Views from Gary Savage – Wed 11 Dec, 2013

Wednesday Morning Views from Gary Savage

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Featuring:
Al KorelinCory FleckGary Savage

Comments:
  1. On December 11, 2013 at 10:05 am,
    Dick Tracy says:

    I like Gary’s reasoning it fits for me. DT

  2. On December 11, 2013 at 10:15 am,
    Dan, calgary says:

    Keep up the good logic Gary. Canada Post will give up on house delivery in next five years. Price of stamps going up and service cuts equals shrinkflation.

    • On December 11, 2013 at 10:24 am,
      Bird Man says:

      Why would Canada post quit house to house delivery? Don’t they make most of their revenues delivering junk mail?

      • On December 11, 2013 at 10:43 am,
        Dan, calgary says:

        They have lost $270 million this year already and they think laying off and going through attrition for 6000 to 8000 employees and concentrating on parcels will save them. I think they will still do house parcel delivery.

        • On December 11, 2013 at 2:17 pm,
          Dick Tracy says:

          Two years ago Canada Post equipped all the letter carriers in Toronto with their own SUV delivery vehicles. I said at the time to my wife how can they compete when the posties drive instead of walking on their routes. The government shouldn’t be involved in any business decisions. DT

        • On December 11, 2013 at 10:47 am,
          Dan, calgary says:

          Thanks for the link (;-)

          • On December 11, 2013 at 11:46 am,
            Big Al says:

            Thanks gentlemen,

            I did not realize the situation with Canada Post.

          • On December 11, 2013 at 12:31 pm,
            Bird Man says:

            I had no idea either. Thanks Bentnail. I really must read the CBC more often.

          • On December 11, 2013 at 1:42 pm,
            Tony says:

            Bird Man – CBC is a TV station – you watch that

  3. On December 11, 2013 at 10:35 am,
    Eric Crane says:

    From Gary’s mouth to God’s ear!

    On an intermediate term uptrend in gold, I think some will surprised by the gains in the mining stocks. It seems to me that many of them have been priced as if gold was going to slide below the cost of production and remain there.

    To the extent that scenario is discredited, the mining stocks make significant percentage moves, just regaining some of the ground lost in the very worst part of the decline.

    I will use ANV for the purposes of illustration. A high of 40+ at the top in 2012. Since that time, down more than 90%.

    From the top, the stock had a relentless decline to $7 or so, by the March of 2013. Then a choppier pattern down to the recent lows. You are now in a position where the stock could double, just trying to rebound back to the Spring low.

    I am not a registered investment advisor, so please do your own due diligence. Just using ANV for the purposes of illustration — but there are many mining stocks that would make excellent bounce candidates on an intermediate uptrend in gold.

    Have a great day!

    • On December 11, 2013 at 11:31 am,
      Heidi says:

      to Eric about ANV ….I watched this stock plunge . Besides a lower gold price now don’t they have a big problem as well ? They might have lots of gold but a very low grade ?
      How did they ever got to $ 40 or above is beyond me but re: speculators … anything goes as long as it goes up .
      And also their production cost is high – like $ 1200 or above ?
      In days like these even the best of Gold/Silver Companies fell to the bottom .
      It will change again mid 2014 but reaching $ 40 again ?

      • On December 11, 2013 at 11:49 am,
        Big Al says:

        ANV is slipping today.

      • On December 11, 2013 at 12:02 pm,
        Eric Crane says:

        Hi, Heidi
        I acknowledge that to know whether ANV can recapture their old high, over time, there are a lot of moving parts to that analysis (but most important, just how far the underlying price of the metal will advance).

        My comment, here, was more related to trading an intermediate term rally (in which the mining stocks simply try to rally back to a previous area of consolidation). Those previous areas of support are now resistance — but the declines have been so severe, that just rallying back to those price points would now result in some very large percentage gains off the lows.

        I grant that there is stock specific risk, that varies from name to name — so which stocks someone selects for that trade would be up to them. Just for discussion purposes, some that I am looking at, in addition to ANV, include: DRGDF, IVN.TO, PVG, NG, KGC, HMY, GFI, SSRI. Also like Frank Holmes GROW and Eric Sprott’s SPOXF as proxies for a possible re-allocation into the metals sector.

        Have a good Holiday!

    • On December 11, 2013 at 11:33 am,
      SILVER MAN says:

      Exactly Eric ,most of my pm stocks are down 50% or more. I just bought shares in four mining companies today at sale prices. Two mining stocks I’am still up from where I bought them SLW,and NGD .

      GOOD DAY,

      • On December 11, 2013 at 12:05 pm,
        Eric Crane says:

        I hear ya — that NGD chart is very similar to the stuff I am looking at! best to you — Eric

    • On December 11, 2013 at 12:13 pm,
      Matthew says:

      Countless junior miners have offered 100–200% gains from their 2013 lows already. With shares now further consolidated into fewer strong hands, I agree that big, quick gains are probable. The HUI would have to double against gold just to return to its 2001 high. That is a very appealing risk/reward setup.

      • On December 11, 2013 at 12:40 pm,
        Mark says:

        Countless?

        • On December 11, 2013 at 3:00 pm,
          Matthew says:

          Yes, countless. I am talking about lows to highs this year. I quickly counted 4 doubles and 4 triples in my portfolio alone (and I might have more).

          • On December 11, 2013 at 3:40 pm,
            Cory says:

            I agree Matthew, there are some great buys out there. I have my target list that I am watching and ready to move in. In times like these it is very important to watch the stocks because they can have some great moves in a very short period of time and profits can be realized. If we hold to long then the price can be right back down if the underlying commodity price does not move up and hold. I think this is just a sign of the market trying to find the bottom and people waiting to inject their money.

  4. On December 11, 2013 at 10:56 am,
    Tom says:

    The needs of the many weighs on the quality of life.

  5. On December 11, 2013 at 11:04 am,
    John K says:

    This morning on CNBC,Rick “I love the smell of shorts burning in the morning” Rule said he sees tax loss selling in gold until the end of the year.

    • On December 11, 2013 at 11:52 am,
      ManAboutDallas says:

      Anyone who “tax loss sells” gold is too stupid to be allowed to own any.

      • On December 11, 2013 at 2:04 pm,
        Dai Uy says:

        I don’t agree. As I understand tax loss sales, one only has to wait 30 days to buy back in and I don’t see that Jr. Miners or even producers will spring back any time soon and that is even more true of the explorers.

        • On December 11, 2013 at 9:40 pm,
          Big Al says:

          Could be close if Mr Market does what I think it could.

          • On December 11, 2013 at 10:00 pm,
            Matthew says:

            I have to agree with you, Al. I wouldn’t want to be out for the next 30 days. One way to “have your cake and it too” would be to take the tax loss and immediately replace the positions with similar companies, thus avoiding a wash-sale.

  6. On December 11, 2013 at 12:11 pm,
    eagleeye says:

    Gary, both gold and the mining stocks are looking like they are poised to move up sharply. Why are you not advising everyone to “back up the truck” and load up as you have done in the past?

  7. On December 11, 2013 at 12:27 pm,
    gary says:

    eagle,
    It’s way too early to back up the truck. 10-20% max in case we get whipsawed out again.

    Picking bottoms in a bear market are tricky affairs and it often takes several attempts.

  8. On December 11, 2013 at 1:03 pm,
    Gary says:

    Watch 1779 on the S&P. If that breaks we will have confirmation of a failed daily cycle and a lower low. That would be a strong signal that the stock market is going to break free of Fed intervention and that an intermediate degree decline has begun.

    As it stands now I’m looking for more weakness into the FOMC meeting next week, followed by a bounce and then a continuation of the sell off into late Jan. or early Feb.

    I won’t short the market personally because I find it hard to make money on the short side. Markets go down differently than they go up. And one will be fighting the Fed as they will surely try to regain control of the markets.

    But I would strongly suggest not buying the dip for now. Wait to see if the sell off materlizes and then buy in late Jan.