Markets

From betting shop to stock exchange

Dear readers,

A few weeks ago, the US discount brokers reported a sharp increase in the number of deposit openings. The customers behind it are apparently newcomers to the stock exchange. You can tell that from the fact that they spend a lot of time with online introductory material that provides the basic knowledge about stocks. The Financial Times took a closer look at this phenomenon, which evokes memories of the end phase of the new market, and came to the following conclusion:

Stock speculation replaces sports betting

“Players who can no longer conclude sports betting because the game has been discontinued have flocked to the US stock exchange. They form a new customer class of online brokers and drive the courses. “

While newcomers flood the market with buy orders, old master Warren Buffett is extremely bearish by his standards and holds a record-high proportion of cash. What we are experiencing here is the modern variant of the proverbial milk girl boom. Like its old-fashioned predecessors, it won’t end well.

Crashing corporate profits

Driven by this new speculator class, share prices have partially recovered significantly, despite the real economic horror reports that confirm the start of a very severe recession. At the moment, the central banks, with their flood of money and their market manipulations, have succeeded in decoupling the financial markets from real economic developments and pumping up huge speculative bubbles. You have literally turned the exchange into a casino.

The combination of rising prices and slumping corporate earnings has led to the fundamental overvaluation of the US stock exchange reaching new records, higher than in February this year or at the peaks of 2000 and 1929.

Extreme values ​​on the option markets

The option markets represent a particularly speculative segment. The indicators of various put-call ratios based on them have given stronger warning signals in recent days than at the February high – even though the share prices are more or less significantly lower than at that time. This development, as well as numerous other technical analysis indicators, indicates that the upward movement that started in March on the stock markets is only a bear market rally, which is now in its final phase.

For gold new short-term price target $ 2,000

The situation for precious metals is very different from that of the general stock markets. As you can see on the following chart, the gold price broke through the resistance zone at around $ 1,700 an ounce in April and rose to an annual high. Since then he has consolidated at this level.

Gold price per ounce in $, 2019 to 2020

The surge above the resistance at $ 1,700 an ounce was followed by consolidation in the form of a bullish triangle. The entire formation has a target price of $ 2,000 to $ 2,050 an ounce.

Source: StockCharts.com

A bullish triangle has emerged, which I interpret as a springboard for the breakout across the $ 1,800 resistance zone. This formation results in a price target of $ 2,000 to $ 2,050 an ounce.

The consolidation has now been going on for six weeks and has led to a significant decline in sentiment indicators. Sentiment indicators for the gold ETF, which is traded in the USA and by far the largest, are now at a level that signals a buying opportunity. This also applies to the largest gold mining ETF.

Don’t miss out on opportunities in the precious metals sector

Our gold and silver mine favorites suggest high price gains. Precisely because the general US stock markets are extremely overvalued, you should get involved in the precious metals markets. Invest crisis-proof with our stock exchange letter and our gold mine depot, Roland Leuschel and I would be happy to assist you. Test crisis-proof investing for 30 days free of charge.

I wish you a nice weekend,

your

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Claus Vogt, editor-in-chief, crisis-proof investing

P.S .: Do you already know the new and up-to-date book by Roland Leuschel and me? “The Wealth Destroyers – How To Get Your Wealth Despite Zero Interest Rates, Currency Devaluation And State Bankruptcies”.

P.P.S .: If you want to get through this crisis safely every week, please request the free Claus Vogt market comment here today easily with your email.

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