Post by
metalhead666 on Feb 24, 2023 6:29pm
One sensible way to play....
Decide how much you want to risk on I-80 and / or other good gold plays. Divide it into 4 pieces. Buy 1 tranche now, 1 at each of the next 3 FED meetings....that will be at least 75 bips higher in the FED funds rate if not a full %. That would put the 2 year bond at nearly 6%. That's more than enough to break the back of the entire global economy. The FED will switch to panic mode and be forced one more time to try to bail out the system. Expect some form of Japanese yield curve control, the $ to weaken and gold to really take off dragging all the good miners with it to new highs.
The problem lies between now and then and just how big of a market selloff is in store. If something big breaks then expect a Lehman like collapse. If it's a big recession expect 25% to 50% dump. I-80 would be sub $2 US maybe even falling to new lows along with the whole group.
The thesis is that we cannot endure 5% or 6% rates very long before something wicked happens...it's just math. There are people paying $1000 per month auto loans, their insurance is going up 15% this year.....credit card balances have soared and that's costing them over 20% interest. Same holds true for all debt holders....they're going to get monkey hammered....they will fold first....earnings will fold....stocks will fold
And then the FED will once again be forced to do what it does best....try to reflate yet another bubble. They'll resort to some serious QE and Japanese style yield curve control....they'll start buying all kinds of krap...maybe even ETFs like they do at the bank of Japan
Stocks will soar but gold will soar even more....it's all about when not if. And just how low everything is likely to get before the best miners bottom out....hence buying in tranches using the FED meetings to add to your positions....you won't catch the bottom but you will have a good average cost basis for the really big bull market to come
If you're more risk adverse then break it into 6 or 8 tranches that will get you to the last FED meeting in December before you're all in.....I don't think it will take that long. I could happen sooner and faster too...very difficult to know so having some skin in the game soon is reasonable so long as you have a plan that is based on a good thesis and can take your time.
Dollar cost average in using the FED meetings and rate hikes as your cue...you will end up buying at least one tranche at the very bottom
In the interim just load up on 1 year Tbills and get a guaranteed 5% ...gamble with the interest payments if you must
I bought 1000 IAUX today....so I'm eating my own cooking...I won't buy another 1000 until the March Fed meeting and the 3rd 1000 at the May meeting...etc etc.....
I think I'll be buying the next tranche under $2 and a final one close to $1.50....can't time this perfectly so I'm willing to start now modestly and stick to the plan.
Comment by
AlwaysLong683 on Feb 24, 2023 8:34pm
In my view, "Cash Is King" until the FED stops raising interest rates into an already significantly inverted yield curve. I'm buying zero gold stock shares now, and I won't consider otherwise until the FED ends its rate hikes and perhaps hints at its first cut.
Comment by
NineLives on Feb 25, 2023 10:00am
Blah blah blah, basic investing 101. So you're back on your meds again, that's good. Keep it up.