Kings Of The Gold Bluff

Aug. 09, 2017 4:10 AM ETCDE, DUST, GDX, GDXJ, GLD, GOLD, IAU, NEM, NUGT, SLV, WPM, ABX:CA, NGT:CA, WPM:CA18 Comments
Markos Kaminis profile picture
Markos Kaminis
13.19K Followers

Summary

  • Gold recovered and rose intraday yesterday as the North Korean threat garnered media attention.
  • Fiery public statements from both the leaders of North Korea and the United States served to stir fear in financial markets.
  • The risks of a war with North Korea are relative to American securities and its currency, and so gold gained in value.
  • However, I see the statements by both leaders as bluffs that will fade in weighting with time. As a result, gold gains should be short-lived.
  • The key factor for metals now is working against precious metals. It is U.S. economic strengthening and likely Fed monetary tightening.

Gold started the day lower yesterday right on schedule as the U.S. dollar stabilized and as risk assets gained steam. The catalyst was clear, a strengthening U.S. economy with positive developments overseas as well. And then the kings of the gold bluff, Kim Jung Un and President Trump, began sabre rattling. Gold moved higher, and into the green into the close of trading. However, I expect this too shall pass, and prove to be yet another bluff for gold. The question is, how far will investors buy into the bluff before it is proven so.

GLD Chart for August 8 2017GLD Chart for August 8, 2017

"Fire and fury," President Trump stated would rain down on North Korea "like the world has never seen." If believable, those are the types of statements, when made by the leader of the free world, that can send gold and precious metal relative securities sharply higher. But does anyone really believe President Trump, or Kim Jung Un for that matter, would really engage in a war that would forever be known as an avoidable bloody massacre, and possibly the worst in history?

The U.S. dollar is threatened because new information indicates North Korea can reach the United States and possibly with nuclear warheads. That combined with fantastically worded threats that most in the American government are well-accustomed to by now, has the U.S. president saying things out loud that are probably better said in one-on-one phone discussions with the opposition and/or its allies. The effect of these public statements is to stir fear, not only in our enemies and allies, but in our own financial markets.

Precious Metals Security 08-09-17
SPDR Gold Trust ETF (NYSE: GLD) +0.3%
iShares Gold Trust ETF (NYSE: IAU) +0.2%
iShares Silver Trust ETF (NYSE: SLV) +1.5%
VanEck Vectors Gold Miners ETF (NYSE: GDX) +0.2%
VanEck Vectors Junior Gold Miners ETF (NYSE: GDXJ) +0.1%
Direxion Daily Gold Miners Bull 3X Shares ETF (NYSE: NUGT) +0.2%
Direxion Daily Gold Miners Bear 3X Shares ETF (NYSE: DUST) -0.4%
Goldcorp (NYSE: GG) -0.1%
Newmont Mining (NYSE: NEM) -1.2%
Barrick Gold (NYSE: ABX) -0.4%
Randgold Resources (NASDAQ: GOLD) -0.3%
Wheaton Precious Metals (NYSE: WPM) +0.5%
Coeur Mining (NYSE: CDE) -0.1%

So we saw precious metals relative securities that track metals' values gain in value yesterday as a result, though many miners did not turn the day around. Gains could continue for a day or two longer as the media grabs full hold of this topic. However, I would not chase the gains in gold, as I give high probability to their cause being bluff-based, and the move being temporary in nature.

I reiterate, the short-term driver against gold and silver prices is powerful and real. A robustly improving U.S. economy serves U.S. dollar stability and strengthening, Federal Reserve monetary tightening and investment in risk assets (not safe havens). The most supportive factor for gold and silver is the possibility of inflation spiking surprisingly, and there is relative data due this week in that regard. Even a market correction should not work sustainably for gold if one occurs over the next couple months. I'll explain why in a near-term report. For more of my work on precious metals, readers are welcome to follow the column here at Seeking Alpha.

This article was written by

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Markos N. Kaminis generated a 23% average annual return on "Strong Buy" stock selections over 5 years while working as a Senior Equity Analyst on Wall Street. As an internal whistle-blower, I sacrificed absolutely everything to do the right thing. And despite being an eyewitness and victim of terrorism on 9-11, I am currently volunteering at a busy border crossing helping Middle Eastern & North African refugees, most displaced by war or other horrors, to land safely in Europe. Despite my life experiences, I still have hope, and believe that we must persevere with patience (forgiveness), tolerance and love. I have determined to struggle for the better good of my brethren rather than for myself, and you'll see that play out over the course of the rest of my life. But I worked far too long and hard to become an excellent stock-picker to not incorporate this work into the fold. Markos N. Kaminis generated a 23% average annual return on "Strong Buy" stock selections over 5 years and ranked 2nd among a group of 60 analysts in-house as a Senior Equity Analyst over a seven-year period at Standard & Poor's. After proving his value in-house, he was promoted into a special role as an idea generator, supporting the portfolios of institutional clients as well as driving performance within S&P's recommended lists and portfolios. At times, Markos was responsible for up to 10% of the firm's entire "Strong Buy" list and is due a great deal of credit for the group's outstanding performance during his tenure. Markos followed a group of 30-40 Small and Mid-Cap firms, and was charged with finding new buy and sell candidates across industry sectors. He generated a 23% average annual return over five years on his "Strong Buy" recommendations, and 26% over three years ended 2004. He was ranked 1st of 60 analysts in-house for his "Strong Buy" performance over 4 years (2nd over 5). Markos also authored IPO research and wrote for high-level newsletters, The Outlook, Equity Insights and Emerging Opportunities, as well as for BusinessWeek Online. He represented his firm as an analytical expert commentator for major media, including television, Internet and through quotes and interviews in reputable publications. Besides predicting the stock market correction of 2015 through a series of prescient reports here in August. (see proof here: http://seekingalpha.com/article/3482226-investor-who-predicted-the-stock-market-correction-offers-an-update ), Markos also advised investors to buy stocks at the bottom of the market in mid-February 2016 and again post-Brexit at the trough, and to buy gold in January 2016 before the commodity started its move higher. More recently, he called the pickup in the economy for 2018, the upward move for stocks in 2018, and the breakout in oil, starting in June of 2017. See: June 15, 2017 – Buy Oil Back Now; August 1, 2017 – Why Oil Prices Will Break Out – The Demand Driver; September 30, 2017 – Why Oil Prices Can Break Out Part II: Vulnerable Supply; and January 26, 2018 – Up 44% Since Our June Bullish Turn – Oil Still Supported Here. While not perfect, over the years, Markos has made countless correct market and security calls for his followers, including forecasting the demise of J.C. Penney on the heralded CEO hire's disruptive plans, the bankruptcies of Washington Mutual and Pilgrim's Pride in the $30 and $20s, respectively, as well as the purchase of Facebook in the mid-$20s when it was considered a pariah post its IPO (today it is a market darling). Markos also warned of the real estate market collapse and the financial crisis in the early days of his blogging. What I personally want you to know about my plans: After witnessing the worst of Wall Street firsthand and having the ideal vision of my childhood career choice corrupted by reality, I almost switched to full-time charity work at age 40 and still have plans for several non-profit endeavors. The future is somewhat unknown, and I am open to employment offers for portfolio management or other ideas. While continuing to publish regularly, I expect to begin work on several book ideas that I believe are important for business, for our nation and for society. I may put  my stock selection skills, earned through blood, sweat and tears, to better use, and to make my own way. I would like to give investors something rare, a dignified partner who can manage money with integrity and a clear conscience about the degree of due diligence behind investment decisions... someone who cares more about your money than your wife. I hope readers will become followers of my column here & at my blog, so that when our numbers are substantial, we might start an investment fund or two. Prior to his Wall Street career, Mr. Kaminis spent time in the back-office, as a mutual fund accountant, where he managed for a time the work of two men. Before this, from age 11 to age 25, he worked as a carpenter's apprentice and carpenter with his father, in both commercial and residential projects. Mr. Kaminis has an intimate knowledge of the real estate (undergraduate degree in Real Estate and Finance) and construction market, as well as the restaurant industry. However, as a generalist stock analyst, he showed the ability to learn any and the most complicated of industries in short time - and he gamed every challenge presented to him. Mr. Kaminis earned his MBA at the Katz Graduate School of Business at the University of Pittsburgh, and his BA at Temple University in Philadelphia. However, Markos has been studying the stock market since age 13, when he determined his career path. He made his first investment at age 16, and funded much of his undergraduate education with the proceeds of his investing success. Mr. Kaminis continues to keep busy forecasting the economic path and securities market activity. Markos is considering the eventual start-up a long/short capital appreciation hedge fund. Such a fund would limit risk through beta reduction, using a diversification strategy targeting sector & industry and long & short position inclusion. At the same time, Markos' theoretical fund would seek maximum capital appreciation through the exploitation of Mr. Kaminis' inherent economic & market discernment gift and proven stock selection skills. Mr. Kaminis also has a team of a select few analysts, technicians, strategists and economists that he has been impressed by over the years, which he expects to tap for the project when the time is right. Mr. Kaminis welcomes your interest in such a potential forward effort, and looks forward to discussing his plans with those appropriate and within legal constraints. Markos toys with very early stage entrepreneurial efforts in the testing of certain business models, all of which he intends to tie to a planned non-profit project serving the most helpless among us. 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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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