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Chris and Doc team up with a market assessment into next week

May 14, 2015

Chris and Doc join us to discuss what they think is driving the markets. Further, Doc continues to like the gold market and Chris is still watching long term interest rates.

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Discussion
56 Comments
    May 14, 2015 14:35 AM

    Al the manipulators will stop one kind of manipulating and go where they make money…as Doc says…. change is underway…

      May 14, 2015 14:35 AM

      Because they have each other on speed-dial?

        May 14, 2015 14:08 PM

        No, carrier pigeon.

          May 14, 2015 14:05 PM

          And that’s why those guys have all the best moves Al. Its kind of funny you say that though because I hear carrier pigeons are making a comeback in the world of politics where zero trust now exists and all forms of communication are being monitored by the state apparatus.

          Ordinary people might feel threatened by the unwavering gaze of Big Brother but nobody has more to worry about than political actors themselves who come and go, often serving just single terms.

          It’s because the real power now rests in the hands of agencies and non elected officials who control and manage the data flow and effectively (not just a theory) have the ability to corrupt, blackmail or influence anyone anywhere as the comprehensive dossiers they have compiled stretch back years in time.

          Even before the idea of politics is a twinkling in the eyes of some.

          One day you are civilian who speaks his mind and the next you are maybe champing at the bit for public office. Just be sure you don’t cross the Monitors in the party who know every intimate detail about you since high school and know your every weakness and strength.

          I was not kidding when I wrote that the reason Obama plays so much golf is so he can enjoy private planning and strategy sessions without every word he speaks being recorded and overheard by some agency, phone company, corporate data collector or miscellaneous insider even within his own ranks.

          There is no trust at all in his world because nobody knows who is really in charge anymore or who the Snowdon’s might be behind the terminals and in charge of the data banks that now brim to the breaking point with a wealth of dirt on every person alive who is connected to the wired and wireless world.

          The last of the refuges are wide open spaces far from the sleepless mobile phones and myriad of electronic eavesdropping equipment. The trick is to keep moving all the time as you carry out State Business or discuss party politics. Even if there are a few bugs on the field the adversary will never catch all the conversations.

          Just be sure to cup your hand over your mouth to speak and keep your back to the security teams and onlookers who always stand nearby. Its amusing to me that nobody gets this as they rant and rave about all his golf sessions.

          I guess they really have no idea how much paranoia exists in the business of politics. And that’s why the trusty old pigeon is making a comeback. The NSA does not yet have a way to invade the space on a little birds leg and gather the encrypted code written on the messages being sent around the Capital!

      May 14, 2015 14:07 PM

      Well okay, “change is underway”!

        May 14, 2015 14:41 PM

        Will it do any good? Slight price increases followed by trashing the price just doesn’t work for me. Real change has to be strategically beneficial or it is nothing.

    May 14, 2015 14:18 AM

    Good interview guys. I agree and would like to see a close above 1225.

    May 14, 2015 14:25 AM

    I think the dollar is going quite a bit lower before it gets a real bounce. Looking at UUP, you can see that it has found some support today.
    http://stockcharts.com/h-sc/ui?s=UUP&p=D&yr=0&mn=9&dy=0&id=p88197349411&a=407163476

      May 14, 2015 14:39 AM

      I’ve been waiting for 92 since April when people didn’t think it would even get down past 97 or 96 or 95 or 94. Right now it is at 93.50 and people on different shows keep saying “I just can’t believe this fall in the dollar”……

      Now if it plows down through 92……it really is getting extreme at that point….

        May 14, 2015 14:40 AM

        …..I’ll be the one saying “I can’t believe it”……. Ha! 😉

          May 14, 2015 14:43 AM

          Don’t get me wrong, long term I think the dollar is going far below 92, but I just expect a turn there and a climb back up to test recent highs at 100.39 and then potentially make new highs one more time, before starting a multi-year decline.

            May 14, 2015 14:13 PM

            Long term is traditionally defined as being greater than five years. (At least it used to be!)

            May 14, 2015 14:40 PM

            Yes, my time frames are much shorter than how you defined them on the editorial, but I swing trade the markets, so everything is condensed timeframes.

            Short term – 2-4 weeks
            Mid term – 2-6 months
            Long term – 1-3 years

            I am not a buy and hold type of investor though, so everyone has different time horizons and risk profiles.

      May 14, 2015 14:53 AM

      I would agree with that. The end of the dollar declines is just a pipe dream for the dollar bulls stuck in a losing trade and praying if they keep singing “UP” that it will actually follow!

      And they really, really, really want it to go back up. Too bad for them.

      On that note its time to dust off an old theory of mine that said the Fed would actually be comfortable to see gold rising again provided it was a manageable ascent and signaled information that was desirable at a policy level.

      The reason of course is that it telegraphs that inflation is coming and that is becoming an increasingly important message to deliver. The mockers in the crowd can wail and shriek that such a thing is improbable but we should not doubt it for a second.

      The beauty of inflation *expectations* is that those beliefs can drive a self fulfilling event. It is the reason that Forward Guidance worked in convincing the herd a trend was forming that could be traded upon.

      Everything is about the belief set of the market and its majority players. It is about psychology on some level. An idea need not be guaranteed in stone but should be probable enough that any confirming data points makes its outcome plausible to the players such that they respond positively and reinforce that idea.

      So inflation is likely if rates rise. There is the basic premise. And the Fed Funds rate cannot rise unless the dollar falls. So then if the dollar falls then we have confirmation of devaluative processes at work and thus validation of rate increases. Ergo…get ready for inflation and velocity of money turning up. That leads us to the idea that expansion can be contemplated. And pretty soon the world is not ending after all.

      Circular yes…but whatever it takes as long as it works

        May 14, 2015 14:59 AM

        Well said Birdman.

        May 14, 2015 14:37 PM

        AS you may recall, this is a reason I’ve given, too, for my belief that the most bearish gold predictions are likely wrong. Just as when Greenspan back in the early 00’s happily pointed to a gold price rising well above his prior $340/ounce ceiling as “proof” that he had whipped deflation so, too, will today’s Fed be happier than not with a modest rise in it, as well as other “inflation” metrics.

        May 14, 2015 14:18 PM

        What do you mean by the term “manageable ascent”?

          May 14, 2015 14:33 PM

          We simply cannot have an uncontrolled rise in the price of gold Al because that only means the Central Banks of the world and their attendant governments have lost control of the reigns of their collective economies or worse, that their financial systems have destabilized and come unglued.

          It’s no mistake either that China has a semi-peg to the US dollar such that what is good for the US where currency strength or weakness is concerned might also be beneficial to China. Gold talks to both those currencies at the same time so its management regarding that strength or weakness is imperative.

          We should not doubt that the forces arrayed against the small community of gold bugs are far more potent than the shriekers in the gold ranks who would enjoy nothing better than to see metals humiliate public policy and those who stand behind the levers of control.

          And it is not a stretch of the imagination to appreciate that with the advent of China and India becoming the largest of gold buyers and holders on par with the Western players who dominated the markets in the past that management has taken on a new meaning. It has in fact strengthened the resolve of all parties to ensure gold does not move in uncontrolled ways.

          The point here is that it is not in the interests of any Central Bank on the planet that precious metals prices hijack the economic agendas agreed upon behind closed doors. Its suppression is therefore assured where necessary just as its eventual price rise must be orchestrated to fit the program.

          But I would not call that manipulation. Rather it is a form of management that is necessary by design and we should understand intuitively that such price management of gold where it stabilizes the globes major currencies is indeed for the benefit of the majority on the planet and their states, not an act that targets gold buyers in a petty irritating way.

          The bugs might really enjoy a great big, fat reset of the worlds economies and financial system but that sure as hell is not an idea that sits well with anybody normal who would much prefer stability to discord, war and the breakdown of our systems.

          Gold cannot thus be allowed to be that canary in the coal mine. But it can still serve a useful purpose in conveying a message when the time is right. Just don’t expect any moon shots because that will mean central policy and planning has failed.

            May 15, 2015 15:14 AM

            Very eloquent take, Birdman, with which I concur.

            May 15, 2015 15:31 AM

            Thank you Chris.

            May 15, 2015 15:28 AM

            Very well said Birdman. I do think the gold price is being “managed” for the very reasons you laid out.

      May 14, 2015 14:10 PM

      Pretty significant downtrend!

    May 14, 2015 14:33 AM

    $TYX has stalled for the last three days, but this makes sense considering this:
    http://stockcharts.com/h-sc/ui?s=%24TYX&p=D&yr=1&mn=0&dy=0&id=p83378563044&a=407316022

    May 14, 2015 14:40 AM

    Doc, what exactly are you looking at to determine future price movements? Is it symmetry in patterns – meaning, when a pattern is partially complete, you extrapolate price to complete it? Would appreciate learning this please.

    In the case of Gary, he uses Cycles (among other things, like sentiment), so that’s his look ahead – after a low tide comes high tide, type thing (in my simplistic mind).

      May 14, 2015 14:52 PM

      Bill; I look at variables that are completely then what Gary looks at. However,I’m slowly learning some cycle theory to see if it adds anything to what I look at. With time I’ll know. I also try to keep it simple since I read one very good technician who advised to “keep it simple, stupid”. I found that to be excellent advice since the more technicals you throw in the equation, the more confusion then reigns. What I’ve done in the past is look at the daily, weekly, and monthly charts on all the assets I watch since I find most value in the further you go out since the monthly charts will give you the long directional view. For instance, on gold, you’ve probably heard me say multiple times that there is no way you’re going to see 1000 gold in the near future—-that’s based on price movement and the variables I watch on the monthly chart. The monthly charts are the first to show the potential of a significant change/direction in the pricing of an asset. On all these charts i’ll pick out 2 MAs. In my case, I use the 50 and 200 MAs and I use them on the daily, weekly and monthly charts. I use bollinger bands and then I use momentum indicators (RSI and MACD) and strength indicators (ADX). I then also plot out trend lines along with looking at pennants, flag and other formations. When you put all of these together you can often divine direction and the potential for major resistance and support along with where your odds are for directional change. Along with all I’ve mentioned, the last part of analysis is what I call the art of analysis and that has to do with looking at thousands of charts which over time form subconscious nuances in your brain which aren’t taught in any technical analysis books. Your brain will tell you things based on experience. As far as extrapolating prices, Rick does that pretty good with his pivot points which of course like every other technical analysis is not perfect. I would love to show you through skype or some other medium how I do what I do since it’s difficult to just write about it without dialogue. For instance gold right now—It jumped about 20 dollars two days ago and after that, there were 2 good possibilities of near term movement for it. I always look for odds of each movement. Well, that’s pretty long winded and I’ll bet you’re more confused then ever—-I’ve recently started to show Cory and Al how I do what I do. When we do it , the best way is through dialogue as we pull up charts. I essentially have learned my own method of chart analysis over the years and for me it’s been quite successful.

        May 14, 2015 14:46 PM

        Good info Doc, and I think if you and Al & Cory could get some video editorials going or a recorded video insert (like what Gary Wagner does on Kitco or what Jordan Roy-Byrne does on Palisade Radio) it would be a huge benefit to everyone to see the charts and the technical indicators visually. I think if people that are adverse to TA could see stocks bouncing off the lower and upper Bollinger Bands, or could see the MACD crosses, or stocks or commodities butting their heads or bouncing of 50 day or 200 day moving averages, they’d have an “ah ha” moment.

        May 15, 2015 15:45 PM

        Thanks Doc.

    May 14, 2015 14:06 PM

    gold’s high was 1228 or 1227.10 according to kitco charts…….just saying…….

      May 14, 2015 14:24 PM

      1228 or 1227 when?

        May 14, 2015 14:47 PM

        Gold did get up to 1228 and 1227 earlier today, but it closed around 1221 and not above 1225 as desired. We’ll have to see if there is still some strength left in the run for tomorrow and the beginning of next week.

          May 14, 2015 14:25 PM

          I was encouraged thought that Gold did make it to the first resistance at 1221-1222, and that during the day it did get above 1225. It is normal to retreat from a resistance level on the first attempt…….that’s why they call it resistance.

    May 14, 2015 14:13 PM

    Great comments by all………even you OWL

    May 14, 2015 14:00 PM

    It appears the Germans are getting a little concerned about QE by the ECB.

    http://money.cnn.com/2015/05/14/investing/gold-germany-europe-ecb/index.html

      May 14, 2015 14:03 PM

      Going to post this one Doc.

      How was dinner? (I don’t want to call you a cheapskate quite yet!)

    May 14, 2015 14:19 PM

    Dinner was okay—I would call myself “thrifty. As you know, I don’t live particularly “large”.

      May 14, 2015 14:21 PM

      Glad you two had a good time. How much better was Judy’s score. That is the critical question!

        May 14, 2015 14:37 PM

        Judy? She burned the course up.

          May 15, 2015 15:55 AM

          Doc – I have another near term producing Gold stock for you to check out that I’ve mentioned in the past that has a similar set up as Golden Queen (I didn’t hear back from you on that one on Monday or Tuesday, but Matthew said he is on the case)

          The one for today is Torex Gold. One of John Doody’s top 10 picks featured prominently at the GSA investor day in February, and is a near term producer with about 50% of the mine completed. Here is a link to their Q1 wrap up:

          http://www.juniorminingnetwork.com/junior-miner-news/press-releases/1242-tsx/txg/7145-torex-announces-first-quarter-2015-results.html#.VVYGufldV8E

            May 15, 2015 15:59 AM

            Here’s a re-post of the questions from Monday & Tuesday to you on Golden Queen, and further discussion with WMK and I:

            n May 12, 2015 at 2:42 pm,
            Shad says:

            Here is a press release for Golden Queen – a small gold company getting ready to go into production this year. I have high hopes for them as a potential takeover target in 2016. For 2015, once they get up and producing by Q3 and Q4 and can prove up their numbers they should start receiving more attention:

            http://www.juniorminingnetwork.com/junior-miner-news/press-releases/golden-queen-mining/6926-golden-queen-reports-financial-results-for-the-first-quarter-of-2015.html#.VVHhUfldV8E

            WMK – Are you familiar with Golden Queen? Any Thoughts?

            DOC – based on your comments yesterday about checking out smaller companies getting ready to go into production, I’d enjoy hearing your thoughts on Gold Queen (GQMNF) is the US OTC.

            On May 12, 2015 at 3:54 pm,
            wocsom morf knarF says:

            I do not know Golden Queen well, but I like what I saw at a glance. Can you provide any nuggets that aren’t in their presentation?

            On May 12, 2015 at 4:31 pm,
            Shad says:

            Golden Queen has a full Feasibility Study, they are fully financed already, and going into production in a safe jurisdiction this year.

            John Doody has Golden Queen as one of his Top 10 picks for the year, and featured them prominently at the Feb 22nd GSA (Gold Stock Analyst) day this year.

            Garrett Goggin Associate Editor, Gold Stock Analyst- also was the first to bring to my attention that Golden Queen was only spending enough capex to prove up the reserves they are going to mine for the next 6-12 months at time to conserve cost, which seemed like a unique approach. This also means they have much bigger reserves than what they’ve put out in their Feasibility Study as they didn’t spend 5 years and burn through all their money proving up reserves that they won’t touch for 5 years. Instead they streamlined the process, got the money raised, are mostly done with construction, and they’ll be producing in the next few months.

            I’ve heard a little buzz about them lately on a few sites, and see them as one of the few Jr Miners about to get some new growth going again (like Romarco and Torex Gold, and Bear Creek Silver).

            I just respect your analysis and views on Jr Miners that are becoming small producers.

            On May 12, 2015 at 4:34 pm,
            wocsom morf knarF says:

            Thanks a lot Shad, I’m definitely going to take a closer look.

            On May 12, 2015 at 4:35 pm,
            Shad says:

            Golden Queen (GQMNF): First Quarter 2015 Highlights

            Golden Queen’s consolidated and non-consolidated cash positions were $64.5 million and $4.6 million, respectively, as at March 31, 2015;

            The workshop-warehouse was fully equipped with the necessary lubrication equipment, compressor, workbenches and a waste oil storage tank in February.

            Work on four (4) offices constructed on the floor above the warehouse was completed in March;

            The Hilfiker wall, a key component of the crushing-screening plant, was completed in February;

            The construction of the assay laboratory was completed in March and the laboratory equipment was purchased and is being installed;

            Preparation of the Phase 1, Stage 1 heap leach pad was initiated in early 2015 and site grading was completed in March;

            Basic construction of the pump box was completed in March;

            Construction of the site-wide power distribution system and water supply infrastructure is well under-way;

            Pre-production mining commenced in late March 2015; and,

            The Company announced a change in its mineral resource and mineral reserve estimates, and filed an updated feasibility study and NI 43-101 Technical Report with the regulatory authorities on February 27, 2015.

            May 15, 2015 15:48 AM

            Shad, I like what I have seen with Golden Queen, but what do you think of it being in a state run by lefty crackpots? How about that idiotic snail issue that was brought up?

            Do you know of any Doody picks that aren’t prominently featured anywhere?

            May 15, 2015 15:09 AM

            California is a nutty state, but they are moving forward with production, and at least it will be starting to generate revenues later this year. Torex Gold, Romarco, and Bear Creek are the other 3 near term producers John Doody’s team highlighted in Feb. While Bear Creek has gotten a little attention from Jordan Roy-Byrne, I don’t hear hardly anyone talking about Torex or Romarco or Golden Queen……yet.

            As for the snails, it is just one of a million environmental things that come up whenever any mine wants to start production, so I believe they’ll persevere there.

            May 15, 2015 15:23 AM

            Thanks, I was just looking at Bear Creek. I like the price and potential, but that is a bigger project than I realized. Torex looks good but is also a bigger deal than I realized. Fwiw, I probably will be taking a position in Golden Queen (wait a minute, that didn’t sound right 😮 ).
            Do you happen to have an opinion about Barkerville Gold?
            http://www.barkervillegold.com/

            Btw, In case I’ve offended anyone, I should point out that I don’t like lefty republicans either -and the vast majority of them are, even if the CA kind are too stupid to know it.
            🙂

            May 16, 2015 16:12 PM

            Thanks for the feedback WMK>

            I was not familiar with Barkerville Gold, so it was interesting to check them out. It looks like they just came out of a rough financial period, but have turned the page, replaced several key positions on the board and at the corporate level, and have worked hard to develop the resources at Cow Mtn. and Island Mtn.

            I like that they have mostly Pyrite and Quartz somewhat near surface and are going to develop underground mines to lower the initial capex requirements. They’ve also been able to just recently increase their recovery rates to 92% so that is promising on a move forward basis.

            As for price action I really like it, as it looks like it clearly bottomed in Nov last year, and has gone up around 28% since March, so It looks really promising. Thanks, I am adding it to my watch-list and will be keeping an eye on it.

            May 16, 2015 16:58 PM

            At Barkerville Gold I also like the recent press release showing the improved head grade in 2015 over 2014. Looks promising.

            http://www.barkervillegold.com/investors/news/barkerville-gold-completes-bonanza-ledge-bulk-sample

    LPG
    May 14, 2015 14:18 PM

    *** Re-posting the below ***

    Here’s a must-read article, IMHO.

    How Saudi Arabia Sets The Global (Currency) Markets
    http://www.zerohedge.com/news/2015-05-14/how-saudi-arabia-sets-global-currency-markets

    GL to all investing/trading.

    LPG

      May 14, 2015 14:55 PM

      LPG, I am really glad you posted it, because I’ve been talking about Saudi Arabia, OPEC, and their dis-interest in continuing to use the PetroDollar, but I never thought about oil pushing the dollar around like this article points out. A few takeaways were:

      “There is an almost perfect negative correlation between crude oil and the U.S. dollar. Consequently, crude oil has a strong positive correlation with the euro.

      Examine the oil/currency correlation. Crude oil is one of the largest markets with an annual value of $1.7 trillion so its moves strongly influence other markets. As the price of crude oil drops, there are fewer dollars in circulation. Consequently, the dollar price rises, and the euro falls.

      Moreover, it appears that oil exporting countries (think Saudi Arabia or Iran) trade oil in dollars but they invest part of their reserves in euros, according to Robert Gabriel Luta. When the oil price falls, their revenues decline, and they transfer fewer reserves from dollars into euros.

      It is clear, based on these data, that oil is one of the fundamental drivers in the currency markets, hence driving the prices for other commodities.

      It is even more clear that Saudi Arabia is one of the most influential market participants. By slightly increasing their oil production, they drove the dollar up in the strongest rally in three decades, causing turmoil in currency markets and commodities. In addition several export dependent companies in the U.S. are suffering from a stronger dollar with deteriorating quarterly earnings reports.

      It is no overstatement to say that Saudi Arabia lies at the epicenter of the global markets.”
      ________________

      Very interesting ideas for sure.

        May 14, 2015 14:40 PM

        I wrote about this exact topic on this site not that long ago, Shad. My point was that anyone who thinks that the dollar is going back up anytime soon is in for a surprise because a rising dollar is not on the agenda when rate hikes are clearly in the cards. The primary lever is energy prices that are in USD and so it should be no surprise that when the dollar either rises or falls it can be accomplished through the energy suppliers. That author you quote above is just another guy who silently reads this site for good ideas. But he did not originate the idea.

          May 15, 2015 15:53 AM

          I remember you writing about this topic Birdman, but question, if OPEC or really just Saudi Arabia can just open the flood gates again and drive oil prices down, couldn’t that just force the dollar right back up using the same strategy?

          The article laid out 2 scenarios for why this oil crash & dollar spike happened the first time:

          1) The first scenario is that Saudi Arabia wanted to show their power (read: their financial muscle). They truly can have a devastating effect, as evidenced by the consequences of their actions on the number of oil rigs in the U.S. According to the American Oil & Gas Reporter, there were 1854 rigs in the first week of May of last year, while today (exactly one year later) there are only 894.

          2) The other scenario is that the U.S. worked with Saudi Arabia to drive up the dollar. As explained in our recent article “Is the USA manipulating its own currency before an important IMF meeting?” the U.S. wanted to drive up the dollar to strengthen their position in the IMF. The red flag for the U.S. is that China recently showed interest in joining the SDR system with its national currency (the yuan). The Americans see the upcoming power of the Chinese yuan as a big risk.

          What is stopping Saudi Arabia from driving oil down again (which is expected) and when it falls driving up the USD?

          It seems like a real probability to me.

          Birdman, I really do agree with 90% of your views on the US dollar, and think it is in trouble for years to come. The only area we differ is that I think the dollar will bottom very soon, (I’ve been using the 92 target as a rough idea of where the reversal may take place, but Gary thinks it could have potentially happened yesterday and we are slightly higher today).