Macro Dragon: Spinning Out of Nothingness...
Summary: Macro Dragon = Cross-Asset Daily Views that could cover anything from tactical positioning, to long-term thematic investments, key events & inflection points in the markets, all with the objective of consistent wealth creation overtime.
Macro Dragon: Spinning Out of Nothingness....
Top of Mind…
- Brownian motion today….
- Gold: As we touched on Mon piece, is breaking out… we don’t have to re-iterate how bullish we are on this, nor how this is one of max 8-10 prime conviction trade/investment views for 2020 that Macro Dragon will make.
- Gold is up +0.24% to 1772 this Asia wed Morning, yet it’s the lvl… above that key 1750 previous key resistance, that is important. Over the last 5D Gold is currently up +2.8%... just wait for it folks, KVP feels we have seen nothing yet.
- So many ways of structuring around the long-term potentially multi-year meta trend here of fiat debasement, exponential debt growth, negative rates here to stay & accelerate, asset diversification & of course negative yields on the way. From outright spot, futures, calls, call spreads… & underlying being anything from gold, to GDX, GDXJ, individual miners… & of course greater precious metals complex (Silver, etc).
- Also selling OTM puts at say $1750 on gold resonate with KVP if he was feeling, he was too light on his exposure or for whatever reason (heaven forbid) work up one morning & found no gold exposure across his asset allocation. For those with greater comfort around options, selling puts to fund calls also make sense & this could be potentially rolling strategy as this theme is expected to have some serious shelf life.
- Again, if folks feel they have missed the break, think again – KVP can envision a future where gold is doing +$50-75 a day for back to back weeks. We need to finish this wk with a weekly close above $1750 & ideally follow that up next wk, feels like we will get it done & soon $1750-1775 will be the new floor when/If we get above $1800.
- Here are some of the recent works that the Dragon has done on gold: Checking in on Paul Tudor Jones & the Bull Case for Gold, as well as looking at the bearish arguments against gold.
- One cannot flock to the longs without understanding the shorts & vice versa – always room to practice this in greater context across our lives, relationships & compounding of wealth.
- Lastly cannot recall if the formal House view is $3000 or $4000 for gold by E-2021… yet KVP’s own view is that +$2000 is a given before 2020 year end, if not mid 3Q20… remember we are still short of ATH of $1920 from 2011 (this is one of the few asset classes that is not at ATHs).
- Think for next year $4000 is very doable by year end – again… lots more debt coming & negative yields are not going away… it is a black hole vortex that – at least given everything KVP currently can calibrate – that we cannot escape out of. Also remember the so called “smart money” is not even positioned for being long gold, if CoT futures positioning are anything to go by… we were just a +1yr lowest positioning… despite ETF holdings at ATH
- Lets see where we close by the end of the wk
- Kiwi & RBNZ: Similar to the likes of RBA, BoE & BoC… they have previously mentioned openness to even go negative, a la “wat’eva it takes”…
- Yet a lot of these CBs have stepped back since their previous meetings in Apr & May, sounding a lot more constructive & gung-ho about things (BoE’s new gov talking about BS going down, really? Did you ever take a look at the Fed BS since 2008/2009 crash?)… or/& at the very least saving their bullets for the future…
- Either way keep kiwi crosses on the radar, risk is obviously to the downside (tactically, still think strategic upside is in line with AUD… & as long as USD is breaking lower… that tailwind offsets a lot of headwinds for not just NZD & AUD, yet also for a lot of EM FX with them surprising on dovish tones or/& moves…
- Inertia & Entropy: Tends to work against us… yet, for the world class outliers, they find out how to tap into the forces of Inertia & Entropy to make it work for them, their loved ones & for bettering this universe…
- How are Inertia & Entropy affecting you positively or negatively? Are they adding or taking away from your decision making & compounding of wealth.
To Keep In Mind Today
- JP: BoJ Mins
- NZ: RBNZ + early doors tmr trade balance
- EZ: GER Ifo Business Climate
- US: Oil Inventories, House Prices
- CH: Will be out on hols for Thu & Fri
- HK: Will be out on hols only for Thu
Start-End = Gratitude + Integrity + Vision. Create Luck. Process > Outcome. Sizing > Idea.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.