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Investor Alert

June 8, 2017, 3:13 p.m. EDT

Investors conclude Trump won’t be impeached, and the smart money dumps gold

There were big changes in money flows, especially among the ‘smart-money’ set

By Nigam Arora


AFP/Getty Images
President Donald Trump

A successful investor’s secret is the ability to set aside one’s own opinions and analyze hard data without biases.

After former FBI Director James Comey’s testimony Thursday, the “hard data” are that, according to the collective wisdom of investors, President Trump won’t be impeached. I conclude this by tracking money flows in three important segments. To learn more about money flows, please see “Four big events that are prompting investors to sell stocks and buy bonds and gold.”

Money flows

As Comey’s testimony progressed, there were big changes in money flows, especially by the “smart money.” Please click here to see updated money flows. Contrast this updated table with prior money flows, which you can see here .

For stocks, we take into account the entire U.S. stock market. However, it may be easier for investors to look at major ETFs such as S&P 500 ETF (PSE:SPY) , Nasdaq 100 ETF (NAS:QQQ) , small-cap ETF (PSE:IWM) and DJIA ETF (PSE:DIA) .

For gold, we take a composite view of several instruments. It may be easier for most investors to review popular ETFs such as gold ETF (PSE:GLD) , silver ETF (PSE:SLV) , gold miner (PSE:GDX) and junior gold miner ETF (PSE:GDXJ) . Flows are especially pronounced in leveraged miner ETFs (PSE:DUST) and (PSE:NUGT) .

For bond ETFs, in addition to bond futures, we also look at popular ETFs (NAS:TLT) and (PSE:TBT) .

Ask Arora: Nigam Arora answers your questions about investing in stocks, ETFs, bonds, gold and silver, oil and currencies. Have a question? Send it to Nigam Arora.

The smart money dumps gold

Please click here to see the timing of the signal from The Arora Report about the smart money selling gold. The smart money was lightly buying gold going into four major events. However, as soon as Comey’s written testimony was released Wednesday, the smart money started selling gold. An immediate signal was given by the algorithms at The Arora Report provided to subscribers.

Fear index

Wall Street’s fear index is called the VIX (845:VIX) . VIX is simply an index, and no one can put money in it directly. I find it more instructive to look at the price action and money flows in popular volatility ETFs (BATS:VXX) , , and (BATS:UVXY) and .

On Thursday morning VXX was as high as $13.42. Smart money flows into VXX turned negative from the open. As Comey’s testimony progressed, VXX slowly drifted down to $13.03. The conclusion here is that investors aren’t thinking Trump will be impeached, an issue that is of very high concern.

U.K. election

Interestingly, all these changes in flows are happening prior to the results of the U.K. election. This indicates that the sentiment among investors is bullish.

Disclosure: Subscribers to The Arora Report may have positions in the securities mentioned in this article or may take positions at any time. All recommended positions are reviewed daily at The Arora Report.

Nigam Arora is an investor, engineer and nuclear physicist by background, has founded two Inc. 500 fastest-growing companies, is the developer of the adaptive ZYX Global Multi Asset Allocation Model and the ZYX Change Method to profit from change in trading and investing. He is the founder of The Arora Report, which publishes four newsletters. Nigam can be reached at Nigam@TheAroraReport.com.

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