Saturday, September 21, 2013
Ben Bernanke saw his shadow this week...
The market expected him to start tapering the Federal Reserve's $85 billion in monthly bond purchases. But the Fed chairman announced this week that he would continue easing...
We're not surprised. A central banker's job is to print money. He causes inflation... He blows up bubbles.
When those bubbles pop, they print more money... It's a vicious cycle.
It's like Groundhog Day... Bernanke takes the podium. He's scared by what's happening in the economy, so he prints more money and scurries home. Only instead of a longer winter... we'll see already artificially high asset prices march higher.
Bernanke also wanted to stress that easing could continue longer than the markets expect...
"There is no fixed calendar schedule. I really have to emphasize that," he announced. "If the data confirm our basic outlook, if we gain more confidence in that outlook... then we could move later this year."
For now, we'll enjoy more of the Bernanke Asset Bubble. Bernanke's latest action certainly supports Steve Sjuggerud's thesis that the biggest gains are yet to come...
But the question remains, what happens when the Fed tries to sell the bonds it's been buying? We know it can and will buy unlimited amounts of bonds. One thing is certain: When the Fed actually does start tapering, we'll see massive volatility in the market. And we'll see interest rates spike much, much higher. Remember, just the hint of tapering nearly doubled the yield on the 10-year Treasury notes.
The S&P 500 hit an all-time high on Thursday. The yield on the 10-year Treasury fell 15 basis points (0.15%) to 2.7%. The dollar got crushed. (The euro is at $1.35 today, near its highest level versus the dollar since February.)
But the biggest move happened in the gold markets...
With Bernanke promising to print still more money, one would expect the value of "real money" – gold – to soar... And in fact, the precious metal jumped from $1,300 an ounce Wednesday to $1,361 Thursday. (It's back around $1,330.)
S&A Short Report editor Jeff Clark has been actively trading the gold sector... And anyone following his advice has made a fortune.
On August 9, he told readers it was time to go long gold... He said the setup was looking similar to 2008, a "once in a century" opportunity, when he produced huge gains for readers...
As he wrote in that issue:
Back then, S&A Short Report readers made 60% in two months by selling Newmont Mining puts, 70% in three months on Goldcorp puts, 47% in one month on Kinross Gold puts, and 63% in two months on Agnico Eagle Mines puts.
And only two weeks after telling readers to buy gold stocks, Jeff closed out winning positions in Kinross Gold and Seabridge Gold for 65% and 61%, respectively.
Jeff guessed we'd see a gold-stock rally following Bernanke's speech this week.
And he nailed it...
When people worry about the strength of the dollar, they buy gold. And Bernanke's announcement clearly terrified some people.
Gold jumped nearly 5%. But gold stocks ripped even higher...
The Market Vectors Gold Miners Fund (GDX), a basket of mining stocks, jumped more than 10% on Wednesday.
Jeff recommended his S&A Short Report readers buy calls on GDX on Tuesday. A day later, the position was up 128%. Jeff recommended closing the position, and subscribers following his recommendation made 100% (at least) on the trade.
This past week, Jeff hosted a free webinar...
We had a massive response... Thousands of S&A readers participated.
If you weren't able to join, we've put up a replay of Jeff's training.
You'll be able to see the full event, where he shared step-by-step how to make money in the coming months and which markets are poised for the biggest gains.
Plus, you'll see how he personally made a fortune that allowed him to retire at age 42.
To watch the training, click here. (Please note, on Monday we plan to take down the replay.)
Date Range:9/12/2013 to 9/19/2013
Date Range:9/12/2013 to 9/19/2013