Changing My Opinion: Specifically... Actionable Considerations.
Some of the change that's coming.... will be seen in major accelerations:
First, there will be accelerations to the downside... all and only consistent with my current opinion here as far as the major markets, price vs. value, and the timing issues. That is not a change in my view... other than in the expectation that we're a whole lot closer to a more linearly directional and dynamic recognition by OTHERS of what I've been recognizing here for a long time. Not alone, of course, in seeing bad days ahead, just now.
So, what's different ? The short term impact... is followed by the impact of the longer term change.
First, we'll see "recognition" that current expectations are wrong. The dynamic tension holding things up now... will break. The markets will crash. I think it will become ugly, fast... but, maybe we get a long, slow, grinding bear market instead ? That's why, other than my interest in trading calls on SQQQ or PASS... I'm still saying "out of the market" and "wait for it"... as we're obviously still much nearer the peak than the bottom... and don't see the blood in the streets... yet. I think that's coming. Not because we're going to implode like China... we're actually much better off situationally than they are...
But, current expectations... supporting the markets now... are wrong. And, when clarity is provided... there will be dramatic re-appraisals that occur in a short period of time. Right now expectations are based in not knowing why we don't have inflation, when we should, but still proceed assuming we've got what we've got... and not knowing why doesn't change what is. There will at first be a new uncertainty replacing the current status quo... when change comes.
So, "wait for it"... until there's blood in the streets... and then, the U.S. will outperform the world through a pretty tough couple of years... and, as always, even in down markets, there are opportunities.
HOWEVER: There has been blood flowing in the streets for a long time... in the minerals stocks, broadly, and in the gold and silver shares more deliberately... leading to a large contraction in the number of companies I follow, as they evaporate... and/or as they and their properties are absorbed by the remaining survivors.
PAAS is a great example of the trend... as it is lower now than it was a year ago... but over time it has absorbed three others among my "wait for it" picks (AUQ >LSG>TAHO>PAAS). HL clearly another... expanding now based on things I've followed for years... close to getting them working. Both are struggling with acquisitions... so, largely, have already realized risks that others might still run into ?
Even the still profitable companies in gold and silver... the few... most of them the known majors with NYSE listings... are closer to struggling and just hanging on... than being caught up in a rising tide. There are others out there that have absorbed competitors, in serial fashion... and then withered on the vine themselves... still surviving, barely, as penny stocks... which, in a market reversal... become leverage.
China's voracious appetite for minerals has slowed... minerals have swooned, some for 7 years or more...
But, pairing the changes in the markets, with the changes in locus ? China's decline... will mean that some types of minerals, long ignored in other places, will become far more appealing ?
REE are one obvious instance... but, the renaissance in steel in the United States ? Will the reversal in steel... bringing the industry home... keep heads above water in a global recession ? China spent a lot of money exploring for iron in Canada. Haven't looked at those "potentials" in a while ? My first stock pick... was in the recession of 1967... MSB... which was then trading in bankruptcy at $0.05 a share... a bargain then... has split a few times since then. Maybe similar opportunities to be found now, or coming soon ?
Lack of inflation contributes to the market expectations now... with suppression of gold and silver prices being a topic among the few remaining investors... but, obviously, that wouldn't work if we had the inflationary headwinds in the economy... that are inflationary tail winds in gold and silver shares.
The trend shows survivors engaged in aggregation in better quality mining assets... additions to the near term, ongoing, or future production potentials being enhanced... making for a drag in the short term as they're digested... but making for a lot of upside in the future... particularly if the price trends in the metals reverse... and then, all the subsumed and suppressed value is... quickly re-valued by the market...
I think we're on the cusp of that...
So, I'm changing ALL of the "wait for it" calls on the mining shares... to "time to acquire"... carefully selected mining shares.
As always, that's not a call to "go all in"... its suggesting it will be useful to pick up good value on bad days in the market... and stay PATIENT.... move carefully...
If the markets crash... many of the mining shares will go down too. That will be more true of the more speculative shares... at first. But, then... at first only in the profitable few... they'll be seen to rise when the broader markets fall... given the pairings in the opposites in their fundamental drivers.
I saw that happening already, here in the last week... so that should be noticed...
NO ONE is making much of a living flogging mining shares these days ? The mortality rate in the juniors over the last few years is... quite high. Majors are able to acquire great properties on the cheap... AND THEY ARE DOING THAT NOW... so, be aware ?
This looks like a turning point, to me... and where solid value is apparent... I'd say "shop well" and "time your trades for the market conditions"... rather than just "wait for it". The driver... is Trump... tariffs... and the fact that what he's doing is working... he is succeeding in alter the flows... ending the hemorrhaging. That's going to be traumatic for the rest of the world. Cause us to have a recession... probably... but, we'll get the sniffles... the rest of the world feeling far worse... China closer to coding. And, things could easily get out of control... on the side of inflation... driving rates higher... driving markets lower... gold higher... mining shares higher.
However... NARROW in focus... buy quality... good value... including in the speculative shares... which should lag the trend... but will have more leverage when they do move.
I still think the peak in 2011... wasn't close to the type of move you might see, when the markets are again being driven by the inflation expectations of the sort apparent in the transition from the Carter years to the Reagan years ? There is still suppression... but, when things break, this time, the suppression might be one of those things that breaks... along with the banks who are most invested in it ? One can hope. But I think what will happen instead... is that the trade will reverse... with them driving the reversal... and making more money from it because of their past suppression... Is JPM still accumulating silver ? |
