Rainer's Investment Insights

Most commentators' spiel aims at convincing you one way or another to buy something. Some take the trouble to explain why you should. I tend to only comment when I see a real potential for change, change that you can follow and trade at some point - with a positive outcome. Today, I want to highlight a few potentials and how they are related. A change usually comes with a comrade or two. It does not mean you need to get ready to jump in straight away, but the signs are accumulating. The most important assets to watch are commodities, including oil and precious metals equities bonds I would say that at least in two the of three asset classes major change is breaking. To evaluate how these changes are coming about, here a brief overview of the important/ most watched indices. USD 1-month view, rising dramatically ever since the election results. Source; chartnexus But before all that, one acute BREAK in the pattern of GOLD PRICES is really important now: Prices h

Post Election Brief "Jetzt haben wir den Salad", the Germans say, which translates as, "Now we've got the salad". Trump is president-elect. Family harmonies still ruptur over lunch discussions, as to how the US got itself into hot soup but - like it or not - they will have to eat it.  When opinions become too one-sided before an event, the chances of an unexpected outcome are high, - and I did warn about it just last Monday,  Volatility revisited CBOE BREXIT TO TRUMP, source: chartnexus To follow through here the updated chart of the volatility that I talked about before the election . The pale arrows in the orange oval indicated my expectations. But they were thwarted. Volatility fell far lower, almost touching the trend line drawn from previous lows, thus acting as a support line.  We are at an important juncture time-wise, despite the confusion in the markets. If market participants continue to respond as panicky as they did all l

Equities from Australia to U.K, are having a bumper day (November 7, 2016)! Stock market investors are said to have responded to the FBI's decision not to go after Hillary Clinton. Looks like these guys want a lady as the next US President. But the turnaround could also just be a relief rally BEFORE the next rout starts. After all, if the race to the presidential finish line turns out to be as close as reported, we will only know more by next Wednesday morning. Source: chartnexus, THE CBOE Volatility index, June 2016 till now. Source: chartnexus, S&P 500, as BREXIT NO VOTE HITS. The CBOE volatility chart provides insight into the currents in the marketplace: Focus on the left of the chart, above the "BREXIT" ARROW. The last big spikes occurred end of June in conjunction with the shocking No Vote in the UK, opening the door to the BREXIT, the exit of the UK from the EU. The chart movements then are relevant to today. Initially volatility ro

USD PEAKS  It is time to take a critical look at USD charts in light of noises about a December interest rate hike, AND because I got it so wrong in my prognosis in September , when I said the dollar should start to soften, and allow gold prices to slowly get into rallying mode. We saw quite the opposite and the portfolios suffered as a result. Looking Back - A Quick History Some time in August 2001, the USD stood at an alltime high of 121. The dot.com bubble had burst and its correction was in full swing. For investors,the USD stood for surety and a safe haven to shore up against a stock market that was falling apart. Everyone rushed to buy the dollar! Interest Rates and The USD SOURCE: FRED ECONOMIC DATA; US interest rates from 2001 till today.  But the crisis quickly engulfed all global economies. From a peak of 6.25%, the Federal Reserve had to reduce interest rates to 1.25% over 12 months and a bit lower still in 2003. When the global economies eventua

Stock Market Divergences The curious thing about divergences is they can last for months, sometimes even years before they dissolve and turn into one big market convergence again. As long as one economy, - the US -, is the global leader, a return to correlated markets is what most parties wish for. Divergence occurs - as an exception, when regional economies are running into headwinds - by plan or by chance. Few people are able to predict the exact time of change from divergence to convergence, but - stock market cycles, seasonal behaviour, even statistics can become the proverbial "straw that breaks the camel's back". If we just knew, which one! Therefore, we reluctantly accept that there is no ONE measure tape, which tells us for sure, when a stock market rally comes to an end, BEFORE it happens. Divergence Pictured: Over the last 2 years, the divergences in trend between the US stock market and the rest of the world could hardly be any starker: Source: Yah

October 7, 2016 A Month With A Bad Record! Statistically, October has the worst record for stock markets. So far, I am inclined to say, it's happening again. Indeed, s ometimes, markets leave me speechless. This week for instance.  Last Friday (September 30), we still paid $1324 for the ounce. The rally seemed intact, the USD range bound.  On Monday, some profit taking set in, nothing out of the norm, as gold prices retreated to $1313. Tuesday morning still looked fine. And then, from 1 p.m. to 10 p.m. (end of day trading in the US), gold fell to $1268, a loss of 3.5%. That price level I considered save for a number of reasons, had it not frequently proven to be a formidable support level. But it wasn't to be. Today, Gold is priced $1252 at their lowest point, and I am not convinced that this is a level from which to expect a rebound. Indeed, right now, the best thing for prices to happen is to retreat to $1200. From such an oversold position at least, the rebound wil

September 15, 2016 Cycles Stay In Control The next few weeks are crucial to the truth of this statement: We said, gold prices will start to rise as of now.  I expected stock prices to see a short term peak on the September 15, - TODAY - , and then retreat in big steps, possibly till late in November.  I expected the USD to start softening, - and interest rates to stay put at least till after the US elections. Continued divergence in indices globally can be attributed to the dissonance in monetary policies between the US and the rest of the world. But that alone is insufficient as a cause. Central banks can reduce or increase short term interest rates, but the markets decided the real rates in mortgages, yields in bonds, and long term interest rates.  Gold prices are just about turning up today, from a low of $1317. A slow rise will improve the chances of a lasting change in direction.  Stock markets have seen major volatility increase, daily moves of 2% and more, c

GOLD  When mentioning "GOLD", I really mean Gold and Silver. Their fortunes are intertwined and rarely uncorrelated in price. Explaining where we are with gold prices is only half the story. Most people invest in gold via gold funds and gold ETFs. Certificates are easier - and safer - to keep in the house than the actual metal. But first, I want to discuss gold prices.  The last time I talked about this asset class was in May, March, and February of this year. Indeed, it was only in February of this year that it was worth talking about gold after long spell of falling prices lasting 5 years. GOLD: a 5 year correction ends in December 2015 ; Source: BullionVault The chart on the left shows gold prices since their high in November 2011. Catching gold at the bottom was our goal by the end of 2015. We started buying in December. After three intakes, we watched and waited. GOLD in 2016 : finally making some money again; Source: BullionVault We accurately id