Friday Morning with Rick
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Everyone has an opinion. Tom seems like a nice guy by the way.
Don’t you think the US dollar is going to 100? I don’t know what the target would be from the chart of the past 43 years but it must be around 100.
Interesting that Rick sees 810 for gold as a target. Since the price is not going down much as the dollar has gone from 84 all the way to 91, a fall in gold by $350 would imply an enormous rally for the dollar perhaps way above 100. What is your target for the USD index Rick?
Personally I think the precious metals market totally stinks. No-one is going to acknowledge that the gold and silver are in a huge bear market, maybe a secular one. Silver is down 70%, come on! There has been no buying impetus in wither for over 3 years, a totally broken market really. Of course that can be what people think at a bottom but the charts look so much like the post bubble charts of the early 1980s.
One needs to use imagination – what if gold and silver are following the pattern of the previous bull and bear markets? A 10 year bull market followed by a 19 year bear market. Then look at the return times for the prices to get to a new all time high. Gold took from 1980 to 2007 to get back to its high, 27.5 years. Silver took 31 years from 1980 to 2011 to get back to $50. On the strength of that, one could see $1920 gold and $50 silver in years 2038 and 2042 respectively. Go goldbugs and silverbugs need to get real. It could be outside many of our lifetimes.
Now the patterns of other intermarket relationships are not like the early 19+80s, especially in terms of interest rates. However, one needs to consider this as an outside case- to bookend that with the idiotic prognostications of Eric Sprott who forecast $2000 gold by Christmas and Jim Sinclair who gets more out of it with every forecast (he forecast 12,000 and when it went to 1200 instead he prognosticated 50,000). Tune out these dorks because they are a disaster area.
Disaster areas that are simply trying to make a living!
Ha! Good one Al. Eric just needs to make another buck! You are making me laugh man.
Need is not the issue here, Bird, personal belief is. I don’t believe that he is a charlatan.
I never said he was. But you said he was “just trying to make a living”. I know a janitor who is just trying to make a living too. He gets 20 dollars a month for full time work in these parts. Wages are typically two bucks a day for most people here. Even government employees earn a paltry 100 a month as average earners. They are “just” trying to make a living too.
Yes, they got it wrong, at least on timing. Betting with them has cost me dearly.
But their arguments are sound, and these guys have proven themselves beyond any question over the long term. To call them idiots and dorks really just puts you in a bad light.
Question for Rick: why dollar is moving in trend with gold today?
As always thanks to Al and Rick for the comments – I continue to learn lots from listing to this show.
Re: the learning process – I took a quick look at TLT and it seems to be near an all time high. How does this stock/fund work? Does it track the 10 year rate and as that goes up it goes up or is the relation with that rate more complex? I like the idea of hedging my gold position but without a full understanding of how TLT works I fear being burned. I got into gold many years ago and did well during it’s last bull cycle and expect to do well during the next one when it comes but in the meantime I feel kind’a locked into a loosing investment.
That is the symbol for Thereleze. It is a low priced Canadian med tech company that Doc, myself and Cory are invested in.
TLT is Barclays ETF symbol …… V.TLT is Theralaze
Rick, $810? you are crazy. No way.
You are giving me flashbacks Lawrence. The bugs were screaming the same thing just before gold plummeted from the 1800 mark. They were just so SURE gold had to rally back to the highs and most seemed dumbfounded when it went against them. Keep in mind gold has not even done a 50% retracement yet so lower numbers are not improbable.
Hey, remember when everyone and his dog swore on stacks of the bible that silver could not fall below its cost of production? The gurus claimed it costs 23 dollars an ounce to mine. They would all shut down as soon as we hit twenty. Bunch of baloney as we now know. Call it metals propaganda.
Silver at sub 15 made hardly a ripple. Did you hear of anybody shutting down?
If gold goes to $810, where would The US dollar be priced, these parabolic moves are indicating an economy on a tightrope.
USD now over 91 on the index, very interesttttttttttting!
Next stop for the Euro targeting 1.1922….I am not giving up quite yet but so far my theory is pretty much smashed and chucked out the damn window. The dollar is the thing to watch this year. No question about it. I though the comments from M. Armstrong were pretty interesting today. Noting how Turkmenistan’s revaluation today was indicating currency devaluations are set to accelerate partially due to crudes declines and thus the dollar to move much higher. So we could have an uncomfortable compounding effect if the trend spreads. Something to watch for all right. But it just means even more money will pour into the US and send stock markets and some property prices much higher. At least for now. Best to just go with the trend.
That’s kind of how I feel Bird.
The Loonie got a big fat kick in the head today too, DT. I had been hoping for a bounce but it was not to be. If you can believe it I am actually losing to a few African currencies right now. What planet is this!
Bird, High US dollar will seriously undermines US export and stimulate US import and it will hurt US shale play really badly. It is not a good thing for US. For example, If all oil producing coutries devalue their curreniesy by 50%, the price of crude is unchanged in their currencies but in US dollar, the cost will be untolerable.
Great point, Lawrence!
Don’t you think the U.S. is on a bit of a tightrope?
Nobody said the price of silver cannot fall below production cost since it was like that for many years in 1990s to early 2000s, when US and Europe dumped billions of ounces of silver reserve to the market. Silver producers struggled for years and gradually faded away. There were very few silver producers left in early 2000s so their stock were all priced very high since there were no choice by the funds. I was trying to find good silver mines in 2005 and so disappointed since they all lost money and traded a negative P/E except SLW. Silver miners can still survive for a while by borrowing money or go dormant. I heard one bankruptcy recently. It is called Ran gold. It used to be a billion dollar company.
Like you to share your opinion about Santacruz Silver.
Thanks, Lawrence
Yes, Bird, I said the lower than production cost price will bankrupt silver mines but it could go lower because they can borrow money. However, the down trend was limited. It has not gone down much from 16-17 when I was talking about this. John kaiser said most of the juniors will go to 0. . That is why I am bullish on gold and silver but not mines. I feel the price of metals will move up but not enough to make the mines profitable. It is why I don’t have much gold/silver mines and I have sold nearly half all of my mining share I have had. I put the money to CEF.A and SBT.UN. Like you, I am not touch miners for now unless the price drop very low so I add the best of miners. Otherwise I will just wait. If price is going up, I will sell some.
Thanks for the information of big bang. Mark my words, I am bullish of PM but BEARISH on miners, for now.
“Nobody said the price of silver cannot fall below production cost…”
I thought you were around when that was a big discussion here. But maybe not. It has been a recurring theme especially when silver was near and falling below 23 dollars. Quite a few were claiming it was impossible for price to drop further because that would bankrupt the industry and blah, blah, blah……
And yet here we are. And silver is still falling after four long years on the same downhill trendline. Nobody is even considering what happens once credit dries up and many of those mines cannot extend loans or lines of credit. You should put that on your list of considerations before buying any of them though.
It is bad enough already that most cannot attract fresh capital but it will likely get a lot worse. Right now the best most can muster to create the impression of interest is to get insiders buying company stock.
The big bang is when lending abruptly freezes up due to some unforseen events. It won’t be personal in any case. I mean, it won’t be an event that only affects gold and silver producers. The shock will be market wide and that is when we discover that anybody who does not have a good cash balance will be seen to be swimming naked.
It is why you should not touch any company that is not well fortified or light on debt. The rest will be in a regular screw fest as they scramble for money that is just not available anymore except to the very lowest credit risks.
Until now, credit has been easy and cash plentiful at improbably low rates. That will all end in time.
Yes, Bird, I said the lower than production cost price will bankrupt silver mines but it could go lower because they can borrow money. However, the down trend was limited. It has not gone down much from 16-17 when I was talking about this. John kaiser said most of the juniors will go to 0. . That is why I am bullish on gold and silver but not mines. I feel the price of metals will move up but not enough to make the mines profitable. It is why I don’t have much gold/silver mines and I have sold nearly half all of my mining share I have had. I put the money to CEF.A and SBT.UN. Like you, I am not touch miners for now unless the price drop very low so I add the best of miners. Otherwise I will just wait. If price is going up, I will sell some.
Thanks for the information of big bang. Mark my words, I am bullish of PM but BEARISH on miners, for now.
Mark my words, Lawrence, gold is getting ready to plunge vs the miners.
http://stockcharts.com/h-sc/ui?s=GLD:$HUI&p=W&yr=3&mn=0&dy=0&id=p27261444895&a=361374318&listNum=1
I believe that the miners will outperform gold for years.
http://stockcharts.com/h-sc/ui?s=$GOLD:$HUI&p=M&yr=20&mn=11&dy=30&id=p25269508570&a=383076793
Matthew, I hope so, which means gold will be up significantly for mines to make money. I am more on silver so it is as leveraged to gold price as miners.
Good luck.
The “Big Bang” isn’t actually my words, Lawrence. It is the term for a theory put forward by Martin Armstrong where Sovereign defaults bring us to our knees and result in an economic collapse.
Somehow it has slipped into my lexicon along with the terms used by Reinhart and Rogoff where they call the conclusion to our massive credit expansion the “Bang! Moment”.
I am sure the two ideas are roughly connected. Here is a quote from “This Time Is Different” that puts a little light on the basic idea of how credit dies. It is an idea well worth keeping in mind each time you might inadvertently slip into the idea that it might be OK to speculate on companies with weak earnings, impaired balance sheets, heavy debts and poor credit ratings. Especially at this late stage in the stock markets rising cycle.
“”Perhaps more than anything else, failure to recognize the precariousness and fickleness of confidence – especially in cases in which large short-term debts need to be rolled over continuously – is the key factor that gives rise to the this-time-is-different syndrome. Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang! – confidence collapses, lenders disappear, and a crisis hits”. — Reinhart and Rogoff — This Time is Different.
In other words, it comes suddenly. Whether in the form of higher rates, credit freezing up, a lack of confidence, fears of losses or many other causes. If you are stuck with some companies when that black day arrives there may not be any time to escape before getting sucked into the undertow.
That is the feared no-bid market.
Sovereign default is just matter of time. The other area is the derivative market where they use to control every market force including gold. They either have to default or print their way by truly pay the banks for their marginal value. Either way, market reset will bring big trouble and physical asset will benefit enormously. I agree with Armstrong and understand his frustration. I just don’t know the timing. As for Reihart and Rogoff, I think they Are absolutely right and it is what is going on. I particularly like their financial repression theory
However, IMHO paying the banks full value should result in bankers being hung. A few will get wildly rich and most will get so poor. I am not sure in US but this will start a revolution in China if Chinese government does it.
What is incredible to me Lawrence is how so many revenue-less companies have been bid up to the stars. It is just too stupid for words and I would not participate in that insanity because the risks are rising too high. Those companies would be dumped like hot potatoes in any major downturn or credit crisis. A real crash.
Yes Bird, the companies with no revenue or big loss have been bid up. They may fall 99% and still expensive. I listen to Jim puplava every week and his justification to buy stocks are full of moral hazards but it is reality. We have to dance while music is playing. Otherwise, we are left behind
Bird, I am not sure you just want to say this or you do feel that gold is going under 810? In investment we are talking about probabilities not possibilities. Gold can go under $1 if we one day find there 1 million tons of gold bullion existing in North pole. I was asking people to sell gold when gold was near 1880 in 2011. I can gave you a link in our Chinese site. I just have to go back to do serious search. Not every gold long is gold bug. I hate people calling longs this way. I said I can sell gold if I consider it is over valued.
As I understand, a 50% retracement is from peak to trough, not from peak to 0. Now peak to trouf 50% value is $1086 and peak to 0 is $960, both significantly above 810. If Rick says anything above $950, I would consider it probable and would not say no way.
Lawrence, I have learned not to argue with Ricks charts!
Interesting targets come from considering the retracements of the previous bull market from $253 to $1920: 38.2%, 50.0% and 61.8% are at about $1284, $1087 and $891. The $891 is fascinating because it is also the 21 January 1980 top of the gold futures market to within a couple of dollars.
Also the mid 1970s correction was about a 60 or 61% correction of the previous 1970-44 bull market run, so 891 is a nice target I feel on symmetry.
Bird, what was gold production for 2014?Is it up above the amount for 2013 and 2014? I have read that it is up despite 6 full quarters of gold spending the entire time under $1500 and quarterly averages basically around $1300. SO you are right the stuff about production falling off a cliff was pure BS. not to say that it would not happen over time but that needs to be in the context of real sustained pain for the producing companies and the explorers too.
Personally I am looking to see if the US dollar will top in 2015 at perhaps around 100 or so and then have a maybe 8 bear market as indicted by its cyclical trading chart since the year 1971. That could be the spur for a good gold rally, either to new highs or a bear market rally like the one in 1985-1987. That would probably be a good trade one way or the other, especially in the precious metal stocks.
810 gold Is certainly not out of the realm of possibility but the fall has been slowing as the dollar’s uptrend has been accelerating, which is interesting and a sign to moderate bearish fears to an extent, perhaps.
I meant 8-year bear market (for the dollar, which is a typical length as per 2001-2008 for instance, once it tops)
Interesting…I will have to look at production numbers since I have not done that in quite awhile. But as we have seen with crude, coal, copper and iron ores that production increased even as prices fell and profit margins were being crippled.
Lawrnce, some people have been predicting about 800 gold for years, 50% retracement is about 950 and 50% retracement is normal. Nothing says it cant overshoot to the downside.
Thing is, people that state that generally are not popular with goldbugs, they can get fired or thrown of sites etc. lol
You mean jj?
There were a few I believe Bird, remember how people used to attack you too?
I never agreed with attacking anyone, anyway, Nadler? fired from kitco?
Trader dan, totally tired of impolite attacks from goldbugs.
Personally, I see gold as money, that’s it, I put 5-10% of investable income into physical, leaves 90-95% for other investments.
I see your point about gold and money, but really, the amount I put in is just not a big deal, also, gold is doing fine in any currency other than the American dollar.
There is vertualy no stress at 5-10% physical gold.
I hope it does hit 800, (premiums might get big tho) I honestly think its going to somewhere around 5k around 2020-2025, of course we could all be digital by then, lol.
Very astute on your part, bb
It is wrong just to keep repeating over and over what gold enthusiasts want to hear. It is akin to stealing money!
It all makes a lot of sense until it doesn’t.
When I hear repeatedly over and over the financial gurus referring to the retirement savings of millions of people as the “GAME”I tend to be bit concerned.
It sure as heck is not a game to me John K!
BB, 50% retracement is retracing to the mean of peak and trough, not to half of the peak value. For example, if S&P go from 1000 to 1,800, the 50% retracement is to 1,400 not 900. Am I right? otherwise we eventually retrace to 0.
Geez Lawrnce, I always thought it was 50% from the peak, I could be wrong tho.
Jim Rogers figures gold could go below 1000, he said he intends to buy lots if it does.
Im sure he said 50% retracement was about 950.
A lot of variables tho, too many for me to calculapute.
I figure eventually, the ameican dollar loses reserve and another will replace it, I think gold plays a part, too many people in this world like gold.
Good lord, dirham and dinar has gotta be a clue, also, the hindus have the world beginning from a golden egg don’t they? Kind of a clue why Indians like gold so much I think.
250 trough to 1900 peak = 1650 differential
1650/2 = 825 … 250+825 = 1075 (50% retracement)
1650x.382 = 630 … 250+630 = 880 (fibonacci breakdown level)
1650x.618 = 1020 … 1900-1020 = 880 (alternate calculation)
It is taken from the peak, but 950…1200, who’s counting? Thing is, we likely won’t be seeing 950 gold for long if it does get there. After four years, a lot of gold speculators have been shaken out already. The gold bull that started around 2002 is still technically intact, and that’s the key thing. Gold hasn’t seen the final and longest wave up yet.
I would think that the Fibonacci corrections of 38.2, 50 and 61.8% are to reverse that fraction of the previousmove. That would be because the markets are like fractals and are nested with many smaller degree moves inside them that look similar. The golden ratio being 1.618:1 from the formula 1+x = 1/x; x=0.618.
The golden ratio (golden – ironic, eh?) is a key geometric ratio in art, architecture and of course nature and the Fibonacci numbers come from it because as the list of Fobonacci numbers gets bigger, the ratio between adjacent numbers tends towards 1.618:1
the Fibonacci series is: 0,1,1,2,3,5,8,13,21,34,55,89, etc.
and each number is the sum of the previous two numbers.
That’s where these Elliott Wave geezers get all their stuff when they count days in market moves and bang on about 89 day downmoves and all that stuff I guess.
Good point about the retracement calculation, Lawrence. Getting to 810 is going to be more than a 50% decline especially if we assume the rise in prices really began way back in January of 2002 at 280 dollars or so.
Yes, Bird. I found sometimes people get lost about topic and the meaning changes. I know not everyone is mathematician so a couple of percent does not matter. $810 representa 67% retracement.
I mean AL? he is pretty bearish.
Not totally bearish, I just think, at least early in 2015, we won’t see much upward movement.
But then again Lawrence, by their very definition, Black Swans can and will surprise everyone.
You know, we used to ask frequently here what it would really mean for the dollar and for the worlds economy if gold ever got to 10,000 per ounce. We have hardly begun to consider what an 800 gold price means though. It is in many ways just as serious an outcome.
So far though the deflation camp has proven it was correct in the overall assessment of the direction the world is heading. We will indeed deflate during the great deleveraging process and in advance of an inflation threat that appears to lie somewhere off in the future (at least in the US).
And that may be the real story. The minor economies and the weaker countries could actually see some shocking inflation even as the dollar soars in value and the developed countries sink towards flat or even negative growth.
I guess it all depends on where you live as to what the experience will be.
And so that should be telling us where some of the opportunities will be as well even as many other people are losing their shirts or suffering confusion about how to get positioned for what is coming.
We absolutely MUST be thinking in terms of currencies each day now because that has clearly become the largest consideration in choosing what strategy is best in deploying capital.
This adds a whole other layer of complication for those who only think in domestic terms and their bipolar world of investments only consider inflation and interest rates. A third major variable is now being added that most people rarely even consider.
So it should by now have become obvious that money itself and its relationship to other nations currencies is taking on a whole new dimension at a time when the globe is growing increasingly unstable economically, devaluations prevail and debt deflation threatens.
I don’t know that this is so easy for everyone. I feel it personally because I live overseas and I see daily how my dollars wax and wane against the local currencies. But if I were back home my sense of my own currency would not be nearly as meaningful or acute.
The sensation of the risk of loss is certainly felt by others though. It is why we see the Japanese and Europeans rushing to move into dollars and into the US for example. They can get a double bang for the buck as both equities and the dollar rise versus their own currency.
Depending on what your originating currency was the effect could have yielded a 10% premium or greater. And at a time when inflation rates are flat as a pancake and interest is at the zero bound it should be pretty obvious the big game is all in exchange rates, the carry and differentials where investing for survival is concerned.
Why would gold go so low? Did all the problems in the world suddenly get solved?
Every time gold goes down, the buyers come in and grab every bit of physical they can get. Also, for gold to really go a lot lower, the real interest rates (currently negative) need to get closer to the inflation rate. Governments need inflation and financial repression. No govt wants higher real rates or they can’t service their debt. So the bottom line is that the world is still nuts, govt’s are still overdrawn and the fundamentals for higher gold remain.
$810 may happen but only if there is either a total deflationary collapse and India and China stop buying gold or emerging markets and currencies around the world collapse driving the USD much higher. If that is the case, then the world will be an ugly place and gold will still be a good thing to have.
FWIW, my view is that gold in 2015 will look flat in USD but what will really be happening is gold and USD going up against other currencies together. If you look at gold as money, it was the second best currency last year. If you pick miners in good non-USD jursidictions like Canada, you could do very well when their costs are in local currencies, especially if energy costs stay low. I think that selective gold stocks will go higher, whether gold goes up or not.
Paul W,
You will definitely enjoy the upcoming interview on the Weekend Show with Grant Williams.
I agree with that analysis, Paul W. Also FWIW.
Paul, Jim Willie, was saying he expected the US dollar to really get strong, then get weak, maybe its playing out, nothing says it doesn’t take a year or so to happen.
Ha! That is a big improvement, b. Before it was “the dollar will weaken and then implode to zero”!!! Guess even Jimmy Boy has had a change of heart now that all his whacko theories about the strength of gold have been smashed and mangled on the reefs of despair.
Poetic eh?
As in Sinclair?
No, Jim Willie…I don’t read Sinclair since he made that call for 50,000 gold.
Agree. For me, I am pretecting my self from Canadian dollar falling. Gold is doing its job.
For gold really to go down, FED has to raise interest rate above real inflation rate and withdraw nearly 4 trillion dollars from the money supply they have added since 2009.
Myself also, Lawrence. Gold held in a safety deposit box in Canada increased in value by 8% for 2014. When people say gold does not do anything (accumulate interest, pay dividend) I just laugh.
Thanks Brian,
We focus on silver and we take possession.
Please do elaborate on your comment pertaining to Rick and Snipp
Thanks
Also, I assume you are using Canadian dollars.
Sign me up for the deflationary collapse, Paul. It cannot be avoided anymore. And what is happening now must really be driving the Russians nuts. At a time when the USD is soaring they are almost literally forced to disgorge dollars into the arms of a planet that is clamoring for more than the markets can possibly supply. Yes it is a crazy world. I wonder how long it will be before they are also forced to sell off gold to defend the Ruble as was suggested here last week. And just as an aside, should we stop and consider how quickly the Chinese treasure trove of dollars might dwindle if they too hit the shoals and their own credit bubble finally bursts. Like I always say….you can only spend it once!
I think a lot of people feel dejected, who doesn’t wish they had sold at 50 and rebought?
I think there is a point when a person has enough silver, its an investment and probly should be limited to diversification percentages, gold, being just money is another thing, I expect gold to do exactly as it has thruout history.
All your gonna do with it is preserve purchasing power.
A good idea as part of a portfolio I think.
Well, sure it is bb!
Preserve purchasing power is good enough foe me.
And, so it should be Lawrence.
The buyers seem to be there now that tax loss selling season is over. Almost all of my gold stocks are up strongly today on a relatively flat gold price.
Precious metals volume in Asian markets continues to be extremely high.
I know it is true. Indian has lowered the import tarrif as well. Wait for those buyers to come back. I feel some countries have taken a lot of gold from their treasurt chest and dumped on the gold market. One source we know is GLD.
Why would GLD dump their gold, Lawrence? That makes no sense. If investors stop buying shares then they will disgorge, simple as that. If the market runs back to gold then GLD will be buying. In any case, its tonnage is now below 700 which is about where it stood at the peak for 2008…..seven long years ago.
There are more ways to drain GLD then investor selling. For example, one entity can short GLD and the guy bought the shares can take the gold out if they have large enough amount. Also we know some large owners are bullion banks. They may have to withdraw the gold to satisfy the delivery. I am not say this is the case since we never know. I just feel it is very unreasonable for GLD to lose so much and SLV has actually accumulated more. Just think about it. I would think SLV will lose more for this plunge if this plunge is totally due to demand.
GLD and SLV have added an extraordinary amount of volatility to the PM markets. Most notably, these funds act as a positive feedback loop when the price trend changes (either up or down). For example, as the price of gold dropped in recent years, GLD was sold and the actual metal was dumped on the market, drastically increasing supply and further pushing the price of gold down. Repeat.
Brian
Yes Brian but not for SLV though
Rick’s been harping on deflation for 20 years, but it didn’t stop the gold bull that began in 2002.
Rick also touts SNIP: This company is part of the problem associated with the on-line experience, consisting of ubiquitous advertisements and tracking people without their full knowledge and often without their permission. But I guess personal beliefs and ethics can be bent when making money, especially when it’s a 4-bagger, eh? But I’m the kind of person that donates money to the guy that developed AdBlocker.
Brian
Hi Brian,
I am sorry but I do not understand your comment.
Quote starts at 31:40
“For all you folks that are in the gold and silver market, you have to keep your head wrapped around the dollar. The dollar has been screaming that it’s going to go lower, even though it’s higher. I know this is a total mind blower, but let me tell you something – with the dollar up 550 ticks, it can’t whack gold down and it hasn’t been able to whack gold down for three weeks, that is saying everything. That is saying, guess what man, this frickin gold market is going to the moon.”
~Tiger Tom, Jan 2/15
http://youtu.be/jPi45F2aGs4?t=31m40s