Comments on the markets and a price target for silver
Doc is with us to cover the minimal moves in the conventional markets today. We then move into the precious metals with a target for silver.
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Shad, do you realize we both got in on the day of the low for UWTI and sold out a day or two later for minimal gains? That would have been a sweet trade if we had held! 🙂
Wiseguy – you said it man. We were in there at the actual low for UWTI on Monday, debated it and both sold out on Tuesday for a minimal gain. I was concerned that the pop wouldn’t last long and that Oil may pull back and test $38 again and may break below it, even though $38 had been my target all year long for the bottom. It’s extremely an extremely bittersweet moment to have nailed the call but jumped out of the trade and missed the move. What a bummer!
When Oil bounced off $43 the first time I mentioned on this blog repeatedly it would get to $64 in the summer, top out and head down to $38-$40 dollars, with my emphasis on $38 as a bottom target. That is exactly what happened and I said when it hit $38 I was buying my first tier of UWTI. That is what happened on Monday and that’s what I did (true to my word). Then I sold on Tuesday after reading all the energy experts and looking at the charts and seeing the long term support at $33.55 from 2009. I developed the thesis that buying under $35 but above $33.55 was my new entry point……and totally missed the rocket launch up. I wasn’t expecting the Middle East conflict to escalate though either, as that was an unknown that just happened to coordinate with this technical move up and gave it fuel.
Gold is at multi decade highs real terms. This will help to keep a lid on it as those who recognize this will rotate out of it to some degree. So, to some extent, I agree with Doc on gold but I feel pretty good about the miners and think they can do surprisingly well soon.
Here’s gold priced in commodities:
http://stockcharts.com/h-sc/ui?s=$GOLD:$GNX&p=W&yr=8&mn=2&dy=0&id=p60363080402&a=421835125&listNum=1
Here’s gold priced in industrial metals:
http://stockcharts.com/h-sc/ui?s=$GOLD:$GYX&p=W&yr=8&mn=2&dy=0&id=p28188899533&a=421835235&listNum=1
I would hope that is the case Matthew.
We have a potential H&S top in the gold-silver ratio on the 60 minute chart. Here’s GLD:SLV (for stockchart subscribers):
http://stockcharts.com/h-sc/ui?s=GLD%3ASLV&p=60&yr=0&mn=0&dy=28&id=p84336318694&a=380154500
Doc mentioned that Gold isn’t affected by the conventional markets but at least GDX today has been very affected by the conventional market’s moves both yesterday and today!
There have been times over the past 2 mths when spot gold and SPY moved almost perfectly in sync… and recently, it has been the case w. SPY/GDXJ.
The key here is that “there have been times”.
It’s an on/off relationship -> ie sometimes it does work, sometimes it doesn’t at all.
To me, it means there’s no relationship at all, and it all depends of the set-up of various asset classes.
My 2cts.
GL to all investing/trading.
LPG
LPG look at the start of the 2015 while gold and silver and their miners had a great run the us$ rose along side as you say watch the set ups
Hello O jj,
Hope all’s well.
I was focusing on the move relative to SPY here.
I don’t dismiss the US$ relationship/or absence of. I was just focusing on the moves w. the SPY – fwiw.
Best to you,
LPG
All is very well thanks, hope the same at your end.
I did realize what you were comparing and thought I’d add another example, the US$ and gold/pm’s can and have risen/ fallen together at times so investing purely off US$ moves can blind the correct action
I agree. Many times more is made of these correlations between asset classes than there actually is. That’s the whole point of Gold (it’s a non-correlated asset in your portfolio). I do agree with you though Original JJ on the fairly strong Yen/Gold relationship that has existed the last few years. I think Yen/Gold is more reliable than the USD/Gold correlation.
That should have said there is a stronger correlation between Yen/Gold than the “Inverse” correlation between the USD/Gold.
Daily chart of silver has the bottom support channel line off the $26.15 low during fall of 2011 and summer of 2013 low at $18.17 comes in around $11 this Nov
No indicator I use suggests any long silver position today….silver really needs a close above its huge resistance at $15.50
Well after that comment Big Al enter Israel apologists stage LEFT.
I have absolutely no idea what you mean by that Jason. Did you listen to what I said?
You are completely wrong, my friend.
Jason:
CFS continues to believe he can be a bigot without response. I don’t agree with his bigotry or his belief that it will go without comment.
Let me make something perfectly clear. As a guy who controlled 500-1000 air strikes and dropped bombs myself 125 times, I can safely assure you that any war on Iran no matter how well someone might think it deserved would mean a nuclear war.
It would not be possible to eliminate their perfectly peaceful and legal nuclear program without using nukes.
It was planned by Israel 33 years ago in the Yinon plan
http://www.gilad.co.uk/writings/the-jewish-plan-for-the-middle-east-and-beyond.html
A valid point.
+1
CFS:
It was discussed again in the Clean Break from the Peace plan 19 years ago
https://en.wikipedia.org/wiki/A_Clean_Break:_A_New_Strategy_for_Securing_the_Realm
It was covered again 18 years ago in what should have been called the Project for a new Israeli Century
https://en.wikipedia.org/wiki/Project_for_the_New_American_Century
After 911 General Wesley Clark reported that he had been warned that the US intended to attack and destroy 7 countries and would end with an attack on Iran.
CFS keeps spouting the propaganda that the totally controlled media have been cramming down our throats for many years.
Iran is not the enemy of the US, Iran has never attacked us, Iran has no nuclear weapons program and the treaty agreed to by Obama and 6 other countries and the UN would remove any vestige of a nuclear threat from Iran.
Israel controls our media and convinces Americans to fight their wars for them. We need to stop doing that. So either silence CFS on the issue or allow me to tell the real story with proof that anyone can verify.
You either stand up for America and American interests or you stand for nothing.
+1
Absolutely + 2 Bob, and thanks for so much info.
I agree with you whole heartedly Bob, but I follow stuff a little more closely than others do.
Im afraid I think that people believe what they are told to believe, and once a person holds a belief they a very difficult to change.
Nobody cared about killing 500k children in Iraq, nobody even got charged, nobody cared about Lybia Syria etc etc
Nobody will care about killing the people of Iran either.
Well, maybe Russia or China, if they think it would be to their benefit I suppose.
How many people actually know what Liberty is? for example, heck if a person actually did vote for it in the last election the vote had a good chance of not being counted anyway.
I agree that you should be able to post actual facts when others post misdirection tho.
I appreciate it.
We would only appreciate posts that can be substantiated.
Bob…who are we to believe..you or what the Iranians keep screaming…death to America..wipe Israel off the map..just asking…
Doc, yesterday you said you could not find a chart for PDG. I meant to ask about PVG, Pretium Resources. PDG was the symbol for Placer Dome which was bought by ABX. I owned PDG for decades and keep mixing its symbol up with PVG which I own now at higher prices. Thanks.
BB; PVG has had a nice run the last 2 days. The monthly charts define a monthly trading range by the BB of about 4.20-7.80. The weekly pricing also shows a trading range of about 4.60-6.30. These are defined by BBs. I believe the weekly trading range will hold its’ own until we see what happens in December. I feel at that point the BBs have the potential of narrowing considerably probably foretelling a potential break out of the range. We’ll see if that happens. I’m basing my weekly trading range on some technicals other then the upper and lower BBs. The 20 week MA of the BBs is currently trending down gently and I have the feeling that may shift the BBs slowly down until December. That could mean your trading range may shift down and PVG might slowly price lower in December. Currently there is no danger of breaking down suddenly. On the upside I do not at this time feel PVG will break to the upside out of the weekly trading range.
Doc, about 10 days ago there was a 9 minute travelogue on “Michigan Playgrounds” made in 1948. I was struck by the beauty of Saugatuck on the Kalamazoo River, and am wondering if it is still as nice as it was in 1948, or has it been ruined?
I was in Saugatuck for the first time in years last summer. The town is an “artsy” town and it still is. They’ve kept the quaintness of the town intact and there has not been any massive growth to ruin it. A lot of the old houses still are intact and it remains a tourist haven.
Thanks, Doc. I’m glad to hear that Saugatuck has not been spoiled as it was so beautiful in that 1948 travelogue I saw on TCM. Michigan is one of the few states I’ve never visited, even though I went to grad school in Bloomington IN, and I hope to see Saugatuck someday. A friend of mine has an old family summer house on Lake Walloon that I’d like to see also. When gold gets to 5K maybe I’ll buy a cottage in Saugatuck.
**DOC – You’ll want to watch this video from Morris. Very interesting!
_________________________________________________________________
Dow Industrials & Transports Bombs Away Video Analysis
Morris Hubbartt – Aug 28, 2015 (posted on 321Gold)
http://www.superforcesignals.com/video/2015aug27dow/2015aug27dow.html
Gold, Silver, & Dollar Volume Alert Video Analysis
Morris Hubbartt – Aug 28, 2015 (posted on 321gold)
http://www.superforcesignals.com/video/2015aug27goldsilverdol/2015aug27goldsilverdol.html
Doc:
You still holding NEM?
I’ve held NEM since it took over Franco-Nevada long ago.
Tom, I do not. I made a “tad” on a trade and sold it. Watch the daily 50 day MA coming down to intersect pricing. That should happen in about 3-4 weeks. That should tell a story. I believe Nem then has a chance of breaking lower. It looks like it has a little run here yet.
If I didn’t sell NEM@70 I sure won’t sell now, as I think it will go to 100 one fine day.
Al,
Your gut is gonna loose to Doc’s TA. Doc’s weekly chart readings are correct. Metals are gonna drop.
We shall see. I don’t have to be the prettiest baby in the nursery!
Dollar is going down Monday. We will see if that matters.
AL and Doc and Cory and Gary and Rick, which self defense ammo do you prefer for your .38 revolvers:
Hornady Critical Defense 110 gr. FTX ammo or Magsafe 37gr. SWAT ammo ?
Neither Cory, nor I, nor Doc, nor (I believe Gary) own any weapons at this point.
What will you do when a gang busts through your door and demands your silver, Al? At least Gary has a climbing ax.
That may be why Gary is climbing. He is out in remote areas stashing away some precious metals 🙂
And I’ll bet Rick has some guns too. Al had better get a shotgun to guard his silver stash.
Nah, he has a small tap-dancing green alien guarding his house.
– referencing the Chris Temple blog from today.
Hello Bonzo,
Hope all’s well.
If you allow me, I will provide below some fundamental views on PVG.
Richard/Doc and myself have discussed the name at length several times over the past 2 mths. I’ll leave it up to him to answer you from a technical standpoint, which I am confident he will do once he sees your message your message. I’ve got my own technical views, but at the end, Richard has to do his share of the work 🙂 🙂 🙂
1) FWIW, I consider that PVG share price currently reflects the fair value of the company given the current price of gold.
What I mean by that is that, according to my calculations, and fwiw, I believe the current share price fairly reflects the value of the company, with the assumption that the Brucejack project will see the light and that gold will stay at $1100 for the life of mine of the project.
Which brings me to point #2 below.
2) The upside for the shares price are 2 fold: project becoming a reality and gold price.
To me, the upside to PVG share price is contingent upon 2 elements: a) Brucejack seeing light (production start slated for late 2017) and b) higher gold prices.
Re: a), as you know, if it is worth keeping in mind that as an explorer gets closer to production, typically, his share price tends to outperform – everything else being equal – in a down gold price environment. The reason is that the project is de-risked and therefore cash flow streams are soon a reality – which investors always want to see and welcome.
b) higher price of gold is really the kicker for valuation.
3) Upside under certain gold scenarios
My calculations indicate that if gold reaches about $1400 and stays there for the life of mine, then PVG shares are worth about $10. However, I would personally expect the shares to trade above faire value if/when we find ourselves in an $1400/Oz gold price environment.
Please note that to come up with this figure of c. $10 with gold at $1400/Oz, I use a reserve figure of 7.27mn Oz, which I believe is understated by the company by 20-25%.
But I believe that the management cannot – for legal reasons – communicate on a higher figure, and anyway prefers to underpromise/overdeliver rather than do the opposite.
As an indication, in case you haven’t done so already, I suggest you take a look at PVG’s last drill results over the say… 12mths to get an idea of where my suspicion from under statement of reserves is coming from.
4) Sensitivity to reserves:
According to my model, fwiw, every additional 1mn of Oz of reserves, everything else equal, is worth about $1.5/share, while at $1100, it is worth about $1.0/share.
FWIW, every $100 delta in gold price assumption over the life of mine is worth about $1.3/share in my model.
5) What’s NOT in my valuation.
My valuation does NOT incorporate anything else than the Brucejack project. Anything else, should it be profitable, is an upside to that. Simply put: that would be the cherry/icing on the cake.
Keep in mind that the Brucejack area is just on part of PVG’s property – to get an idea, if you haven’t seen it, take a look at some of the company’s recent presentations.
FINAL DISCLOSURE, to be transparent, as always:
x I am a current shareholder of PVG and did my last purchase this week (on Wednesday) at $4.80.
x My current average price is between $4 and $5.
x I am currently 1/6 size on the name given my current allocation to the stock in my portfolio.
x I use technical analysis for deploying capital/trimming my position on the stock. [My apologies to Bigbill. 🙂 🙂 🙂 as I am not a billionaire… but you never know: sh**t happens]. My valuation model is the additional backbone that helps giving me an idea of where the price stands vs. what I view as the value.
x I have shared my valuation model w. Richard/Doc a few weeks back.
Hope this gives you some ideas. But please do keep in mind that this is the way I see it, with my personal assumptions.
My 2cts.
Best to you and GL investing/trading.
LPG
Thanks, LPG. I’ve owned PVG for about 3 years and hope you are right about every $100 increase in the gold price being worth another $1.40 to PVG. Then if gold goes to 5100 PVG would be worth 60 even if they don’t find more gold, and I think they will find a lot more. I’d still like to hear what Doc’s technicals say before I buy more.
Oops. I meant if gold goes to 5100 then PVG would be worth 75 a share. Not bad!
Oops again. I was right the 1st time.
Bonzo,
Keep in mind 2 simple but important things though:
1) share price are most of the time not aligned with fair value.
2) more importantly, and to make sure this is clear:
my model takes into account an average price of gold for the life of mine.
So if you think $5100/Oz for gold means $75 share price for PVG, then it implies that you assume that from 2017 onward for the next 18 yrs of the life of the Brucejack related mine, gold will be at an average price of $5100.
Hope this clarifies.
Best,
LPG
I think gold will be higher than that and that much more gold will be found by PVG.
LPG – Great thoughts on Pretium.
So when are you going to share your valuation model with the rest of the class? 😉
Nice try Shad.
🙂
Hope you have a pleasant WE.
Best to you,
LPG
You have a great weekend as well. Hey, it never hurts to ask right? : – )
Doesn’ t hurt indeed. 🙂
TC
LPG
+1 for Bob Ms information & his insight-
SPXS for me homey. I have an after hours order in at $19.75. Already pulled down 26% profit this week. I want to get in now. Not sure what tricks The Fed is going to be up to this weekend but a crash is coming either way.
I always prefer to analyze the actual index or an unlevered ETF (like SPY; GDX; or GDXJ, for example) even if want trade the levered ones., homey.
We now have two weekly closes below the 50 week MA for the first time in almost 4 years.
http://stockcharts.com/h-sc/ui?s=SPY&p=W&yr=4&mn=1&dy=0&id=p31175960245
The death cross is coming soon on the daily chart:
http://stockcharts.com/h-sc/ui?s=SPY&p=D&yr=1&mn=6&dy=0&id=p25173723858
It’s getting darn close to crossing isn’t it? Good chart on SPY.
$12.44 is a good target for silver base on an age old pre-bubble three peaks and a domed house formation from 2010.
However ,the formation was clearer on gold. The target was $1155 for gold and it has already been exceeded to the downside.
Doc, thanks for your unemotional level headed views over the last year. I too think we should be looking at December at least for a bottom in PM’s. The equity bull is not going to give up yet without a retest of the highs.
So, Al, forgive me if I don’t agree with your bottom in silver call. I recall you were pretty adamant back in 2013 that gold won’t go below $1321 !
this site is a joke..just shut it down…
I think it was nice of you to make an appearance, Reo. For each of the last several times you’ve done so, the sector has made a meaningful low. Thanks for confirming that the worst is behind us for now.
GDXJ:
http://stockcharts.com/h-sc/ui?s=GDXJ&p=D&yr=0&mn=9&dy=0&id=p75339755863&a=422282167&listNum=1