S&P 500

Numismatic News: ‘Precious Metals, On Average, Have Outperformed U.S. Stocks Since The End Of 1999’

“Past performance is not indicative of future results.” That being said, I spotted the following over on the Numismatic News website tonight. Pat Heller reported Thursday:

While much attention is now focused on U.S. stock indices reaching record levels, only a handful of people are aware that precious metals, on average, have outperformed U.S. stocks since the end of 1999.

As measured in U.S. dollars, here are how various asset classes have performed from Dec. 31, 1999, to Dec. 30, 2016

Gold +299.0%
Silver +193.5%
Russell 2000 +168.9%
MS-63 $20 Saint-Gaudens +147.9%
MS-63 $20 Liberty +139.8%
Platinum +111.5%
Dow Jones Industrial Average +71.9%
Switzerland Franc +56.4%
MS-65 Morgan dollar +54.4%
Palladium +54.1%
Standard & Poors 500 +52.4%
NASDAQ +32.3%
China yuan +19.2%
Australia dollar +9.8%
Canada dollar +8.2%
Euro +4.5%
Japan yen -12.7%
Great Britain pound -23.6%
Brazil real -44.3%
Mexico peso -54.3%
South Africa rand -55.0%…

(Editor’s note: Bold added for emphasis)

Interesting. Note the performance of numismatic coins ($20 Saint-Gaudens, $20 Liberty, Morgan dollar) in that list.

The inclusion of “MS-65 $20 Saint-Gaudens”- popular with numismatic gold investors- in the analysis would have been neat to see.

I just blogged about a MarketWatch piece on rare coin investing this Tuesday, which pointed out:

Between 1979 and 2014, the most recent year for which data is available, coins with a minimum score of 65 posted an average annual return of 11.9%, according to a study by Penn State University. That’s near the average annual return of 13% posted by equities and more than twice the 5.5% average annual gain of gold bullion. Coins with a lower score, between 63 and 65, had an average annual return of 10.1%.

(Editor’s note: Bold added for emphasis)

Getting back to that Numismatic News piece, Heller also discussed long-term performance of some major currencies against an ounce of gold and recent demand for precious metals. An informative article, which you can read in its entirety on the publication’s website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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Jeremy Grantham: ‘Still No Signs Of An Equity Bubble About To Break’

Right before the weekend, Jeremy Grantham, the British-born investment strategist and founder/former chairman of Grantham, Mayo, Van Otterloo & Co. (currently overseeing $99 billion in client assets), penned an article on the Barron’s website entitled “Jeremy Grantham Warns on Immigration, Brexit.” As part of this piece Grantham, whose individual clients have included former U.S. Vice President Dick Cheney and U.S. Secretary of State John Kerry, talked about U.S. stock prices. He wrote:

Despite brutal and widespread asset overpricing, there are still no signs of an equity bubble about to break, indeed cash reserves and other signs of bearishness are weirdly high.

In my opinion, the economy still has some spare capacity to grow moderately for a while. All the great market declines of modern times- 1972, 2000, and 2007- that went down at least 50% were preceded by great optimism as well as high prices. We can have an ordinary bear market of 10% or 20% but a serious decline still seems unlikely in my opinion. Now if we could just have a breakout rally to over 2300 on the S&P 500 and a bit of towel throwing by the bears, things could change. (2300 is our statistical definition of a bubble threshold.) But for now I believe the best bet is still that the U.S. market will hang in or better, at least through the election

(Editor’s note: Bold added for emphasis)

“2300 is our statistical definition of a bubble threshold”

2,300 on the S&P 500 was the same bubble threshold Grantham indicated in his last quarterly investment newsletter contribution. He wrote in May:

2) that we are unlikely, given the beliefs and practices of the U.S. Fed, to end this cycle without a bubble in the U.S. equity market or, perish the thought, in a repeat of the U.S. housing bubble; 3) the threshold for a bubble level for the U.S. market is about 2300 on the S&P 500, about 10% above current levels, and would normally require a substantially more bullish tone on the part of both individual and institutional investors; 4) it continues to seem unlikely to me that this current equity cycle will top out before the election and perhaps it will last considerably longer…

As I type this Monday afternoon, the S&P 500 stands at 2,167.

An interesting article by Grantham, which you can read in its entirety here on the Barron’s website.

By the way, I noticed there’s a comment attached to that piece from “Christopher Hill.” That is not from me.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; a qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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Jeremy Grantham Made Commander Of The Order Of The British Empire

Jeremy Grantham, the British-born investment strategist and founder/former chairman of Grantham, Mayo, Van Otterloo & Co. (currently oversees $99 billion in client assets), was recently made a Commander of the Most Excellent Order of the British Empire by Britain’s Queen Elizabeth II.

Grantham, whose individual clients have included former U.S. Vice President Dick Cheney and U.S. Secretary of State John Kerry, was awarded the CBE for his philanthropic service.

Regular readers may recall that the last time I blogged about the “crash prophet” (May 12), he warned about U.S. stock prices (“the threshold for a bubble level for the U.S. market is about 2300 on the S&P 500”) and housing prices (“in 12 to 24 months U.S. house prices – much more dangerous than inflated stock prices in my opinion – might beat the U.S. equity market in the race to cause the next financial crisis”).

Survival And Prosperity would like to congratulate Mr. Grantham on his CBE.

Christopher E. Hill
Editor

(Editor’s notes: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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Jeremy Grantham: ‘U.S. Market Will Rally Once Again To Become A Fully-Fledged Bubble Before It Breaks’

Last week, I blogged about the latest quarterly investment letter from “crash prophet” Jeremy Grantham, the British-born investment strategist and founder/former chairman of Grantham, Mayo, Van Otterloo & Co. (currently oversees $104 billion in client assets). While it was an interesting read, I noted that I was a little disappointed that Grantham, whose individual clients have included former U.S. Vice President Dick Cheney and U.S. Secretary of State John Kerry, didn’t talk about two themes he’d brought up in recent newsletters. I wrote:

Two things I’m dying to know from Mr. Grantham right now:

1. Does he still expect “the stock market to continue to march higher in the coming year, eventually sucking in retail investors and setting up a serious decline around the time of the US elections in late 2016”?

2. Does he/GMO “still believe that bubble territory for the S&P 500 is about 2250”? The S&P was really marching towards 2,250 for a while before the index went south.

Last night, I saw that Grantham penned a piece on the Barron’s website that answered those questions (for the most part). From the article:

Looking to 2016, we can agree that uncertainties are above average. But I think the global economy and the U.S. in particular will do better than the bears believe it will because they appear to underestimate the slow-burning but huge positive of much-reduced resource prices in the U.S. and the availability of capacity both in labor and machinery. So even though I believe our trend line growth capability is only 1.5%, our spare capacity and lower input prices make 2.5% quite attainable for this year. And growth at this level would make a major market break unlikely. As discussed elsewhere, this situation feels at worst like an ordinary bear market lasting a few months and not like a major collapse. That, I think, will come later after the final ingredients of a major bubble fall into place

(Editor’s note: Bold added for emphasis)

Concerning the U.S. stock market, Grantham wrote:

The U.S. equity market, although not in bubble territory, is very overpriced (+50% to 60%) and the outlook for fixed income is dismal… I still believe that, with the help of the Fed and its allies, the U.S. market will rally once again to become a fully-fledged bubble before it breaks. That is, after all, the logical outcome of a Fed policy that stimulates and overestimates some more until, finally, some strut in the complicated economic structure snaps. Good luck in 2016…

(Editor’s note: Bold added for emphasis)

In the section entitled “U.S. equity bubble update,” he added:

On the evaluation front, the market is not quite expensive enough to deserve the bubble title. We at GMO have defined a bubble as a 2-standard-deviation event (2-sigma). We believe that all great investment bubbles reached that level and market events that fell short of 2-sigma did not feel like the real thing. (In our view, 2008 was preceded by an unprecedented U.S. housing bubble – a 3-sigma event.)

Today a 2-sigma U.S. equity market would be at or around 2300 on the S&P, requiring a rally of over 20%; even from the previous record daily high it would have required an 8% rally…

On the more touchy-feely level of psychological and technical measures, the U.S. market came closer to bubble status but, still, I think, no cigar

(Editor’s note: Bold added for emphasis)

So to answer my two questions from last week:

1. Grantham believes U.S. stocks will rally once again to become a bubble (no mention of “a serious decline around the time of the US elections in late 2016” though).

2. He also believes bubble-territory for the S&P 500 is no longer 2,250, but a tad higher “at or around 2,300.”

As highlighted at the bottom of the “Crash Prophets” page, Jeremy Grantham has an impressive track record with his financial forecasts:

• In 1982, said the U.S. stock market was ripe for a “major rally.” That year was the beginning of the longest bull run ever.
• In 1989, called the top of the Japanese bubble economy
• In 1991, predicted the resurgence of U.S. large cap stocks
• In 2000, correctly called the rallies in U.S. small cap and value stocks
• In January 2000, warned of an impending crash in technology stocks, which took place two months later
• Saw the 2008 global financial crisis coming. In April 2007, said we are now seeing the first worldwide bubble in history covering all asset classes.

As such, it’s difficult to dismiss this latest one.

Check out Grantham’s piece on Barron’s website here if you have time. I only scratched the surface, and it’s an insightful read.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; a qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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Signs Of The Time, Part 92

To reintroduce this special series of posts on Survival And Prosperity, I’ve got a two-fer for readers this week.

When I opened up my Internet service provider’s home page last Friday, one of the featured articles that day included a graphic of a man grasping his head in frustration with the following text below it:

“What to do if your 401(k) is tanking”

Something tells me this piece received a lot of views.

Earlier tonight I headed on over to MarketWatch.com where the main headline on their homepage screamed in big, bold letters:

“Recession risks warn of ‘severe’ drop in market”

Clicking on the link the article had this included with it:

“Most S&P 500 stocks could fall 50% or more if a ‘worst-case’ recession unfolds”

Definitely not the typical fare served up by MarketWatch, a wholly-owned subsidiary of Dow Jones & Company, Inc.

“Uncertain Times” indeed.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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GoldSilver.com’s Mike Maloney Predicts U.S. Currency Crisis ‘Before The End Of This Decade’

One “crash prophet” who I check in on from time to time is Mike Maloney, a precious metals expert, advisor, and author who runs California-based GoldSilver.com (specializing in the instruction of precious metals investing and providing world-class gold/silver dealer services). This afternoon I watched two videos in which he was featured, and thought I should share his observations with Survival And Prosperity readers.

First off, in a video just uploaded onto his YouTube channel Tuesday, Mike Maloney informed viewers:

I’m making this video because I’ve noticed a major shift in the markets lately. Every trader, every investor, everybody in the world is looking at this. This is the Wilshire 5000 but the S&P or the Dow- they all look the same. There’s these major topping patterns, and we’ve put in a third, what looks like to everybody, a major topping pattern. And what we’re seeing is more, very, very large customers- people that are cashing out of the stock markets and going into gold and silver…

Here at GoldSilver, what we’re seeing is a shift from a whole lot of smaller purchases to some very, very big purchases coming in. It’s highly unusual. And what I get out of it is that people are scared. So I just wanted to update everybody on the markets, to me, look like they are topping out…


“Markets Topping Out, Large Investors Run To Gold – Mike Maloney”
YouTube Video

In the second video, Mike Maloney focuses on the “big picture.” Speaking to investment newsletter publisher Jay Taylor on his web-based radio show Turning Hard Times into Good Times, Maloney said in a video uploaded on YouTube on January 20:

I believe we’re going to have a currency crisis before the end of this decade. But everyone is going to feel it. And only precious metals investors are going to benefit from it…

Taylor asked Maloney:

I recall a discussion you and I and my friend Ian Gordon had up there in Vancouver two or three years ago in which you were almost in complete agreement with Ian’s views that we were heading into a deflationary implosion the likes of which probably would make the 1930s look like child’s play. Are you still of that view? And if so, isn’t the dollar then a store of value if we’re in a deflationary environment?

Maloney responded:

Yes it will be temporarily. It’s going to be the beneficiary. This will probably start out of China or Europe and there will be this temporary flight to what people have been taught is this safe haven- which is U.S. Treasury bonds. And that will make the dollar the beneficiary of this temporary event. But we are in for a global deflationary episode. And so the dollar will rise temporarily… And so you’re going to see one last pop in the dollar probably, but then you’re going to see gold take off like a rocket

Maloney envisions this deflationary event turning into a hyperinflationary episode. He finished the interview with the following:

I think the markets have topped right now. And we are in the space where over the next few years we’re going to see a really big crash…

What you’re going to probably see is a short-term dip in precious metals and you have to use- to me, I’m using this to buy. I think gold under $2,000 is just a bargain-and-a-half. So if you can buy down near $1,000, or if it does dip under $1,000- I don’t think you’re going to be able to get a whole lot of physical for under $1,000 but the stocks will be a bargain. This is the time right now. Before gold starts to spike is when you want to buy, not after. Then, it’s going to take off like a rocket one of these days and never look back…


“Michael Maloney-The Greatest Crisis in the History of Mankind is here!”
YouTube Video

“Pop in the dollar.” “Short-term dip in precious metals.” Sound familiar?

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

Maloney’s recently-revised (September 2015) gold and silver investing book…

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Gold ‘One Of The Best Assets To Own In 2016’?

Gold is making headlines again as interest in the yellow metal picks up due to the recent carnage on Wall Street and other financial concerns. It’s been some time since I’ve checked-up on precious metals, and here are excerpts from two insightful articles I read Wednesday afternoon. Mark Decambre reported on the MarketWatch website today:

Who would have guessed that gold would be one of the best assets to own in 2016? So far, that has been the case- while the U.S. stock market has rung up its worst start to a year and a miasma of economic gloom continues to roll across much of the world.

Gold is on a hot streak, after shrugging off the Federal Reserve’s interest-rate increase back in December that should have spelled doom for prices. Instead, it’s on track to gain 5.4% so far in 2016, FactSet data show. True, it’s still early in the year, but if gold were to just tread water for the next 11 months, it would mark the best annual gain in four years.

By comparison, the S&P 500 is down 6.4%, the Dow Jones Industrial Average has slumped 7% and the Nasdaq Composite has skidded a hefty 9%…

(Editor’s note: Bold added for emphasis)

Decambre added that silver is up 5 percent, platinum is down 1 percent, and palladium is also down 11 percent so far in 2016.

Down the stretch, Thomson Reuters GFMS analysts predict gold could end up having a good year. Jan Harvey reported Tuesday on the Reuters website:

Gold demand fell 2 percent last year, GFMS analysts at Thomson Reuters said on Tuesday, but is set to recover in 2016 as U.S. rate hikes arrive more slowly than expected, while concerns over economic growth and yuan weakness stimulate Chinese buying.

In 2016 GFMS sees gold prices, currently near $1,100 an ounce, recovering to above $1,200 an ounce by year-end, and averaging $1,164 an ounce in the full year. Gold demand is expected to grow by 5 percent this year, it said…

Mine supply is set to keep falling after posting its largest quarterly decline since 2008 in the last quarter, while lower prices are expected to stimulate retail demand, and central bank buying will remain supportive…

(Editor’s note: Bold added for emphasis)

Speaking of “mine supply,” I’m hearing more talk of “peak gold” these days, which is something I’ll have to look into.

Good news for gold these days. Which means mainstream (financial) media outlets will start beating up the yellow metal again shortly.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

Sources:

Decambre, Mark. “Gold has been one of Wall Street’s best bets early in 2016.” MarketWatch. 27 Jan. 2016. (http://www.marketwatch.com/story/gold-bugs-have-been-crushing-it-in-2016-relative-to-stock-markets-2016-01-27). 27 Jan. 2016.

Harvey, Jan. “Gold eyes 2016 rebound on slower rate hikes, Chinese demand – GFMS.” Reuters. 26 Jan. 2017. (http://www.reuters.com/article/us-gfms-gold-idUSKCN0V411O). 27 Jan. 2017.

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