold still needs to navigate daily cycles 3 and 4 of the current investor cycle (we are currently mid-way through daily cycle 3) before the next big move higher. I expect the next investor cycle to kick off in May 2017 and if gold holds together until then, the move could be significant.

 
 

The silver chart looks more bullish than gold's. Silver broke above the 20MMA last year and has re-tested the trend line from above a couple of times since. Silver is leading the way and this is another positive for the precious metals market. The Active Asset Allocator currently holds a 20% allocation to the Central Fund of Canada (CEF), which currently holds a 61% allocation to gold bullion and 39% allocation to silver bullion. CEF trades at a -5% discount to the net asset value of the bullion held in the fund. This discount has narrowed from -8% at the start of the year.

 
 

For more information on my gold market analysis, please get in touch. You can reach me at brian@secureinvestments.ie or at 086 821 5911.

April 2016 Investor Letter

Strategy Performance

Investment Philosophy and Approach

The Active Asset Allocator investment strategy is designed to deliver a consistent level of positive returns over time with a strong focus on capital preservation. I follow a multi-asset investment approach, actively allocating between global equities, bonds, precious metals, currencies and cash. I always invest with the primary trend of the market and do not follow a benchmark. Instead, I manage the market risk for clients. This strategy has returned +11% per annum net of fees since inception with a lower level of risk than the average multi-asset fund. My active asset allocation approach is best illustrated in the following chart.

 
 

Gold Trader and Gold PowerTrader focus on capturing the strongest and weakest parts of gold's daily cycles, buying daily cycle lows, selling daily cycle highs and holding for 10-15 trading days, depending on the cycle count. This approach allows me to effectively manage risk. The strategy aims to capture +5% to 6% profit per trade while risking just 1.5% each time and has a win rate in excess of 70%.

Executive Summary

Following the worst start to the year for equities in recorded history, we have just experienced one of the sharpest recoveries off the lows since records began. This rally has been so strong in fact that my technical studies have just triggered a buy signal for the stock market for the first time since September 2013. This month, I review the recent improvement in the stock market's technical setup and outline my plan of attack for the weeks ahead. For now, the Active Asset Allocator remains defensively positioned, 20% equities / 30% bonds / 30% PM's / 20% cash.

This month I also explain why I remain bullish on bonds and expect an additional 15-20% upside for the 10 year duration bond ETF I hold in the Active Asset Allocator and provide a brief update on the ongoing bullish developments in the precious metals sector as this bull market shifts into gear.

Stock Market Update

My technical studies have just triggered a buy signal for the stock market for the first time since September 2013. Equity valuations today are approaching an extreme only witnessed near prior stock market peaks and US corporate earnings are now in a declining trend. Despite these cautionary flags, continuous central bank intervention has created the perception that stock market investing is a low risk endeavor and a buy-the-dip mentality on every correction has taken hold. This will not end well. In the interim, price trumps opinion. My Technical Trend Indicator (TTI) is smarter than I am and keeps me on the right side of the prevailing stock market trend. In this monthly update, I consider my plan of attack for the weeks ahead.

 
 
Based on valuation measures having the strongest correlation with actual subsequent market returns across history, equity valuations have approached present levels in only a handful of instances: 1901 (followed by a -46% market retreat over the following 3-year period), 1906 (followed by a -45% retreat over the following year), 1929 (followed by a -89% collapse over the following 3 years), 1937 (followed by a -48% loss over the following year), 2000 (followed by a -49% market loss over the following 2 years), and 2007 (followed by a -57% market loss over the following 2 years). A few lesser extremes occurred in the 1960’s and 1970’s, followed by market losses in the -35% to -48% range.
— John Hussman, Hussman Funds, 18th April 2016.

In this long-term chart of the S&P 500, I have highlighted the prior instances in 2000 and 2007 when the stock market topped and rolled over, followed shortly thereafter by a bearish cross of the 50WMA below the 100WMA. This coincided with the onset of a bear market in equities and a declining trend in US corporate earnings. In 2016 YTD, we have already experienced a sharp -14% drop in stocks followed by an equally sharp +16% rally. However, there has been no bearish cross yet of the 50WMA below the 100WMA and the S&P 500 currently trades above both trend lines. Meanwhile, US corporate earnings have begun to slide, highlighted in the lower section of the chart below. This should be expected and is consistent with the maturing phase of an ageing equity bull market, which is now over seven years old.

 
 

Margin debt, a measure of the degree of speculation evident in the stock market, also appears to have peaked and rolled over. Prior peaks in margin debt have coincided with past peaks in the stock market. So today, we have a combination of stocks that are trading at expensive valuations, a weakening trend in US corporate earnings and a declining trend in margin debt. That's the bad news.

 
 

Despite this backdrop, equities have powered ahead in recent weeks. In February 2016, only 15% of stocks on the NYSE were trading above their 200DMA. Today, this figure has jumped to a much healthier 69%. If stock markets can consolidate their recent gains over the next couple of weeks while a majority of stocks continue to trade above the 200DMA, the bulls will remain in control.

 
 

In another positive development, the NYSE Advance/Decline Line (lower left chart), which captures the trend of rising stocks versus declining stocks over time, has recently broken out to new all time highs. This suggests that price should follow suit shortly. Volume flowing into advancing versus declining stocks is lagging however and has yet to break out (lower right chart) to new highs. So, we still have some mixed signals here (click on charts to enlarge).

As markets have rallied, stocks making new lows have also all but disappeared, which is another requirement before a bull market can resume.

So from a technical perspective, the outlook for equities has improved, but there are still many reasons for caution. Remember, 2016 started with the worst negative stock market performance in history, so it's only natural that the first rally following this correction should be powerful. The markets are overbought in the short-term and a correction of some degree should now be expected. The extent of the correction will determine when and by how much I will increase the equity allocation in the Active Asset Allocator. Stay tuned, we should find out soon enough.

 
 

For more information on my stock market analysis, please get in touch. You can reach me at brian@secureinvestments.ie or at 086 821 5911.

Bond Market Update

 
 

The ECB is attempting to stimulate economic growth and generate inflation in the order of 2% annually by printing money, buying bonds, funding some EU country deficits and potentially using some form of "helicopter money" for EU citizens. The road ahead is concerning but we have not yet reached an inflection point where ECB policies trigger an acceleration in the rate of inflation and a path towards higher government bond yields. Draghi has committed to doing "whatever it takes" which means he is willing to drive 10-year EU government bond yields into negative territory. 

 
 

The Active Asset Allocator currently holds a 20% allocation in EU government bonds (IEGZ). The regional split of this bond fund is 32% France, 27% Italy, 19% Germany, 17% Spain, 5% Netherlands. The fund has a yield of 1.4% and a duration of 10 years. If ECB policies are successful, the yield on IEGZ should reach zero or negative implying 15-20% upside return potential from here. I plan to increase the allocation to inflation linked bonds (IBCI) and reduce the allocation to fixed interest rate bonds (IEGZ) later in 2016. Of course, the overall allocation to bonds will reduce if/when I increase the allocation to equities in the weeks ahead. Stay tuned.

For more information on my bond market analysis, please get in touch. You can reach me at brian@secureinvestments.ie or 086 821 5911.

Gold Market Update

Gold closed above the 20-month moving average (20MMA) in February 2016, confirming a new bull market had begun. As long as gold continues to trade above the 20MMA, bull market rules will apply - we buy and hold and do not get shaken out of our position. The 20MMA closed on Friday at $1,170 and should start trending higher shortly.

 
 

Silver's bull market kicked off a month later, as this more volatile precious metal closed above its 20MMA in March 2016. Silver's 20MMA closed on Friday at $15.60, so above this price, bull market rules should also apply. 

 
 

The one fly in the ointment for both precious metals (silver in particular) is the extent of the speculative long position that has been accumulated by hedge funds and those betting on higher prices for the precious metals. The latest Commitment of Traders report shows an all time record net long position by speculators in the silver market.

 
 

Commercial traders (the mining companies and bullion banks) take the opposite side to the speculators and are always net short the metals to varying degrees, depending on price, to hedge their production. The Commercials are often referred to as the "smart money" as they are able to manage the gold and silver price in the short-term, knocking down the price and covering their short trades when the speculators get overly stretched on the long side. We are potentially at this point now, particularly in the silver market. The Commercials do not always win and have been forced to cover at much higher prices in the past. As always, I will be guided by the price action as it unfolds. Above the 20MMA, it's a bull market.

I expect the precious metals bull  market to benefit from an overall declining trend in the US dollar over the next 3-5 years. The USD has been perceived as a safe haven currency since the 2008 financial crisis and has benefited handsomely from significant inflows into various US growth assets, driving price and valuation to extreme levels. As valuations normalize, I expect the USD to decline on a trade weighted basis.

 
 

Confirming the bull market in precious metals, the gold and silver miners are rocketing higher. The gold and silver mining index is already +111% from their recent lows. The miners are notoriously volatile. However, for those willing to close their eyes and hold on, I expect BIG rewards here. The miners are too volatile for the Active Asset Allocator but are confirming my bullish view on the sector.

 
 

For more information on my gold market analysis, please get in touch. You can reach me at brian@secureinvestments.ie or 086 821 5911.

June 2013 Investor Letter

Model Portfolio Update

Note: Performance figures updated to 31 May 2013. Warning: Past performance figures are estimates only and may not be a reliable guide to future returns.

 

Executive Summary

reduced the allocation to equities in the Active Asset Allocator model this month from 50% to 20%, investing 20% of the proceeds in 5+ Year Eurozone government bonds and 10% in cash. Following this change, the model portfolio now holds an allocation of 20% equities / 50% bonds / 20% gold / 10% cash. Following an epic run in the stock market over the past 2 years, equities are now showing signs of technical damage and deterioration. The S&P 500 broke below the 50 day moving average on Thursday 19th June, which generally doesn't happen in healthy bull market advances. Previous breaks of the 50DMA occurred just prior to big stock market corrections in May 2010, July 2011, May 2012 and October 2012. There is no way to know how deep the next correction will be. However, stock markets today are pricing in an awful lot of good news and long term support for equities is approximately 20-30% below current levels.

Equity Market Update

Equity market cycle count

I will start this month's Investor Letter with a look back in time to 1987, a year that will be etched into the memory of many seasoned investors active in the market at the time. 1987 started out quite well for the stock market. The S&P 500 surged +13% in the month of December 1986 from 242.17 to 274.08. The bulls were firmly in control and investors generally were in optimistic mood. After all, Paul Volcker was at the wheel of the Federal Reserve and was in the process of successfully taming inflation after a period of rapidly rising consumer prices the late 1970's and early 1980's; 30 year US Treasury yields had peaked in October 1981 at 15.2% and had declined to 7.4% by December 1986. In January 1987, economists were forecasting 3% GDP growth for the year ahead and US stocks were trading at a cyclically-adjusted P/E of 17 times earnings. What could possibly have gone wrong?

US Treasury bond and the US dollar peaked in March 1987 and both declined for months in advance of the US stock market collapse, signalling all was not well in the United States at the time.

As the months of 1987 passed, US bond and currency markets began to turn lower. The 30 year US Treasury bond peaked in March 1987 at 102 and then began to fall. The 30 year Treasury bond would end up declining by -24% to 78 by October 1987 (before recovering +10% by year-end). The US dollar also trended lower for much of the year, signalling many months in advance that all was not well in the United States. The USD Index started the year at 104 and ended the year at 85, a decline of -18% in 12 months. Gold began 1987 at $400/oz and delivered a strong 12-month performance, closing out the year +20% higher at $480. Of course, we know now that stocks drifted higher until August, peaking at 337.89. September 1987 was a mild negative month for US stocks as they fell -2.4%. Then the floodgates opened a month later. On no apparent news, selling in the S&P 500 began to accelerate. Everybody ran for the exits at the same time and stocks collapsed -34% from a high of 328.94 to a low of 216.46 in the space of a couple of hours. Portfolio insurance was blamed as one of the reasons for the rout and I am sure it played a part in the flood of sell orders that hit the floor of the NYSE but the simple fact was that stocks were overpriced at the time and too many folks were crowded on the long (and wrong) side of the market.

Stocks and bonds both peaked in May 2013 and have started to decline. The correction so far has been quite orderly.

The reason I bring up the 1987 experience is that I notice a number of similarities in today's stock and bond markets. Despite quite an optimistic mood, the S&P 500 has already peaked this year at 1,687 in May and has corrected by -7.5% so far to a low of 1,560 in mid-June. The 30 year US Treasury bond also peaked in May 2013 at 149.65 and has declined by -11% so far to 133.10. The US dollar has held up better, while gold has acted quite weak year-to-date. So, it is a bit of a mixed bag so far when compared to the 1987 analogy but that could change. The US dollar Index topped in May 2013 at 84.50 and fell -5% to 80.50 in June before rebounding. The USD Index is currently trading at 83.00. Gold began 2013 at $1,675 and has taken quite a dive in the intervening period. Much like the correction that played out in the last big gold market during 1974-1976, gold is correcting the 12-year monster move from $250 in 2000 to $1,900 in 2011. (During the 1970's, following a run from $35 all the way $200, gold then plunged almost 50% to $100, before starting the second leg of a powerful bull market, which ended at $850). Gold closed this week at $1,235. The recent change in behaviour of the stock and bond markets suggests to me that investors should play a defensive hand for now.

The stock market is overvalued, overbullish and overbought. The next chart on the left shows prior times when the stock market exhibited similar overbought readings followed by a deterioration in the technical set up for stocks, which is where we are right now (thanks to John Hussman at www.hussmanfunds.com for that detail). Margin debt levels are also peaking after an almost 40% surge in the past 12 months. Prior peaks in margin debt levels, which measure speculators’ intent to borrow and invest in the stock market, have always coincided with at least short-term tops in the stock market. When you also factor in quite frothy levels of investor sentiment, which I wrote about last month, I think it is time to play defence for a while and move to a more conservatively invested position. This could just be another short-term correction, or it could be the start of something bigger. Time will tell.

Stocks are overvalued, overbought and investors are overbullish. Meanwhile, margin debt levels have reached lofty levels again.

A note on earnings as we approach second quarter earnings season in the United States. Stock analysts at all of the investment banks are back in optimistic mood. Goldman Sachs analysts for example are forecasting strong corporate earnings growth of 8% per annum for the next four years for all the large US multinationals, despite corporate earnings already at record all-time highs and being highly cyclical. There's plenty of room for disappointment. 

IBM, Oracle, Accenture and Cisco have all reported varying degrees of disappointing earnings results this quarter. Analysts don't appear to have noticed yet.

IBM, Cisco, Accenture and Oracle are a sample of US technology focused companies that have already reported disappointing results during the second quarter and their share prices have all declined. 

So, today we have short-term interest rates at zero. There is no room left to cut when the next slowdown happens. The Fed has boxed itself into a corner and is now trapped to a large degree. Bernanke has started to talk about backing away from QE. It is a dangerous game and it appears that the markets are about to call his bluff. We have reached a point in time where stocks are trading under the assumption that corporate earnings in the US, already at an all time high, will continue growing by 8% per annum and investors will continue to pay a rich multiple for those earnings. It really could be different this time but risks are tilted to the downside in my opinion.

References to the 1987 stock market collapse are not intended to cause alarm; stock market crashes are very low probability events by design. I simply advise caution as stocks are relatively expensive, bullish sentiment is running high and after a significant move higher, equities have recently showed some technical weakness, breaking below their 50DMA. After a +150% rally over 3 years, it could be a long way down! It's time to be cautious and watch out for additional signs of market weakness, or indeed strength.

For now, I expect we will see a relatively orderly correction in stocks over the next 6-8 weeks, which is why the model portfolio is now positioned as it is. However, if US Treasuries continue to sell off over the summer months and the US Dollar reverses course and starts declining in tandem with the US bond market; and gold turns higher in an overdue resumption of its long-term bull market, then the outlook for stocks will become a lot more uncertain and we could see something more disorderly. Another reason I am concerned is because I feel that the Federal Reserve, after years of appearing to be in control of inflation and the bond market, now appears to be losing control. 

Bond Market Update

Rates are rising as central banks' control over their bond markets is slipping.

5 year interest rates in Germany, the United States and the United Kingdom have almost doubled in six weeks. 5 year interest rates in Germany have jumped from 0.36% to 0.73%; in the US from 0.74% to 1.39% and in the UK from 0.75% to 1.42%. These are huge moves in a relatively short space of time. It is a similar story for 10-year government bond yields, against which mortgage interest rates are typically set. 

In the United States, the mantra at the Federal Reserve for the past decade has been to signal to the capital markets a willingness to print money and buy government bonds of varying maturities to keep interest rates low. This in turn, they believed, would buy time for over-leveraged banks and over-leveraged individuals to get their financial affairs in order, and also act as a stimulus to the economy and housing market. The problem with this approach is that it is only a temporary solution and has now been fully priced in. Bond markets are now clearly signalling that the current QE printing programme of $85BN/month is not enough to keep rates at record lows. $1 trillion of money printing every year  is just not enough. 

I believe that the Federal Reserve will very shortly row back on their tapering talk and will revert to their old policy of QE to infinity. Another 6-8 weeks of falling stock prices should do the trick. The real problem will come when Bernanke says "don't worry we will just keep printing money and buying bonds to keep rates low" and the bond market doesn't co-operate. At that point we will know that the Fed has lost control. Then there will be real fireworks.

Gold Market Update

goldcount.jpg

The gold correction continues; a cyclical bear market within a secular bull market. The correction from the peak in September 2011 of $1,921 to this week's low of $1,180 is  -39%. The decline has had its effect. Small speculators have thrown in the towel and closed out their long positions. Meanwhile, the large commercial traders, who are always net short the gold market to hedge their clients' (gold miners) long exposure, have cut back aggressively on their short position. 

Small speculators have thrown in the towel, while the commercial traders, always net short to hedge their clients' long exposure, have cut back aggressively on their short position. 

During the last gold bull market of the 1970's, gold corrected in price from $200 to $100, a -50% decline before surging higher to a peak of $850 in 1980 as inflation ran wild. It is a different environment today. The scourge of inflation has yet to take hold due the continued credit contraction/destruction cycle. Quantitative easing is being pursued at record rates by central banks across the world and inflation will eventually follow. Gold is destined for much much higher prices and I continue to search for clues that the current 18 month correction has finally run its course. It may have actually occurred just a couple of days ago. The gold miners typically lead the metal higher in bull markets and lower in bear markets. On Thursday last, with gold lower during the day, the miners posted a positive close. On Friday, gold started the day lower but closed almost $50 higher at $1,235 and the miners took off adding 8%-10%. The reason I am paying close attention here is that the upside for both precious metal and mining stocks is potentially enormous if the bull market is about to resume.

The gold mining stocks are pricing in the end of the gold bull market, such has been their abysmal performance over the past 18 months. The next chart show all of the major declines in gold stocks since 1930. Corrections A, B and C all occurred during secular bull markets. Correction D is today's drop. The subsequent recoveries are also noted in the chart and were epic rebounds. If the steep 18 month correction is over, gold miners should start moving aggressively higher in the months ahead.  

This chart measures every major decline for gold stocks since 1930. The current plunge should be close to an end.

To learn more about the full range of investment services available at Secure Investments, please contact us by email at brian.delaney@secureinvest.ie.