From August 24 article on “Canadian Mine Analysis” Napoleon Bonaparte once offered this wise advice; “Never interfere with your enemy when he is making a mistake.” Napoleon’s theory was proposing that by letting his enemy make a mistake it offered him a better opportunity to defeat his enemy. In a sense, over the last two years we have seen investors  literally throwing away shares of stocks that were selling at multi-year lows offering us the opportunity to buy those shares while they were extremely undervalued.   Our research has suggested for the past two years that we were making major bottoms in gold and silver mining stocks and it has been an ideal time to accumulate them. We had suggested “dollar cost averaging” and wrote articles that appeared on our sites and in publications such as “The Bull and Bear.” Today we are in the early stages of a bull market for many gold and silver stocks incrementally. Some have already seen enormous percentages while others will see a bull market later on as all mining stocks do not move up at the same time.

The Eurodollar futures chart has given a major signal that the short term interest rate regime of the last eight years is under attack and breaking down right now. Yes, the chart action indicates that we may finally be seeing the market warning of a rise in short term rates. Since 2010, the Eurodollar futures chart has demonstrated price support in the 99.17 to 99.25 zone on three separate occasions. Today, Eurodollar futures prices have violated this support zone and are trading at 99.125. For chartists, this strongly suggests that something profoundly different is happening and that the old paradigm that generated the previous trading range environment has come to an end.

The global debt load surges higher and higher, adding to risks to the global financial system. In the next recession, overextended borrowers (whose numbers are large and growing) may be unable to pay on their loans, and debt defaults could mushroom, leading to general systemic financial distress. The total of all forms of U.S. debt, including government debt, business debt, mortgage debt, and consumer debt, is now more than $59 trillion. The great majority of this debt has accumulated in recent decades–and at an accelerating pace–with the exception of the financial crisis of 2008, when lenders were afraid to lend. This unsustainable growth in debt has blown the greatest debt bubble of all time and has put the economy and financial system at risk.

 By Harold AGJ Davis     19 July 2016  Change unfolds as a slow and cumulative process over extended periods of time until something happens to cause an abrupt shift. Rock formations contain layers of different thickness and colour, often separated by very thin boundaries. What happened from one moment to the next? Human history unfolds in much the same way, except that timespans are shorter and few recognize the periods equivalent of rock layers. Perhaps many are unaware of this cyclicality because it is partially obscured by the cumulative nature of technological progress, and they fail to consider that the route taken was not the only choice, nor was it inevitable. Thus, when a market guru suggests that his favourite holding period is forever or when the “buy, hold and prosper” types chant their mantra, they may be biased by uncritical confidence in the successes and good intentions of their known and familiar layer, the secular western world since 1945.

By Harold AGJ Davis    10 July 2016  Most old market denizens are familiar with Charles Mackay’s 1841 classic “Extraordinary Popular Delusions and the Madness of Crowds”, and know from personal experience that it is easier to read about collective insanity than to recognize it when you are in the midst of it. After all, “This time it’s different!” Oh, really? The remarkable political stupidity that has gripped Europe and which reached dizzying depths in Britain can only be described as a madness of the ruling elites. Now, with Europe and the U.K. threatening to unravel, a wave of anxious flight money is seeking safe havens around the world, and an extraordinary popular delusion believes that U.S. Treasury long bonds yielding 2.11% are an appropriate sanctuary from the storm. However, considering how often people in a panic make bad choices that end in tragedy, could this be another?

  We would not mention this if it would not provide us with a perfect example of whom not to listen to or take advice from despite the fact that they may be appearing on television. In a television interview, this TV commentator was imparting his negative opinion on gold to the viewing public abusively by chastising the guest for having advised gold as a part of a portfolio. Fact?  What was incredible is at that very time of the December 2013 on air interview; numerous gold stocks were making their major price bottoms and have seen gains since then of 800% to 1500%. Their enormous price gains have shown the business television host to be an even greater fool.   The interview? In an incredibly rude and bombastic manner, the interviewer asked the guest if he had regrets for even having recommended gold implying that investing in gold had caused gold investors inordinate suffering and pain. The key point was posed in an extremely pompous and disdainful manner as if he (the host) was an expert. He is not by any means as we will show! At that time, with gold down and numerous mining stocks fashioning major price bottoms while at multiyear price lows, the guest was condemned by the ignorant uninformed interviewer. Yet, the guest is not a “gold bug” but rather always recommends a balanced portfolio including a percentage in gold stocks. The commentary by the host was so overdone that within minutes we received calls […]

Adam Posen, president of the Peterson Institute for International Economics in Washington, contends that the U.S. institutional framework for preventing crises is “likely to fail.” Posen said discretion within individual financial institutions was “huge,” forming a “recipe for creating uncertainty.” Posen is skeptical of the council of financial regulators created by the Dodd-Frank Act of 2010, known as the Financial Stability Oversight Council, which he calls “a mess”, due to Washington’s difficulties in coordinating between multiple agencies. The shaky global economic recovery and the threat of extreme market volatility leave the world’s central banks with little or no margin for error, Bank of England Governor Mark Carney said at a joint meeting of the International Monetary Fund and the World Bank. “This is a pretty unforgiving environment” and “not a type of economy in which one can make mistakes,” he said.

Prices for many commodities are now experiencing important upturns. Years from now analysts will look back and see 2016 as a broad brush changeover from bear markets to bulls, but, here and now, the process is unlikely to be as smooth and continuous as some might imagine. The reasons behind the behavioral diversity in the price bottoms reflect the specific differences underlying each commodity. Collectively, commodity prices and those of other raw materials are considered sensitive to changes in economic activity.

We have expected a decline to occur of minimally 25% to be followed by rallies back up for three years. Half of all stocks have already been corrected 20% or more which classifies them as being in bear markets. Yet, the large cap S&P 500 has not been down much over about 12%…….Let’s also add that the “buybacks” occur in the large cap stocks giving support to their prices-that is $1.3 trillion in buying. That is $1,300,000,000,000 ! As well, Central banks buying shares has supported the market as well. However, it has created a situation where too many large cap shares were purchased at price levels that are selling far above reasonable valuations. Payback will come as it always does.