Money Rain – The Rainmaker

Featuring Alejandro Reyes

Alejandro Reyes, publisher of The Rainmaker Investor Report, is back to handicap the June FOMC and give some actionable advice on how to position for the rest of 2016 in his presentation Money Rain.

Published on
13 June, 2016
Topic
Monetary policy, Gold, Trading
Duration
48 minutes
Asset class
Commodities, Equities, Currencies
Rating
150

Comments

  • JM

    John M.

    8 2 2017 04:30

    0       0

    I thought his position on gold was very controversial when I first heard this presentation last summer but after reviewing again he was in fact right about gold at least through the end of 2016. I wonder how his view on gold might have changed at year end? Good call!

  • MK

    Murphy K.

    3 7 2016 19:30

    0       0

    I think his comments on gold would only matter in a pre Bretton woods environment. It would be deflationary for the world only if King dollar went up to far. I do like his style though. I also think he gives to much credence to CBs, They are only one market actor even if they are the biggest. The market is not just a place to trade it is the individual actions of every person on the planet. Best to keep a position at this point in gold and gold assets like miners.

  • WT

    Weilian T.

    1 7 2016 08:25

    0       0

    No one gets it right 100% of the time.

  • jw

    jackson w.

    24 6 2016 05:44

    7       1

    I bet this guy feels stupid after the Brexit today

  • SD

    Salvatore D.

    23 6 2016 04:30

    2       0

    Oh, please... don't give lessons...

  • LM

    Leonard M.

    21 6 2016 19:52

    0       2

    Raining goldbugs today good call!

  • RG

    ROMAN G.

    20 6 2016 14:29

    1       0

    He is all the time touching his nose, why? Anyone knows read body language as AR does?

  • DM

    Daniel M.

    20 6 2016 01:44

    1       0

    LOVE THIS GUY!

  • JR

    Jeff R.

    19 6 2016 17:14

    3       0

    So would the technical analysis performed on the shoulder shrugs be considered a head and shoulder pattern?

  • CH

    Calvin H.

    19 6 2016 16:31

    0       0

    Great comments except for a few trolls. Oh well. I'm a Rainmaker subscriber, started recently based on a RVTV segment. AR is an acquired taste with respect to reading his daily riding instructions and grabbing beers. AR, I know you read here, and many of the comments below, echo my email to you - i.e. Jim Grant quote - 'gold is the reciprocal of faith in CBs'. Either you have faith they will be able to keep this house of cards up or you don't and just don't articulate it. Please be more specific because it is confusing with respect to the gold strategies. Everything else I follow.
    I've made money for beers, actually saved more then made so far, but I am very satisfied. Love Rain or Shine! I like the SVXY play and Bullish calls- however I don't recall them being specifically spelled out in the daily read, like you did here. Please explain better next week -- I can't hear in the back of the pack, too much swearing going on. :) Keep on the great work AR and RVTV. Ride Hard!

  • RO

    Robert O.

    19 6 2016 03:00

    0       0

    The arguments for gold and gold miners have already been made below.
    The idea that it is a good time to buy stocks seems unsupported given the famous chart showing the high correlation of the Fed's balance sheet with the S&P 500. Without QE(n) or QE (infinity) = Helicopter Money, there does not appear to be enough currency fuel to raise the S&P 500 balloon.
    And without the central bank stimulus it just seems like a matter of time before Atlas Shrugged the market off.

  • WM

    Will M.

    18 6 2016 20:02

    1       0

    I enjoyed Alejandro's piece and "thumbs up it" as I always do for folks I think have presented a reasoned argument. Now I am not fully in agreement with his views on this, being more aligned with Thomas R several points below. However I agreed 100% with Robert A just below. I enjoy RVT because it brings me real discussion and not just one sided discussions. That being said I hold significant physical exposure to gold and remain cautiously optimistic for a new high breaking through 1320 to show strength, but soon, with a sell below 1210. My reasoning for gold apart from the obvious and much discussed banking / debt / counter-party risk issue are the black swans of a Brexit (feels less than 50%) and the potential for a strengthening dollar (feels more than a 50% risk). Europe is in a political and banking turmoil which could boil over and drive large amounts capital out of Europe to where? India? China? Japan? No !!! It will largely come into the US and the USD driving up the dollar value, and possibly even stocks! However, only a fraction needs to head into gold which will rise with the US$ against the Euro and Sterling.

  • RF

    Raoul F.

    18 6 2016 12:51

    0       0

    Love Alejandro's work, but this one was a bit long and all over the map. I think these presentations are more effective in the 20-25 minute range.

  • JD

    John D.

    17 6 2016 17:11

    2       6

    You don't 'buy a naked call' bud. He lost me after that comment. This is the one series on RV I find completely useless.

  • PO

    Peter O.

    17 6 2016 13:47

    0       0

    Testing

  • KD

    Ken D.

    17 6 2016 12:51

    0       0

    Interesting presentation, as always. Maybe I'll change my mind after reading the "assigned" papers but here are my thoughts on gold. If the price of gold goes up against the dollar, that would be deflationary in gold terms, as suggested, but inflationary in dollar terms. It would only be deflationary in dollar terms only if gold and the dollar were linked, so that a rise in one resulted in a rise in the other.

  • RA

    Robert A.

    16 6 2016 22:09

    6       0

    I knew the comments would be HIGHLY controversial, but this video is why I have watched EVERY video and why I love RV TV. This was extremely well reasoned and extremely creative original against the grain work which allows me to broaden my thinking. Agree or disagree, but you have to give this guy the street cred he deserves for going against Soros, Ichan, Druckenmiller, et al. He seems to have a little of Mohamed Ali in him. Win, lose or draw I am so happy with RV's curation!

  • MB

    Mike B.

    16 6 2016 16:59

    4       0

    Making a call on Gold based on how the world used to work back in the 1930's (Gold Standard) is problematic. Now that Central Banks have re-written the rules and the Fed has to consider foreign policy objectives suggests Central banks have no alternatives but to monetize debt. A Fed that cannot raise rates should have him concerned. I think he is making a short term contra call that is not working.

  • MM

    MZ M.

    16 6 2016 16:38

    2       0

    Rainmaker makes valid points here about CBs attempts/efforts to avoid deflationary spirals by managing gold, currency, interest rate expectaions etc. I think the CBs continue to slow-walk us all toward their academic monetary ideals while global debt continues to build regardless. CBs play whack-a-mole with currency, gold, etc to buy time. Cooperation of CBs is evident but eventually they just end up being reactionary to market forces and not able to produce their desired outcomes. They haven't prevented crisis only delayed crises at best - it seems it always ends up being larger and more costly crisis.... Thanks Alejandro i really enjoy your digging into the research to understand the thinking of the bankers and educating us at the same time.

  • DD

    Demi D.

    16 6 2016 12:06

    0       0

    Whoops, meant to say prevents the USD*

  • DD

    Demi D.

    16 6 2016 12:05

    6       0

    If gold was the currency that caused the Great Depression due to central bank hoarding, what causes the USD or US Treasuries from causing another one. The only reason the banks clung to gold is because it was universally accepted as a safe haven asset. Why couldn't the same thing happen to the USD? Do you think the Fed can print like mad in order to prevent it? I'm not sure they would survive politically in the current environment long enough to be able to because most Americans think a stronger dollar is better for GDP growth. I think you have to extend your logic to the dollar now being the safe haven and consider the consequences.

  • S

    Simon .

    16 6 2016 11:52

    5       0

    His thesis seems to be gold can't go up because CB's won't allow it. Likewise they can control the $. So as long as CB's are omnipotent we are all good.
    Hummmmm.........

  • PJ

    Peter J.

    16 6 2016 11:48

    2       0

    A very narrow view, a short term view? and chooses his historical comments to support his argument where the actual story is far more complex

  • KH

    Katrina H.

    15 6 2016 21:11

    7       3

    I would venture to say that none of the negative comments come from actual Rainmaker subscribers. While you may not agree with what he says, the dude makes $$.

  • mj

    maria j.

    15 6 2016 20:32

    1       17

    this Dude is a total tool

  • PS

    Phil S.

    15 6 2016 20:25

    2       1

    I prefer to use Bookmakers odds, rather than opinion pollsters, for the probability of Brexit

  • PU

    Peter U.

    15 6 2016 17:59

    1       8

    No terribly useful

  • BM

    B. M.

    15 6 2016 16:21

    3       0

    Montago Norman, Gov. of BoE, 1920-44.."all the thought and work and good intentions..we achieved absolutely nothing...we collected money from a lot of poor devils and gave it over to the four winds."

  • LA

    Linda A.

    15 6 2016 16:13

    4       0

    Admirable analysis Alexandro! I love your series and this is what makes markets. Rule #1 in trading - cut your losses short people.

  • VP

    Vincent P.

    15 6 2016 15:32

    4       2

    Never talk about or make recommendations on 3x ETF movement! Very green horned!

  • TS

    Thomas S.

    15 6 2016 15:25

    3       0

    Where I agree is that there is plenty of evidence the Central Banks have been manipulating the paper gold market through DB, CS, etc. This can easily be done and it is scary because it's clearly out of there mandate. CB's are also trying to manage the currency market. This is harder to do and takes a very coordinated effort from all CB's. Will Japan or others stop cooperating? I also agree that rates will never rise without a major blowup that includes defaults and limiting the powers of CB's. Stocks can rise without GAAP earnings growth for a long time, even though they shouldn't. CB's are also buying stocks and trying to managing the S&P. Can they do it all? Just a scary time to invest!

  • IJ

    Ian J.

    15 6 2016 14:55

    2       0

    See Worth Ray's latest note: http://www.stawealth.com/2016/06/14/sta-weekly-market-report-ferguson-vs-burbank-there-can-be-only-one/

    Sounds like Alejandro is in Niall Furguson's camp.

  • CB

    C B.

    15 6 2016 14:53

    14       0

    The pushback against Mr Reyes' short gold call may well serve as a perfect contrary indicator, but here I am also saying it's wrong. Gold took off when the idea of negative rates and helicopter money gained traction. So rather than being a bet against CB cooperation, it is a bet that they will go further and in a concerted way. If they do, gold goes up. If on the other hand one or more CB breaks rank (the Fed raises in 2016, for instance) then gold may decline short term with a stronger dollar, but this may also mark the tipping point for CB credibility. So gold again is likely to go up as an insurance trade. Either way, bullish for gold.

  • AA

    Ali A.

    15 6 2016 14:49

    4       6

    7 minutes into it and the guy still hasn't actually said anything insightful

  • IJ

    Ian J.

    15 6 2016 14:48

    3       2

    He lost me at "Ray Dalio..beautiful deleveraging"

  • Dd

    Diego d.

    15 6 2016 13:35

    4       0

    It is hard to buy his short gold call given the current macro data and a looming helicopter money

  • GH

    Gary H.

    15 6 2016 13:26

    6       4

    Judging by the comments the Rainmaker could be onto something here with these calls

  • TH

    Tim H.

    15 6 2016 13:04

    9       2

    Saw there were a lot of thumbs down voted on the video, assumed he must have be bearish Gold, sure enough....

  • fc

    frank c.

    15 6 2016 10:54

    7       0

    Cojones for sure, as mentioned in other comments the assumption is that CB's are in control sometimes they are not...(Soros and the BOE 1992)....this time it is not George alone, it seems..... I think the CB's lost it and its a matter of time the world loses faith (completely), it looks like the players are distancing themselves from the PHD culture infected CB's, players are players and they have no allegiance. The mere fact that the strategies/visions are so far apart, complete opposites and liquidity near zero means it will NOT end well for any asset class....except GOLD.

  • bp

    bart p.

    15 6 2016 09:32

    11       0

    Always very interesting to hear a variant perception, which in this case is buy stocks and short gold.

    Not inclined to agree with him but he's made some good calls in the past so definitely something to take note of.

    I do however not see how the big rise in GDX and its leveraged brother NUGT are unreasonable at this point, and should therefor be shorted? Quite a shallow analysis there imo.

  • DH

    Dale H.

    15 6 2016 05:56

    7       0

    Hmm.. Keynes - nah. Is it the same as 100 years ago - or are we in unprecedented territory? Does all this depend on whether or not the CBs can be in control of gold prices or other prices for good? - They did not stop 2000 and 2007. Can they stop the next crisis.? It seems to me that the CB have got low velocity all by themselves already.? (As far as I can see, they didn't think anything was going to happen to even think about stopping the crises mentioned above). Looking at my Aussie gold stock charts today, they have been looking a little overbought. Trading is working for now when they get this way. I note that some miners are very resilient - I think because they are exceptional businesses - there are only a few like this - but all gold miners, including the best, are down a huge amount from a few years ago, so although up 100% plus , some still don't look over priced enough to short. Shorting (ALL) goldminers seems to me to be a big call.... Maybe no Brexit could see them go down - but a vote for Brexit could have the opposite result. There are other people who think that the bond market will go crazy (see Bunds now below zero) and then there will be a "blow off" that will affect other investments. Sometimes all this gets too complicated for someone not so sophisticated like I am. So .... I get back to the charts and to what I've learned watching the price action over the last 15 years. RV Help!!!! Where is Grant....

  • EV

    Emma-Lotta V.

    15 6 2016 05:35

    8       1

    10,4 trillion in Govt. Bonds now have negative yield, and I'm supposed to short gold and miners? And I'm not even talking about real interest rates or permanent QE and helicopter money. I think it's not wise to trade with assets that are part of one's portfolio insurance. Put options ? Maybe, but gold is trading differently this year so I'll pass.

    But what do I know?

  • MK

    Mark K.

    15 6 2016 04:24

    20       1

    I thought his comments on gold were very superficial with little analysis or reasoning, other than he has a personal prejudice against it.

  • RC

    Robert C.

    15 6 2016 03:51

    8       0

    Like much of what RM says but got the December rate increase wrong. Said would not happen & did. Gives the Fed too much credit as being logical and all on the same page. Janet Yellen calls the show. The other guys are the side show, talks too much about deflation and then stock going up. How does that make sense. If you get serious deflation you get Recession. Recession does not spell stocks going up. I think the Brexit is a one off and maybe a short term buy but don't get carried away with that idea. If the jobs reports keep trending the way they are trending and the S&P earnings recession keeps going on stocks will get sold. You don't keep paying more for a declining set of earnings. Q2 will be 5 quarters of declining earnings. You better watch Factset for their forecast of Q3 EPS on S&P.

  • ml

    michael l.

    15 6 2016 03:43

    8       0

    so short gold and gold miners at the same time that helicopter money is on the horizon?

    also, central bankers have kept control of markets for longer than I would have thought possible, but it would appear that that is ending in Japan and maybe Europe (see DB and CS falling day after day), yet go long equities because CB-delivered helicopter money will be warmly received? maybe, maybe not. would appear to me that CB's are now agents for uncertainty as much as stimulus...

  • AR

    Alejandro R.

    15 6 2016 02:42

    12       0

    I forgot to leave everyone the reading assignments...

    http://www.dartmouth.edu/~dirwin/Cassel.pdf (Full Cassel Paper)
    https://www.interdependence.org/wp-content/uploads/2013/01/Helicopter_Money_Final1.pdf (Helicopter Money Paper)

    Enjoy!

    rm

  • MB

    Michael B.

    15 6 2016 02:16

    11       3

    too many faulty assumptions...

  • WS

    William S.

    15 6 2016 01:32

    24       4

    Alejandro, like so of the rising generation who have never known a world absent enormous economic distortions due to the corruption of money, epitomizes the old saw that "a little education is a dangerous thing." Perhaps better stated in 2016: "A narrow education is a dangerous thing."

    I gave some thought to bullet-pointing the several flawed assumptions and logical fallacies manifest in just the first ten minutes of his presentation ... then I reminded myself of the futility of bringing logic, facts, and a coherent interpretation of history to bear against what is effectively the religious conviction of the disciples (and dupes) of neo-Keynesian economic thought.

    My only hope is that, a year or so from now, Alejandro can scratch his head for RealVisionTV's cameras again, and explain why both gold AND the USD price of most commodities have risen in tandem. I look forward to seeing his updated velocity of money chart at that time.

  • RG

    Robert G.

    15 6 2016 01:30

    6       0

    Rainmaker has some cojones!

  • TR

    Thomas R.

    15 6 2016 01:06

    5       0

    Lastly - the point on the close proximity of Helicopter money and a warning to anyone shorting risk assets - how do I reconcile the recommendation to short gold and the warning to people who are short risk assets - given the possibilty of helicopter money?

  • DC

    Dave C.

    15 6 2016 01:04

    35       0

    Re the theories of Cassel related to the need to control CB gold demand & the gold price under a Gold standard. Given that the world economy is no longer on a gold standard I fail to follow the reasoning that the Cassel analysis is relevant to the present economic system and that this should be one reason to short gold & gold miners. What did I miss?

  • TR

    Thomas R.

    15 6 2016 00:52

    6       0

    Valid points on velocity of money detracting from money supply. Valid points on highly rising Gold or USD being deflationary. Valid assumptions that Central Banks will continue to increase the money supply in sufficient quantity to offset declining velocity and the risk of deflation. How do all these points support lower gold prices. No lift off typically means dollar steady or weaker and higher gold.

  • TR

    Thomas R.

    15 6 2016 00:34

    23       0

    Gold Mining Company stocks valuations are impacted dramatically by the price of gold. While mining companies do have variable costs of extraction that correlate to their actual production, most of their overall direct operating, extraction, and overhead costs are sunk or committed costs and have almost nothing to do with the market price for gold - so once their overall breakeven is met - most of that actual additional revenue from the gold price, once their operating costs are met in excess of breakeven essentially goes to the bottom line. The impact to earnings is basically exponential relative to other industry companies have a more that NUGT is a 3 times multiple of the minors index - so highly volatile and measured daily, not as a function of the combined stock value of the index. The fact that it is up 332% can easily be correlated to the 88% jump in GDX (which is a one times multiple of the Gold Miners - therefore 3 times 88% = 264% - then consider that both are targeted to meet daily moves so the denominator changes every day). The 88% jump in GDX can readily be correlated to the 20% move in GLD. I believe as a general guideline - the average industry threshold to meet for gold production currently is about $1,000 (appreciating many companies and certainly many individual mines will have a breakeven threshold of less than $1,000 per ounce.
    The idea to short the minors has to be supported by an anticipated drop in Gold price below $1,200 - and if a person is interested in the 3x multiple in trading minors short I believe DUST is the short equivalent to NUGT. Given the structure of NUGT - I would question the validity of any chart of NUGT. A chart of each of the underlying mining stocks would be more meaningful. If you generated a 2014 chart of the same GLD, USD, GDX, and NUGT - it would probably be the reverse picture and if you are going to chart this comparison - certainly a much longer perspective would be more useful to gain a context.
    Summary - while creating a short trade based upon an overbought position might be valid, and shorting to the next trend line for NUGT is about a $10 move from 99 to 89 (the current 50dma. NUGT currently moves in an average range of $15 per day. GDX is about a $2 move from $25 down to $23 to hit its 50dma - so not being a "day trader" I'm questioning the validity of this recommendation.

  • CW

    Cole W.

    15 6 2016 00:33

    3       6

    Great as always.

  • JH

    John H.

    14 6 2016 23:54

    5       1

    reading the body language, you nailed them, cold! I love the longer format. fantastic style from top to bottom. between the rainmaker and ben hunt, central bankers don't stand a chance. my guess is he's got the gold trade right for now, but will he signal the buy that's coming?

  • jw

    jackson w.

    14 6 2016 23:01

    25       0

    i think it is good to hear your point of view. if you look at a 10y chart of the GDX, the rally this year looks like small noise. maybe i'll set a trailing stop, but fundamentally, gold and gold miners are still a buy IMO