WASHINGTON, July 15, 2014 – Despite Thursday’s late evening terrorist massacre in Nice—yet another reminder that today’s Western socialist elites are increasingly ruling like France’s Louis XVI—gold and silver, those well-known hedges against war and political disaster, are down in Friday trading, with gold taking by far the worst hit. Oddly, crude oil, which took a nasty hit in Thursday trading, recovered a bit in Friday’s trade.
By no means are we attempting to diminish the tragedy and heartbreak of the French people, especially those 80+ individuals who were viciously slaughtered by the most recent Islamofascist crusader. But we do wish to highlight here the severe disconnect and dislocation evident in major world markets.
From time immemorial, gold and to some extent silver have been seen as stores of value and hedges against disaster, political and otherwise. Ergo, gold should have gone up hugely this morning, but instead, it tanked. This seems to the Maven to be proof positive that the precious metals markets continue to be manipulated by central banks eager to keep a lid on the price of gold and its friends, the better to control their own wealth as well as public perception.
From a financial perspective, disconnecting gold from Thursday’s horrendous violence is not much different from the Obama administration’s touting of America’s alleged 4.9 percent unemployment rate, which is an out-and-out lie of at least 5 percent if not more. And it’s not much different from Obama and Europe’s absolute refusal to protect their own people from a relentless tide of barbarian monsters that always reminds me of those surging zombie hordes in the film “World War Z.”
The fact that gold is not undertaking its traditional role at such times offers further proof that Western governments are betraying their own people by offering them not solutions but smoke and mirrors. As the summer unfolds, this is likely to make markets even more treacherous as even traditional stores of value are losing credibility by being as badly gamed as are current stock and bond markets.
It’s a gloomy reality, but there you have it. Nothing much more to say, other than our hearts and prayers go out, one more time, to the French people. Having experienced senseless tragedy once again, largely due to greed and blundering of their feckless academics and political elites who care little for the electorate, we hope that they, along with the rest of the West finally stand up and oust those who have utterly destroyed their way of life. The Brits have already accomplished this. America itself will have its own turn at redemption this November. Let’s hope that the average citizen finally sees the light and ignores the universally faulty narrative that’s got us heading for an instant replay of the Dark Ages.
Reluctantly, the Maven is dialing back a bit on a large position we’ve been holding in the hapless Teekay Tankers (symbol: TNK). It’s clear that the shorts have been back at their game since yesterday, waiting for a nice rally in the stock to spike it back down to where it was last week and perhaps below.
Management of the company actually appears to be doing a decent job deleveraging and improving cash flow even though rates for tankers have eroded somewhat across the board in recent months. But if the most recent quarter’s earnings come in even slightly below par, the shorts will have at it again, sending this already cheap stock right into penny stock territory ($1 or less) which is a place the Maven, at his advanced age, does not want to be.
On the other hand, most of the rest of our portfolio is doing quite decently, and our triple play of management company/vulture capitalists—Blackstone (BX), Carlyle (CG) and KKR (KKR) are hanging in there with some of the bankers, with our position in BX now back up 1.6 percent, yo-yoing Carlyle bouncing back up about 1.15 percent, and somewhat battered KKR off a mere 0.1 percent, at least as of 3:30 p.m. EDT.
As we noted earlier, today is options expiration for the month of July, and it’s probably too nutty and too unreliable to do much on a day like this one.
Nonetheless, holding a bit potential gain in our silver ETF (SIVR), we’ve been holding a trailing stop order for the last several days, just in case the ETF gets hit while we’re out on a bathroom break. (It happens.)
With our brokerage firm, we can put the trailing stop in as a “bracket order,” which is jargon for the fact that our secret stop number can NOT be seen by the hedgiest or the HFT computers, both of which love to pick these orders off from little guys’ accounts on days like today. Thus, we have at least one tactic for protecting our positions from “easy pickin’s” by the crooks who make money this way. If your brokerage doesn’t offer a similar way to make your stop order invisible, do be forewarned that you could get picked off at a low price while you’re at MickeyD’s (MCD) and then come back home furious to find your holding has gone back up 10, 20 or 30 cents. As we already indicated above, it’s a nasty world out there. But the Maven will try to help.
Have a good weekend.