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Market Close for an eventful day!

Big Al
February 8, 2016

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Who ever expected a day like today? Doc has some interesting thoughts on what could happen tomorow.

Discussion
75 Comments
    Feb 08, 2016 08:30 PM

    Tahoe Res Buy Lake Shore Gold ! Don’t drop that panty’s DOC ! https://www.youtube.com/watch?v=JuY9-gGgkbs

    Feb 08, 2016 08:36 PM

    Probably more interesting than gold is the TLT chart:

    http://schrts.co/ilm1CC

      CFS
      Feb 08, 2016 08:05 PM

      Fran6……TLT gapped up and its RSI is 73; I think it will retrace. Be Careful.

        Feb 08, 2016 08:32 PM

        Note the spread between TLT and gold prices, that TLT is challenging the historical high in bond markets, and where gold prices were at previous levels. The difference is the oil price, which is now in capitulation, and rallies on bounces in the markets. TLT advancing on stock market declines, gold prices advancing on declining interest rates against inflation.

        Feb 08, 2016 08:23 PM

        TLT:GLD looks like it’s trying to backtest the wedge it fell out of before heading down…

        http://schrts.co/0tsbkc

          Feb 09, 2016 09:03 AM

          It may be getting ready to turn, but both TLT and Gold have done their job as safe havens the last few months and both have out-performed. As you know I like Gold better for a number of reasons, but it is hard to ignore that when investors have gotten nervous at the capitulation in the Oil and general stock markets, that they have flooded into both. If the markets do turn back up soon, then I expect both to cool off for a little bit.

            Feb 09, 2016 09:33 AM

            Always Ben a safe haven for me, Excelsior..

            Feb 09, 2016 09:58 AM

            Looking at the big picture, the 30 year T-Bond is really no safe haven at all compared to gold. After the economy peaked (in real terms) 15 years ago, the 30 year lost as much as 83% versus gold. It is now down “just” 66% from its 2001 peak but is now turning down once again and gold will resume its huge outperformance for a long time to come. Now that stocks are in a bear market, I wouldn’t worry about them getting in gold’s way either.

            http://schrts.co/JgRukg

            Feb 09, 2016 09:42 PM

            Big Al – Yes Gold is traditionally considered a safe haven, but the last few years it was not acting like one. I submitted chart evidence on a few different days in Jan & Feb showing that since August when the markets corrected down hard, that Gold got more in lockstep with the Long Term Treasuries, which traders absolutely go to in times of instability and market turbulence. Bond and Gold (the odd couple as Chris Temple calls them) have both acted as safety plays since August, and have traveled in the same direction (much more so that Gold and Oil or the inverse nature of Gold and the US Dollar). That correlation may break at one point, but with all this uncertainty I expect them to continue to get safe haven bids when things get rocky in the conventional markets.

            Matthew – having said that up above, I agree that Gold could also travel up even with the general markets, and I’m not worried about the markets getting in Gold’s way.

            Obviously Long Term Treasuries and bonds of all stripes are affected by interest rates more than Gold is, so that stands to reason. Over the long haul I completely agree that Gold is the ultimate safe haven and that is why I invest in the miners that pull it out of the ground and why I’m on this site versus a bond website, however, the 30 year is a safe haven and has been acting like one the last few years without a doubt.

            Feb 09, 2016 09:42 PM

            I have to disagree about gold over the last few years. As of its 2011 top, the Dow had plunged almost 90% vs gold since it peaked ten years earlier. Then, from 2011 to now, the Dow bounced close to 80% and gold came under pressure as smart investors cashed-in part of their “insurance policy.”

            More recently though, it did extremely well versus commodities regardless of the fact the the dollar did a little better. To be clear, the dollar only did better in the short term.

            Gold never loses its safe haven status in the big picture. In the risk-on ’80s and ’90s, almost everything beat it just as we should expect but those who sat in gold still didn’t lose purchasing power overall because commodities in general went nowhere along with it. Then, in the risk-off post 2000 era, no major asset has come close to performing as well as gold has. It is worth 566% more commodities (CRB) in that period while the dollar is worth about 20% more.

            Feb 09, 2016 09:15 PM

            “Gold never loses its safe haven status in the big picture.”

            Agreed. As I said, “Over the long haul I completely agree that Gold is the ultimate safe haven and that is why I invest in the miners that pull it out of the ground and why I’m on this site versus a bond website”

            Feb 09, 2016 09:27 PM

            We have exactly the same philosophy, Excelsior

            Feb 09, 2016 09:28 PM

            Thanks for creating this website Big Al. It is a true refuge and source of insights from all the great contributors.

    CFS
    Feb 08, 2016 08:52 PM

    ESF at work. ESF = exchange stabilization fund

      Feb 08, 2016 08:59 PM

      I think I would agree with that……….concerning the ESF

      Feb 09, 2016 09:10 AM

      Yes, the same culprit behind the BOJ intervention 2 Friday’s ago to prevent an epoch waterfall event in the S&P monthly! Nevertheless, Feb 29 will be interesting seeng what shenanigans play out then.

    CFS
    Feb 08, 2016 08:01 PM

    Re: oil.
    Iran cannot ramp up instantaneously. It takes time.
    No doubt about 18 months from now they will be pumping 4 times as much.
    But ships have to be found to transport it; Many are already full and being used as storage. sales have to be made, letters of credit accepted, etc..

    Feb 08, 2016 08:01 PM

    Doc, what do you think of TAHO compared to PPP? Maybe I should accept TAHO shares for my LSG, or maybe I should sell my LSG and buy PPP… Thanks.

      CFS
      Feb 08, 2016 08:10 PM

      PPP has a tax problem. It is hard to win against any government over significant taxes. PPP will get their write-offs eventually, just not right now, is my opinion.
      I own a small amount of PPP, significant TAHO.
      But I’m annoyed at TAHO. I think they are over-producing at these low prices.

        Feb 09, 2016 09:13 AM

        TAHO, Ok, with a marvelous resource, as long as cash flow positive, to cherry pick along the way with excess reserves.

      Feb 08, 2016 08:13 PM

      I will BUY TAHO one a good pull back ! What you think DOC ? Thank’s ! ?

      Feb 08, 2016 08:21 PM

      Bonzo; I hate to say it but I don’t like the price action of Taho especially with this big move up in gold Also, the technicals are suggesting that if the stock moves down again to about 7 dollars you might be in trouble. Looking at the chart, it looks like it has a good chance to move to 7. Not investment advice but I personally wouldn’t touch the stock.

        Feb 08, 2016 08:22 PM

        I would not touch TAHO for ethical and jurisdictional reasons.

        LSG doesn’t look good from MY OWN investor’s viewpoint either: (a) Selling the company for a 15% premium and (b) Lying on Friday about “No material reason for stock fluctuations” when they were in a meeting to sell the company. They lied and sold out the investors.

        Norway Divests from Tahoe Resources Based on Ethics Council’s Concerns at Guatemalan Mine
        http://www.ciel.org/norway-divests-from-tahoe/

        Why did Goldcorp really pull out of Tahoe Resources’s troubled Guatemalan mining project?
        http://politicsofpoverty.oxfamamerica.org/2015/07/why-did-goldcorp-really-pull-out-of-tahoe-resourcess-troubled-guatemalan-mining-project/

          Feb 09, 2016 09:12 AM

          I agree Brian. I posted their news releases on here where the board of LSG denied anything substantial that they had not released to the market, and said they would not speculate on rumors. Then a day or two later they acknowledged they were getting bought out at only a 15% premium. Unfortunately, I had sold out of them somewhat recently to play other Gold stocks instead, and was upset that I missed the buyout announcement; but then realized it barely moved the needle, and all the other gold stocks I held went up about the same percentage anyway.

          This was a great deal for Tahoe but not a great deal if someone was a longer term holder of Lake Shore gold that may have purchased at higher prices and were holding for a turn in the PM prices. The LSG share price would have gone up about this same amount, even if there wasn’t a buyout, so the timing was terrible and may have stunted the upside in both TAHO and LSG.

    Feb 08, 2016 08:02 PM

    I did like you did Doc, I got out of SPXU when the Dow was down 275 and it was a good move. When does it look good to get short again?

    Feb 08, 2016 08:10 PM

    ANYBODY catch the news on the 6 large mining companies quitting the London Exchange
    Andy Hoffman posted it today.

    Feb 08, 2016 08:29 PM

    I accidentally sold my Netflix I purchased today by punching in 58 instead of 85 and had to buy back 1.35 higher in the after market. I had about over 20 orders today with my head spinning watching the market crash but closed significantly higher thanks to the oil sector purchases.

      Feb 08, 2016 08:51 PM

      Jerry…Serves him right for buying that dodgy case of red wine…..or should that be whine………

    Feb 08, 2016 08:02 PM

    Hi Doc.
    First – thanks for answering my question the other day. Second if you don’t mind I’ve got another question for you. You’ve mentioned that there are some miners that have bottomed- looks like an example would be Ric and Claude. You’ve also said there are some other miners that haven’t bottomed or probably haven’t bottomed. I’m curious, do you think GDX and GDXJ have bottom or do you think they have further to go? Thanks

    Feb 08, 2016 08:09 PM

    Doc, what exactly is the indicator that you trust? Thank you.

      Feb 08, 2016 08:27 PM

      Bill, sorry but that one is kind of my proprietary info that helps me to be as accurate as I am. I’ve noticed something over time when I put a couple of technical methodologies together that I’ve never seen anyone else use. For the time being I’ll keep it to myself since I keep watching it over time to see if it tends to be 100% consistent—That’s one of the reasons I keep on harping that we’ll see lower prices come late April. We’ll see once again if my indicator works—do me a favor, remind me of this conversation in late April if I’m correct.

        Feb 08, 2016 08:35 PM

        I do think it is good to keep certain things private. Once an indicator becomes popular its power will most likely diminish. And eventually computer algorithm people will try to fade widely used indicators.

          Feb 08, 2016 08:39 PM

          Jay, interesting and good comments.

    CFS
    Feb 08, 2016 08:10 PM

    Now I understand why representatives from France and Germany are in meetings discussing increasing bank capital, as I posted earlier in another section of this blog.I saw there was a panicly arranged meeting at high level, but did not appreciate why the panic.

    Feb 08, 2016 08:11 PM

    Hi Richard & Al, Great to hear your thoughts as always! Check out the Dow:gold ratio; flirting with a 2 year+ support line.

    Feb 08, 2016 08:28 PM

    Power; great observation. As mentioned in the past the PMs are starting to outperform paper assets. You can expect that for months going forward.

    CFS
    Feb 08, 2016 08:32 PM

    There was a significant divergence in behavior of oil stocks in Europe versus the US today.
    I don’t know why. Just saying….

    E.g. Compare two stocks which trade in both locations.
    On NYSE; compare NRT and CHK.
    I know NRT is a royalty trust which holds royalty rights covering gas and oil production in certain concessions or leases in the Federal Republic of Germany. and CHK is mainly explores, develops and acquires properties for the production of natural gas and crude oil from underground reservoirs and also provides marketing & midstream services.
    But NRT was up 8% and CHK down 33% is quite a difference.

    CFS
    Feb 08, 2016 08:43 PM

    Re. TAHO:

    Tahoe Resources Announces Acquisition Of Lake Shore Gold
    by Jayson Derrick – Benzinga

    Tahoe Resources Inc (NYSE: TAHO), a mineral exploration, development and mine operator, announced on Monday it will acquire Lake Shore Gold Corp (NYSE: LSG), a Canada-based gold producer with operations in the Timmins Gold Camp of Northern Ontario.

    As part of the agreement, all of the Lake Shore Gold issued and outstanding common shares will be exchanged on the basis of 0.1467 of a Tahoe common share per each Lake Shore Gold common share. The ratio implies a total consideration of C$1.71 per Lake Shore Gold common shore based on the closing price of Tahoe’s stock on the Toronto Stock Exchange on February 5, 2016.

    Lake Shore Gold’s NYSE listed stock was trading higher by more than 12 percent following the announcement.

    Tahoe Resources noted that the combined entity will create a leading Americas based precious metals producer and one of the largest and highest grade sliver miners globally.

    Tahoe Resources continued that all of the combined entity’s operations generate free cash flow in the current commodity price environment.

    Tahoe Resources also added the following 2016 production guidance: 18-21 million ounces (mozs) of silver at total cash costs of US$7.50-US$8.50/oz and all-in sustaining costs (AISC) of US$10.00-US$11.00/oz and 370,000-430,000 ounces of gold at total cash costs of US$675-US$725/oz and AISC of US$950-US$1,000/oz.

    Kevin McArthur, Executive Chair of Tahoe, said, “The combination with Lake Shore Gold enhances Tahoe’s position as the new leader in precious metals by adding another low-cost operation in Timmins, one of the most prolific gold camps in the world. We are impressed by the long-term presence and see tremendous regional opportunities going forward. We look forward to continuing the strong relationships that Lake Shore Gold has fostered in Timmins with local stakeholders. Finally, I am very pleased to welcome Alan Moon, the current Chair of Lake Shore Gold, to our Board of Directors upon completion of the Transaction, as well as Tony Makuch, the current CEO of Lake Shore Gold, to Tahoe’s management team as President of Canadian Operations.”

    Tony Makuch, President and CEO of Lake Shore Gold, stated, “The combination with Tahoe represents a unique opportunity for our shareholders to gain exposure to a high-quality portfolio of long life producing mines with substantial mineral reserves. Today’s announcement of an initial resource at our 144 Gap Deposit is a perfect example of the long-term growth potential of our Timmins portfolio. Tahoe’s strong balance sheet and superior cash generating capabilities will provide Lake Shore Gold with the financial resources to unlock the enormous growth potential of our asset base.”

      Feb 08, 2016 08:11 PM

      I sold my LSG today after the announcement. Fifteen minutes of on-line research told me that TAHO is not a PM company I would feel comfortable owning (Ethical issues, IMO)

        Feb 08, 2016 08:19 PM

        The new world is a GREEN world OIL is a NO NO NO ! OBEY SLAVE !

          Feb 08, 2016 08:03 PM

          Okey Dokey

    CFS
    Feb 08, 2016 08:55 PM

    WAY OFF TOPIC:

    Who would’ve thunk it?
    On the same day reports are made that the Mars Rover discovers “cauliflower growths” possible remnants of alien life on Mars, the UK gives the OK to produce alien humans on Earth.
    http://www.naturalnews.com/052899_GMO_embryos_Britain_fertility_clinics.html

    CFS
    Feb 08, 2016 08:57 PM

    It was an eventful day…..What a way to start a New Year!

    Feb 08, 2016 08:28 PM

    I think we’re gonna slice through 1200 like butter this week.

    Feb 08, 2016 08:30 PM

    1300 is the biggy. If gold breaks 1300 we have a new gold bull market.

    CFS
    Feb 08, 2016 08:32 PM

    http://www.wnd.com/2016/02/bombshell-obama-to-cut-border-surveillance-in-half/

    All across the southern border, there are rumors that surveillance is being further reduced.
    http://nstarzone.com/ARTS/20.html

    At the risk of getting myself banned from this site; it is becoming increasingly obvious that there is a Muslim Traitor to America in the White House, who may be trying to inculcate socialist aims so pervasively into America that it will destroy forever the Greatness that was America..

    CFS
    Feb 08, 2016 08:52 PM

    Prior to Lehman going down it was leveraged at30:1
    The overall European Banking system is leveraged at 26:1, not including any derivative exposure.
    Also that was as of 12/31/2016, and the European stock markets are currently
    collapsing.
    this does not look good!

    CFS
    Feb 08, 2016 08:09 PM

    The former governor of the Bank of Israel, Vice-chair under Yellen and who will probably replace Yellen when she rrtires recently made surprisingly positive comments about NIRP, so I have to believe it will be com,ing to the US; along with capital controls.

    CFS
    Feb 08, 2016 08:14 PM

    The NIKKEI is collapsing right now.

    Feb 08, 2016 08:51 PM

    IPT “only” kept about half of its 103% gain today but it did manage to close above its .2106 VWAP (volume weighted average price) on the largest volume since 2011.

    http://schrts.co/1HJGcA

      Feb 09, 2016 09:14 AM

      Man, hindsight is 20-20, but I almost reset my bid price last Friday to just pay the market price for Impact, because it just barely missed my ask price. I was going to go for it Monday but it was already streaking up and of course, it jumped 100% the very next trading day after I tried to take a position….. bummer……

      Thanks for making me take a closer look though, and I’ll pick some up on the next dip.

        Feb 09, 2016 09:16 AM

        I’m sure you noticed Americas Silver corp changed their ticker today. Do you think this will be a good thing and give them a fresh association and re-rating with the marketplace?

          Feb 09, 2016 09:42 AM

          It actually changed yesterday for me. If it makes any difference, I think the benefit will come much later when newbies with little knowledge come to the sector and latch onto it because it’s easy to remember. Much more important right now is the 2016 AISC guidance at 11.75 – 12.75 and cash cost guidance of 9 – 10. 2015 AISC guidance was 16.50 – 17.50 and management delivered with 17.16 so the new outlook is quite positive even with silver where it is today.

            Feb 09, 2016 09:01 AM

            Agreed on the AISC in the $11.75-$12.75 zone (with Silver over $15). When I saw that improvement in their press release, then it appears they have turned a major corner and now they’ll be cash-flowing….. I’m hoping for a re-rating and jump like Impact saw.

    Feb 08, 2016 08:53 PM

    Stocks remain a sell…

    http://schrts.co/dFr1Rg

    Feb 08, 2016 08:04 PM

    This is the best silver has looked vs gold in 2016:

    http://schrts.co/3qC6g2

    Feb 08, 2016 08:09 PM

    The S&P 500 is ugly:

    http://schrts.co/8sui7E

      Feb 09, 2016 09:46 AM

      Thanks for the beautiful charts! Much appreciated.

      Feb 09, 2016 09:23 AM

      Dang, after looking at that, maybe I should not have sold my TVIX today. That looks like the setup for a waterfall decline. Yikes!

        Feb 10, 2016 10:30 AM

        Nope. I’m glad I sold yesterday, but may buy back into volatility again in the near future.