Is It Ever Going To Be Enough?
Two members of the Portfolio Armor team went to see Metric at Brooklyn Steel last week, where the band played their early hit, “Gold Guns Girls”. We live in a golden age of high-quality concert footage getting uploaded to YouTube, so you can watch the same performance we saw below.
The song’s title and hook (“Is it ever gonna to be enough”) came to mind Tuesday while reading the latest of a series of bullish articles on gold and silver by multiple analysts who cover the precious metals. Generally, the bullish case rests on allegedly high physical demand for the metals, and fears of fiat currency debasement amid inflation.
Whenever I read one of these bullish precious metals articles, I immediately check to see how the Sprott Physical Gold Trust (PHYS) and the Sprott Physical Silver Trust (PSLV) are doing (those are ZeroHedge readers’ preferred alternatives to the SPDR Gold Trust (GLD) and iShares Silver Trust (SLV)). I think of this as a sanity check: maybe gold and silver have finally taken off and I’ve missed it?
Alas, not. As of Tuesday’s close, PHYS was up 1.03% on the day, and down 9.96% over the last twelve months; PSLV was up 1.79% on the day and down a brutal 19.02% over the past year.
Taking The Other Side
As I mentioned in a post last month (“Betting Against Gold Miners“), the Direxion Daily Gold Miners Index Bear 2X Shares (DUST), a leveraged bet against gold miners, appeared in our top ten names then, in part due to a new factor we added to our selection process over the summer. That new factor is based on historical data we’ve been tracking which shows that, all else equal, securities that underperformed over the last week and month relative to their historic averages, outperform ones that did well over the most recent week and month. Although DUST was up 11.33% YTD when it hit our top names last month, it was still down more than 14% over the most recent week and month as of then.
Since then, DUST was up a modest 2.76% as of Tuesday’s close, though our top ten names from October 5th were up 10.27% on average, versus the market-tracking SPDR S&P 500 Trust ETF (SPY), which was up 1.97% over the same time frame.
On Tuesday, DUST was again one of our site’s top ten names, so we’re still bearish on gold miners along with a couple of other sectors. We’ll see how precious metals react to the Fed meeting on Wednesday. Let’s close with a quick update on a previous post.
YPF Sociedad Anónima
In September, I wrote that I had purchased $7 strike January calls on the Argentine oil & gas company YPF Sociedad Anónima (YPF).
With YPF closing at $8.26 on Tuesday, those $7 strike puts were up 60% from their September 15th price.
As I mentioned recently, I’m going to start a site where you can follow these trades in real time, if you want. This won’t be a “newsletter”: it will be real time notification of actionable trades I’m making with my own money. It will be free for current subscribers to the Portfolio Armor website or in-app subscriptions within our iPhone app, and I’ll keep it inexpensive for everyone else. If you’d like an alert when it launches, you can sign up for our occasional email list below.
Wednesday Evening Update
As we said yesterday, the Fed doesn’t care about the midterms.
Chairman Powell demonstrated that with his comments today, which caused the market to tank into the close.
And DUST closed up 11% on the day.
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