Stock Market Insiders, Gold, Central Banks

This is a “must invest “market? That is what we have today. The vast majority of the stock market’s volume is done by institutions and professional trading desks. They must participate and continue to invest despite overvalued prices. Yes, they must invest in order to compete.  If they do not perform to their clients’ satisfaction, the clients move their accounts to another money manager. Bottom line is that they cannot hold large cash positons and must invest …..despite very high prices.

By avoiding what would be normal interim corrections of 15% to 25% over the last four years , the stock market has moved to a valuation level that every time in the past has been followed by a brutal bear market. The stock market is now carrying a value of approximately 140% of Gross Domestic Product….just as in 2000 and in 2007,  both times it led to brutal declines.

Also,  the insider selling of the personal shares by the officers and directors (insiders) over the last year is near the highest selling rate in history. Last week saw over $428,000,000 of the officers and directors selling some of their personally owned shares in the companies where they work; it was nineteen times the amount the officers and directors bought of their own companies’ shares.

 The world’s central banks have been buying stocks which until recently was not done. Since January 2017, they have bought approximately $1.3 TRILLION in publicly traded stocks. This is an enormous amount of buying power coming into the markets. To us, it is an artificial stimulant that will add to the “ungluing” when the market comes down as the central banks could be heavy sellers.

Opportunities for exceptional capital gains in the stock market are always present but too many stocks have been bought at extremely overvalued prices. Many of the best performing stocks now sell at very high valuation levels which eventually ends sadly. History has always shown that “paying up” for stocks generally leads to disasters. A bear market is something that Canada and the United States cannot afford but are facing.

A major requirement for a bull market in gold mining and other mining and resource stocks is the necessity of a bear market in the industrial stock market such as the S&P 500 and Dow Jones Industrials.  Gold investors should look forward to a bear market in industrial stocks as it will greatly benefit gold and mining stocks. We believe that the oncoming bull market will be in gold and silver mining stocks. However, Major Banks’ manipulation will continue to try to keep gold down and under $1300.