RICKARD SANTELLI: CENTRAL BANKS ARE THE PROBLEM

On this genteel Friday morning, ahead of an insane weekend of Americans blowing off their faces with Chinese firecrackers, in celebration of our independence away from the wig wearing assholes in England, I offer you RICKARD SANTELLI, destroyer of central banks, arc antagonist of the elite, worldwide.

The yellow metal, as some idiots call it, has been surging all year long, even more so since BREXIT. Year to date, GLD is higher by 26%. The gold stocks tracked in Exodus are higher by 145% on a median basis–FOR THE YEAR. That’s not a typo.

Even the biggest capped stocks are ripping. ABX has a cap of $24 billion and is higher by 198% for the year.

All of this is because central banks have gone literally infuckingsane, with their perverted distortions of reality, endless bailouts and a means to destroy every currency on the planet. Granted, the money being created is being sequestered in a very small area of the market, which only benefits the ultra elite. Maybe that’s why inflation for the very rich is running upwards of a 10% clip, while everyone else is staggered in the deflationary vortex?

Just a thought.

Seasonally speaking, July is a weak month for gold, down 55% of the time for an average loss of 1.854%. Next to October, this is the worst time to buy gold, which is why I like it.

In an Alice in Wonderland world where up is down and down is up, I like my chances long this ancient currency into what many expect to be a runaway market rally.

On a valuation basis, the median p/s ratio for the gold miners is 2.97x, almost triple that of 2014. However, if we look towards the high end of the range, set back in 2006-2009, stocks can run another 100% before they’re considered expensive again, on a price to sales basis.

Again, data provided by the indomitable Exodus.

In Exodus, there is a seasonality engine that spits out all sorts of interesting facts, like TQQQ (triple upside NASDAQ) has never traded down during the month of July.

Also, out of 31 years being publicly traded, AMGN has a 77.42% win rate during the month of July, for an average return of +6.82%. Both UA and BIDU sport 11%+ returns in July and China seems to bode well, up 9 out of the last 11 years.

On the downside, both CI and AMD are cursed during July, lower in more than 75% of the time–spanning 33 and 34 years, respectively. If you’re long CI, you’ve done well. If you’ve avoided holding CI during July, you’ve done better.

Some stocks have never gone up in July, such as ADXS, ANGI, HHC, JIVE and of course SQQQ. It’s also a dreadful time to bet against REITs, with DRV sporting a -10.65% return in July.

All in all, July is a respite, in an otherwise unremarkable time for stocks.

It goes without saying, all of these things could fail to occur this month, during this year. That’s how averages are built. But the probabilities point towards a somewhat sanguine market.

Europe intends to liberalize their QE program to switch from buying bonds in the largest economy to the most indebted. This would switch much of the $90 bill or so in monthly appropriations to Italy and Spain and away from Germany.

The second quarter ended. But we’re getting more of the same, large swaths of money chasing yield. I equate these people to zombies, because there’s no rationale behind buying a 1% Spanish or Italian bond, let along a negative yielding Japanese or German. Out of all the western nations, America has the highest yielding government bonds, which is why I am long TLT in size.

These are all record low yields, all due to the creation of money, out of thin air, which is then tossed into the bond market like zombies running after people for their brains.

In case some of you are new to this investing game, let me describe QE in simple terms. Europe has a lot of expenses, so they issue bonds to people, offering a yield to lure them into the fold, sort of like when you took out a mortgage for your home. But instead of waiting for someone to buy their bonds, they create money, out of thin air, and buy the bonds themselves. Yes, they’re literally financing their own debt. This intervention in the bond market is the reason why yields keep plunging, as ordinary investors front run scheduled monthly purchases of debt by central banks.

This is the definition of perversion of economics, a Frankenstonian experiment destined to blow up in our faces.

Hao Zhou was talking extra greasy tonight about the great walled nation of China. He better be careful, otherwise a mobile execution van might accidentally visit him while visiting family, or holiday in Beijing. Zhou is woefully disappointed in private investment in China, which is virtually non-existent. I gather from the words streaming out of his mouth, he’d like China to take a more western approach to fixing ailing economies, such as creating money out of thin air and then taking said dollars and tossing them at the bond and stock markets.

This is the way of the future, the way of the future (extra Howard Hughes).