{"id":37752,"date":"2013-04-22T18:10:32","date_gmt":"2013-04-22T22:10:32","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=37752"},"modified":"2013-04-22T18:10:32","modified_gmt":"2013-04-22T22:10:32","slug":"the-wizards-of-finance-are-clueless-sell-your-stocks-and-hold-onto-your-gold","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/04\/22\/the-wizards-of-finance-are-clueless-sell-your-stocks-and-hold-onto-your-gold\/","title":{"rendered":"The Wizards of Finance are Clueless: Sell Your Stocks and Hold Onto Your Gold"},"content":{"rendered":"

By Chris Hunter<\/strong><\/p>\n

The smart money is now selling stocks<\/strong><\/a> and holding onto gold. You should do the same.<\/p>\n

I know. I know. Stocks have been rallying since November. I am also
\naware that the media is full of wringing of hands and gnashing of teeth
\nover the end of the 13-year secular bull market in gold.<\/p>\n

Bloomberg reports that in India, “There has been a rush to buy gold
\nbecause now people are getting jewelry 15% cheaper than before. It’s
\nvalue for their money.”<\/p>\n

And from my sources in the physical gold storage business, it is
\nclear that the buying of bullion remained steady during the recent
\npanic.<\/p>\n

Below are some statistics from physical gold storage business BullionVault (bullionvault.com<\/a>).
\nAs CEO Paul Tustain put it in a note to investors recently, “I think
\nthey offer a useful reminder about how markets work.” (Remember also
\nthat for all those people who sold their gold in a panic, someone took
\nthe other side of the trade \u2013 and gladly so.)<\/p>\n

\u2022Monday and Tuesday were our strongest 48-hour period for new customers this year.<\/em><\/p>\n

\u2022Since Friday the gross value of customer bullion sales
\nincreased markedly. About 1% of gold we look after was sold back to the
\nmain market. That was characterized by a few large sellers. Holders of
\n99% of BullionVault inventory were not panicked.<\/em><\/p>\n

\u2022Those who did sell have mostly not withdrawn their cash from the
\nBullionVault system. To me that suggests they may be intending to buy
\nback into gold sooner rather than later.<\/em><\/p>\n

\u2022We normally have about 230 deposits a day (300 on a Monday) and
\nabout 100 withdrawals a day (120 on a Monday). Mondays are usually
\nhigher because they include weekend activity. On Monday we had 723
\ndeposits versus 284 withdrawals. On Tuesday we had 732 deposits versus
\n150 withdrawals.<\/em><\/p>\n

\u2022Monday was a record day for business transacted, beating the previous peak of September 2011.<\/em><\/p>\n

Meanwhile, US stocks are wobbling. As you can see from the chart
\nbelow, as of Friday, the S&P 500 had breached a not-insignificant
\ntrading channel.<\/p>\n

\"S&P
\nView Larger Image<\/a><\/p>\n

I believe we’re witnessing the start of a correction in the rally in US stocks that began last November.<\/strong>
\nThis correction is being driven by soggy earnings and an even soggier
\neconomic backdrop that remains, from our lens, at least, in a contained
\ndepression rather than in the “recovery”<\/strong><\/a> the mainstream media is so fond of talking about.<\/p>\n

Just witness the recent downgrading by the IMF of its 2013 growth
\nforecast for the US from 2.1% to 1.9%. (The Fed, at one point, was
\nforecasting a 4% expansion. So much for the predictive abilities of the
\npolicy wonks now in charge of resuscitating growth, balancing inflation
\nat precisely 2% and bringing the jobless rate down to below 6.5%!)<\/p>\n

The problem with the bullish case for stocks\u2026 and the bearish case
\nfor gold\u2026 is that it depends on a fallacy: Nothing can go wrong in the
\nworld now that central banks<\/strong><\/a> are doing “whatever it takes” to save the financial system.<\/p>\n

Smart investors know that gold is a form of insurance against future
\nfinancial disasters (and the blowup in paper assets that goes along with
\nthem). But now there is a growing consensus that the wizards of modern
\ncentral banking have the situation.<\/p>\n

So now there is a big rush to sell these gold insurance policies and
\nbuy stocks (which can only go to the moon, so the logic goes, as long as
\nthey have the wind of central bank monetary largesse at their backs).<\/p>\n

But the reality is that these wizards of finance are clueless. They
\nare able to print money, all right. But does anyone know how they unwind
\ntheir bloated balance sheets? I certainly don’t.<\/p>\n

This is no time to be selling your gold. Nor is it wise to buy into a mature bull run in stocks.<\/strong><\/p>\n

It may even soon be time to dip your toe back into the gold market.
\nThe yellow metal is unloved right now. And that makes it very
\ninteresting for independent thinkers and contrarians.<\/p>\n

\n
\n

Disclaimer<\/span><\/span><\/span><\/h3>\n
\n

Article brought to you by Inside Investing Daily. Republish
\nwithout charge. Required: Author attribution, links back to original
\ncontent or www.insideinvestingdaily.com<\/a>. Any investment contains risk. Please see our disclaimer<\/a>.<\/em><\/p>\n

 <\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

By Chris Hunter The smart money is now selling stocks and holding onto gold. You should do the same. I know. I know. Stocks have been rallying since November. I am also aware that the media is full of wringing of hands and gnashing of teeth over the end of the 13-year secular bull market … <\/p>\n

Continue reading “The Wizards of Finance are Clueless: Sell Your Stocks and Hold Onto Your Gold”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-37752","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/37752","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=37752"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/37752\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=37752"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=37752"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=37752"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}