Dave Kranzler's  Instablog

Dave Kranzler
Send Message
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
  • Buy All Attempted Takedowns Of Gold, Silver And Junior Mining Stocks 3 comments
    Jul 3, 2014 4:19 PM | about stocks: AAU, PLGTF, EMXX

    The most absurd part about today's payroll report is the fact that supposedly highly educated people get on financial spin networks and discuss and debate the report with serious expressions on their faces as though the report has any degree of validity. It's emblematic of the fraud and fiction that has infected our system to the core. The economic reports are bogus, the physical gold in Ft Knox has been replaced with hypothecation agreements and Comex fiat paper futures contracts and the politicians and business leaders are all corrupt - every single one of them.

    Please see Zerohedge etc for a dissection of today's fiction published by the Government, in conjunction with the Fed and Wall Street. Just for point of note, the number of people who have left the labor force hit another all-time record high and half a million full-time jobs were lost, replaced by 800,000 part-time jobs. There's your 6.1% unemployment rate: deadbeats collecting unemployment insurance and Social Security Disability, students taking out debt and enrolling to DeVry on-line University and full-timers converted into part-timers.


    The day of reckoning is coming. I had a "eureka" moment last night when I read the comments by the chief economist of the Bank of England who, presumably unwittingly, warned that the aggregation of derivatives in the derivatives clearing system (primarily a subsidiary of The Depository Trust and Clearing Corporation - aka DTCC) could be "a problem from hell."

    The nexus of the problem is that fact that interest rate derivatives contracts make up the majority of the OTC derivatives. JP Morgan and Citibank alone have $97 trillion in notional amount of OTC interest rate derivatives exposure. To put that in perspective, the total size of the U.S. stock market is around $22 trillion. And $97 trillion doesn't include the leverage that is embedded in these contracts.

    My co-producer and I are going to do a video on this topic. I think viewers will be stunned. Pimco, Black Rock and Fidelity have by far the largest concentration of exposure to this. That's why the Vice Chairman of Black Rock is going around promoting the idea of a mechanism to bail-out DTCC when the derivatives bombs start to fly. Trust me, I was told this morning by someone in a position to know that the regulators are absolutely terrified of this problem and of a total bond market collapse.

    As for the precious metals action today, it was almost as funny as the Government jobs report. With the entire analytic world (except me and few colleagues) expecting a massive take-down today, here's what happened (click on chart to enlarge):

    (click to enlarge)

    They are having trouble taking down the precious metals sector. I can't recall the metals ever behaving this way when the market is technically and psychologically set up for a big move lower. Hell, Goldman still has an $1000 target for gold. Keith Weiner of Monetary Metals still thinks fair value for silver is like $15.

    The truth is, the precious metals market as "sniffed out" the complete Ponzi-nature of our entire system. The scramble globally to buy and possess physical gold and silver os starting to take over the ability of the Fed/big banks to manipulate the prices with fiat futures contracts that can readily printed up. GATA (www.gata.org) predicted this would eventually happen over 14 years ago.

    The bottom line is that you need to dump your bond funds before they put capital controls on them and load up on gold, silver and junior mining stocks on every sell-off. Since I published my research on Pilot Gold on May 20th, it's gone up 22%; Almaden is up 9.2% (5/15); EMXX is down 3 cents but requires patience; and the Big Upside Idea is up 5.6% since 6/25. All four ideas still have a multiples of upside potential and you can read my analysis here: Junior Mining Stock Research Reports.

    Whether you want to buy into the precious metals sector is your decision but if you wait much longer to decide whether or not to get your money out of bond funds, you soon won't have any control over that decision because getting out won't be an option.

    Stocks: AAU, PLGTF, EMXX
Back To Dave Kranzler's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (3)
Track new comments
  • june1234
    , contributor
    Comments (4353) | Send Message
    I love your articles. But you're wrong about SS disability I have a friend with cerebral palsy. Despite that condition dude has worked his you know what off his entire life till his condition finally got the best of him this past january and following a 3 week sting in a Phoenix area hospital he had to quit his job job at Macy's and apply for SS disability. He had to hire an attorney to get that SS disability. They don't make it easy thats for sure. It's just survival money. He ended up filing BK. Dude ain't no deadbeat thats for sure anymore than he's part of the problem
    4 Jul 2014, 06:16 AM Reply Like
  • Investor Talkroom
    , contributor
    Comments (561) | Send Message
    Good observation. Gold and silver "puke" take downs become difficult for CB banksters to arrange.
    I would give a word of caution - stay away from leverage and/or margin. Bond and stawk markets will collapse but nobody knows when. Also when massive collapse in markets starts gold and gold shares might fall temporary together with other stawks as scared panic selling will hit all stocks.


    Main catalist for gold and silver prices will be the collapse of dollar value (inflation). When dollar start collapsing and people realize the inflation is here there will be a scramble to buy anything which can hold value. And anything liquid like PMs will be especially valuable.
    6 Jul 2014, 09:17 PM Reply Like
  • Mark Humphrey
    , contributor
    Comments (931) | Send Message
    There is no reason I know of that gold and gold stocks cannot rise today in anticipation of rising inflation and a falling dollar.
    7 Jul 2014, 09:12 PM Reply Like
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.