The Fed paints itself into a corner...
You are receiving this message because you have specifically subscribed to Golden Opportunities, have purchased a product or have registered for a conference with us or with one of our partners. If you'd rather not receive emails from us, please click the "Manage Your Subscription" link at the bottom of this page to unsubscribe from our database. Remember your personal information will never be rented or sold and you may unsubscribe at any time. Contact Us |  Privacy Policy

Painted Into A Corner

The Fed has set the stage very badly for itself, proclaiming that they won’t cut rates again unless the economy has taken a severe downturn.

So what’s everyone going to think when the stock market inevitably forces them to ease again?

Dear Fellow Investor,

After the whirlwind of wisdom that is the New Orleans Investment Conference, I find my head spinning in trying to come up with a few summary thoughts.

I have no doubt that hundreds of our attendees are having the same issues.

You see, in contrast to the reports from other recent shows, our halls were bustling with highly-experienced and successful investors, eager to find opportunities where a confirmed gold bull market is in force yet junior mining values are near long-term lows.

They found those opportunities in our Exhibit Hall as well as our General Sessions, where a faculty of today’s top experts shared their latest views and top picks.

There were so many great insights, from so many insightful analysts and experts, that the sheer volume of information is one issue we all faced. But then, some of the views conflicted, true to our decades-old policy of presenting every side of the story.

It’s a lot to sort through, and we’re all still working at it.

I’ll provide some content from this year’s amazing New Orleans Conference in these pages over the coming weeks, and Gold Newsletter readers will get much more coverage in our next issue. However, all of this will only scratch the surface of what you get from actually attending the conference in person, so please mark your calendar for next year’s event, being held from October 14-17, 2020.

For now, suffice to say that New Orleans 2019 was another smorgasbord of valuable insights into the economy, the markets and global geopolitics, with a healthy dose of specific stock picks.

A big topic of discussion, of course, was the Fed, which had cut rates another quarter-point just two days prior. In discussions with pros like Danielle DiMartino Booth, Peter Boockvar and Grant Williams, I offered my view that Chairman Powell had set up high stakes for the next rate cut by essentially saying the Fed wouldn’t cut rates again unless the economy took an exceptionally bad turn.

In other words, when the stock market pitches another hissy fit to get the Fed to cut rates further, the central bank would face two options: 1) ignore the stock market, likely prompting a major sell-off and resulting recession, or 2) yield to the request with another cut, thereby indicating that the economic situation was indeed dire.

This week, in a presentation to the Joint Economic Committee of Congress, Powell didn’t walk any of his previous comments back. If anything, he doubled down on them.

As Peter Boockvar put it, “I think it only took one sentence in the entire Jay Powell speech that bottom lines his thoughts on future monetary policy: ‘We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook.’ In other words, we do not want to see more rate cuts from here...because of what that would imply.”

The New Orleans Conference was also an incredible opportunity to get feedback from many of today’s sharpest financial minds on the implications of the Fed’s repo funding issues.

And here’s where it gets truly worrisome: Despite many of the smartest authorities on the subject pondering the problem, and consulting with networks of other top analysts around the world, no one — and I mean no one — could fathom precisely what the cause was and what it meant.

But one thing everyone agreed on — it was much more significant and troubling than the Fed was letting on. It was yet another indication that the Fed had transitioned from the lender of last resort to the lender of first resort.

Not only that, but this repo facility, even if “only” representing overnight lending, was part and parcel of a return to quantitative easing that rivaled QE1 in size.

My view is that once the market truly appreciates that this is not a temporary program and is in fact a return to massive QE, the price of gold will soar.

Junior Bargains Abound

For me, the bottom line of New Orleans 2019 was that we’re in a long-term bull market for gold and silver, one confirmed by both the technical and fundamental evidence. Yet we’re also in a market where the prices of junior mining stocks remain near historic lows.

In other words, this is the kind of classic “window of opportunity” that only comes around rarely. And we need to take advantage of it.

Looking at the big picture, gold may have bounced off of support around $1,450 and the correction may, in fact, be over. On the other hand, I wouldn’t be surprised to see the price hit our original target range of $1,400-$1,425.

No one truly knows for sure, and if someone tells you they do...well, consider that they may be lying to you about something else too.

My best guess is that we’ll trade sideways-to-lower going into mid-December, following the seasonal trend of the last few years, and will actually begin the typical early-year rally sometime in late December.

Regardless, the long-term picture for gold is one of a major, multi-year bull market, one in which we’ll kick ourselves if we don’t take advantage of the current junior mining sector valuations.

So don’t try to pick the precise bottom...and don’t let this opportunity get away from you.

All the best,


Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference

 

You are receiving this message because you have specifically subscribed to Golden Opportunities, have purchased a product or have registered for a conference with us or with one of our partners. If you'd rather not receive emails from us, please unsubscribe here. Remember, your personal information will never be rented or sold and you may unsubscribe at any time. Advertisements included in this issue do not constitute endorsements from us of any stock or investment recommendation made by our advertisers.

As you know, every investment entails risk. Golden Opportunities hasn’t researched and cannot assess the suitability of any investments mentioned or advertised by our advertisers. We recommend you conduct your own due diligence and consult with your financial adviser before entering into any type of financial investment.

Golden Opportunities
Jefferson Companies
111 Veterans Memorial Blvd. Suite 1555
New Orleans, LA 70118
1-800-648-8411

Our Privacy Policy