VRA Investment Update: Overbought Conditions Wearing Off. Year of the Bull Market. The One Group That MUST Be Owned.

Good Friday morning all. Over the last 3 trading sessions the Dow Jones has lost close to 1300 points, giving up its gains to date for 2023. If our read is right on the markets for this year, this is about the time when we should begin to see reversal action higher. Headed into last Friday the rubber band simply stretched too far…we hit extreme overbought…as the move higher from the 10/13/22 capitulation lows took the markets to extended readings. 

VRA Bottom Line; Our views are unchanged from the 10/13 capitulation lows; the dollar, interest rates and inflation have all peaked and US stock markets have bottomed. We will continue to use pullbacks to add to positions.

Too many people flipped from bearish to bullish, pretty much at the same time and Mr. Markets primary job is to make the maximum number of people feel foolish, losing money in the process. Investor sentiment combined with readings of our VRA momentum oscillators are an important duo.  

We’ll be using this OB pause to add to positions. I doubt that the pause in our new bull market will last long. 

Thanks as always to our great friend Wayne Allyn Root for having me on his top-ranked show last night. 

Here are the talking points I used:

1) This is the year of the Bull Market (best analytics of my career to back it up)

2) How do we know the Federal Reserve is lying to us….their lips are moving….and the bond market is screaming “lower rates, “recession within a year" and “more QE”. 

3) The one investment that must be owned, featuring one of my favorite technical buy signals: we just got "Golden Cross Buy Signals" in gold, silver and the miners. Huge buy signal. 

You can watch the full show here

The analytics could hardly be more clear. The post midterm-election year is extraordinarily bullish with gains of 24.1% since 1950 with the markets higher 18/18 times. And this is just one piece of analytics that point to a high-powered year for stocks. Combined with readings of the VRA Investing System and investor sentiment that continues to flash some of the biggest buy signals of my career (contrarian buy signals from deeply bearish sentiment), we will continue to use pullbacks to add to our positions. 

Latest From The Federal Reserve

As you’ve heard us say often the Fed is, once again, over their skis…and the markets know it. 

We no longer have inflation…we have deflation. 

And here’s the ongoing proof; the 10 year yield continues to collapse, now with a yield of just 3.49%. Remember, just 3 months ago the 10 year yield was 4.33%. This is a stunning, short term collapse of over 20%. By year end I see the 10 year with a 2 handle. By 2025-2026 it’s likely that we’ll have negative rates in the U.S. 

Our biggest risk?? That the Fed keeps tightening into a rapidly slowing US economy. That’s why the markets are going down (along with our extreme OB readings). We’ve all seen the Fed’s propensity to break sh*t. 

#EndTheFed

The Fed never leads. They only follow. And the Fed will follow the bond market and make a full and complete pivot, ultimately cutting rates by year end. That’s my call.

Gold, Silver and Miners: Here Comes the Biggest Bull Market Since 2003-2011

I first recommend gold and silver in my second-ever VRA Letter in 2003. Gold was $375/oz and silver was $4.75/oz. We also had a buy rec on Newmont Mines (this was before ETF’s) and this was also the time frame when I first started recommending Vista Gold, Ivanhoe Mines (Ivanhoe became Turquoise Hill, which we just booked 170% profits as RIO acquired them) along with other gold/silver miners/ETF’s. 

The set-up today compared to 2003-2011 is more than just a little intriguing. The Fed hiked rates 17 straight times during this time frame (2004-2006)…we’re of course seeing similar action from the Fed now. Most investors mistakenly believe that rate hikes are a negative for PM’s and miners but the charts below prove otherwise. 

Gold, in particular, is an amazing discounting mechanism. From 2003 on, gold was sniffing out what would soon follow, as the Fed hiked rates irresponsibly and then crashed the system into the financial crisis. Gold knew what was coming all along as it ultimately rose from the $300 range to its 2011 peak of $1923.70, for a stunning increase of 420%.  

Below we see the move higher in the miners, through this chart of GDM (Gold Miners Index), as the miners rose more than 360%. 
What we also see below is the impact of the financial crash on the miners in 2008…we must never forget that miners are publicly traded stocks as well, and get hit right along with other stocks. 
But what a remarkable buying opp at those 2008 lows. From those lows the miners soared 300% in just 3 years.  

We are long and strong this group now and will make fortunes in gold mining stocks and of course physical gold and silver (Visit VRAinsider.com.com to view our portfolio). We’ll soon have a new buy rec in this space to replace TRQ. Just know that, yes, this group is hitting extreme overbought on the VRA System. It’s a (short term) quandary we must deal with. 
 

Until next time, thanks again for reading. Have a good weekend. 

Kip

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