So I think now of all times this is a good time to have a large allocation to metals, really for the first time in many years. — Jared Dilllian, The Daily Dirtnap, August 1, 2018.
Dillian publishes his commentary for stock traders. He often makes recommendations on sentiment, meaning that when the sentiment is overwhelmingly negative he looks closely at the situation. That’s where he is now on precious metals.
A few pertinent comments from his August 1, 2018 issue:
* The one really pleasurable thing about a precious metals bull market is going to be the complete humiliation of the irrational gold haters, which there are many.
*. . . I start getting bullish on stuff right when the price action is at its most awful, when it seems like all hope is lost. (That pretty much lays out the sentiment for precious metals.)
* Gold, and silver, and platinum, and palladium will go higher, in varying degrees. It may not happen today or next week or next month, but it will happen soon.
Dillian goes on to say that people usually get bullish on gold because of outlandish economic policies. He notes that when Obama won in 2008, gold went straight up. When Trump and Bernie were exchanging verbal volleys in the 2016 campaign, gold got a big bump. And, that gold went up in the 2000s during Bush’s “compassionate conservativism,” which employed deficits and gave us the prescription drug benefit, a costly program. (Investors paid attention to deficits in those days, but not today.)
He further notes that we now have tariffs, and huge quarterly deficits are getting revised higher all the time, which means tax revenues are falling short of expectations. As noted in Zimbabwe, a road too often traveled, interest alone on the national debt is projected to hit $1.3 trillion in 2022, only four years out.
Dillian also asks: So why isn’t everyone bullish on gold? Because of the seven years of abuse. Because of the price action, which you got from the toilet store.
Finally, Dillian says something that I’ve long thought: that the top in 2011 was an intermediate top, the prelude to a much higher high sometime in the future.
For more information on The Daily Dirtnap, visit http://www.dailydirtnap.com/.
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