What is driving the PMs and overall commodites?
Doc joins us today to focus again on the nice move in gold. We look at a couple charts from a technical perspective but we also discuss the fundamental reasons why the PMs are getting a buy. On the flip side of gold the US Dollar continues to move down How far could it go?
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Excellent Gentleman!
Seems to be so Marty. That was the one wild card variable. Looks like the Bank of Japan is on the side of commodities and precious metals if it keeps rising. Judging by the bowl shape on the chart it has a long way to go.
Which is not to suggest it won’t reverse course again next week. That thing is like a roller coaster ride.
Thanks DOC………..
Most happy because I didn’t listen to the many here that said the PM’s were going to tank!
No one ever knows exactly what will happen in the future.
Everyone, including the “experts” are making guesses.
Some are right more often than not, but not many.
The ones you should be particularly wary of are those that can gain financially:
By selling newsletters,
By selling advice, either directly, I.e. they tell their sponsor’s message, or indirectly. i.e. By telling folks what they want to hear, they can attract higher advertising revenue, etc.
Always, use their advice for informational input, but learn and think for yourself.
As Big Al, has said…the more information you have, the better.
You get a 100% agreement from me on that comment CFS.
I think I might refine that statement by saying this: have the right information. Be right, sit tight.
Ha! . . . you read the article too!
The coming margin hike is also a possible indication that the COMEX is running out of physical.
It looks like one way or another they want to force the prices down.
JUST ANOTHER WAY TO MANIPULATE.
you should post the article on CME….here CFS….it was a good notice…….
How many days notice was given in Sept 2011………..this was a ONE DAY NOTICE., just wondering…………thanks…….
Comex Margin was hiked more than 20% in September 2011 (virtually at the peak of golds record high price) and in the next three weeks gold crashed down to 1550 which shocked the ever-loving shoes right off all the most devoted bugs.
They ranted and screamed bloody murder at the time if you recall and swore it was a conspiracy to crash prices and protect the dwindling levels of warehoused gold. Nobody believed it was simply to reign in excess speculation.
But the actual announcement that there would be a margin hike came in August just prior to the top when gold was trading near 1880. The sharp drop that followed was a result of long specs rapidly closing positions out and in the few days that followed prices dropped 160 dollars.
There was then a bounce back from there into early September creating that double candle top we all know but it was too late to stop the carnage or change the mood. The long bear had begun.
And the 2011 top was officially in by then……. and that was all she wrote.
Gold Points Sharply Down As Margin Hikes Loom — Barron’s, August 25, 2011
http://blogs.barrons.com/focusonfunds/2011/08/25/gold-points-sharply-down-as-margin-hikes-loom-silver-etfs-pare-earlier-losses/?mod=yahoobarrons
I am reposting, because I posted in wrong are.
How many days notice was given in Sept 2011……..this was a ONE DAY NOTICE., just wondering…………thanks.
LOOKS like more than a ONE DAY NOTICE…….maybe THREE….?
I linked the story up above, Jerry.
CME Group made the Margin hike announcement Wednesday, August 24th, 2011 and by Thursday in the pre-market prices were already sharply down for both silver and gold. The story records the hike as being 27% margin increase.
The final top in gold was seen 12 days later.
I was using the wrong calendar………..I see that now……..
I can’t see the press release anywhere. You have a link to the story CFS?
Nobody said they were going to tank (if you are referring to my comments). What I said was they were still in a technical bear market until the metals and miners had broken out of their trend channels. And most were factually inside those channels until today.
So we don’t declare a new bull market until one actually exists.
All the rest is water over the dam because it only amounted to guesses and speculation on the part of most people here. There was NEVER a guarantee the HUI (for example), would break out on this cycle so nobody gets a pat on the back for that.
Birdman gold is still in a bear trend.Still below the 1307.42.The leg up from dec low is a 5 wave impulse.If I am right regarding the expanding diagonal triangle then we are in the final stages of wave iv (expanding flat)Wave c of expanding flats is 5 wave impulsive.Next month gold should start its descent to lower lows.
Sounds good to me Don.
There is actually quite a bit of evidence the run has almost ended. Unless something unusual happens in the next week this big rise will be getting ready to correct.
birdman a death cross has formed on the monthly silver chart i.e. the 50mma has moved below the 100mma.Besides that the price on the monthly has touched the ubb (20).These two together are very bearish signals considering that all other momentum indicators and oscillators are in overbought territory.Accidently the commercials are net short at a record level too 🙂
Thanks Don. Good to know. I won’t have much patience with this trade of mine though if gold does not correct fairly soon. The banks can stay short for years but I am no bank. I live in the world of mortals and time is always a big consideration.
What do you think about next week?
The probabilty is that next week gold is gonna rise to 1303 birdman.It is very close to a top birdman but timing is difficult.I am still on the sidelines waiting for bearish technical confirmations.I will keep you updated next week.
Again, look at the timing on PM price movements today.
Small takedown in price as globes session ends,
Steady rise in London, indicating to me they are low on physical.
Perhaps all coincidental, but it tends to reinforce my fundamental understanding and beliefs. Just saying…
Doc:
Thoughts on Corn? I hear many farmers are switching their fields to soybeans in an attempt to rebound corn prices.
Pinto beans are better than soy beans.
For soup yes, but not if you are making Soy milk.
Not exactly true as there are a lot of factors involved as far as fertilizer, herbicides, and so on that prevent them from switching at this stage of the game. But I am also curious to see how the charts look because I think corn has some upside potential.
Tom, I just looked at a chart of corn—it’s scraping its’ bottom on the lower BB of the monthly chart —-the daily looks like it may break higher over the 200 day SMA. If it does, the pricing on the monthly could move up to hit its’ head on the upper BB. If that occurs, then it would be interesting to see if it breaks out of the monthly trading range to start higher. I’m seeing a similar picture with nickle which I’ll probably take a position in on Monday with tight stops on the downside.
I am thinking of taking a position in July corn on Monday, it just appears to me it might be coiling.
Funny but I was just noticing Nickel too. Hudbay (HBM.TO) seems to just be starting to break out and was up 10% yesterday. It has doubled since it made a nice bottom at the start of the year and may just double again in the near future.
Sorry, I have to watch my IPad more closely,
I typed globex not globes.
Why not just spring for that bigger, newer I-Pad…..
My current IPad is now about 18 months old. It is my eyesight that is failing.
CFS – You may want to take a closer look at Globex Mining. You’ve typed Globex twice this week, and I thought of this prospect generator both times.
Globex Mining – Corporate Presentation:
http://www.globexmining.com/documents/2016-02-18-Globex-updated_newversion_001.pdf
Thanks for reminding me, Ex.
The only red flag in my senile memory is that Globex mining enterprises is a bit of a gadfly.
They move to new trends.
I seem to recall they were staking Lithium properties in Nova Scotia, last I heard.
Perhaps their geologist is super knowledgeable, and knows a lot about all metals!?!
130 Projects
69 Precious Metals
• Gold, Silver, Platinum, Palladium
43 Base Metals & Polymetallic
• Copper, Zinc, Lead, Nickel (Gold, Silver)
Specialty Metals & Minerals
18 • Talc, Iron, Lithium, Magnesium Oxide, Manganese,
Mica, Molybdenum, Rare Earths, Titanium, Silica,
Bismuth, Pyrophyllite, Vanadium, Antimony, Feldspar
40 Royalties
Owned Properties 6 Active options
• Cash payments
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• Gross Numerous and Royalties
Assets include over 30 Former Mines
49 Historical or NI 43‐101 Resources
OPTION REVENUE and PROPERTY INVESTMENT from exploration at:
Parbec (Au) Renforth Resources Inc.
Fontana (Au) Tres‐Or Resources Ltd.
Duvay (Au) Secova Metals Corp.
La Motte (Ni) Sphinx Resources Ltd.
Bell Mountain (Au, Ag) Eros Resources Corp.
Houlton Woodstock (Mn) To be announced
PROPERTY ACQUISITION and EVALUATION (GLOBEX)
Pandora – Wood (Au) with J.V. Partner Canadian Malartic
Duvan (Cu) Tonnancour (Cu, Zn, Au, Ag),
Wawagosic (Cu, Zn) Rich Lake (Cu, Zn, Au, Ag),
Santa Anna (Au) TTM (Talc, Magnesia),
Montalembert (Au) Devil’s Pike (Au)
Dalhousie (Cu Ni) Soissons (Au)
Exploration – Diversification – Mining – Royalties – 11
Cu, John Beetz (Feldspar) Carpentier (Au, Pyrophyllite)
PRODUCTION REVENUE:
From our Mid Tennessee Royalty (Nyrstar) CAD$605,000 in from this long life mine (currently on care and maintenance due to zinc price)
MEDIUM TERM POTENTIAL: Magusi Deposit
New study being completed
Negotiating new terms Magusi Deposit
MID TERM POTENTIAL: Bell Mountain
Eros Resources is studying putting our Au, Ag deposit in Nevada
into production via open pit, and heap leach methods
We hold an Advance Royalty (2016) and a 3% GMR
EXLORATION:
By Globex Mining Enterprises Inc
By Renforth, Tres Or, Sphinx, Nyrstar, Integra, Rogue, etc.
I like Globex a lot and continue to buy it despite being in at a lower average price.
Doc,
I have also heard so many times in the past that if a market makes a new high on the last trading day of the month that there are very good odds that it will have good follow through the next month.
Will they will use margin hikes to help cap price?
Margin Hikes
By Pining 4 the Fjords Friday, April 29, 2016 at 1:59 pm
That is what they did in soybeans.
Lewis, good observation—that’s another sign of market momentum. I’m really looking forward to Monday to look at the long term charts to see if the current pattern continues.
Vixy is finally singing the right tune. Up 5+% yesterday and now up 7.3%.
Bought 3k shares of BP and sold out at 33.69. I am too afraid to go long as the oil stocks are stretched out and in need of a correction even if oil is strong.
So, what am I missing folks? Markets down. Gold through the roof? Friday afternoon conventional pump begun yet?
Would it be strange if we got a market correction next week that took everything down?
Nothing is strange to me any more. As a follow up, luckily I traded the range with DWTI and UWTI playing the whipsaw action and recouped my money back with a little spare change…. (but I was physically sweating through my shirt). I decided I had too large of a position at risk and was too affected by the moves, so for peace of mind I only ended up leaving a small bite-sized short position in place in DWTI.
Who knows what will happen on Monday or over the next 2 weeks, but things seem like they are about to get really wild to me. What if the market corrected next week? That wouldn’t surprise me. Volatility crept up today and brought my TVIX position back above water. Strangely enough the marketplace seems to be waking up to the fact that all is not peachy, and they are at least considering the bad earnings report as they shrug them off. The markets ended down and that was a real buzz-kill for Wallstreet today. My day ended surprising positive with Oil and Volatility back to neutral, gains in a number of sectors, and overall a relaxing way to start the weekend. As for next week – Bring It On!!
Nobody expects the Spanish Inquisition…….
Dunh….duhhh……Dunh…..duhhhh…..Dunnnnnhhh…..Duhhhh
You know, Shad……I keep thinking that gold, oil and stocks could all go down together sometime in May. That would suggest a little more than a garden variety correction. The reason is that both crude and gold (including silver) are at speculative extremes. Even historical extremes if the writers who tell us are to be believed.
At the same time we have markets appearing to be rolling over and VIX at very low levels. It just looks like a combination set-up for trouble in my books but it would help explain why mining stock might be due for a considerable setback based on their severe over-bought levels.
We can only wait and see. Like you I am not presuming anything at this point.
Yes, there could definitely be a “sell everything” environment that could set up in May, and seasonally it is not a strong month for PMs or for equities.
This is why I like having a volatility position in place, and the long volatility vehicles have bounced back nicely which tells me the volatility monster is waking up from it’s slumber. I’m actually looking forward to a little shaking of the tree to get things moving again and provide entry points into various stocks and ETFs. Until then…..
London closed on Monday. Not sure about other European Markets. May Day holiday in the UK.
Monday or Tuesday could be opportunity for a smash down in gold.
Mayday….Mayday…..Mayday!!!!
Of course Bob! You’ve got it. Eurex (EuroStoxx) is closed for trading the day following May Day (Monday May 2nd) as are other minor exchanges. May Day lands on a Sunday so Monday is the holiday date for some European exchanges and according to you for London too.
And we know what a day of thin trading can do to gold especially when the world center of gold trading is off on holidays. So Monday is an obvious day for a shakedown if one is coming….or for a shake-up whatever the case might be.
Just wondering if anyone is still holding Great Panther SIlver (GPL)? It seems to be parabolic and I’m contemplating on selling out. Any thoughts?
I already sold out of most of my position in Great Panther but left a little on to ride. I’m an early trimmer though 🙂 With Silver & Gold forging ahead all week, I wish I had left the whole position on, but nobody ever got hurt taking profits.
EX, still have a 40% position left in GPL. Curious though the Point & Fugure bullish price objective = $5.04, not a key technical, but always good to have in mind.
Thanks for that. Plenty of room to grow then.
BTW – Good job to Gold today. It looks like it is going to close above $1280 and $1290 – currently at at $1294.30. This is going to be a very positive daily, weekly, and monthly close.
Ex, I had a huge position in GPL before it took its’ run and then sold out earlier then I should have. Then I got in later again with a smaller position before this massive move. It really is a quandry to know when to take gains. Having said that, I’m now in for the long haul and no more attempting to game the moves. On pull backs, I’ll just add.
Doc – yes I trimmed far too early thinking the miners were going to top out, then added, picked up a small gain, and sold right back a day or two later, and only left in place a tiny position.
I usually do well re-balancing within a stock by buying dips and selling rips, and re-balancing by juggling between several stocks in a sector (like amongst the Silver miners). The problem I had in April was that I got the overall trend in the miners wrong.
The problem was trimming gains as much as it was my timing because I really did not anticipate metals to stall out so long and then suddenly start running higher. I got the macro trend wrong. Watching my tiny remaining mining positions go up this week has been bittersweet.
In defense of rebalancing and trimming, I was able to trim a number of my Lithium stocks with insane gains, watched them drop, and bought back many of them over the last few days at far lower prices. I’ve done this over and over with Uranium stocks and made FAR more money buy dips, and trimming into strength, than if I just would have bought and held. I have also repeatedly sold close enough to the tops of rallies to maximize gains, and avoid a number of sell-offs and thus preventing bad losses. I’d rather sell a gain and miss the extended move, than hold as stock and watch it erase all the gains I had, or worse, go negative and cost me money.
There is validity to both approaches buying & trimming and buying and holding.
There are also times where a stock paints the tape with conflicting technicals and instead of completely selling it, I just sell 15-33% of it. There are times where the management makes a bad call, or an accident of consequence or mine shutdown happpens, or a million other problems that plague mining companies. In those cases, trimming a big chunk and getting out of the way of the fall, and then going back in during the consolidation is far more advantageous than just holding through that on the way down, and simply buying more when it bottoms.
Last example. I bought and sold DWTI and UWTI a few times yesterday and a few times today and made up for a big loss by buying into weakness and selling into strength. If I had bought and held I’d have had a catastrophic loss in my energy allocation, but buy trimming and selling and being an active trader, I turned a lemon trade into lemonade. 🙂
Yes trimming along the way is how the pros play. You don’t get stuck bagholding that way. SInce earnings are on Wednesday, will hold and sell thereafter.
+1 Aida Norkis. I agree, and while there are times I have given up potential gains due to trimming winnings (like this week for example which has me miffed), I also have avoided far more heart aches and haven’t had many of the terrible experiences people talk about where they held a stock from $40 down to $.40.
That kind of “well I just hold on as it goes down 10% – 20%- 30 % – 40% – 50%….. and buy more later just doesn’t make any sense to me. Sell the friggin’ thing and get out of the way, and then buy back a partial position when you think it has bottomed, and if you’re wrong average down with 1 – 2 more tiers. If it keeps going down after that, then cut your loss and try one of the other 10,000 stocks or ETFs on the planet.
The buy right and sit tight plan has it’s advantages of not getting knocked off the bull, and seeing a stock run away from you. This is absolutely true, and if I had had held tight and not trimmed I’d have made far more money the last 2 weeks. However, I never hear those guys admit all the times they sacrificed their whole gain “holding” to watch a stellar move get erased. I don’t hear them discuss how they “bought right and held tight” as the stock lost 20-50% of it’s value and half their position went to money heaven.
The pitfall of the buy and hold strategy = becoming the bag holder (sometimes for years…..). The advantage is letting the “winners run” and catching the surprises to the upside. The advantages to actively rebalancing a position is continually lowering your cost basis and being able to ride out pullbacks, maximizing gains before pullbacks and buying back at a better price, and most importantly managing risk and taking winnings off the table so they don’t get erased. The disadvantages are trimming or selling too soon and missing potential gains and upside surprises. There is a time and place for both strategies and one way is not wrong or right. Different strokes for different folks.
As I mentioned above – buying and holding Uranium stocks or Lithium stocks or many of the mining stocks is often the recipe to see your money disappear, but swing trading the stocks where you buy on the dips and sell on a rallies has been incredibly profitable and keeps you from losing money many many times.
I have bought and sold certain Uranium stocks about 50-75 times in the last few years and turned a nice profit in the vast majority of the companies I’ve invested in. Did sell to too early a few times and miss big gains? – you bet I did; and I hated doing that. 🙁 However did I sell on a rally only to watch the stock tank 10-20% the next day or week – yep, all the time…. 🙂
There are so many times where my capital preservation by trimming the winnings allowed me to stay in the game, where other peers got their clocks cleaned and left the sector never to return. I’d be completely out of money in my Uranium allocations if I’d had bought the quality names 2 years ago when I thought they had bottomed and just “waited it out.” Poppycock!
There are definitely times it is better to buy and hold (like in a raging bull market – and that is if you are darn sure you are in one), and then there are times to take some partial profits and leave part of the position on to ride higher. If the stock or ETF pulls back then you buy lower with the profits you already saved while trimming.
In the case of miners this year: I knew buying big in Dec/Jan/Feb would be rewarding, because I saw the double bottom in Gold in December we discussed it quite a bit at the end of last year, and we noted the mining lows in Mid January. However, even though I was buying and adding from the end of last year all through early Feb, I really never went into a full 100% allocation in the miners because nobody had definitive confirmation that we were in the new bull – only bullish charts and arrows pointing higher. I got up to 60-70% allocations at times with about 20 miners, but generally hovered around 50% allocations in Feb & March and then towards the end of March faded down to 30-40% and by April around 30%-25%, and then 2 weeks ago down to just 20%. I was too concerned that the rally would be topping out and wasn’t convinced until this action recently that PMs really may be in the new bull market. I’m probably too jaded and cynical though (because I still want to see gold close above $1307.80 and $1321.50 definitively before I break out the bubbly and party hats…..and we are getting very close!)
Now, in hindsight, would I have made more money going 100% in on Jan 19th – yeah of course, but I don’t know anyone that did that. I was actually one of the few people on here holding my nose and buying on Jan 18th, 19th, 20th, 21st, 22nd, and the rest of the month. I even did some swing trades and added those profits into even more positions in early Feb. However, at the time I didn’t know if that would be “THE LOW” or not, and nobody started calling it a “baby bull” until the run away gains had already started and got their attention.
Even then, when the stocks were just charging higher, I was not convinced we necessarily had to be in a new bull because we had seen so many bull-trap rallies at the beginning of the year that looked convincing get smashed to smithereens.
In April it looked like the miners were stuck in limbo, and I thought the US Dollar may spike and crush the metals over the last few weeks so I took a defensive strategy. The problem was not the concept of trimming and rebalancing. The problem was that I was wrong on the macro picture, and thus my trades were wrong-footed. I’d still rather protect my gains (which were sizable so far in 2016) than give them all back or lose money in a sell off. Luckily we didn’t get the sell off and the positions I did leave in place are still gaining.
….and that’s the end of this rant.
Ever upward!
Aida Norkis:
Still holding, although I feel I’ll trim around $2.50. Sold 1/2 of my Coeur for some good profits and regretted it. Not going to make the same mistake with GPL. Good luck.
I’m keeping it.
gary savage, saysgold won’t break 200 week mvg avg & don’t short anything in the next 4 years in gold, oil, or stocks… http://www.gold-eagle.com/article/what%E2%80%99s-going-gold
DW, well worth a listen. nice presentation GS!
Birdman,
You said gold is going down below 1000 that sound like a tank
Yes, that was my long term call. But it’s not valid when prices are rising!
This current metals frenzy will have to subside and fall back before that lower price target can come into play. The problem however is that we did see mining indexes break out of their bear channels today so the case for sub 1000 gold might just be dead and buried.
I will look at it again next week. The fat lady is singing but the curtain has not come down yet.
Bird, all I’ve got to say is you’ve been consistent in your view while being cajoled by some. But you’re correct in looking for technical confirmation to determine a bear market is over. Since I generally look at other things to give me clues to an early turn around I get in often before confirmation because I like to take positions when everyone hates an asset. Fortunately, you get lucky sometimes and you’re one of the first to the party. Having said that, there is still a possibility of a strong reversal in the future and people should understand that and not get too carried away. If you look at the moves in PM stocks in 2009 there were even bigger monthly swings then we’ve seen with this PM move—-this is nothing yet compared to 2009. There’s a point when an investor has a nice position to not add in an aggressive way all the way up. Sit on your position and then when the correction comes (and it will) your dollar position will be higher then when you started. Then on the next move up, you can add with more dollars to ride it into the sunset over the next 5-6 years.
I can guarantee you Doc that its not easy being the contrarian in the room when virtually everyone cat and his dog are shouting “BUY, BUY, BUY”!!!! All I know is that these kinds of moves always correct and that the more extreme the move the more severe the decline that follows. If anything I hope I injected some sanity into the discussion but I really doubt that to be honest. Bull market participants never want to hear anything except more of what confirms their positive bias and makes them feel better about what they are doing.
Bad news does not sell except on Network TV.
So, is it load up the truck time, doc?
For commodities, that is.
It was a fabulous week for the mining stocks !
I still think we have further to run yet to the upside in the miners,
The time to hedge to the downside is not now imo.
Cheers.
I agree with you, skeletal. (Re. Hedging)
Everything has a natural pace. We have been going up a little too quickly. (RSIs are getting too high) in PMs and metal stocks. It would be nice if we just went sideways for a few weeks, but probability says we are more likely to correct.
THIS IS WHERE BUYING A FEW PUTS, can provide cheap insurance. THIS IS WHERE USE OF THE PAPER MARKET DOES NOT MATTER.
I.e. If you believe there is a reciprocal relationship between gold/ silver and the dollar and the dollar halos moved too quickly down; or if Gold/silver has moved too quickly up, then buys some PUTS on GLD or SLV when you think they are peaking or the dollar is bottoming.
I, personally, am mostly invested most of the time, but use PUTS as insurance, when I believe we are close to a top. (That also allows me to get long-term capital gains more often.)
I will probably consider hedgin at Gold above $1300 or when the dollar index drops to about 92.7
I would guess I typed “has also” which my.Ipad corrected to “halos”
Part of my problem is the slowness of the ATT 4G network.
“Skeletal” was typed “skeeta”
I hate Apple
I’m glad you clarified that on the “dollar halos” as I thought there was some technical jargon that I was not up to speed on. I read it twice and was wondering what the heck are dollar halos?
If the bottom is in, it’s in. No need for insurance, just to cover downside hiccups.
I was referring to a local top in Gold/silver during a secular Bull, which is a few months old.
CMC, here’s the problem technically with some of the commodities. Some are flirting with the 200 day SMAs and look like they want to break higher. I feel the odds are good. Now, if they do; my thought is how could they run in isolation to the PMs? Could the commodities run and the PMs turn down. That would seem counterintuitive. Just a thought. I love the nickle chart here. I’ll take a position most likely on Monday with a tight stop. I believe nickle probably will sell off a little on Monday based on some technicals and then I’ll probably jump in.
Thanks, doc. I think I’ll wait a little bit more before diving in. Maybe I’ll just add a smaller amount to my PM position until the waters are clearer, especially silver.
Oil closed the week above the 55 week EMA for the first time in almost two years…
Al: Can’t say why PM’s are going up other than they stopped going down and everything gets its turn, eventually. Your thoughts on people being concerned with US potential ‘leadership’ though, I would disagree respectively. The people I speak with are really sick of listening to the news accounts every night. Many have literally tuned out and don’t plan on any participation. Neither Trump or Hillary have anything at all as part of the reason I watch PMs. It is completely an economic reason for me and the belief that eventually the $ and all other fiat currencies fail because of the debt levels, worldwide. Have a good WE.
That is why the Kereport discusses the world economy and why Big Al says fundamentals drive long term changes.
That’s right Silverdollar. Even war doesn’t matter to gold, contrary to popular belief. It’s the deficit spending to fund the wars that sends big money into gold. Cut the government’s income (taxes) at the same time and gold likes it even more. Better still, governments can invent a bunch of new agencies and departments at the same time and plan it all for a time when the economy is contracting. Like this:
(Hope you can see the annotations)
Anyone still waiting for the $1170 pullback in May-June?
Yes
First I’m most interested to see if gold can close above $1307.80 and $1321.50 on this rally. If so it may keep running even in the summer doldrums. However, seasonally May – July are slow periods for the metals, and May is rough on the general stock markets. If Gold falls short of those targets then a pullback in May-June to $1170 as you mentioned would not surprise me. First we need to see where this rally will top out IMO.
I think still think there’s a very good chance that we are going higher in this run than most would believe.
Will we correct from there…of course.
But thats when to hedge to the downside, not now imo.
I think those in short gold positions will lose their pants in the next week or two.
I said on here last week I was going to add to my positions aggressively…..I intend to do the same this coming week also.
Cheers.
I agree with you Skeeta. I think it is still a bit early to hedge (but look at me I hedged at the end of March and throughout April like a dummy). I did add to positions today in a few companies I’ve been watching but that haven’t made as big of a move yet.
If Gold pulls back at one point next week (like in a bouncing dollar scenario) then I’ll probably add to some of my mining positions because over the next 2 weeks it looks like there is room for Gold to run a bit higher. When this second leg higher starts topping out then it will be time to trim. [please remind me of this in 2 weeks 😉 ]
Stop calling yourself a dummy Shad. Nobody is a dummy here.
OK. We’re all our own harshest critics I guess. Thanks.
How about “I hedged like a nincompoop?”
Nincompoop is better. I just hate hearing people beat themselves up. Especially a guy like you who is obviously really bright and a hard worker.
Thanks. I’ve moved through it today and look forward to seeing how May develops.
If the markets keep sliding the volatility positions could suddenly become very interesting.
Nobody who hedged their bet will be losing much of anything Skeeta. What you are losing out on is the chance to participate in the last part of the bull phase of a trend and maybe you get to look foolish when all your friends clean up on those days you are trying to time a reversal.
I had made it clear early on that my own position was hedged and I just assume everyone on this site is smart enough to know to use some strategy when prices are obviously still rising.
So its kind of curious you would say it is good to hedge to the downside in one sentence and then in the very next say those who went short are going to lose their pants! Are you going to lose your pants when the miners correct down?!!!
The other thing is that every person who comes here regularly made good money on the reversal in gold fortunes off the bottom. Except for a rare few who said they did not catch any of the trade at all we all made out fine.
The only real difference between any of us therefore is where we see the correction begin and how far down it might go. Its a discussion that seems to come down to counting Angels on a pin since nobody agrees with one another despite plenty of strong views. The rest is just semantics.
My view has been a serious retrace is in the cards but at this point it looks like I am going to be wrong about that since the trades all turned unquestionably bullish with this final thrust. What then remains is how to trade the bounce following a corrective decline.
So far I have not given it that much thought except to consider that the correction may end up being a lot shallower than I could have earlier hoped for. In other words, the short trades will not pay off too well even if they are a success. Next week will hopefully offer a little more guidance.
Bird,
I’m not sure why you are riled up about my comments?
I said last week I was aggressively buying when you were saying you were shorting the pm market instead.
I said I still intend to aggressively buy in the upcoming week also.
I also said I think those who are short pm’s will lose their pants in the coming weeks.
I’m not sure what I have said could upset you unless you happen to be pn the other side of the trad
Now is not the time to take a hedge for any downside imo.
I’ve mentioned that for the last few weeks now.
…..but you do whatever you want to do.
Good luck.
Cheers.
I am not riled up but I did conclude you were talking to me (indirectly) because I am almost the only person here who was talking about taking a contrary bet on gold. I did take that bet albeit it was a bit early however I have not abandoned my basic premise that miners and metals are seriously oversold, over-hyped and over-cooked.
It’s also my opinion they are due to correct down fairly soon as the charts indicate they have now reached to the upper boundaries of major resistance based on my premise established back in December of how far the run could take us.
I don’t expect to lose my pants on this trade. Far from it. Indeed I will add again to the position next week if a better price presents itself once more so I am not backing away from this at all. I will average the cost basis to the smallest number possible.
At this point it is just a matter of time before we hit a final top and that top could be just days away. Gold WILL crack. So will the gold miners. I intend to make a gain on that trade.
Just as an aside Skeeta….while there may not be many on this site who share my outlook I am certainly not alone in my beliefs. Commercials and the Large Traders are massively net short. They will not end up losing when the day is done. If I am lucky they will sell gold down hard next week and begin the process of reversing this trade back down to planet earth.
Basically….I smell blood. And I think we will get some.
Birdman,
I wish no ill will.
But at this time in the PM market if your adding to your short position, then to me its like paddling up s#/t creek in a barbed wired canoe.
Go short all you want mate.
I don’t care..
Good luck to you personally.
Cheers.
You may not understand what I am doing and I can appreciate that.
This short is only dangerous unhedged Skeeta. And keep in mind the trade is intended to catch a correction over a relatively short period of time. Its not a hold for months or anything nutty. Just a bet to play off what I see as an obvious medium term speculative excess.
Nothing rises straight up without end and nothing goes straight down either. We know those as facts about how the market works so we can easily infer what will happen once the boundaries are reached.
Obviously this is not something I want to be in for very long and as it stands today I will exit should precious metals fail to correct in a fairly short period of time since nobody knows with certainty how long this frenzy might actually last.
I am hoping that we see a set back in gold this coming week.
My loss is I was not long any miners for the past while. But so what? Until yesterday my central belief was that we would not get a genuine breakout that would be lasting. If however this is a grand new bull market we have entered and it is one that will keep running for years then nothing much is lost anyway. B
But there is still quite a bit to be gained if I am correct that we are near an interim tradeable peak. I just think the odds now favour a gold correction over much more upside.
So this is just another way of speculating on the probabilities of a reversal. Its what makes the market too since there needs to be bettors on both sides of the table or there is no game to be played.
The problem for me is I will have to be right fairly soon (like a few days to one week max) or I am out because there is nothing to be gained if this thing gets bigger legs and really does start to take off higher.
All the best Skeeta.
Birdman,
It won’t matter in the long term whether you are on it right now or later.
In time to come I have no doubt it’ll be high 5’s everywhere.
Just don’t lose your pants in the next few weeks mate.
Pm’s are going higher imo.
Cheers.
I appreciate your enthusiasm but I am sorry to say you sound like a broken record. I will only remind you it was exactly your kind of blind reasoning that cost so many bugs their portfolios after the metals bubble bust of 2011.
But I am not “into” group think. there are two sides to the trade.
So its not just “up” all the time. Even when you are sure.
Well then we obviously disagree . Good luck to you on those gold shorts you have Bird…sorry, but your pants may be by your ankles before you know it if you persist with that.
Like I said, no ill will intended.
But it is what it is.
Cheers.
Click…..click…..click…..pop.
You do know what a broken record sounds like I hope. It does not matter how many of you guys I talk to it’s always the same damned song. Year in and year out without a change. All of you think you are unique too.
But all of you are sheep.
Baaa…..Baaaa….Baaaa!
I agree, Skeeta.
P.s. – I don’t think anyone knows why Bird likes to get riled up by our comments.
Of course you agree. A predictable response from you. But that makes you ummm….original. Not one of the local sheep. You are like a snowflake. Totally unique.
On the disaggregated commercial COT futures report silver shows another net short position increase of about 2000 contracts while gold surprisingly shows essentially no significant change.
No wonder doc there has been an additional 2k short pos in silver.I mean look at the death cross on the silver monthly chart.50mma has moved below the 100mma.
Doc,
You got abroad this gold rally recently not at 1050 when everyone hated it.
DUST will have to be reversed split soon if it is going to continue trading. That will be time to short it again.
For precious metals “It’s a bull market, you know.” quote from Reminisces of a Stock Operator–and that is all you really need to know.
Topic: Alexco’s $10 M Equity Financing.
Wow. That was interesting. Alexco dilutes shares by 8,340,000 (12%) to raise C$10,008,000 for exploration and development.
The stock drops about 20% intra-day and now has regained all losses, plus a nickel.
Welcome to the new, crazy bull market ! ! !
I was thinking the same thing Brian. What a rollercoaster!
Another crazy thing? When there are significant positive gains, in my stocks, day after day (after day). I’m just starting to understand the power of compounding gains. It is really mind-boggling. And only something you get to actually experience (appreciate) by buying and holding in a crazy bull market.
Yes, it is very strange how something down 80-90% off it’s highs can go up hundreds of percent from the low levels and still not be anywhere close to where it’s original highs were.
Brian, the only thing that bothers me about Alexco is their streaming arrangement with SLW—It is confusing to say the least. I would like to get the CEO on big Al’s show to answer some questions. Just a thought
Great idea Doc. Let’s get them on the show. When Alexco finally does go back into production, they are forecasting a $14.50-$15.50 AISC (how they calculate it). They’ve also had time to develop a new game plan. When they do announce they are going back into production that should be a significant stimulus for them.
I believe that AISC number takes into account their streaming agreement with Silver Wheaton, but it would be nice to get some clarification around the economics at their mine.
DOC
I am in you camp. Gold to $1450-ish, then a large decline (25% or $100 minimum), before going higher (probably in the Fall)
Brian
Gold did what it needed to, when it needed to…
Btw, look at the blue box on the right. I drew the path I expected the slow sto to take about five weeks ago. It did not disappoint.
Matthew,
Where do you see gold going in the next 3 months?
Alan, I think gold can easily see 1365 by next Friday or early in the following week. By the end of May/beginning of June, I think we can see 1465 to as high as 1510, but whether we get such dramatic moves or not, I think gold will be above 1410 three months from now (end of July).
Of course, no one should act on such projections since even an educated guess is still a guess.
Wow. 1365 in a week. Do you think Gold will blast straight through $1307.80 and $1321.50 and just melt on up catching most investors off-guard?
Also is that 1365 target a Fib or Fan level, or moving average? Just curious how you came up with it, and if you have chart to view that may show the 1465 and 1510 levels as well. I’ve read a few other articles where people have targets in the mid 1400’s and I believe both Jordan Roy-Byrne, Gary Wagner, Avi Gilburt, and Morris Hubbart mentioned targets in the 1400’s as well on a Gold breakout.
You might remember that two or three weeks ago I said that once we got through 1258, 1307-8 would be no big deal. We’ll know soon if that proves to be true but it was just yesterday that gold finally closed above 1258 and look where it is now.
1365 is based on a fork but I don’t consider it a significant level. It just seems like a plausible level to reach in 5 to 7 days following the start of a move like the one we have now.
If the commercials start to cover, we could see 1520 or more by the end of May.
Yes, I do remember you saying that once $1258 was passed that $1308 would not be a big issue. Wouldn’t you think there would at least be a knife fight at that level as some resistance? If Gold just sails straight through and also challenges the $1321.50 trough from 2013 that started this whole 3 year downwards consolidation, then that would have me convinced 100% that the bull is on for 3-5 years.
Thanks for unpacking the 1365 insignificant target – it forking figures 🙂
Yes those commercials may experience quite a short squeeze if this thing gets moving.
Between you and me, I’ve been convinced that the bear is over since February. When the whole gold/silver mining sector sees that kind of price action on huge volume, you’re witnessing the result of the collective analysis and due diligence of the biggest and smartest money — for free.
Among many other considerations, the position of stocks, bonds, and the dollar as the new year started also strongly suggested that the trend was changing. Like the top in stocks, the low for the miners was about 18 months in the making. The miners displayed positive technical divergences during that time just as stocks displayed negative ones.
I think the HUI is heading for 270+ next week.
Wow. That would be quite a move in the HUI.
It seems I’ve just not been bullish enough. More likely, I’ve just become a crotchety old man.
Why would Commercials cover shorts into a parabolic price rise? That makes no damned sense Matthew and it’s never the way Commercials behave given the depth of their pockets and thus their staying power. They have not taken the opposite side of the trade against specs and hedges because they enjoy losing money and then are going to suddenly cave in and send prices soaring by covering. One thing about Comm’s that is consistent is that they tend to work together while they panic the sheep in and out of their positions.
The high weekly close and April monthly close could bring in a new type of investor.
On Monday morning, we could see the first wave of investors (non-gold bugs) who look at the performance of gold and PM miners and want to jump on the train. Then comes short covering …
The Venture exchange just had its biggest monthly gain in 16 years. That’s another good sign since it is composed of a lot more than just gold and silver miners.
It had to rise 44% since its January low just to reach its 2008 crash low.
I would think the stock market has a lot further to fall then.
Thanks Matthew
It turns out I explained the action in the silver juniors 7 months before it started:
On June 25, 2015 at 1:29 pm,
Matthew says:
When silver finally starts to trend higher, the miners with healthy margins today are unlikely to perform as well as those that have tiny margins today.
For example, the company that’s making $3 per ounce today, at $16 silver, would see a 33 percent rise in profitability if silver were to go up one dollar. However, the company that’s making 10 cents per ounce today would enjoy a 1,000 percent rise in profitability in the same scenario. That’s a 30 times greater increase in percentage terms. The performance of the shares in the second example would blow away that of the first.
The same concept also applies to the value of a miner’s assets in the ground. Less economic deposits enjoy a greater benefit for each increase in the price of the metal.
Yes, I remember you writing that and taking pause to really consider that, and started looking for the best of the worst…. Companies that were just barely underwater and who had share prices that had been gutted and left for dead. I figured that when the metals prices started moving that they’d really have the most upside momentum.
This is why I felt OK buying into Americas Silver Corp and Great Panther at the time, and why I agreed with you that Impact Silver was a wise choice (but I never got any shares darn it). It is also why I like companies like Alexco, Aurcana, and Nicola because their mines are on care and maintenance, but don’t need much higher prices to spring into action. Also it is why I like Perseus, Scorpio Gold, and Jaguar mining – they are bit higher on the costs, but as metals prices rise, their revenues will jump in a big way.
_________________________________________________________________________
Hey some time when you get a moment check out Alkane Resources. (ALKEF – OTC). It primarily explores for gold, copper, zirconium, hafnium, niobium, tantalum, yttrium, and rare earth elements.
* The reason I bring it up is because they actually produced 69,000 ounces of Gold last year. They used to be one of my prime suspects for their Specialty Metals and Rare Earths, but they rebranded as a Zirconium company?? I had put them on the back burner until Skeeta brought them up a month or two back.
What blows my mind is that they are actually producing way more gold than the majority of gold stocks on the planet (because as we know most Explorers will never make it to production, and many development stage companies run into permitting, money, or equipment setbacks) and project generators are more interested in creating royalty streams out of their mineral banks. What has my interest peaked is that Alkane is actually producing more gold than many of the touted smaller producers that are more common in gold dicussions.
I’m not very good at analyzing cash flows and debt loads versus rates of return or looking at book value etc…. Are they making money? I’m wondering if they just may surprise the crap out of the gold community because they’re growing the development of their specialty metals and rare earth assets through revenues from gold production, but apparently it was not enough because they are also doing a $16 million flow-through financing right now to build their Zirconium mine.
I don’t think I’ve seen any other company with this scenario, so I am intrigued, but if their gold operations were profitable enough, then I don’t know why they are doing the financing, unless the Gold operation is a slow drip revenue, and they are just trying to fast track things to get into production of specialty metals. Any thoughts?
Alkane Resources Corporate Presentation:
http://www.alkane.com.au/images/pdf/presentations/20160413.pdf
Tomingley Gold Operations FY15
$115 million funded without debt
-CIL Processing Plant
Caloma open cut October 2015
• Resource – 688,000oz of gold (21 Sept 2015)
• Mine Method – open cut & underground
• Mine Life – 6.5 years (targeting 10+ yrs)
• Processing plant throughput – 1.0Mtpa
• 2.00g/t Au and 93% recovery standard CIL
• Gold Production – ~400,000oz over base case life
Gold production commenced February 2014
FY15 at 30 June 2015:
o Production 69,612oz —— (They produced 69,612 oz of gold last year. Startling!)
o Revenue A$101.9M
o Cash flow A$28.6M
o AISC A$1,249(1) – (just a reminder that the figures are in Australian Dollars)
(1) AISC = All in Sustaining Cost comprises all site operating cash costs, royalties, mine exploration, sustaining capex and mine development and an allocation of corporatecosts presented on the basis of ounces produced.
**Dubbo Zirconia Project [this is what they are raising the $16 million to build mine & processing center, and they are shoveling any gold revenues at this project. Strangely enough, but being an unknown Gold Producer, they just may catapult themselves into the next specialty metals producer since Lynas]
___________________________________________________________________________
Dubbo Zirconia Project
– Located 400km northwest of Sydney within a region that has substantial infrastructure – roads, rail, power, gas, light engineering, people (~100,000), being a large agricultural and mining area
– A very large polymetallic resource of the metals zirconium, hafnium, niobium (tantalum), yttrium and rare earths – Important and strategic metal mix
– Reserve supports 35 year mine life at 1 million tonne ore processing per annum with defined resource supporting an 80 year open pit operation
– Demonstrated flow sheet with pilot plant and products for market evaluation operated at ANSTO since 2008
– August 2015 Front End Engineering Design (FEED) study confirmed the robust technical and financial DFS of April 2013
– State and Federal environment approvals in May and August 2015
– Finnish technology/engineering solutions company Outotec appointed for Early Contractor Involvement (ECI) in September to present a fixed price EPC
And yet it was GDX that was first to break out of its trend channel, not JNUG or GDXJ. So that means that there was heavier buying of the majors and probably shows that interest was coming from more serious players initially. The rest played catch up.
GDXJ has outperformed GDX by 33% since GDXJ:GDX bottomed in February. As you should expect, GDX outperformed GDXJ for the entire bear market. GDXJ will now outperform GDX (on net) for the entire bull market as investors seek leverage.
GLDX will beat them both and has been outperforming GDX for over a year.
The juniors I like will beat all the ETFs.
Matthew, what I was referring to is the charts themselves, not the absolute percentage gains. On that point you are correct but my concern has been which were indicating break-outs on a technical basis and on that score GDX was first out of the gate. So my comment was a reflection on what others were discussing some months back about how we might know if a new bull market was underway…..would it be the Juniors that told us or the majors. It was only partially related to your remark.
The euro is going higher.
Stocks are going lower.
Notice how the Schiff fork (blue) beautifully contained the close on the 20th…
Agreed. Volatility is about to pick up in May.
Here is the TVIX chart. I believe we are finally there to where Volatility is starting to build. The next few weeks may get wild.
Woops – Here’s the TVIX chart:
http://stockcharts.com/h-sc/ui?s=TVIX&p=D&yr=1&mn=0&dy=0&id=p99385731291
Just a matter of time, Shad.
Great! I’m back in the black on TVIX. Very exciting 🙂
I was at a profit when vixy hit 11.60 but closed in a loss position.
Yes me too Tad. I trimmed into the strength to ratchet down my position a bit, because I had to average down a few times, but now I have a cost basis at $3.803.
Copper has closed above the 200 day MA for 8 days running but remains below the 233 day EMA.
It’s going higher.
The TSX Venture is weekly overbought for the first time in five years.
The yen is going to blast through fork resistance…
The dollar is going lower.
There was an interesting video from G.S. posted up above (at the top of this blog) and he believes that fork support (right below the low of 92.52 in the low 92 range) is going to hold and the dollar is going to bounce. He also believes the 200 week moving average will cap the moves in GDXJ and the HUI, and that gold may top right after breaking through the Jan 2015 high of $1308.
If you haven’t watched it yet, it is very interesting food for thought.
Here is yet a different take on the Dollar from Morris Hubbartt.
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Precious Metals: More Upside Breakouts
Super Force Precious Metals Video Analysis
Morris Hubbartt – posted Apr 29, 2016
Here are today’s videos and charts (double click to enlarge):
US Bonds, Dollar, & Dow Video Analysis
http://www.superforcesignals.com/video/2016apr28dow/2016apr28dow.html
There is some interesting thoughts and analysis on the DOW as well…..
For those that want to see all of Morris’s videos that he posts each weekend on 321gold and Gold-Eagle, click on the link below. (any of the blue links are videos):
And here is Martin on the prospects for the dollar. He discusses this in terms of the Euro close for April and notes it is on track to rise to 116 meaning in other words the dollar will fall.
Month End Closing — Martin Armstrong
https://www.armstrongeconomics.com/markets-by-sector/foreign-exchange/month-end-closing/
I like how G.S. says “this intermediate cycle in the dollar is just stretching absurdly long…”
Translation: He has been wrong for weeks. He was very cocky about the dollar making a low and going higher weeks ago when I said it was going lower.
I also noticed that he takes great liberties with his assessments about what “everybody” thinks. “Everybody was this was this, everybody was saying that…” I don’t believe that everyone is as bearish as he thinks. It seems he overstates such things to lend weight to his arguments.
Just as many technicians focus almost exclusively on price action, G.S. appears to focus almost exclusively on cycles. I think it’s a mistake to ignore strength/momentum readings and they are getting worse for the dollar as we approach levels that should offer decent support. I think that my fork support and the August low will not hold.
If we do get a bounce from here, I think there will be substantial resistance at the support line that broke a few days ago (blue line).
Yeah, it was a good video. Gary drives me nuts sometimes but other days he has a real talent for just cutting through the noise and saying the obvious others seem to miss.
The real question is what does the market have to pay to get the real goods.
Too much. Gold is still over-priced on a long term inflation basis. That is not to say specs won’t drive it up into the silly season to earn as many dollars as they can 🙂 but it is definitely over-priced by most metrics and has no business being above 1000 dollars.
Nothing I can do about that sadly. But let me price the fix and gold will sell a lot cheaper than it does today.
Looks as if the USDJPY again is the Key indicator in the directional move in the PMs.