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Chris weighs in on the conventional markets, Europe, Greece and China

Big Al
July 9, 2015

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Chris Temple discusses the Chinese stock markets; the Sunday “deadline for the Greek situation; and, the rebound in the U.S. conventional markets.

Discussion
25 Comments
    CFS
    Jul 09, 2015 09:20 AM

    Re: cyber security, in addition to HACK, there is a NASDAQ listed ETF, CIBR, which as an even more recent ETF, judging by its components, might even out-perform HACK.

    Re: Greece. I don’t think Germany wants Greece to leave the EU, but Germany does not wish to support it financially……Germany’s politicians are merely acting with fiscal responsibility towards its own citizens.

    I repeat an earlier statement that leaving the Euro is not synonymous with leaving the EU.
    Mathematically, sooner or later, I believe Greece has to drop the Euro.
    I hope a satisfactory arrangement can be reached, and end all the uncertainty.

      Jul 09, 2015 09:36 AM

      Thanks, CFS, I have to agree with you.

      Jul 09, 2015 09:06 AM

      1. I did see the PR of CIBR just being introduced, CFS…will be interesting to see what the differences are ultimately in their portfolio weightings.

      2. RE: Gremqny, like a verse in SCripture says, “A double minded man is unstable in all his ways.” It’s Germany more than Greece that wants to have its cake and eat it too. On one level (by having a cumulatively weaker currency) Germany’s manufacturers have greatly benefited by having Greece and all the others part of the common currency. On the other, the bankers and old-line monetarists in there hate the idea of supporting Greece.

      As has been the case time and again, if a deal is at all to be made, Merkel will come on board. Like her mentor Helmut Kohl, this whole unified Europe thing is ideological and a cause for her; she wants to prove it will “work” despite itself.

    Jul 09, 2015 09:31 AM

    ” BIGGEST ONE DAY UP MOVE IN CHINA!”………………..you mean BIGGEST ONE DAY RIGGING MOVE !!!!!!!!!

      Jul 09, 2015 09:37 AM

      Something like that, Mark!

      Jul 09, 2015 09:13 PM

      It is a bloody murder. China government does not hide the fact that they want to kill the “hostile shorts”. They obviously treat it as political incident instead of financial. Based on what we have seen, it is political.

    Jul 09, 2015 09:46 AM

    Sky News just pointed out that Greece is a 350 billion problem but that the Chinese dip in the markets has been a 3.5 trillion loss.

    Saying that millions of the new middle class have lost a lot of money and these are the very people that all the goods companies are relying on buying their stuff.

      Jul 09, 2015 09:18 AM

      Exactly right Bob. We will almost certainly see a reaction amongst average Chinese investors who have suffered losses to increase savings and reduce family expenditures. This is just the point I was trying to make a few days ago where I discussed the obvious outcomes to the sudden loss of the wealth effect in China due to a market crash and housing in decline. Interestingly enough it is also what happened following the crash of 29 when households retrenched, consumption fell dramatically and people were confronted with paying down debt even as they hoarded cash. Savings rates skyrocketed during the 30’s. It was a convulsive reaction to losses suffered during the bust. And the cumulative effect was what drove the unemployment rates to such highs as the retail and services portions of the economy were eviscerated due to belt tightening and delevering debt. The result meant new investment itself fell dramatically as households attempted to repair their balance sheets and recover. On a macro basis though it was poisonous because the trend was so widespread. It is all fine and good when the usual fraction of the population stops spending and starts saving again but quite another when it is a social phenomenon that consumes a countries psyche. I believe China is heading there and that the dream of the Powers to turn the country towards a consumption model will be set back for many years. It may also mean that China eventually sees its GDP growth fall near zero as the world itself is slowing all together. So I will be watching two important themes develop as their stock market bust completes and those will be first, a rise in the savings rate and secondly a drop in internal consumption. Both will feed into falling GDP growth projections for 2016.

      Sorry about being so long winded.

        Jul 09, 2015 09:35 AM

        Which also makes me wonder – and I have stated this on here before – that if the Chinese market crashes will people then shun stocks and move to something that they perceive as being / having real value.

        I am not a gold bug but I have been wondering for a few years now how Chinese stock speculators would react after a crash.

        If the Chinese govt reinflates the stock market back up to previous highs will a percentage of those new Chinese middle classes breathe a sigh of relief and look to get out? If so, what do they then do – stay in cash or buy some gold and silver which are seen as traditional stores of wealth in Asia.

          Jul 09, 2015 09:58 AM

          That is a good question, Bob.

          I saw an article today written by Louis James at Casey Research where he is suggesting that a probable outcome of a stock bust in China would be that the public would react to losses by selling off their gold to meet margin (as one example of what would force sales).

          What Louis did not mention in his article though is that it is currently illegal in China to sell gold out of the country. In other words, if the public did suddenly dishoard their gold due to stress brought on by a crashing stock market then the final buyer in many cases would be the PBOC who would mop up whatever surplus sales came their way.

          We should note too that gold is near a tipping point and will almost certainly begin a new decline phase in the coming days. I believe in fact it is ready to break to new lows and that suggests to me that the carnage in the indices in Asia is not over nor are the declines for the commodity sector at an end.

          My point is that if gold is falling even as the stock markets there are on the ropes that a sell off of metals is indeed in the cards (primarily in China) and the near term implications for bullishness in gold and silver will not be rewarding. The technical setup for the miners looks equally gloomy in the coming weeks so caution is warranted.

          The idea I am getting at here suggests that if Louis James is correct in his belief Chinese investors are on the threshold of dumping gold that the net beneficiary will be the warehouses and vaults of the government itself. The big losers will be the gold bulls in the West. But the outcome that follows will mean we are closer than ever to a lasting bottom in prices so it is not all bad news.

          Hey, who needs confiscation when the people will give the stuff up voluntarily?

          Why Millions of People Might Have to Sell Their Gold and Silver — Casey Research
          http://www.caseyresearch.com/articles/why-millions-of-people-might-have-to-sell-their-gold-and-silver

            Jul 09, 2015 09:34 PM

            Yep, that is really interesting. Thanks.

            What happens overnight in China is going to be really interesting. Will the bounce continue or will it already begin to fall back.

            The amount of people having bought on margin in China is no different to what happen in 1929. Yes, you could be right and these margin buyers, in their millions, might soon be forced to sell. If China goes down then the global markets will go down IMPO.

    Jul 09, 2015 09:16 PM

    Avino Announces Concentrates Prepayment Agreement with Samsung C&T
    July 09, 2015

    Avino Silver & Gold Mines Ltd. (ASM: TSX.V, ASM: NYSE – MKT; “Avino” or “the Company”) is pleased to announce that it has entered into a concentrates prepayment agreement with Samsung C&T U.K. Ltd. (“Samsung”).

    Pursuant to the prepayment agreement, Avino will sell Avino Mine concentrates on an exclusive basis to Samsung for a period of 24 months. Samsung agreed to make available to Avino USD$10 million for prepayment of such concentrates.”

    http://www.avino.com/s/news.asp?ReportID=715412

    Jul 09, 2015 09:29 PM

    July 9, 2015
    Endeavour Silver Produces 1,769,741 oz Silver and 13,047 oz Gold (2.7 Million oz Silver Equivalent) in the Second Quarter, 2015

    http://news.edrsilver.com/press-releases/endeavour-silver-produces-1769741-oz-silver-and-13047-oz-gold-2-7-million-oz-nyse-exk-11g047090-001

    Jul 09, 2015 09:33 PM
    Jul 09, 2015 09:34 PM

    Great Panther Silver updates mineral resources at Topia mine

    VANCOUVER, July 9, 2015 /CNW/ – GREAT PANTHER SILVER LIMITED (TSX: GPR)(NYSE MKT: GPL) (“Great Panther”, the “Company”) provides an update to the Mineral Resource Estimate (“MRE”) at the Company’s 100% owned Topia Silver-Gold-Lead-Zinc Mine operation in Durango, Mexico.

    http://www.juniorminingnetwork.com/junior-miner-news/press-releases/1118-tsx/gpr/9268-great-panther-silver-updates-mineral-resources-at-topia-mine.html

    Jul 09, 2015 09:55 PM

    First Majestic Produces 3.8 Million Silver Eqv. Ounces in Q2’15

    VANCOUVER, BRITISH COLUMBIA–(Marketwired – July 9, 2015) – First Majestic Silver Corp. (“First Majestic” or the “Company”) (TSX:FR)(NYSE:AG)(FRANKFURT:FMV)(BVM:AG) is pleased to announce that total production at its five operating silver mines in Mexico for the second quarter ending June 30, 2015 reached 3,802,558 equivalent ounces of silver, relatively unchanged compared to the same quarter in 2014.

    http://www.juniorminingnetwork.com/junior-miner-news/press-releases/1082-tsx/fr/9242-first-majestic-produces-3-8-million-silver-eqv-ounces-in-q2-15.html

    Jul 09, 2015 09:56 PM
    Jul 09, 2015 09:57 PM

    Corvus Gold Intersects New Vein System in Sierra Blanca North Target, North Bullfrog Project, Nevada VANCOUVER, July 9, 2015

    http://www.juniorminingnetwork.com/junior-miner-news/press-releases/1084-tsx/kor/9251-corvus-gold-intersects-new-vein-system-in-sierra-blanca-north-target-north-bullfrog-project-nevada.html

    Jul 09, 2015 09:59 PM

    Teck Announces Carmen de Andacollo Gold Stream

    VANCOUVER, BRITISH COLUMBIA–(Marketwired – July 9, 2015) – Teck Resources Limited (TSX: TCK.A and TCK.B, NYSE: TCK) announced today that Compañia Minera Teck Carmen de Andacollo (“CDA”) has entered into a long-term gold offtake agreement with RGLD Gold AG (“RGLDAG”), a wholly owned subsidiary of Royal Gold, Inc. (NASDAQ: RGLD; TSX: RGL). Teck has increased its cash position by US$162 million as a result of CDA entering into the offtake agreement and terminating a separate royalty agreement with Royal Gold Chile Limitada.

    http://www.juniorminingnetwork.com/junior-miner-news/press-releases/417-tsx/tck-a/9292-teck-announces-carmen-de-andacollo-gold-stream.html

    Jul 09, 2015 09:00 PM
    Jul 09, 2015 09:02 PM

    Lake Shore Gold Produces 95,600 Ounces in First Half of 2015, Company Announces Improved Full-Year Operating Outlook
    July 08, 2015

    http://www.marketwired.com/press-release/lake-shore-gold-produces-95600-ounces-first-half-2015-company-announces-improved-full-tsx-lsg-2036478.htm

    Jul 09, 2015 09:04 PM
    Jul 09, 2015 09:05 PM
    Jul 09, 2015 09:21 PM

    Thanks Shad for the pm equity brief.

      Jul 09, 2015 09:05 PM

      Thanks mj12. There were a bunch of press releases on Tuesday and today, and I know different posters have discussed some of these companies on the blog. Again, it is probably a bit early to still to start positions on the miners until we see what plays out over the next few weeks, but I’m doing homework on companies that may fare well once the metals markets start to recover.

      Have a great rest of the week!