Bull Exhausted, Will Soon Lay Down, Savvy Money Turns to Gold

Bull Exhausted, Will Soon Lay Down, Savvy Money Turns to Gold

Bull Exhausted, Will Soon Lay Down, Savvy Money Turns to Gold

$DIA, $SPY, $QQQ, $GLD, $VXX

Stan Druckenmiller, the billionaire investor with one of the best long-term track records in money management, says the Bull market has “exhausted itself” and that Gold is his largest currency allocation.

Mr. Druckenmiller, speaking at the Sohn Investment Conference in New York Wednesday, said while he has been critical of the US Fed’s monetary policy for the last 3 years he expected it would lead to higher asset prices.

“I now feel the weight of the evidence has shifted the other way; higher valuations, 3 more years of unproductive corporate behavior, limits to further easing and excessive borrowing from the future suggest that the Bull market is exhausting itself,” said Mr. Druckenmiller, who averaged annual returns of 30% from Y 1986 through Y 2010 at his Duquesne Capital Management.

As bankers experiment with “the absurd notion of negative interest rates,” Mr. Druckenmiller said, he is buying Gold.

“Some regard it as a metal, we regard it as a currency and it remains our largest currency allocation.” he said.

Mr. Druckenmiller said “volatility in global equity markets over the past year, which often precedes a major trend change, suggests that their risk/reward is negative without substantially lower prices and/or structural reform. Do not hold your breath for the latter.”

Commentary

After 4 months of trading, “risk-off” investment strategies like Gold, bonds and utilities stocks continue to outperform “risk-on” stock market investments. Monday, COMEX Gold traded above 1,300 oz for the 1st time since January 2015.

Y 2016 started strong driving precious metals North, Gold and Silver both rose 21.9% and 27.4%, respectively YTD.

The demand for paper Gold, including the SPDR Gold Shares (NYSEArca:GLD) rose significantly and is + 21.5% YTD.

GMFS reports estimated that Gold purchased through ETFs rose to 330 tons during Q-1 of Y 2016. The figure is almost 10X higher than the 36 tons of paper Gold demanded in Q-1 of y 2015.

HeffX-LTN is overall Bullish Gold in here.

Wednesday, the US major stock market indexes finished at: DJIA -104.85 at 17646.06, NAS Comp -35.35 at 4727.87, S&P 500 -12.84 at 2050.53

Volume: Trade was above average with 972-M/shares exchanged on the NYSE

  • NAS Comp -5.6% YTD
  • Russell 2000 -2.0% YTD
  • S&P 500 +0.4% YTD
  • DJIA +1.3% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Neutral (0.20) Neutral (0.06) Neutral (0.11) Bullish (0.42)
HeffX-LTN Analysis for SPY:  Overall Short Intermediate Long
Neutral (0.20) Neutral (-0.05) Neutral (0.18) Bullish (0.47)
HeffX-LTN Analysis for QQQ:  Overall Short Intermediate Long
Neutral (-0.11) Neutral (-0.23) Neutral (-0.24) Neutral (0.14)
HeffX-LTN Analysis for VXX:  Overall Short Intermediate Long
Bearish (-0.36) Neutral (-0.17) Bearish (-0.41) Very Bearish (-0.50)

Stay tuned…

Paul Ebeling

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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