Wednesday, February 7, 7:51 am EST. Goodness, the prices of everything are rapidly changing, both up and down, and… back again!!! Why?
The short, simple answer is that changes are taking place, and no one can say just how far, or short, these changes are going to take us. It’s affecting stocks, and the metals and their miners. But, if you’re following your prices, you certainly already know that!
I had thought that the upsetting of the stock markets the world over was going to give metals a real boost, but I didn’t see that happening, and then, when stocks decided they were going to really right themselves, and lift, Tuesday… well, you know what happened. Money came out of metals fast! And, so, here we are. Where are we???
I’d like to say, in a good place, but we have a very serious issue. I don’t know if anyone else sees it and is relating it, but gold is actually looking fairly healthy still, believe it or not, but silver is truly underperforming badly, and that’s never a good sign. And, so, I can’t feel good about the metals, or the miners, at this time. It’s just not supposed to work this way, if prices are going to go up. Silver rises to the occasion, and outperforms gold, almost always, when the metals heat up… so, current price action is disconcerting.
Markets often adjust and make changes with the coming of each new year. Often that change is foretelling of what the entire remainder of that new year will be like. If the first week is bullish, it’s not surprising if the first month is. If the first month is bullish, it is not at all unusual should the entire year end well. It’s true of stocks, and as an asset class, it’s often true for the metals, too.
Just tracking each of the 16 symbols I follow, I see that the first week was not bad, but it wasn’t particularly good either. And, for the entire first month… the same, truly flat, neither good nor bad.
But, just since this month started, it looks like an Amtrak train wreck… with fatalities!!! As with stocks, at this time, so with the metals and miners… the world is changing, and no one is yet sure what it is becoming, so we must go thru a spell of turmoil and upheaval, due to uncertainty. Is inflation rising, are rates going to continue to rise, is the economy going to truly expand bigly? What if all of these things don’t happen?
What if, instead… inflation remained low, rates didn’t need to rise, and the economy still expanded well? Hunh? And, why might I say that? I’m surmising here, but why does inflation have to rise? Well, you’ve got bonuses, pay raises, tax cuts to consumers, increased hiring, and increasing consumer confidence! How can all these not result in inflation? I can think of one huge reason, and I have yet to hear a soul mention it… why won’t the massive corporate tax cut, from 35% to 21% result in a spate of producer, wholesale and consumer price CUTS, which is deflation, offset the whole scare of rising inflation? Is there real capitalistic competition within our economy, or is there not? If corporate costs of doing business are being slashed, because corporate taxes, just another cost of doing business, is being greatly reduced… why is it thought it will only go down to the producer’s bottom line, and not result in some serious price cutting, right down to the consumer level, as all of these corporations compete for all these new bonus, pay raise, new hires, consumer tax cut, and increasingly confident consumers’ dollars???
I’m arguing for a true, Goldilocks economic scenario… which maybe just what the markets are trying to peer into the future and see, which is resulting in stocks wanting to recover so quickly, and for metals to slide again. In any case, here’s what I am looking for…
Metals are taking a beating, and the miners are getting hit even harder. They had bottomed, and done well out of 12/12+13, not two months back, but have been taking a bath since Jan 31. Stocks have gotten cRaZiLy volatile, trying to decide which way they’re going to go… and, the whole point is simply this: Uncertainty has gripped the markets, because the world economic/financial picture is taking a rather sharp turn, and no one knows just yet where it’s headed next, but the thinking may be coming around to where it may be perceived that it is actually going to be getting even better than anyone was previously thinking. IF, that should be what unfolds, stocks are going to soar. The metals will limp along somewhat, but continue to take a back seat… and, yesterday was just one day where many are trying to make up their minds as to what they believe is going to happen, and is moving money around to line themselves up for their perceived scenario to unfold.
I do this. I have investable assets in both places, stocks and metals and their miners. It’s made me practically market neutral, as the ups and downs on both sides nearly even out! Plus, I’ve a slug of cash, not being roiled at all. And, since I’m hardly even about capital appreciation, but my major concern is for portfolio dividend income, and attaining unto a retirement income from investments goal (see here: https://dividendgrowthinvesting.wordpress.com/ ) I don’t much concern myself for any of this stuff. My wife and I are merrily moving forward toward that goal, and I don’t need to be doing this at all.
I do this for the impetus to keep my eye on a different asset class, and to maintain a proper level of ‘insurance’ against some kind of a blind side stock blowout. If, or when, stocks ever go through another meat grinder, my metals and their miners will be the saving of our bacon!
So, metals may go back into a bear hibernation, and disappoint every gold bug… I’d be disappointed, too. But, my stocks will soar, and my income goal will still be attained, and my ‘insurance’ will always remain in place. “Peace, Peace, Wonderful Peace”… My very favorite hymn.
Until all I’ve mentioned above has been determined and resolved, expect continued volatility… and, more from Washington will be coming forth to stir the pot, as well!
Be patient. Situate yourself appropriately, that you don’t get crushed, ever… and try to reason through what may be going on, and consider what the possible outcomes might be. That’s what I do, and though I’ll likely be wrong often, I suppose; I’m positioned to fare well, regardless… and it never affects my sleep negatively at any time. Find your balance.