December 3, 2017
December 3, 2017


“But the bond market is the world’s most important market as it sets the price of money.”
Could you please explain this?
And, why this time there are views that the fall is mainly due to several big funds and not due to general market pessimism?

Most interest rates are priced off the bond market and the yield on bonds or LIBOR or some variation of that. I’m not saying that the fall in the market is due to just a few funds. There are lots of sellers. I’m saying that a huge move in bonds–which are products that people like to leverage in the first place–has to leave skeletons. We will find out who, soon enough.

Hi Kuppy,
I just finished reading the probable outcomes by ed easterling (talking about secular bull and bear market), maybe you read this book as well.
It seems that we are likely still in the secular bear market period, and there is a technical breakdown in S&P uptrend recently.
Do you think the market will start the bear market now, or the government will continue to stimulate and pend the market, then the real crisis will happen sometime in the next few years. which scenario is more likely to you?
and how you compose your portfolio, how many percentage you invest on stock, gold & cash.

I think we (in the West) are still in a secular bear market that started in 2000. This is yet another downdraft in that bear market. The governments of the West will likely do all that they can to bankrupt themselves and debase the currency in order to try anf fight this bear market. Fortunately, as investors, we can invest anywhere in the world. Asia is booming. There are lots of small countries with double digit growth. Then, there’s always gold and other assets that should appreciate based on government stupidity. I cannot tell you what you should do percentage wise with your money. I have most of mine invested in money printing beneficiaries (precious metals, miners, mining services) and those countries that are booming like Mongolia.

Hi Harris,    I assume you saw this but if not this is a great piece on EGD that apparently you or your team helped with.

http://beforeitsnews.com/story/929/941/Energold_Drilling_EGD_CN.html                   I know why you like this better than AAG—much better business.

I had nothing to do with writing this, but I pass it along for readers who have an interest in what a different analyst has to say. Energold is a much better business than AAG and it’s the reason that it is by far, the largest position in my fund.

Flash Crash up!

Got gold? As Charlton Heston says, “Out of my cold dead hands”!!

That’s a good friend doing a victory lap….and that probably tops gold for a few weeks…. hehehe

You heard it at AIC first. Gold will have lots of ‘flash crashes’ in the next few years–every time investors feel that governments of the world are incompetent, they’re going to rush into gold. 300 pts in a month will seem tame compared to some of the moves coming in the future.

Really enjoy your posts. Regarding the jump in the long bond. It could be Pimco which reportedly had a big inflation bet against Fairfax Financial who was on the deflation side.


This is why it’s called Clue Jr….. we won’t know who it is for a week or two…. That’s one guess.

Read your blog – why not buy XIV which is more liquid? Or trade the futures on VIX?

Futures are a fine way to play. I don’t like XIV as it rebalances every day so you over time have a decaying vehicle due to the rebalancing aspect. IVO doesn’t rebalance.

For disclosure purposes–I added quite a lot more to my IVO long at prices in the mid to high 18’s over the past two days.

What is your opinion on buying any of cfx, fbk or merc at current prices? Which would you buy first? Thanks

I prefer MERC as it has hte most NBSK exposure. I bought a lot of it at under 8 in the past few days.

To the reader who asked about options books on 08/07……Just started “Options trading for the conservative investor” by Michael C. Thomsett Hope that helps..

I pass this along for readers with an interest….

Are you continuing to add to your position in paper company merc now that it’s dipped well under $9 per share?if yes, Are you slowly adding to doing large chunks at a time?
Your website rocks!

I have been scaling in since around 10. Bought a lot under 8. It’s still a pretty small position for me as I hate investing in cyclicals that may suddenly be secular plays.

I’d like to trade JPY from the short side but so far that trade has earned its title as “the widow maker.” Being in Osaka can you give some background on what it will take to turn the JPY?

It sure is the widdow maker.

JPY won’t go down because all the other big currencies are even worse…. It’s a ‘least bad’ currency. That said, it’s amazingly expensive here. That’s usually been a good indicator of a currency that you don’t want to own–doesn’t mean you want to short it though.

Kuppy, nice call on short vix, is that more than a daytrade? Im curious about how central banks acquire gold. Do they buy from miners like NEM,etc? It seems very odd, if there is massive demand for gold/silver and assuming it cant be printed, someone must mine it, process it and sell it to central banks, etc. so even though the miners cost rise every year, their stock performance should not be as tethered to the “stock market” as it seems to be. If they are not finding as much metal as there is demand for it, then at some point couldnt they just start hoarding the metal they have and wait for higher prices? Or if more places like china dont even buy metal on the open market versus from govt owned miners, at some point the miners might be the owners of last resort? Just trying to figure out whats holding them back and what can happen to make that change. thanks

That’s a lot of questions. Miners can and likely will hold back metal at some point. For now, they’re not going up because they’re not seeing much margin expansion. I belive that is starting to change, but then mining companies will find new and creative ways to waste money, like exploration. These guys all want to be the biggest producers–very few of them really seem to care about being the most profitable producers….