From Birch Gold Group
As major stock market indices continue to climb, the trading activity of top U.S. executives and bankers suggest that the end may be near. According to security filing analysis by the Wall Street Journal, since the election nearly three months ago, insiders have sold off a staggering $100 million in shares. Is this just a coincidence, or are they preparing for something the rest of us don’t know about?
Why Record Highs Are NOT Cause for Celebration
Stocks are still riding their post-election rally and hitting record highs. For the first time ever, on January 25 the Dow Jones Industrial Average broke 20,000, and the broader market is charging upward as well.
With so much excitement, it’s hard to imagine that the party could ever end. But no rally lasts forever, and history shows that times like these are when Americans should be the most cautious.
Back in 1999, nobody thought disaster was possible. Stocks were soaring, the media was buzzing with positive stories, and the Dow broke 10,000 for the first time. The landscape looked much like it does today.
But while the majority of people were transfixed by the bubble’s shiny surface, Wall Street insiders knew it was destined to pop. That’s why they silently started dumping piles of stock while the masses stayed on the bandwagon.
Then, on January 14, 2000, reality struck the market and it began a two-year downturn that stripped $5 trillion from investors’ pockets.
Now it appears that history could be repeating itself, as stocks crest record highs and insiders start to jump ship yet again…
Insider Selling Just Broke a 10-Year Record
To say Wall Street is “rigged” might be an oversimplification, but it’s not too far from the truth.
The market’s elite level traders have a distinct advantage over the average Joe, or even someone with a healthy chunk of financial education under the belt. The reason why is simple: These insiders are privy to information, resources, insider research, and tools that always put them one step ahead. By the time typical investors get the chance to catch up, it’s too late – the big dogs have already made their move and moved on to the next one.
While that’s a discouraging prospect for anyone who doesn’t dwell in the upper echelons of the financial sector, there is a bright side: The trading activity of those on the inside might be able to tell us far more about where the market is headed than any research of our own.
Case in point, when insiders start selling shares at their fastest rate in a decade, you know something has to be up – and that’s exactly what they’ve done since November of last year.
Executives at some of the biggest Wall Street banks have sold nearly $100 million worth of stock since the presidential election, more than in that same period in any year over the past decade, according to a Wall Street Journal review of securities filings.
The share sales occurred as financial stocks soared since Nov. 9 on expectations of lighter regulation, lower taxes and pro-growth economic policies. The KBW Nasdaq Bank index is up nearly 20% since Donald Trump’s victory, about triple the gains notched by the broader market.
In addition to the share sales, bank executives have sold another $350 million worth of stock to cover the cost of exercising options, filings show. That is twice the amount sold for that purpose at big banks in the year leading up to the election.
Just as they did before the 2000 crash, insiders appear to be getting out while the getting is still good, and it should be a sign for the rest of us where stocks may go next.
“There’s been a massive spike in insider selling,” says Dave Kranzler. “The ratio sellers to buyers currently is 59 to 1. A ratio over 20:1 is considered bearish.”
What Average Investors Don’t See
Stocks might be hitting record highs, but there’s a reason why the Wall Street power players know it’s too good to be true. In terms of price-to-sales, stocks are more overvalued today than they were before the crash of 2008 and the crash of 2000.
Source: ZeroHedge
Essentially, the chart above means that we’re in a bubble where stock prices are inflated far beyond their actual value, which would strongly suggest that a correction is coming. Stocks might keep feeding on investor hype for a little while (just as they did leading up to the devastation in 2000), but according to this chart, any gains will be built on sinking sand. Eventually, prices would have to make a sharp reversal back to reality.
After Selling High on Stocks, Here’s What Insiders Are Buying…
If insiders are fiercely pulling out of stocks, what are they buying instead? There must be another asset they’re flocking to for safety and returns, and a recent spike in the purchase of gold-backed assets suggests that precious metals might be it.
Of course, the spike in buying that we’re seeing in these “paper gold” funds doesn’t reflect all the other insiders who are quietly accumulating physical precious metals through direct ownership. After all, gold stocks and funds still leave a thick layer of separation between owners and their metals.
So, in preparation for the crash that may be coming, exactly how many Americans have been buying physical gold these last few months? While there is no official reporting available, here at Birch Gold, we can certainly report an increase in interest. The folks that we’re speaking to seem to think that the flood is coming. Now, you’re faced with the same question that they’ve pondered: Do you want to buy your insurance before or after it hits?
Even if you’re just thinking of buying your insurance, take the first step now to educate yourself – click here to request your free info kit on gold. There is zero cost and zero obligation to you to get this invaluable information.
Birch Gold Group helps Americans protect their savings with physical gold and silver. Clients can purchase precious metals for physical possession, or move their IRA or 401(k) into a Precious Metals IRA. To learn more, request a free Info Kit on Gold – there is zero cost and zero obligation to you. All you need to do is enter your details at www.birchgold.com
I’m going to get a home equity loan and buy Gold.
Don’t do it Kokoda….. If this advertisement were true, you would see the price of gold futures on the rise……. which they’re not, they’re essentially flat ,trading in a narrow range.
The paper gold market is a ponzi scheme – that you can take to the bank!
Meh, you had me until the end when I find out it’s just a sales pitch to buy gold.
These guys have been pushing Gold for years. Crash just around the corner…..the next corner, oops the next. We are in a bubble, there is no doubt about that, however that does not mean there is nothing to invest in. For instance, get out of index funds, and move in to individual dividend paying stocks with high free cash flow. Then hedge the index volatility with something like the SDS (inverse SP 500) or similar to protect your principal. Then, if the market takes a dump, you make money on the SDS (hedge) until the storm passes, and you continue to make the dividend on the stocks that you have that have good free cash flow. Low debt companies (hard to find I know) with high free cash flow will ride the storm. Others, with high debt loads, and low or no cash flow are done.
Insiders have many reasons to sell. They are always in fact selling at various times. The TBTF may be selling as they see possible liquidity issues coming, or regulatory issues, or they are just concerned Trump may make them eat their own cooking if it goes rancid. Following the “insiders” has been a losing strategy on both sides of the market – long and short – for as long as I can remember, and listening to ANYONE (including me) of when to sell is stupid. As Jesse Livermore used to say, “play your own hand”.
Gold pays no dividend, and hedging against the end of the world is a fools errand. If the end truly comes, then Gold is not going to help you. You can’t eat it, it pays you nothing to hold, has little utility value, and can be confiscated or simply illegal to own. Paper gold (think GLD index) is even worse, as it is nothing but a fractional reserve index that is leveraged. Try redeeming your Gold from that ETF or the futures market if things get dicey and you may come to find out the bank of Sealy would have been safer.
Trader Jim–You say,”If the end truly comes, then Gold is not going to help you. You can’t eat it, it pays you nothing to hold, has little utility value, and can be confiscated…”
1. News Flash! You can’t eat paper currency, stocks or bonds, either. Any thing the the government wants can be confiscated whether it is call that or not–your bank account, your IRA or 401K, the value of your stocks or bonds or just your income with taxes, windfall taxes, etc.. What do you think Inflation is all about?
2. News Flash! Gold does have utility value as the most conductive and stable of all the metals. It is just too expensive for ordinary industrial use. It may have monetary utility in the future if past history is any indication. If it was as useless as you imply, it would be used commonly in industry.
3. “Paper gold (think GLD index) is even worse, as it is nothing but a fractional reserve index that is leveraged.” So true! But…Your currency, stocks, bonds, as well as your ETFs all have counter party risk. If the economy was stable it wouldn’t be a great concern, however, it is not stable. It moves from one ‘HotFix’ to another. That increases the risk as it is a red flag that something is wrong.
Gold like any commodity has no counter party risk. Can it go up or down, NO! HELL, NO! The currency that you use to get it can go up or down and it does which is why it is commonly referred to as insurance against currency debasement.
Trader Jim, you are right in your thinking and reasoning, but times have changed and it is not the same stable world that is was even 10 yrs ago. Thinking that tomorrow will be the same as 10 yrs ago may be a big mistake. Change is happening slowly and incrementally and is hardly noticeable to the common man.
No sin in selling gold. Stocks and bonds are hyped and sold, too. Predicting that you are going to die “… just around the corner…..the next corner, oops the next.” doesn’t negate the prediction. Sooner or later, you are goina die. It’s a given. The ‘fly in the ointment’ is timing. It’s hard to get right. Reading a chart, you are looking into the past and from that past trying to extrapolate the future. My problem with Technical Analysis is you don’t understand the causes why the chart acted as it did. It is the causes that have predictability.
Any way your comment was good!
Nice advertisement.