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Dave Kranzler's  Instablog

Dave Kranzler
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I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for a large bank. I have an MBA from the University of Chicago, with a concentration in accounting and finance. Currently I co-manage a precious metals and mining stock... More
My company:
Golden Returns Capital
My blog:
Investment Research Dynamics
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  • The Markets Are More Broken Than We Thought

    Not only has volatility ramped up and several NYSE Rule 48's issued over the past week, but now the ETFs are broken. I'll have more to say about this in a future post but Bank of New York, which is the custodian for a large number of ETFs, has not issued an updated price for any of its ETFs for a week. And today the VIX ETFs were behaving like apes on LSD: VIX ETFs Are In Crisis Mode

    The Fed's points of interventions have become more obvious by the day and it's becoming more obvious that the Fed's ability to prop up the stock market is losing traction:

    (click to enlarge)

    Either the massive stock market bubble is finally bursting or the Plunge Protection Team is letting the stock market drop so they can blame their decision to defer raising interest rates again in two weeks on China.

    Some of the stock bubble angels have fared better than the S&P 500, but that will soon change, as many of them have a high beta vs. the SPX, meaning that they move a lot more in either direction than the overall market. My favorite "bubble angel" is - click to enlarge:

    (click to enlarge)

    AMZN gapped up at the end of July on its aggressively promoted Q2 earnings report. It trended sideways for several days and filled that gap on last weeks stock market sell-off. It bounced, along with the SPX when the Fed pumped the market back up and it has rolled back over the last two trading days. So it filled that break-away gap from the end of July, bounced and has re-filled that gap.

    The SPX has already crashed through its 50 and 200 day moving averages, now it's AMZN's turn. If the stock market continues to slide, the selling in AMZN will accelerate. Assuming the Fed's continued attempts to prop up the stock market fails, AMZN will quickly shed another 100 pts down to its 200 dma.

    My report on AMZN shows in fine detail why the Company's Q2 earnings were a literal joke. AMZN trades at 45x EBITDA and 323,699x operating income. To say that AMZN is "overvalued" is an extreme insult to the term "overvalued." The hedge fund community is loaded up on AMZN. They will be looking for "bagholders" to whom they can unload blocks of AMZN. The Swiss National Bank does not own any AMZN, amazingly, so I'm guessing they'll pass on being a stool pigeon for the hedge funds.

    You can read why AMZN is insanely overvalued in my AMAZON dot CON report. Several readers of this report have already made several hundred percent gains from buying puts. My report has a section devoted to capital management and options strategies, if you are not comfortable shorting stock outright.

    You can access this report by clicking on the link just above or by clicking on this pic:

    Sep 02 12:09 AM | Link | Comment!
  • A Gift From The Fed – AMZN

    Don't worry about the price difference it is already a incredible bargain so $5 is insignificant. Besides I made $600 on a $1,060 investment selling a BZH call a few weeks ago. On Monday morning I closed a Put option on AMZN that tripled my $1,306 investment in 4 days. Both of these are because I read your reports on these companies.

    You have a good website with quality info especially during these crazy times. Thanks for the info. - research report testimonial

    Note: AMZN has already faded 9 points off its high of the day while the SPX has "powered" to highs of the day.

    The Plunge Protection Team has given us a gift. Many of you who read my research report have sent me emails about making a lot of money shorting AMZN and buying puts based on my Amazon dot Con report. I responded by suggesting, especially the put buyers, to take some profits and roll them into further out and lower-strike puts.

    Notwithstanding today's bogus GDP revision in which the Government's mathematically-challenged statisticians are attributing an increase in "economic wealth" to a massive build-up in auto, housing and electronics inventory that will go largely unsold, this bounce in the stock market is absolute gift to anyone looking to capitalize on stocks, like AMZN, that are more overvalued than at anytime in history.

    Here's my "swing trade" call on AMZN - click to enlarge:

    (click to enlarge)You can purchase the research report that goes with this chart here:

    AMAZON dot CON

    When someone presents you with a "gift horse," it's a mistake to examine its teeth.

    Aug 27 12:34 PM | Link | 2 Comments
  • Silver Shortage Update: Another Delay From Apmex

    Investment Research Dynamics

    There has to be a big problem in the financial system coming that the Fed knows about but we can't see it yet. Why? The behavior of the Fed and its ECB/BOE cohorts with respect to the paper gold/silver market conveys a sense of terror on their part.

    We learned yesterday from an "official" source, Reuters believe it or not (Reuters has furiously been spreading anti-gold propaganda ), that India is on track to import 900-1000 tonnes of gold this year. This does not take into account smuggled gold which is estimated to be another 25%. India alone, it seems, will inhale 50% of the amount of gold produced in a year.

    Then there's China…China it's hard to say for sure. If you go by Hong Kong exports into China, it only captures a portion of China's gold demand. If you go by Shanghai Gold Exchange Withdrawals, China is on track to scoop up over 2000 tonnes of gold this year.

    China + India combined are going to import at least 30% more than the total amount of gold produced in a year. Both India and China are entering their seasonally strongest period of gold buying, which will last through the end of the year.

    Then there's silver. By all apparent market indications, there is a serious shortage of silver that has developed, at least at the retail level. Although charlatans from down under who avoided taking economics in undergrad seem to think the 1000 oz Comex bar market is the bellweather, I would like to see a bona fide independent audit of the inventory reportedly being held in Comex vaults. Note: those reports are prepared by the banks - do you trust them?

    Premiums on silver products in the U.S. have widened to levels not seen since 2008, when silver eagle premiums approached 100%. Currently, my "bellweather" indicator is Apmex. The premiums on 500 oz monster boxes have widened today to $3.79 over spot. This is the lowest premium product and it's 27% over spot. If you want to buy just one mint roll of 20, you will have to pay $5.75 over spot, or a 41% premium.

    But it's worse, certain products are not available. We know 90% bags of coins are not available, although they can be had in onesies and twosies for about $7 over spot. But a friend of mine ordered a 100 unit gold gram product from Apmex and was notified this morning that there is "a delay in processing" his order. In the past he said shipment was immediate. This particular product is minted by Valcombi and is a "tear away" sheet of 100, 1 gram units. It's perfect for preppers who seek fungability. And now there's a shortage of them…

    Base on all the evidence from the physical market - and there's a lot more evidence of shortages in silver - how do we explain the behavior of the price of gold and in the paper market? Here's two graphs of the trading in paper gold and silver - click to enlarge:


    (click to enlarge)(click to enlarge)

    This type of price action that can only occur by the exertion of an exogenous outside force. In this case it's the western Central Banks and, specifically, the NY Fed in conjunction with the Treasury's Working Group on Financial Markets' Exchange Stabilization Fund. The decline in the price of gold and silver nearly every night for the past four years seems to occur primarily only in the NY/London paper markets.

    Certainly everyone by now knows that the Plunge Protection Team is working overtime to keep the U.S. stock market from collapsing. And it is also exerting at least as much effort, and probably more, in keeping the price of gold and silver from exploding.

    For now, the banks are finding enough physical gold and silver to keep the Indians and Chinese happy. My best guess is that the GLD, SLV, and the Comex and LBMA custodial vaults are being looted for this purpose. The U.S. retail market is another matter - it's mind over matter: the Fed doesn't mind and they don't matter - for now.

    But this will become problematic once those sources are tapped. If you think you have bars being kept in the non-bank vaults on Comex (Brinks, CNT, Delaware Depository and Manfra, Tordella) I would suggest paying a personal visit and verify serial numbers. And then leave with your bars in hand.

    If you are looking to buy silver from a big U.S. internet-based dealer in order to minimize the premium you pay, I would suggest instead taking your fiat cash and buying from a local dealer. At least you can guarantee that you will have the product in hand when you tender payment. Otherwise you risk seeing this in your email tomorrow:

    Thank for your recent order xxxxxxxx. While processing your order, we encountered a short delay. APMEX strives to ship every order as quickly as possible, but in rare cases order processing may take longer than expected. (Apmex)

    Tags: SLV, GLD, AG, SLW, FSM, PAAS, Comex, LBMA, Apmex, gold, silver
    Aug 26 12:04 PM | Link | Comment!
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