I am going to offer a longish, detailed post today.... both my opinions, thoughts and trade positions. I have no idea if other people are interested or care... I just feel like doing it and I hope someone enjoys it.
In understanding wtf is happening there's roughly 5 levels of investigation. ....1) researching the primary data for one's self (i.e. statistics, reports) ....2) listening to the people conducting the primary research ...3) listening to the public commentators reviewing the information supplied by the primary researchers ...4) going with the business media 30 second grabs ...5) staying in a cave and entertaining one's own fantasies.
As a diligent market participant, I operate at level 3 (with the occasional access to level 2). At level 3 you only tend to get some references to the primary data but it's heavily conditioned by the presenter's opinion, biases and agenda. To compensate, you have to sample a wide range of commentary and not take any of it too seriously.
I restrict myself to a fairly small subset of the investing universe. So... these are the things getting my attention in particular.
Gold...
The US$1800 level was a 10% retrace from the August high... overnight it broke down from that and it's now also broken the recent uptrend. If you click this link you will see the PoG is sitting on a support established this year...
https://www.tradingview.com/x/lPbp69fg/ if it respects that then all is ok... but if it breaks lower then next support is somewhere around US$1600. Just have to see what happens.
Why?... $US is weak, the base metals are strong, Bonds are being bid (yields lower), stock markets are trending higher, oil is improving in price. Usually, if the $US is down and Bonds higher then gold is also rising.
Piecing together the general comment, the consensus view is the US Fed will be forced to move to negative interest rates... this may or may not happen... but being the consensus idea it explains the moves in the market. The big money is front running the expected move by the Fed. Bonds, in many places, currently offer a negative yield and yet not only are they being bought but enthusiastically so. Contrary as it seems, while US government bonds are still on the positive side of the zero bound, although they effectively provide a negative real return, there's a capital gain to be had as they are bid up while inching closer to zero. Once they actually go negative the value reverses... mad, I know, but that seems to be what's happening.
The prospect of negative interest rates is what's supporting commodities.... a sort of safe haven trade (and not an expectation of an improving economy). The market is going up in part as a search for a capital gain and in expectations the magic money tree is about to provide another bumper harvest.
And gold?... a reasonable bet but, in the short term, it doesn't provide a matching return compared to the alternatives. Gold's weakness is only a function of the market dynamics... if negative rates do come along gold's recent rise will resume (imo).
Gold ? Bitcoin....
imo... 2 separate and unrelated markets. I am still trying to get my head around Bitcoin. As a percentage of the investable universe it's still very small... ( but growing strongly). At the moment, it appears to be held mostly by a few 'whales' with probably too much capacity to manipulate the price. This is slowly changing.
The history of the big rises in price for BTC is interesting... in 2017, when it nudged US$20k, it was the primary vehicle for wealthy Chinese to get around the capital controls. BTC quickly fell below $10k when the Chinese government plugged that hole. This time around there's genuine interest from major institutions, a growing take up by retail and quite a bit of favourable comment. Personally, I can see crypto currency is coming... but I just can't see that BTC will be the definite winner. There's going to be a huge (and probably unfair) battle for control of the space... I don't know nearly enough to enter those waters.
A bit of personal investment info...
Overall, I had an amazing year. Early on was down 30%... reversed that to be 20% up.... did a reset and now up 60%. I have never before been in a position like this. Quite suddenly, I can contemplate taking some outsized risks.... which I intend to do. Hold on brother, you might say... count your blessings and be satisfied. Good advice and probably the wise course. But... I see it differently. In life, you don't get many chances to have a red hot go.
I have a habit of putting overweight bets on. Sometimes (actually, frequently) it crashes and burns. Sometimes I make a profit but it doesn't match the fantasy. I'm doing it again. This time I am running a dual bet.... 30% position in SGQ with a 30% position in CAI. With CAI I am confident it will double in the next 12 months... so if I am wrong about SGQ I can at least break even. With SGQ... I think that's something special. It's the classic beginners mistake... going for the big hit.... I know. But, there you have it.
I have tipped SGQ for the STT comp.... what I think is their Mt Alexander deposit might be one of the world's largest. There's only 2 really big nickel sulphide deposits... Norilsk in Russia (really massive) and the other is Voisey's Bay in Canada. Something they have in common is massive nickel sulphide mineralisation with platinum group metals (PGE). In Australia, there's a few nickel deposits about the place but minus PGE. SGQ's ground is throwing up nickel over a 6k strike length, the best grades currently being reported by any explorer and in association with PGE's. I am speculating that indicates something unusual.
If I turn out to be correct... I have more plans... bigger plans. We'll see what happens.
