Category: Investing

Platinum at $950 is cheap right now. I have detailed the bullish case for platinum over the last few months. See here, here and here. You buy investments cheap. You sell them when they get expensive. Over at capitalist exploits they have made the case for owning platinum. Read the article here. He points out the South Africa problem that I have detailed at this website. He also has other observations I have not detailed at this website.

From the classic book, “Technical Analysis of the Futures Market” by John Murphy, he gives an example of a symmetrical triangle trade.

My plan dictates I can trade these. My experience is one of many failures. They usually do not go according to plan. After the break out they tend to linger around.
Let us look at the SP500. The moment it broke out it went right back to test the trend line.

Another case is the Dow.

The Dow more closely fits with classic charting since it has the 6 touches required. I don’t plan on trading this even though my plan dictates I can. What most likely will happen to the Dow is the same thing that happened to the SP500.
Symmetrical triangles usually do not break the trend line and go right to its target. Additionally, the further it goes into the apex the less likely it will wind up being a symmetrical triangle.
I prefer trading ascending and descending triangles.

The trend that will propel FNV higher.

How do you get rich? “Buy low and sell high.” That is a wall street adage. It happens to be true. It sounds easy. Few investors do it. Investors love to buy at the top and sell at the bottom. In short, they can not control their emotions. If you are buying the SP500 or Dow, you are not buying low. You are buying stocks that are over valued. I don’t think the bull market in stocks (SP500 & Dow) is over. I own stocks. You can check out the performance tab to see for yourself. I think they will become more expensive.
While you are over there take a look at the worse performers. They are the resource shares. If you were to take them away you would have an open profit of 10.6% in the stock portfolio. They have gotten cheaper. This is typical when you buy depressed stocks. They tend to get cheaper. They tend to stay cheaper a lot longer than can be imagined. So how cheap are they?

Above is the HUI to Gold ratio. The resource/mining shares have not been this cheap since 2001 relative to gold. This is called “buying low”. How will you know when you should sell? Easy. Flip the chart.
This is called “selling high.”

Let me tell you what FNV did in 2017:
1) $675 million in revenue- a new record and a 10.6% increase year-over-year.
2) $516.1 million adjusted EBITDA- a new record.
3) $194.7 million of net income- a new record.

Most investors will wait until the resource shares get expensive. They will go higher and higher. Than, at the top, they will want to buy. This never ceases to amaze me.

Looking at the SP500, I see the following:

Let us see if the the market ignores the downward trend line. Resistance is at 2785. A break above this will be a good sign that the correction is over and new highs will be coming. Support is at 2675 and 2590. Price action today and all next week will give some indication about the current correction.

J.P. Morgan notes:
“There is room for further upside to our buyback estimates if companies increase gross payout ratios to levels similar to late last cycle when companies returned >100% of profits to shareholders (vs. 83% now). Corporates tend to accelerate buyback programs during market selloffs.”

SP500 companies are expected to buyback $800 billion dollars this year due to strong earnings and the new tax law. This will add further upside pressure on stock prices.

Ramaphosa wants to redistribute land from whites in South Africa to blacks. We know what these policies will do. It was tried over and over in the 20th century with the same results. Zimbabwe tried it in the 21st century. Take a look at the Zimbabwean Dollar VS USD to know the future of South Africa.

I wrote about this here and here. This philosophy will bleed over into the mining industry in SA. Buy platinum. Sit and wait. If you live in South Africa, black or white, you should begin planning your exit strategy.