Al's Insights – Fri 27 Apr, 2012

From the Chicago Resource Expo we discuss the future of the Resource Sector

Click download link to listen on this device: Download Show


Featuring:
Al KorelinMickey FulpMarshall BerolRich Radez

Comments:
  1. On April 27, 2012 at 11:05 am,
    Denns M. O'Neil says:

    If you sold in may nad went away in 2011 you missed 2/3′s of the 2011 y/y move in gold.
    July and August were pretty good months last year.
    http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx
    2011 was evidence of sell in september and go away.
    My point…with the major macro historical evnts occuring as i type on an hourly basis
    we need to throw away the seaonal calendar and pay attention.
    Have a core position in both physical and the resource stocks then accent those core positions with similar trading positions you are prepared to trade with the ultimate goal of adding ounces and shares.

    • On April 27, 2012 at 11:31 am,
      Marc says:

      Dennis,
      Absolutely! Throw the calendar away – too much macro stuff going on!! Your comments are seen, heard and I will heed it!
      All the best,
      Marc

    • On April 27, 2012 at 11:41 am,
      Mark Alan says:

      Mr. O’Neil

      You share my opinion! I was noticing last year when gold blew upwards in June that the seasonal patterns seemed off, only to confirm that when September came around. Lost a lot of money listening to “gurus” talk about the seasonal bullishness, when in fact, it wasn’t so. Took control of my own decisions shortly afterwards. With the macro-economic pictures of Europe, Japan, Middle East, I say seasonality is completely out.

      • On April 27, 2012 at 11:50 am,
        Matthew says:

        I agree with all of you. Fundamentals lead TA, especially in extreme conditions.

    • On April 27, 2012 at 12:13 pm,
      Jerry O^OTB says:

      DMO…..”have a core postition.”……..is correct……, long term gold is going
      higher,

  2. On April 27, 2012 at 12:29 pm,
    Jerry O^OTB says:

    Nat gas, that is another problem….and has been since 1971
    I say stay focused on the” big pie”…if you are a little trader,
    or small investor, and you have a job other than watching stock, and
    the market…..just my three (3) cents,,,
    although I do like pm stocks….and Al’s companies, since he is doing all
    the leg work…OOBT

    • On April 27, 2012 at 12:45 pm,
      Jerry O^OTB says:

      PS….GREAT INFO…AS ALWAYS

      • On February 1, 2014 at 8:07 pm,
        Patryk says:

        Tonight I met a friend whom I’ve not seen for 9 years so I’ve had a relaly nice evening! :-)Mio looks as if he’s growing fast! :-) And Helsingborg looks like a relaly nice place! :-) Also, on the photo you’ve called ‘cute city houses’ I’ve noticed that the roofing pattern is identical/very similar to the roofs we have in my part of north-west England where I live :-) Though I suppose Sweden, after Norway, actually isn’t that far away from where I am. It’s only over the water! :-)

  3. On April 27, 2012 at 12:49 pm,
    Dai Uy says:

    Al:

    I’m beginning to believe more and more in the old adage that a bird in the hand is worth two in the bush which if true, bodes well for for the physical PM’s vis a vis the equities. Mining costs, at least those associated with energy and labor, have been increasing about 8% a year so if we assume that the markets will not change, which is not necessarily a valid assumption, then the physical prices should be roughly 8 % more this time next year just based on mining cost increases alone. Furthermore, these costs are already behind or in the past for the physical PM’s and the physical is not subject to political events such as nationalization, increased taxes etc. as govermnents search for new ways to increase revenues such as Argentina and Australia…………..

    BTW, I ran this theory by Eric Sprott last Fall and he didn’t seem to buy it but lo and behold, within a month or so, he picked up a huge quamtity of AG and did the same earlier again this year…………………

    Having said the above, the larger and quality well managed Miners with little(ABX) or no debt(GG)are making money hand over fist because of low costs, increasing reserves through quality M&A’s, have large cash reserves and are paying at least small dividends, have attractive tangible BV’s, have a very bright future indeed medium to large long term. IMHO. First quater earnings this year are down but so are PM prices. GG sold their AU last year for over $1700. an ounce

    • On April 27, 2012 at 4:25 pm,
      Jerry O^OTB says:

      DAI….GREAT THINKING….Not all the so called experts know everything….
      The only thing you might think about is that inflation is 10%…., but, your idea
      of the pm, and one in the hand….I like…., I like physical….,stock so,so,

  4. On April 27, 2012 at 1:00 pm,
    Dai Uy says:

    BTW: I plan on being on the island for a week starting June 10th and will have a genuine Cougar treat for you should you be in the neighborhood………………..

  5. On April 27, 2012 at 1:02 pm,
    Richard says:

    Al, unfortunately, I agree with Fulp. I’ve said for some time that we’ll trade sideways to down for weeks to months. I have dipped my toe in a miniscule manner yesterday into a couple of gold stocks but I’m keeping my powder dry for the future. The future will come and patience will be rewarded.

    • On April 27, 2012 at 2:42 pm,
      Matthew says:

      The strength in copper lately has been consistent with it’s outperformance of gold since the lows for both metals last fall. Since then, copper rose 50%, then retraced 38.2% of the move -never closing below this fibonacci support. Gold, on the other hand, showed much less strength, rising just over 18% before retracing 61.8% of the move -closing below this last significant fibonacci support once. Gold is now above the 50% resistance. With copper now back above the 50 day moving average, it looks like the market is anticipating serious monetary debasement. China might simply view copper as a better bargain than gold for the moment. Priced in gold, copper is now trading at 2003 levels.

  6. On April 27, 2012 at 1:29 pm,
    Dennis M. says:

    I just want to make sure I am not right on monetary mahem and wrong on timing.
    Fulp made the same calll last year as did many others.
    Turk called the summer rally 2011.
    If I recall it was macro and debt ceiling related.
    Election year Fed easing….the fiat fiasco and lookie here we have hit the debt ceiling again.
    Election year further easing is 99 percen proaility and they are nckking on the debt non-ceiling again.
    I am

    • On April 27, 2012 at 2:27 pm,
      Richard says:

      Dennis, I believe many of the markets are focusing on further QE. This week the Bernank pretty much said the Fed is sitting on the sidelines for the foreseeable future. We will probably have the debt ceiling issue again but the amounts of money for that pales compared to QE. Will the Bernank come into the market again—-certainly; probably for 2 reasons. Operation twist comes to an end in June. If people/institutions are not moving into the treasuries in any big numbers the Fed will purchase more. However, I don’t believe they’ll have to purchase as much since I believe others will be moving into the treasuries for safety especially when the conventional markets go south. The Fed will also consider further easing when the conventional markets get testy. I believe that will happen in the not too distant future.

      • On April 27, 2012 at 5:50 pm,
        Denns M. O'Neil says:

        Sorry for all the typos I was typing on a phone..
        I also think Fulp may be right!!!!!!!!!!!!!!!!1
        I also think he may be wrong as he was on the same call last year.
        People should always gage when is the tide in and out.
        But there is a pending thrumping trumping of the monetary normal tide coming soon and it is dangerous to be on the wrong side.

      • On April 28, 2012 at 11:34 am,
        Dennis M. O'Neil says:

        Richard I agree a significant Fed Annoucement that it’s monetary policy is as loose as a horney hooker short on cash is coming near term.
        To have to to benefit Obama and be sustained I am thinking an announcement pre- July 4.

  7. On April 27, 2012 at 3:18 pm,
    Peter says:

    “Something BIG is going down. First Blythe appeared on CNBC 2 weeks ago claiming that JP Morgan holds its metals positions on behalf of clients, then the CFTC moved 1 step closer to finally implementing position limits last week with their meeting discussing swaps, and today we have the kicker:

    JP Morgan adjusted 5 million ounces of silver into dealer (registered) vaults Thursday, increasing their registered inventories 500% OVERNIGHT!!!

    While the CME is now reporting inventory levels to 3 decimal places, strangely enough- once again, NO MENTION FROM THE CME OF THE MISSING 1.4 MILLION OUNCES OF REGISTERED SILVER THAT SIMPLY DISAPPEARED IN THE AFTERMATH OF THE MF GLOBAL BANKRUPTCY!

    As a strangely coincidental supply turned up in JPMorgan vaults almost simultaneously as the MFGlobal clients phyzz went missing, until the CME provides an update of what happened to this stolen inventory, The Doc will continue to provide the latest available info on this from the CME:”

    http://www.silverdoctors.com/jp-morgan-increases-registered-silver-inventories-500-overnight/#more-5018

    • On April 27, 2012 at 4:31 pm,
      Jerry O^OTB says:

      Peter,,,greaat post…thanks for the info…..great heads up….thanks…ootb

  8. On April 27, 2012 at 3:18 pm,
    shawn says:

    To me this segment of Al’s show is all about gambling, nothing spiritual here but from the day we are born gambling is a big part of life, but where it gets really interesting is when you are in a room full of professional gamblers and like they say, “if you can’t spot the mark than you are the target.” I think that there is always opportunity if you can find it.

    • On April 28, 2012 at 4:21 am,
      Denns M. O'Neil says:

      The late Maurice Farber from the Department of Psychology at the University of Connecticut on why we gamble:

      In his opinion, there are six vital factors.

      In my opinion, some of his opinions are a little out there, but here they are:

      1) To relieve boredom. Many people feel desperately bored and empty. Gambling offers excitement, an antidote to boredom. Playing the game makes the hours go by like minutes.

      2) The challenge of a battle. To many, gambling is a “war,” a battle of wits between the gambler and his opponent or “the system”. While gambling, we can attack, conquer or retreat without the deadly effects of real battle. Money adds interest to the battle. If the stakes are not too high, no one is really hurt. Thus, gambling can be a way of having your cake and eating it, too.

      3) You can dream a little. Gambling is often related to the secret wish of many of us that something wonderful will happen, solving all our problems. Our ship will come in. Gambling small stakes for large winnings is a manifestation of the wishful day-dream aspect of gambling. It may explain why so many sweepstakes tickets are sold and why there is so much long-shot betting. Undoubtedly, there are people who never really expect to win, who know that the odds are heavily against them, but gamble only so they can dream luxurious dreams.

      4) The feeling of power. The cravings people bring to gambling sometimes involve an unconscious or conscious magical belief that they are all powerful and cannot lose. They believe the horse they bet on is sure to win, the speculative stocks they buy sure to go up. This is a complicated emotional side of gambling and even may be related to deep unconscious sexual feelings. Perhaps to the extreme gambler, winning is something akin to sexual experience; to this gambler, losing becomes associated with sexual punishment.

      5) The “family enemy” explanation. To some gamblers, the opponents stand for family members against whom the gambler feels hostility. For instance, the opponent may symbolize the gambler’s father, who for various reasons may be resented by the gambler. Or the opponent may be seen as the brother who the gambler believes was favoured by his parents. Thus the gambler seeks to “defeat” family members against whom he has harboured ill feeling since childhood.

      6) The desire to lose. Perhaps the most curious paradox about gambling is that some gamblers really have an unconscious desire to lose. These gamblers seem so controlled by hidden guilt (which may arise from childhood experiences) that they actually play to lose as a means of relieving their guilt. People who persistently bet on very long odds often are of this type. They may protest long and loud about losing, but unconsciously they are deeply satisfied.

      #6 sounds a lot like James Dines.

      In the end the precious metals market will be more about psychology than it will be about calendars and fundamentals.

      • On April 28, 2012 at 8:58 am,
        Peter says:

        “In the end the precious metals market will be more about psychology than it will be about calendars and fundamentals.”

        But do not fundamentals, as they trickle down to the masses, influence their psychology?

  9. On April 27, 2012 at 4:07 pm,
    Mark Alan says:

    I don’t agree with Mr. Fulp, and I don’t completely agree with Mr. Berol.

    This is NOT going to be a “Sell in May and Go Away” Summer. You have two major important geopolitical events happening next week, May 6th: The Greek vote concerning the new budget plans, and the Second Round of the French elections. Then just a week later, or sooner, you will have the second b.s. session from the 5+1 talks regarding Iran’s nuclear program. Last year gold blasted to new highs during the “summer doldrums” all while ALMOST EVERYONE was saying “sell in May and Go away.” James Turk hit it BIG. Most gold stocks rose during June last year, on average 50% with some junior producers rising to as high as 100% and that was when they were producing at prices in the range of $1300 to $1500. Fulp says “liquidity” is the issue. I completely DISAGREE! Liquidity was what escalated the 2008 crisis. We have more liquidity now than ever and it is just sitting on the sidelines and some going into the conventional markets. The REAL problem was that most investors were convinced that the so-called “parabolic” move in gold last June/August was just that; a parabolic blow off top. Combine that with fear of Europe crashing, our own markets getting whacked during the Fall season and no wonder no one was wanting to get into the mining stocks! THEY WERE NOT CONVINCED. This blew all the “seasonally favorable time for gold stocks” wisdom out of the water. No one was willing to step in an be a buyer, especially the smart money. But look at the really great low cost producers today! they are starting to bounce and some have been rising the whole week. I think the junior producers are going to really well this summer, but I would want to re-evalute them going into mid-late June. Gold will probably channel, but in an upward fashion. I don’t see it going down below the $1625 mark, even if there is a serious event. Why? Only the strong hands and smart money are holding gold, there isn’t a weak hand left. No sovereign, or central bank is going to let go of their gold even if they have a margin call, or a derivative explosion. The only thing that will get dumped are the paper gold holders.

    Dr. Copper looked damn healthy today! and crude oil is looking really strong too. I would not be surprised to see oil move to challenge the $110 if we cut through $105.65. We can still have lowering gasoline prices at the same time as rising oil prices, so I think we may see just that up until Memorial Day. The Fed has been pumping around $13 billion A DAY INTO THE SECURITIES lending pool, so this is why we have horrible economic information all the while, the market is rising.

    The general market is looking weak on a technical basis, but there are some other sectors that are pointing to strength, so we may still see higher highs achieved in the conventional markets come mid May. From there, sideways to down, but would not be surprised to see a blow-off top happen before July 4th to sucker in all the sidelined money. There is going to be some really incredible volatility this Summer in the markets.

    To me, the US dollar looks broken. But it could make a short run back into the high 79 index, but I doubt it. It closed below the apex triangle today and that is bearish. I would not be surprised to see more sideways to down regarding the dollar. But I honestly think we are at the stage where the US dollar and gold finally disconnect.

    • On April 27, 2012 at 4:54 pm,
      Richard says:

      Wow, Mark, you’re really on a roll tonight. Do me a favor. Since I look at many charts look first at the USO—-we talked about it in the past regarding oil. I told you I was short oil because the 200 week MA was dropping like a stone and I have not often seen an asset move through a 200 week MA that steep. We’ll know in the next 2 weeks if I’m right. If it takes out the 200 week MA I’ll get out post-haste. Another chart I follow “religiously” is the dow/gold ratio. Interestingly, the ratio is right up against resistance. If you draw a line down through the 2 high points in March of 2010 and February of 2011we are right at that resistance line. If it drops back from that resistance, there are 4 possibilities: 1. Gold and the conventional markets will both move down with the conventional markets moving down more. 2. Gold and the conventional markets will both move up with gold moving up more. 3. Gold stays the same and the conventional markets move down. 4. The conventional markets stay the same and gold moves up. I pick #1 since the volumes in both markets is very quiet. Now, if the resistance is taken out, that’s a whole different ballgame.

      • On April 27, 2012 at 4:57 pm,
        Richard says:

        By the way, Mark, when I talk about the Dow/Gold ratio chart, I’m referring to the weekly charts.

        • On April 27, 2012 at 5:16 pm,
          Mark Alan says:

          Richard,

          I would be more than HONORED to look at some other charts you mentioned. Yes, the weekly charts for DOW/GOLD is what I like to look at as well as the weekly for the $HUI/$GOLD. Also, I have learned that the ETFs like USO can often give false signals, as well as give more clear signals. So, I always like to look at both the ETF and the actual comodity using weekly charts.

          As a whole, though, my analysis favors more #2. But I will look further.

          • On June 15, 2012 at 10:52 pm,
            Allan says:

            CAgoldprospector97,Hmmm .oil out of plastic gold pans? Well, I’d start by wahisng it in REALLY hot water and dish soap. Scrub the heck out of it rinse/dry several times. Then, take a really rough piece of 30 grit sandpaper and sand/scratch the entire inside including the bottom really well. Make it have cross sctarches on the sides and circular in the bottom so specks can hold ont to when panning. Use JetDry in your panning water to prevent fine gold float. Pan in clean water. Randy

        • On April 27, 2012 at 5:26 pm,
          Mark Alan says:

          Okay, Richard…

          I’m back. This is what I am seeing on the WEEKLY USO chart: I see a HUGE inverted Head & Shoulders pattern, along with a beautiful apex sideways triangle formed during the last five months of up and down price action. However, one could argue that there is also a BEAR FLAG present on this last leg down. But the volume doesn’t really support it…hhhhmmmm. Also, the SLOPE (Regression) is starting to turn UP, so this could be a false BEAR FLAG. But then again, this could also be a perfect head fake to lure a long into the trade. Another factor is that the UUP ($ ETF) and the USD index both look like they are confirming weakness. So, this to me, supports more of a bullish move for crude, which would also effect the markets and gold, but more gold and oil. That’s my take.

          • On April 27, 2012 at 6:01 pm,
            Richard says:

            Mark, on the bear flag of the last 3 months the down weeks show much more volume then the up weeks. I also consider some fundamentals such as the globe is awash in oil, the Iran issue appears to receding to the background, and the manufacturing in Europe, China, and the US appears to be going south—just some consideration.

          • On April 27, 2012 at 6:28 pm,
            Mark Alan says:

            hey Richard
            I went and looked back at the volumes on both USO and WTIC and I get a more clear picture with USO. It looks bullish. Now, although I have been reading a lot of the fundamentals that can affect the price of crude and could support a drop in prices, I also read fundamentals that show increasing prices to be realistic as well. It may appear that the globe is awash in oil, but we are consuming it at a faster rate than we are pumping it out of the ground, especially the light sweet crude which is easier to refine. There was a report on BLOOMBERG today that said China imported 1.4 million MORE BARRELS per day in February than the year before. India is also wanting to increase their imports by an additional 80K barrels a day! WOW! Even with manufacturing decreasing across the international scene, my personal feeling is that oil is going to go much higher and increase in demand because of a three letter word W-A-R. If you go over to the Tehran Times and the Russia Today websites, and you read the articles there regarding Iran’s nuclear power spat, I think there is A LOT of hidden tension that our media just isn’t covering.
            And this is why I said ealier; “fundamentals and logic just don’t seem the “norm” anymore” It “appears” that things are cooling, but under the surface they are building. Also, go to Al Alarabiya website and read what Israel is saying regarding Iran. very interesting stuff.

      • On April 27, 2012 at 7:04 pm,
        Matthew says:

        You left out a fifth possibility. Conventional markets could move down while gold moves up. I don’t believe that we’ll see a repeat of 2008.

        • On April 28, 2012 at 7:10 am,
          Mark Alan says:

          Howdy Matthew

          Honestly I think that scenario is what we will see in the late Fall. I agree that we will not have a repeat of 2008 because of all the “breakers” that have been put in place, as well as the FED being ready to fire up the helicopter.

  10. On April 27, 2012 at 5:50 pm,
    Richard says:

    Mark, I love reading your stuff. As far as oil is concerned I’ll have my answer in the next 2 weeks. If you look back over the last 2 years, guess when oil took a dive—-in May of both years. Anyway, let’s see what happens in the next 2 weeks.

    • On April 27, 2012 at 6:04 pm,
      Mark Alan says:

      Yeah! LOL!! That’s the funny thing because it of COURSE correlates with the Memorial Day Holiday. They have almost always tried to have lower gas prices before that time. Also, with all the “evil speculator” talk coming from the OFFAL office, we may get a smack to the downside in oil. But, this is what is troubling me, Richard, fundamentals and logic just don’t seem to be the “norm” any more. It would not surprise me in the least to see oil move to the upside because of all the horrible financial problems that are there and increasing tensions mounting between not just the Middle East and Israel, but between North and South Korea! heck even the Phillipines and China are getting aggressive with each other.
      Yeah, I think two weeks should be plenty of time….but who knows… The way things are going, it may only be one day that is required!

      stay frosty!

      • On April 27, 2012 at 6:24 pm,
        Richard says:

        Now here’s a possible scenario. Oil breaks down and the astute money buys gold miners since a large part of their costs is energy and with energy going lower, their profit margins should expand.

        • On April 27, 2012 at 6:31 pm,
          Mark Alan says:

          Now that is an idea! And oh boy! Wouldn’t that be wonderful for some trades! If oil dropped and could stay below $100 for at least a week, the mining companies should hedge their inventories and buy as much diesel and oil they need at reduced prices.

          Hey, by the way…what is your thought about the mining companies switching to Natural Gas to power their operations? Do you think this is something that seems out of the ordinary, or do you see the possibility if oil does continue to go up in price over the next six months?

          • On April 27, 2012 at 6:39 pm,
            Richard says:

            Absolutely, I believe natural gas is going to be huge in the future in more ways then one. I’ve been waiting to pick my spots to go long natural gas. We’ll probably get our chance this fall. By the way, gold could rally in the next 2-3 weeks but I don’t believe it’ll get much higher then $1750. I do believe we’re range bound for awhile.

          • On April 27, 2012 at 7:01 pm,
            Mark Alan says:

            Your price projection is EXACTLY within my target! I am projecting $1685 by next week with a POSSIBLE attempt at $1700. But I think that after May 7th, we should see gold somewhere between $1745 and $1775 and then some profit taking bringing it back to around the $1715 mark. But who knows? It is really possible that some black swan comes out of nowhere and we see a $60 to $70 move in gold in one day. But that would still put us in the range of oscillation between $1625 and $1900, so, “yes” range bound Up and Down. Now, on another note, If this inverted H&S pattern plays out on the weekly chart, then we COULD see $2050 gold by the end of July, especially if we see some serious volume step into the market.
            Have a great weekend!