I was going to post part of tonight’s report to the blog but decided I didn’t want to go through the hassle of transferring it over. So I just unlocked it on the premium website. If you want to read the report just click on the link to the right and it will take you to the subscriber website.
Smart Money Tracker
Gary, what do you think about “bubbles don’t re-inflate”
the Nasdaq is a clear example.
Also the cause or indicator of a recession is usually never the same twice in a row
In fact the Nasdaq only retraced about 38.2% of its high before collapsing again and Oil is there now
I don’t think oil will lead this bull (it obviously isn’t) but if the dollar starts to get seriously weak all commodities are going to rise and that will include oil.
BTW I don’t really consider oil to have been in a bubble. It was being driven higher by Ben destroying the dollar but we never saw the public piling into the oil market. Thta is what it takes to drive the final stages of a bubble.
Like clockwork, ole Timmy Knight is short gold again. I love being on the other side of his trades!!!
More upside to come!
Yeah and right after getting runover by GDX. This guy has to be the dumbest trader on earth. He just keeps making the same mistake over and over.
Where is the moron that assured us gold was making a double top just the other day?
Hey dumbass still think it’s a double top? LMAO
Another idiot gets runover by the bull.
OK folks lets keep things civil.
Great call Gary on the folks not paying their mortgage and using that extra coin to buy crap. It has been suggested by others and makes complete sense. People in the bubble states have been in their homes for 1-2 years without making payments…Just think of when the housing market takes it 2nd nose dive! The amount of houses underwater and the people who will just opt not to pay will be staggering. Now the oil gusher will impact FL and the economy there will take a huge body blow. This is getting very ugly.
Gary, you are right. It is all broken. The underwater homeowners or investors have figured this out quick by not paying their mortgage and keep collecting rents. Obama has really satisfied his voters of not having to worry about their mortgage and car payments. The restaurants in Orlando are also packed all the time! What a moral hazard they have created.
I have a friend in MI that just quit paying. That is going to spread like wild fire. He can afford it, but he is underwater, mad as hell, and he isn’t going take it any longer.
@ Moral Hazard
What about the moral hazard of bailing out the megabanks (more like the megabank’s large shareholders and creditors) with taxpayers’ money? The same taxpayers who are now enjoying the mortgage payment holidays Gary’s talking about?
Does anyone have any thoughts on IVN and SWC? They were great holdings in the past and have been underperforming by a large margin lately. I’m thinking of dumping them in favor of some of the other miners.
Thanks
Gary,
In Nevada an HOA can initiate a foreclosure.
Also, loans prior to 2008 are recourse so you can’t just walk away.
I live in Sacramento. We had a bubble here similar to Las Vegas.
I paid $320k in 2006 for a house that would now sell for $150k or less.
I haven’t paid the mortgages (BofA and Citi) in over a year, and neither lender has done a thing.
Gary is correct that this is widespread in former bubble areas, particularly in non-recourse states such as California.
What SUCKERS we have been! Those who scrimped and saved, put down our 20% on our homes, paid bills in time for decades, no credit card debt, not HELOCs, paid cash for used modest cars, tried to invest wisely, etc…What were we thinking?
My bro in law and wife bought a house in St Louis back in 2005 for 500K. Ended up taking out a 2nd mortgage for 125K to pay off all their goodies (cars, trips, junk)…Ended up owing about 475K. Wife lost her job last year, couldn’t pay the mortgage anymore, so they had to do a short sale. The bank that had the 2nd mortgage (Citi) settled that 125K for 6K! The other bank settled for 350. They then went out and bought a brand new, much cheaper house for 225k. Bottom line, they were able to get a loan immediately (FHA). Guess what? They can’t make their payments.
This is like a bad dream.
I did some research on recourse and non recourse states. What’s weird is FL doesn’t show up on many lists as non-recourse, but the stories coming out of the state are that many are staying in their houses not making payments. They banks aren’t doing anything there. I don’t think they want to foreclose on millions upon millions of houses nation wide.
How about the moral issues with banks pushing these risky loans, drive by appraisals, approving loans with no documentation, etc…etc…This drove up property costs so high that honest folks got caught upside down. Who’s fault was this? I do see the logic with not paying back a corrupt banking system that created and feed this lie. At some point, it becomes a business decision to walk or stop paying.
I don’t have a mortgage, but if I did have one with the banks that got “bailed out”, I’d tell them to shove it!
Nobody I know in Florida is paying, and most have several properties..LOL!
“Blogger Jayhawk91 said…
What SUCKERS we have been! Those who scrimped and saved, put down our 20% on our homes, paid bills in time for decades, no credit card debt, not HELOCs, paid cash for used modest cars, tried to invest wisely, etc…What were we thinking?”
Well I would fit into that category Jayhawk and quite frankly I don’t feel like a sucker at all. I think the suckers were the people like your bro in law. I am watching them all now, what were once upper middle class families having to face a reality they were neither cognizant of and unprepared to deal with the worst case scenario. We are now in the worst case scenario for many of these folks. How many marriages and families have been destroyed? How much stress have these people inflicted on their bodies and minds for failing to think through decisions they made?
Frankly I sleep well at night knowing that I will always be able to pay my mortgage, monthly bills and still have extra’s…like taking a trip to Vegas next weekend..(Gary lets meet for a beer..I will buy the first round or two) and like you Jay, I drive two older vehicles, an ’03 and a ’97.
Nope, I think the ‘suckers’ were the ones who thought they could get something for nothing.
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John,
IVN just had a monster run up. It’s probably going to have to consolidate a bit before another big move. But it’ ver likely will be one of those mega winners during this bull.
Go back and look at those charts of Dell again and you’ll know what I mean.
IVN also has some company-specific issues, namely problems with the Mongolian government moving the goal posts on mining project permits and royalties.
Jayhawk,
This story is far from over.
Those who squirreled away gold will eventually rule.
I’m not so sure about ruling, at least if you’re not connected. As a gold and silver investor, I am very worried about conficatory levels of taxation. The government is broke and they will seek to rape and pillage those who have money are who do not have the political connections to keep their money safe. What do we do when the capital gains tax rate or the tax rate on gold and silver metal are raised to 50% or more? Remember that a large part of the rise in PMs will simply be to offset the coming inflation, it is NOT profit, it just allows us to tread water. Now if the government bites down hard, we’ll end up losing money. That sucks.
They are going to tax us with higher rates and inflation anyway so I don’t see any way to avoid that one.
The MarkToMarket rules really have given the banks no incentive to foreclose owners asap. They can do it at a leisurely pace, make money at 0% interest … and slowly bleed off these dead mortgages. If you read fundmymutualfund, the blogger has coined this phenomenon the “Stealth Stimulus” and he has been describing this issue for about 1 year ( perhaps longer ). Some states are waiting close to 2 years before even starting to initiate foreclosure proceedings against homeowners.
Really, who can even imagine Interest rates rising before spring/summer 2011 .. and even those will be moderate.
The main issues to be fixed, and its been repeated ad nauseum, housing and unemployment, and those are far from being addressed.
Peter
Good points lowtax…that is why one should hold US Eagles coins (if in the USA) of Gold and Silver…no tax implications. Eagle coins are legal tender so exchanging them for Federal Reserve Notes doesn’t carry a tax burden. Bars and foreign coins are subject to the tax man.
When the CONgress passes laws (like last year FASB 157 I think)letting banks keep loans on the books for 100 cent on the dawler…why the hell would the banks want to forclose and sell for a realized loss…once the NONperforming loans catch up with reality the chit will hit the fan man…this scam will end badly…
I am glad people walk away from these loans…screw the banks…it will get ugly…
DG out…
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Nat, I think you’re incorrect about Eagles not having tax implications, at least from what I’ve read. The basic law is that if you profit, you must report. Coin dealers may not be required to report under certain circumstances, but you are.
http://investletters.com/blog/what-are-the-tax-consequences-of-selling-gold-gold-etfs-and-gold-stocks/
Sacramento guy here again.
Lots of the stories you see in the MSM on strategic defaults depict people who cashed out to the max to fund extravagances and are now blowing all their squatter stimulus money in the same way.
Not everyone behaves that way. Getting caught upside down has been the rudest financial awakening I could have imagined. My family is saving every penny of our squatter stimulus for the next time something blows sky high. The last I’m going to do is run out to the mall and start spending my safety net. And I’m in no hurry to dump it back into another house.
Nan-
I hear you, it’s just frustrating to think about what LOWTax mentioned. There was an article posted on GoldSeek about how gold owners could be raped by the government.
Sacramento guy-
Even just having an extra 1-3K by not paying your mortgage is putting money into the economy, even if it’s buying food and gas.
A link for the the GoldBugs! Beware.
http://www.grandich.com/2010/05/bill-murphys-latest-newsletter-says-it-all-regarding-option-expiration/
You do realize this is pure nonsense right?
By far most of the open interest in the commercial catagory is miners hedging production.
Just think logically for a second. If the government or banks are trying to manipulate gold why do they put on shorts as gold nears all time highs but then take them off once it corrects?
That is just normal behavoir for anyone hedging anything.
If someone really was trying to manipulate the price of gold down they certainly wouldn’t cover shorts when gold corrects they would pile them on in an attempt to keep price suppressed.
That never happens now does it.
Murphy & GATA are nothing more than scam artists. And they’ve latched on to one of the oldest tricks in the book. “Find a scapegoat to blame when your calls don’t work.”
That way they can always pull out the nefarious cartel takedown BS when gold corrects.
Gold is acting just like all bull markets act. It has regular cycle lows and highs. There is absolutely nothing strange about what is going on.
well, no, hadn’t thought that way, but seems to me investing in gold was always a controlled market anyway, so fact or fiction, I still think it’s deceptive bs.
Example- all the mail-your-gold-in-for-top-dollar infomercials running rampant everywhere!
IMHO, this isn’t the activity of a secure investment commodity that I would consider, and I will always scoff at that notion regarding gold, sorry.
All the evidence I need is from the Krugerrand bubble, and if it really gets that bad that we need gold as a currency, I’d rather have more lead… 😉 lol
“and if it really gets that bad that we need gold as a currency, I’d rather have more lead… 😉 lol”
– That’s patently absurd and displays a fine ignorance of history. The U.S. has had multiple currency regimes throughout its history, and the collapse of each has NOT led to a massive social cataclysm making guns worth more than mankind’s oldest method of exchange. Read Denninger much?
Also, commercials compelling the populace to sell their gold is activity indicative of smart money getting (or staying) long, not retail buying into a great scam.
Ignorant perhaps, but with gold I will stay that way, and blissfully so….
Your point(s) are well taken, however, FYI.
@lowtax…that article doesn’t really make clear the facts which relate to eagles and any other of the gold investment vehicles it names. All the investment vehicles named in the article have records and documentation for them, except Eagles. Lets say you’re right and I am required to pay capital gains on selling eagle coins. How can the IRS know what I paid to purchase and what I received in the sale if I don’t tell them? There are no records. And there are no records from the US mint who sells the coins to dealers. No records on when the dealer sells the coin to me. And their are no records on when I sell the coin back to the dealer or anyone else. Now think about this for a minute..one dept of the treasury, the US mint, produces and sells eagle coins and keeps no records of those transactions, but the another dept of the US treasury, the IRS wants you to pay capital gains tax..Why do you suppose this is the case if taxes are to be owed?
Therefore, it would seem that in respect to US eagles we are all on the honor system with respect to the IRS. Can you name anything else that is subject to a tax that is on the same honor system? That is, no records kept anywhere? You realize when you buy/sell Maple Leafs, or Krugerands, or bullion bars, the business/seller has to produce a 1099B TAX form. Not so with eagles.
Lastly, if it was very clear that taxes are owed on eagle coins, it would be very simple to find that spelled out on the IRS website…its not. Also, if you were legally required to report the sales of Eagles there would be documentation throughout the whole chain of transactions which their isn’t.
I don’t plan on paying one cent of tax on my eagles and good luck to the IRS to prove I owe them tax.
crws,
I was going to post something, but there’s just no point. Believe what you want to believe.
If the government is manipulating gold, I hope they keep doing it, because gold is up %400 in ten years.
The conspiracy theorists are all going to make a fortune in the bull market… and then they’re going to lose it all because they failed to sell at the top. People like you spent 1980-2000 sitting around sulking and losing money and talking about how gold is manipulated.
Gold is in a bull market. But someday it will end. Be prepared.
Love,
The Government
also, lowtax..you ever notice the serial numbers on the federal reserve notes? Why do you suppose they have those numbers on that currency? Why does the mint not put numbers on the eagle coins or other government money such as pennies/nickles/dimes/quarters etc..? my guess is because federal reserve notes ate private currency that is legal tender while eagles and other US government minted coins are MONEY and Legal tender. Money and Currency are not the same thing. That’s why their is a comptroller for currency and no comptroller for money. Thats why we have a currency act and not a money act. Money is defined in the constitution, currency is not.
Okay, Gary; we minions will work hard to not fumble the ball during the upcoming run-up.
And, on your part, do not ‘Favre’ us over, trying to force something to happen, and throw a boneheaded interception.
Actually, it seems like your investing approach is the antithesis of that.
I’ve read tons of stories about folks who are underwater on their mortgage, have stopped paying, and are spending the money on restaurants and whatnot. Boring. Old news. Now find me a person who has done the same, except is spending their mortgage payment on physical gold instead of consumer items. Now THAT would tickle my fancy!
Too funny!
Stopped out of ole yeller jest abuve 1250…maybe ill have better luck next time…overall some give back but only down a bit this year on ole yeller…i will live to trade another day…haha…
DG out…
Not if you keep doing stupid things like shorting bull markets you won’t.
If you’ve been trading as long as you say you should have learned that lesson by now.
DG,
What’re your thoughts on ole yeller? Why are you so bearish on it?
Just wonderin’…
Not that I am so bearish on gold…i rode the dawler bandwagon long with a reel nice gain…along with short equities and short yeller…my total profit is positive for the year…diversify is the key to longevity…Some of you here are gambling on an all in for yeller to the moon…hope it works for you but i can’t put all or most into one thing…
DG out…
Don’t forget, dawler boy, you had 4x the position in gold as you did the USD, from averaging up so many times.
Be honest. And you also only caught a small piece of the run-up in the dawler.
You’re not kidding anybody but yourself, and that gets costly.
Hi gary…
What do you think of the move today…lotta bears back calling for head and shoulders CRASH (bounce of 1130)…still think we’re headed to 1300?
LOL one day doesn’t a crash make.
We have a higher high and a higher low. That is the definition of a up trend.
When the market is ready to roll over again I expect it will be accompanied by a huge SoS day. That hasn’t happened yet.
The pattern readers can continue to lose money with technical analysis if they want. I’ll wait till something a little more convincing tells me the bear is back.
what’s SoS?
Selling on strength.
It’s a sign institutions are exiting the market.
that’s true…today’s volume was sub-par
SoS isn’t anything to do with volume it’s a measure of money flows into and out of the SPYDER’s.
The data is available in the WSJ
ok..i went to the money flows page on wsj…what exactly am I looking for to see if a bear market has started