Thursday, October 30, 2014

Good Day For Silver Puts

This chart "looks like" it is going to about $10/oz which, coincidentally, is about the cash cost of silver.


Stagflationary Mark said...

On a monthly basis, and in inflation adjusted terms, the gold bubble peaked on the 10 year anniversary of 9/11 (Sep 2011). I doubt that's a coincidence!

St. Louis Fed: Custom Chart

As an owner of gold and silver from 2004 to 2006, I have absolutely no desire to buy either back at anywhere near these prices.

I will be doing another post on this in the not too distant future, but I thought I'd give you a preview. There don't seem to be many of us who...

1. Think long-term treasuries have value even with "low" yields.
2. Think buying gold or silver is very risky at these prices.

There might just be two of us. Hey, at least nobody can accuse us of herd mentality. ;)

Stagflationary Mark said...

Put another way, since I'm retired and therefore value safety more than most, I have no desire to invest in anything right after it experiences a serious exponential trend failure.

That is *not* a safe environment for the "buy the dip" crowd.

There have been an amazing number of exponential trend failures in the last decade or so. Watching them has been a hobby of mine since starting my blog in 2007. Gold and silver aren't special. They are just two of the latest victims.

Nonstore retail sales might be next.

StNonstore Retail Sales Analysis: The Das Boot Edition

Amazon warned of weaker Christmas revenue. Few seem to care. Go figure.

I bring it up because we also seem to be among the few who think deflation can happen during ZIRP.

CP said...

Yes, you could've called your blog "Exponential Trend Failure".

By the way, most investors still think that equity markets are in an exponential trend (growing at a perpetual compound rate of return). We'll see whether economics trumps physics.

Stagflationary Mark said...


Not surprisingly perhaps, my bet's on physics. Sigh.

whydibuy said...


Now back to your regularly scheduled falling sky bear commentary.

Anonymous said...

Whydibuy never adds any value. Never a mention of an attractive long idea in this market that he claims is so undervalued. Even his "criticism" is lame, rah rah, sports-fan style boosting.

Stagflationary Mark said...


Now back to your regularly scheduled falling sky bear commentary.

Well, if you insist.

November 1, 2014
Exponential Trend Failure(s) of the Day: Real Corporate Dividends (Musical Tribute)

The following chart shows government social benefits to persons divided by corporate dividends.


It was nip and tuck there for awhile, but I think we've finally permanently removed ourselves from the long-term exponential trend channel! We're out! We're back in! We're out again! Fortunately, complete failure was an option! And as seen in the first chart, we have the real corporate dividend bubble popping yet again to thank. Isn't that fantastic? Of course, an honorable mention also goes to this "strong" and "sustainable" recovery that will drive long-term interest rates ever higher!

whydibuy said...

ANON, my long experience with the market has shown me that the best position to be in is long in a S&P fund. Since almost none of you experts can beat it, it fits nicely with the axiom of if you can't beat'em, join'em.
Its not that complicated.

As for value added ideas, most investors en up getting their head handed to them with their keen insights.

Stagflationary Mark said...


ANON, my long experience with the market has shown me that the best position to be in is long in a S&P fund.

Long experience? Here's what you wrote in the comments of my blog.

Every Year we read about some predictions for a bad Christmas for retail and then in Jan the story always changes to sales were just fine.
Rinse, wash, repeat.
Every single year that I can remember.

Emphasis added.

If you have such a "long experience", then how come you cannot remember the Great Recession?

To be fair, you did elaborate.

Every year I can remember in my lifetime.
Hint: I'm not a toddler.

There, I've edited my post to help in your reading comprehension.

That certainly cleared things up, lol.

Stagflationary Mark said...


It is not my intent to permanently heckle you by the way.

I have definitely not attempted to prosper off the economy's decline. I have never shorted a stock. I do own long-term treasuries and I-Bonds based on my belief that our weakened economy could not support higher real yields though, and thank goodness I did.

The first sentence on my blog says it all.

"I live in the USA and I am concerned about the future."

I've been supporting my unemployed girlfriend since the Great Recession. I have nothing to gain from a collapsing economy. I assure you of that. Things aren't well though and all it takes is a close look at this country's many recent exponential trend failures to see it.

Take these for example.

March 21, 2012
The 5 Charts I Shared with My Tax Preparer

She never tried to talk me out of being bearish after that. Further, she asked if she could keep the printed copies. Go figure.

Stagflationary Mark said...

One more thought.

I honestly hope that I am wrong to be bearish on our economy.

The only way that I can be financially ruined is if things get worse than even I think.

It would mean that all my long-term investments in long-term inflation protected treasuries and I-Bonds ruined me.

There are only two ways that can happen.

1. Inflation is so bad that the taxes ruin me.

2. The country goes downhill so fast that it defaults on its debt.

Of course, if I am financially ruined so will everyone else. The same cannot be said of stock market investors. I am not necessarily ruined if they are ruined. As a treasury bond investor, I do not rely on stock investors. Stock market investors rely on me. You therefore better hope that I am not financially ruined, because if I am then I will not be going alone. Sigh.

whydibuy said...

Mark, you use the couple outlier Christmases that had a minor dip in sales due to a minor economic slowdown. I, on the other hand take Christmases in the long term where sales tend to increase year by year. The long term trend is up and I like to play the odds and those odds say Christmas will be just fine. I don't fixated myself on those couple that actually had lower sales. As they would say those had insignificant statistical meaning.

As for the moniker "great recession" it was a 9 month slowdown that was recovering already by spring of '09. Those that stayed the course made all their S&P investments back and are nicely ahead. More like just another recession to me. "Great" is you trying to hype it.

BTW, what happened to your value added call about the economy being in a recession by the fall of '14??
Looks like is growing to me. OOOOPS.
And what about CP's call about a , what was it, 50 week moving ave break that portended a huge pull back? OOOOPS.

Stagflationary Mark said...


BTW, what happened to your value added call about the economy being in a recession by the fall of '14??

We actually don't know yet. Most recessions aren't discovered until long after the fact.

February 11, 2008
Fed's Poole says U.S. likely to avoid recession

"I think the best bet is that we will not have a recession," he said in response to questions after a speech to the St. Louis chapter of the National Association for Business Economics.

In hindsight, that was two months after the recession officially began. Go figure.

That said, I would agree that my original prediction's odds have been lowered.

I never acted on my prediction. I'm not a short-term speculator. I therefore never base my investment decisions on timing.

I owned long-term TIPS and I-Bonds when I made that prediction. I intended to hold to maturity. I still own them. Nothing has changed for me. That includes my long-term opinion of the economy.

Also keep this in mind. As bearish as I am, I still own US government debt. I won't be leaving the country. There are no thoughts of bribing a border guard someday to escape to China. Let's just put it that way. As of 2006, I don't even own gold or silver.

"Great" is not me trying to hype the recession. It was the worst recession since the Great Depression. I am not the one who named it.

Great Recession

The Great Recession is a term used to describe the general economic decline observed in world markets around the end of the first decade of the 21st century.

You also might want to look at this.

Real Median Household Income

That is not an insignificant amount of damage and it has not recovered, at least not yet.

What is and has been my biggest concern? What's going to happen if we slide into the next recession (whenever it happens) while we are still stuck in ZIRP? That's a game changer and heaven help you if you think it isn't.

Don't you think it is at least a little bit ironic that CP's post is heckling the ownership of silver and you are here heckling the bears? Perhaps all bears are not the same.

In any event, as I stated previously, I hope I am wrong to be a permabear. It is my best possible outcome for that to be the case.

The last thing I want to see is horrible real yields on treasuries when my long-term bonds mature. Since I'm holding to maturity, I root for higher real yields in the future and that can only come from a truly healthy and robust economy.

So on that note, good luck to both of us (and I mean that). May the economy grow in wondrous ways that I cannot even being to fathom (over full business cycles going forward). I'm just not going to hold my breath awaiting that outcome.

CP said...

Mark is indeed correct when he points out that stock owners have two ways to lose (deflation OR actual economic recovery with higher interest rates) while bond owners only have one.

Stagflationary Mark said...


Put another way:

1. Stock market bulls should *always* be very worried about a treasury bond bubble bursting.

2. Treasury bond market bulls *rarely* need to worry about a stock market bubble bursting.

As a long-term treasury market bull over the long-term, smarter stock market bulls should therefore root for my continued success and spend less time trying to convince me to dump bonds.

Just a thought! ;)

CP said...


CP said...