For three years we have suggested that the stock market should have faced normal downsides of between twenty to twenty five percent to cure the overvaluation excesses that the market has been carrying. After reasonable corrections, the market would have rallied again, but during the corrective periods it would offer the opportunities for investors to invest when stocks are undervalued. These are regular and beneficial market cycles. We have never suggested shorting stocks but rather taking some money off the table and searching for undervalued stocks of which there are always plenty available. But the banks and brokerages cannot afford to face normal bear markets which bring harsh declines in their profitability….which in the past led to the necessity of “bailouts” to the US banks and brokers.  So grossly overpriced stock recommendations are foisted on the public and investment funds that often must invest at excessively high prices. It later leads to disasters! Don’t believe me? Examine the S&P 500 charts in the years 2000 and 2008 and note the 40% declines that followed. Note the similar chart pattern today. Near zero interest rates have permitted the stock market to sustain overvalued levels for a prolonged period. 

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.

This article is from www.Canadianmineanalysis.com                                                Our focus going back to our prior research site the “ Canaminvestor.com”  in analyzing any mining company has been “assets that are in the ground” with the potential for further discoveries. Make no mistake about it, successful exploration always remains difficult and challenging. We have rather rigorous requirements but we have had some superb successes with our recommendations in the past.   

We have warned of decline…26% or so, will it be an Opportunity? For the last two years the S&P 500  stock market should have faced declines of at least 20% to be followed by rallies up again. That would have prevented the exceptional overvaluation that the market has been carrying today; it will soon be paid for Let’s just review some of the gauges that have a history of accuracy. Investors and above all major brokerage houses have little use and and  dislike for cyclical anacontempt for “technical analysis” and dislike cyclical analysis. Why? It often tells people that the stock market is overvalued headed down or worse yet that their own stocks are overvalued and heading for large declines. The major brokerage houses do not want technical analysis because it advises at times that stocks are overvalued and better buying opportunities will happen later! It limits business and commissions. Brokerages fight bearish news despite the fact that it is often quite accurate-it interferes with business.

  Sometimes you can get a more sober and unbiased view on the U.S. economy and politics from friends who live in Canada. I remember that about a year before the “great recession” began in the US, Quebec businessman and Hockey Hall of Famer, the late Dickie Moore told me when he thought a recession would begin. He missed by about 10 days. A good friend of mine has been watching the U.S political scene very closely. You can’t say that it has not been entertaining for everyone whether in Canada or in the U.S. My friend’s family has been in Canada for many generations.  One of his children lives in the United States and is now  an American citizen. When the election primaries began, he seemed more entertained than interested, but with recent events and world news, he is now watching the race closely.

The officers and directors of the listed stocks have again been very heavily to the sell side. Last week, they invested a total of slightly over $6 Million in stocks of their own companies. At the same time they sold over $212 Million in stocks of their own companies. That insider “buy to sell ratio” of one purchase to thirty five sales was seen in April of 2015 and again in October 2015. Historically as well, that is very high sell to buy level. Note well that soon following those huge sell to buy ratios, the U.S. stock market suffered harsh declines of approximately 15%. Thus we see this “insider”indicator as suggesting that the S&P 500 and Dow Jones Industrials could soon see a downside correction of 15% or perhaps commence a bear market. We will soon see. This very negative now and without the manipulation that we have seen, the stock markets would never be at their present high levels. I must mention that one sector with solid insider buying over the last eighteen months is the MINING sector.  

We have said during the last two years that gold has been finishing making a major bottom that will lead into a long term bull market in gold bullion, silver and many mining stocks. We have studied cycles, fundamental valuations, the stock market’s effect as well as the regular and timely manipulation by the central banks and brokerage houses. Our conclusion view leaves little doubt that we are in a bull market…..finally.  Since 2014, we recommended gold mining stocks Richmont Mines, Claude Resources and NIogold. Richmont has moved up over 500%, Claude Resources has moved up over 700% and NIogold moved up over 100% as it was merged into Oban Mining.    However, we have mentioned before that there are approximately 900 to 1000 mining companies in North America with no comprehensive research coverage.That is the major problem that those companies must address.  We must keep in mind that “all the horses don’t leave the corral at the same time,” so many mining stocks have not and will not have substantial moves up yet.   If the bull market in gold lasts what our projection is-four years at least, it will be a very profitable time for those with the stomach to invest in the mining stocks. During the last two years some so called experts have said to wait until gold goes to $850 and to not invest until we get that “final bottom” that would allow investors to buy the shares at even cheaper levels than they have been selling at. It […]

   Two years ago I was with an analyst in Montreal and he mentioned that he had his gold bullion held in “safekeeping” at a company in Montreal. I immediately said ” let’s go over there now”   We went into the building and through the security and he got his gold “ingots.” I advised him to trust nobody but his wife and find a secure place to keep it.                                                           We have known for years that the banks and brokerages were manipulating gold prices for the primary reason to serve their own purposes, interests and profits-last in line has always been the best interests of the investing public.                               Through their manipulation of gold to the downside, they made enormous profits at the expense of the investing public and at the same time causing extraordinary damage to mining companies as well. Financing exploration when gold is selling at low prices is very difficult.   This past week in court in New York, the Deutsche Bank admitted its involvement in the manipulation of gold. The admission sends strong messages.  The first message is that the price of gold is not always where it should be but rather where it can best benefit the banks and brokerages by their manipulations. The Deutsche […]