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The Kids Birthday Party Hustle
Issue #518A, April 18, 2018

A Pension Question: Part II of II
Issue #518, April 16, 2018

A Physician is an Executive
Issue #517A, April 11, 2018

A Pension Question: Part I of II
Issue #517, April 09, 2018

Is the Correction Over?
Issue #516A, April 05, 2018

Used Car Dealers, Student Loans, the Chinese, and Uncle George’s Rule
Issue #516, April 02, 2018

Starter Homes
Issue #515, March 26, 2018

Redecorating: Beware!
Issue #514, March 19, 2018

NASDAQ Closes at Record High
Issue #513, March 12, 2018

A 40% Chance
Issue #512, March 05, 2018

Several Things
Issue #511, February 27, 2018

Human Capital, Education and Wealth
Issue #510, February 19, 2018

Another Stock Market Update
Issue #509A, February 18, 2018

Some Thoughts on Savings
Issue #509, February 12, 2018

A Stock Market Upfate
Issue #508S, February 10, 2018

Who Can You Trust? Part II of II
Issue #508, February 05, 2018

The Christmas Decoration Pre-worn Jeans Hustle
Issue #Interim Bulletin #507A, February 03, 2018

2018 Outlook for Financial Markets
Issue #507, January 29, 2018

Who Can You Trust? Part I of II
Issue #506, January 22, 2018

Life Insurance Settlements
Issue #505, January 15, 2018

Commodities and Buying the Breakout
Issue #504, January 08, 2018

Buffett Wins His Bet
Issue #503A, January 04, 2018

Practice Real Estate and Free Agency
Issue #503, January 01, 2018

Outlook for 2018: Part III: Stocks and Bonds
Issue #502, December 25, 2017

My Outlook for 2018: Part Ii: Precious Metals
Issue #501A, December 21, 2017

Outlook for 2018: Hard Assets: Part I of III
Issue #501, December 18, 2017

More Thoughts on Bitcoin
Issue #500A, December 14, 2017

Fees and Good Relations with Bankers
Issue #500, December 11, 2017

Salvator Mundi
Issue #499A, December 07, 2017

Should You Rent or Own a Home?
Issue #499, December 04, 2017

A Gift Subscription
Issue #Interim Bulletin #498A, December 02, 2017

Stocks vs Real Estate: Asset Allocation: Part II of II
Issue #498, November 27, 2017

When Good Enough is Fine
Issue #497A, November 22, 2017

Stocks vs Real Estate: Asset Allocation. Part I of II
Issue #497, November 20, 2017

The Saudi Arrests and the Perils of Foreign Investing
Issue #496, November 13, 2017

Gambling and Las Vegas
Issue #495, November 06, 2017

Some Tips on Auto Insurance
Issue #494, October 31, 2017

Bitcoin and the Digital (Crypto) Currencies
Issue #493, October 23, 2017

The Coming Bear Market: Part II How to Prepare
Issue #492, October 16, 2017

Some Observations on Cemeteries
Issue #Interim Bulletin #491A, October 12, 2017

The Coming Bear Market: Part I: The Myth of Buy and Hold Forever
Issue #491, October 09, 2017

The Market makes New Highs
Issue #490, October 02, 2017

The Importance of a New High
Issue #489, September 25, 2017

A Little Insurance: Wealth, War and Wisdom
Issue #488, September 18, 2017

Some Observations
Issue #487, September 11, 2017

How to be Successful in Your Career
Issue #486A, September 07, 2017

How NOT to Buy a Home
Issue #486, September 04, 2017

This Week in the Market
Issue #485, August 28, 2017

Is the “Trump Bump” Running Out of Gas?
Issue #484, August 21, 2017

Gold is on the Move
Issue #483, August 14, 2017

The Importance of Estimation
Issue #482, August 07, 2017

Buying Art and Collecting: Part II of II
Issue #481, July 31, 2017

Buying Art and Collecting in General, Part I of II
Issue #480, July 24, 2017

Physicians need to be More Forceful: Follow-up
Issue #479, July 17, 2017

Physicians need to be More Forceful
Issue #478, July 10, 2017

Your First “Real” Investment
Issue #477, July 03, 2017

Leasing a Watch: Don’t
Issue #476, June 26, 2017

The Importance of Your Children having a Job
Issue #475, June 16, 2017

The Problem with Medical Student Debt is—the Med Schools
Issue #474, June 12, 2017

Critters and Varmints in your Home and Yard
Issue #473A, June 07, 2017

Leveraged ETFs
Issue #472, May 29, 2017

Leasing a Vehicle: Don’t!
Issue #471, May 22, 2017

Issue #470, May 15, 2017

More on Buying Jewelry
Issue #469, May 08, 2017

Buying Jewelry: Gold, Diamonds and Pearls
Issue #468, April 30, 2017

Thomas Sowell: Part III of III
Issue #467, April 24, 2017

Thomas Sowell: Pat II of III
Issue #466, April 17, 2017

Live Close to Where You Work
Issue #465, April 10, 2017

Medtronic in Hospital Management
Issue #Interim Bulletin #464A, April 07, 2017

Thomas Sowell: Part I of II
Issue #464, April 03, 2017

A Political Contribution a an Investment: Part II of II
Issue #463, March 27, 2017

A Political Contribution as an Investment: Part I of II
Issue #462, March 20, 2017

Buffett Selling Vacation Home
Issue #461, March 13, 2017

Advanced Placement (AP) ourses
Issue #460, March 06, 2017

The Importance of a Credit History
Issue #459A, March 02, 2017

A Credit Card Scam
Issue #459, February 27, 2017

The Electronic Health Reord
Issue #458, February 20, 2017

Issue #457, February 13, 2017

Platinum and Palladium
Issue #456, February 06, 2017

Economic Outlook for 2017: Part II of II
Issue #455A, February 02, 2017

Economic Outlook for 2017: Part I of II
Issue #455, January 30, 2017

A Story From Vegas
Issue #454A, January 25, 2017

Land Donation Deals and the IRS
Issue #454, January 23, 2017

The Theory of Gambler’s Ruin
Issue #453, January 16, 2017

Student Loans: But Wait, There’s More!
Issue #452, January 13, 2017

A Second Home
Issue #Interim Bulletin #451A, January 04, 2017

The Consumer Confidence Index
Issue #451, January 02, 2017

Social Security
Issue #450, December 26, 2016

My Outlook for 2017: Part II of II
Issue #449, December 19, 2016

My Outlook for 2017: The Market
Issue #448, December 12, 2016

Medicine in 20 Years
Issue #447, December 05, 2016

Higher Interest Rates
Issue #446, November 28, 2016

Trump and the Markets: The Bad and Ugly
Issue #445A, November 23, 2016

Trump and the Markets: The Good
Issue #445, November 21, 2016

Negative Trends: The Suits aren’t Makin’ Steel
Issue #444, November 16, 2016

The New DOJ Fiduciary Rule
Issue #443, November 07, 2016

Barron’s Conference, Part IV of IV
Issue #442, October 31, 2016

Barron’s Conference, Part III of IV
Issue #Interim Bulletin #441A, October 26, 2016

Barron’s Conference, Part II of IV
Issue #441, October 24, 2016

Barron’s Conference, Part I of IV
Issue #440, October 20, 2016


By Robert M. Doroghazi, M.D., F.A.C.C.

Precious Metals: Don’t Jump in Yet

Issue #407, February 29, 2016

    From mid-January to mid-February, the ETF GDX, a basket of the large miners, shot up 55% on record volume. Gold exploded from $1,080 to $1,263. This action is impressive, but I believe it is still too early to declare the bear market in the precious metals is over and the bull market has resumed.
    To recap: gold bottomed in 1999 at $255. As our stock market tanked, the commodity boom started, interest rates came down and the US Dollar weakened. Gold took off, to peak at $1,910 in September, 2011. Gold then backed off, and in April, 2013, suffered a Hiroshima-like smackdown, dropping from $1,550 to $1,400 in one day.
    Let’s look first at fundamentals, since major moves are always driven by primary forces. Studies have shown that the most important factor in gold prices are interest rates. Gold pays no dividend, and furthermore, costs money to store. If inflation is +2%, and the rate on a CD is +6%, the real interest rate is +4%. Gold is not competitive. But if there is 9% inflation, while the 10-year Treasury is paying only +6%, as was the case in the 70s, real interest rates are -3%, and gold shines because it preserves purchasing power. In January, the precious metals took off almost to the day that they began discussing the possibility of negative interest rates in the US.
    Watch the US Dollar, because gold and the dollar have a strong negative correlation. Gold weakened over the last several years as the dollar took off, and has again showed strength when the dollar failed to break out to new highs. Likewise, the Dollar popped last Friday, and gold was spanked. If the dollar breaks above 100, gold will weaken, whereas if the dollar breaks down below 93, gold will go bonkers.
    Also watch the US stock market, and especially the ratio of the DJIA to gold. At the market peak in May of last year, the DJIA was 18,000 and gold was $1,200. It took 15 oz. of gold to buy the Dow. The current ratio is about 13.75. If this is the start of another bull move in gold, this ratio should fall.
    I am a believer in the importance of both technicals and fundamentals: the latter to determine what to buy or sell, the former to determine when to pull the trigger. Gold must first break above the recent high of $1,265. The next resistance level after that will be $1,350, then the real biggie of $1,550, the level from which it broke down in April, 2013.
    Another important factor is the COT, the Commitment of Traders. Traders are divided into 3 groups by the commodities exchanges: 1) the small speculators (specs) like me, who trade 2, 3 or 4 contracts. 2) The large specs, such as hedge funds, and 3) the commercials (see more below), such as the miners and the large bullion houses, the “big boys”. Not surprisingly, at major turning points, the large specs are invariably wrong and the commercials are right: that’s why they are the “smart money”. At tops, the large specs are caught long, and the commercials have all the short positions. At present, the commercials had built up quite large short positions, mandating caution. 
    In the meantime, there is never a wrong time to buy physical gold. Consider this an insurance policy to financial turmoil and whatever else might happen. “Paper gold”, from GLD to the miners to the futures, are an investment. I just can’t recommend these to you at present.
    Stay tuned. It will be interesting. 
    The miners routinely have short positions. It is how they do business, it’s how they sell their product into the market. Say they sell the futures short at $1,250. If gold goes down, they cover their short, keep the gold, and take the profit. If gold goes up, they just deliver the physical gold to satisfy the contract. They can’t lose.
    Nobel Prize winner Robert Shiller called the tech bust in Irrational Exuberance, and the real estate bust in Irrational Exuberance II. Several weeks ago, Barron’s noted that since last August Shiller had sold ½ of the stocks in his retirement account. He further commented that when he buys back in, it will be in Europe and Japan.
    RMD comment: Shiller is a smart guy. His opinion carries a lot of weight with me.
    It’s tax time, so let me remind you of 2 things.
    Should you be audited, have your accountant or lawyer handle all of the communications. Even if you are not under oath, telling a lie to an IRS agent (or any agent of the Federal Government) is perjury. The first question you are always asked is “have you reported all of your income?” If you haven’t, you have committed a felony, and you will be prosecuted. Just ask Martha Stewart, who lied to the FBI.
    Communications with your physician and lawyer are privileged, communications with your accountant are not. You say “I’m an honest man, I have nothing to hide” Don’t be naïve. Say you ask a totally innocent question because you just don’t know—about something that is patently illegal: you don’t want that in writing. 
    I believe Oscar Robinson was the most talented basketball player ever (my med school roommate saw him play at Crispus Attucks HS in Indianapolis). Michael Jordan, and LeBron James were/are certainly good, and my hero Bob Pettit (of the St. Louis—now Atlanta—Hawks) was the best forward ever. But Wilt Chamberlain was the greatest and the most dominant player ever. To be truthful, if Wilt was white, he would be as revered as Babe Ruth.
    The 10 highest scoring games in NBA history:
    1) Wilt Chamberlain   3/2/62     100     36 Field Goals, 28 of 32 Free Throws
    2)  Kobe Bryant       1/22/06     81
    3)  Wilt Chamberlain 12/8/61     78
    4)  Wilt Chamberlain 1/13/62     73
    5)  Wilt Chamberlain 11/16/62     73
    6)  David Thompson   4/9/78       73
    7)  Wilt Chamberlain 11/3/62     72
    8)  Elgin Baylor       11/15/60     71
    9)  David Robinson   4/24/94     71
    10) Wilt Chamberlain 3/10/63     70
    From Kissinger: Volume I by Niall Ferguson: Kissinger commenting (in the late 60s) that a gap had opened in many countries between the requirements for reaching high office and the qualities needed to exercise it.
    “When political leaders are characterized primarily by their quest for power, when they decide to seek office first and search for issues later, then their technique to maintain power is necessarily short-range and manipulative”.
    RMD comment: as applicable in 2016 as it was 50 years ago. In fact, it fits with what a Jew of eastern European descent recently told me: “The campaign vulgarity and nationalistic rhetoric is increasingly disturbing”.
    Over the next 2 weeks I’m going to discuss “The War on Cash” and the “Over-priced Food Presentation Hustle”. 

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