The ongoing debate of why fundamentals are not driving these markets
We wrap up the markets today starting out with a discussion on why fundamental factors are not driving the equity markets. We also touch on bonds, oil and gold in a an all encompassing market wrap.
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So Cory agrees with Bob Hoye.
Many people consider the US as the best nag in the Hacker’s yard;
It probably will be until it drops dead.
But you are wrong about manipulation, Cory. (Just my 2 cents)
Thanks both. Very interesting.
Who says fundamentals are not driving these markets?
Fundamentals are clearly driving these markets?
Clearly the fundamental cheap money supply is driving the general market, despite deteriorating fundamental technical factors such as EBITDA, P/E ratios, Price/asset values etc.
I will not let you steal the word technical and replace it by fundamental!
There’s too much stealing goin’ on.
Historically technical factors (as opposed to technical analysis) has always included things like P/E ratios etc.
I’m just an old pedantic curmudgeon.
This debate has been kicked around on this site for years.
I’ve talked about it for years now
If I look I can probably find some of my old essays…
Published April 24th,2013 by me talking about the fundamentals…
Many people talk about the fundamentals as if they are some discrete, finite, objective set of data or issue points that you either agree with, disagree with or are ignorant of.
They swear allegiance to the fundamentals, proclaiming they are aware of and agree with these collection of said data and/or issue points. Almost as if they are in an exclusive club. I suppose the converse would be, “No I don’t agree with the fundamentals” which sounds patently absurd. On the surface.
This has been the conundrum since the gold highs of 2011. Sticking with the fundamentals.
Some of you may grow tired of my missives, and that is ok. I write them only to edify and encourage. I also have selfish reasons – I find writing to be the best way to clear my head and arrange my thoughts. So if there is no one on the other end that’s ok too.
One of the hardest things for any one of us to do is to acknowledge we were wrong. To admit you were heading in the wrong direction and now must turn around is a very difficult thing to do. I stand here admitting I was wrong. Wrong about what? I was wrong about the direction of the gold price after the Sept 2011 highs. I had played out two scenarios in my mind, neither of which came too fruition. The first scenario was a correction, limited in price and brief in duration, like many other corrections before it. The second scenario was a true parabolic phase that continued to accelerate as the average person climbed aboard the gold train. Although I was not eyewitness to the great bull market of the 1970s I’ve heard stories of the long queues of people clamoring to get in on the gold fever. I was persuaded we were right on the cusp of that. Perhaps this did happen in a stealth way with the advent of the Internet, in which case I was fooled. In any event neither scenario played out and here we are. In hindsight clearly the time to exit the position was the second failed attempt at $1920 shortly after the first high was put in, but hindsight is twenty twenty.
I think many people, including myself, lost a lot of money and a lot of investing time clinging to the fundamentals as gold became stuck in a slow frustrating meandering range between $1800 and $1550. I should have known better. Only those who were willing to adapt and willing not to be tethered to the old fundamentals survived and thrived.
In the spring of 2000 I was handicapping the races at the start of a new race meet. I was selecting my horses based on the fundamentals (speed, class, condition…) and losing. It became apparent very quickly that the fundamentals weren’t working. Horses breaking from the inside were winning a statistically large proportion of the races regardless of the actual merits of the horse. I saw the trend and instead of bucking it changed my approach and played horses breaking from the inside. I rode this for the few weeks it lasted making several thousands of dollars. But while it lasted I had to shelve the old fundamentals, or at least temporarily suspend them, and go with the new bias that was trumping the old fundamentals. I firmly believe we witnessed this same scenario in the gold market from Sept 2011 until now.
So where are we now?
I am becoming more and more persuaded that, like horses breaking from the inside, some other factor is having an undo influence on the gold price. Until this factor ceases or becomes evident I think gold is going to continue to struggle.
$1440 is now becoming strong overhead resistance. Physical demand might start to dry up, we need to watch this very closely. If the consumers in India feel they are getting a bargain now and were willing to suspend purchases until now, what does that tell you?
It tells me the most astute gold buyers on the planet felt the price was too high until now.
Not to mention the smartest guys in the room at GS and what they might pull at anytime
I am monitoring these developments very closely.
Gold at least has stopped going down and that is always a good thing.
Don’t get me wrong, I am holding, but we need to brace ourselves for what could be more pain. And we may even need to be willing to admit to the heretical conclusion that perhaps gold is no longer in a bull market. All I am saying is don’t be married to any one asset or opinion. Adaptability could be paramount to success at this stage of the game! I needed to relearn this lesson sooner this time.
Published by me March 7th, 2014
Many people are not going to like it but today’s gold price grade is a “D+”
I am not giving it a “D+” because of the amount of the drop, which wasn’t all that much.
I am giving it a “D+” because it failed to take back $1340.
Look at the price action today.
Gold had all day to come back from the NFP take down, and it couldn’t.
The bears drew a line in the sand and gold couldn’t cross it.
The bears said “Show me your hand” and gold had nothing.
I said yesterday the NFP report would be the excuse to whack gold.
It didn’t matter what the number was. It was used to hijack gold.
And that it did
If you know anything about the game of chess you know it is a war of time and space.
Gold too is in a war and it is rapidly running out of time and there no longer is any space for days like today.
I can’t fathom how anyone can seriously give gold an “A”
What would you give it if it ever got back to $1900?
No I think the grade is accurate.
Today gold battled all day to take out $1340. The price hardly moved a buck in either direction once the battle around $1340 was drawn.
Even in the last minutes of closing gold poked its head at $1340 only to be pushed back again.
It missed by 50 cents on the bid.
You say why quibble.
Because gold had every right to come back after the NFP hit and it couldn’t.
With restrictions loosening in India, tensions in Ukraine and gold manipulation starting to become main stream gold should be stronger.
The story is in the price.
Published by me March 24th, 2014
An amateur is someone who has the same information everyone else has, like Fibbonacci retracements; and thinks he has something no one else has.
When everyone has the SAME information then everyone has USELESS information.
Worse than an amateur is the person who thinks he has the “fundamentals” cornered.
Really hopeless.
They talk about the fundamentals as if they are some finite data points that can be quantified that only they seem to be enlightened about. RUBBISH.
This is what I said once before about the fundamentals…still applies…
Many people talk about the fundamentals as if they are some discrete, finite, objective set of data or issue points that you either agree with, disagree with or are ignorant of.
They swear allegiance to the fundamentals, proclaiming they are aware of and agree with these collection of said data and/or issue points. Almost as if they are in an exclusive club. I suppose the converse would be, “No I don’t agree with the fundamentals” which sounds patently absurd. On the surface.
This has been the conundrum since the gold highs of 2011. Sticking with the fundamentals.
I know all about the so called fundamentals. We all do.
This goes back to point #1. When everyone knows the fundamentals then they are useless.
No one has a monopoly on the “fundamentals”
And I like the reference to Silky Sullivan, unfortunately it is a terrible analogy.
While he was exciting and thrilling to look at with his come from behind running style; the fact of the matter was when the big money was on the line he came up too late and too short.
He was the favorite in the Kentucky Derby and got trounced. A lot of people who bet with their heart and not their head lost a lot of money.
Kind of sounds like gold
The New Banking Crisis — In Two Frightening Graphs
http://thedailycoin.org/2016/09/27/the-new-banking-crisis-in-two-frightening-graphs/
Peak Gold Coming as Exploration Dwindles, Randgold CEO Says
Peak gold production may be reached within the next three years as miners fail to replace their reserves, according to Randgold Resources Ltd. Chief Executive Officer Mark Bristow.
Lucky we have a 70 year supply.
Breaking news:
Google parent Alphabet Inc (NASDAQ:GOOGL) just announced some new initiatives in India to bring free internet access to what it calls the “Next Billion Users.” From Google’s official India Blog: The growth of the Internet has been explosive in India. Every second, three more Indians come online for the first time.
Do you think electricity usage will increase?
Ding, Ding, Ding. Exactly.
That is why I think people put too much emphasis on just China to power commodities and energy. The whole world is electrifying and they are going to need Copper, Silver, and specialty metals for the electronics, and Lithium, Nickel, and Graphite for batteries, and they Electricity will be a mix of Carbon based power, Nuclear, and Renewable Energy sources (Solar, Wind, Hydro, Run of River, Tidal, etc….).
Good stuff CFS and Ex. Totally agree.
It’s a big globe out there, full of many emerging markets, and developing countries, and there is more going on than just what’s happening in the US, Canada, and China.
b..there’s more than that. Since the Fed non raise, open interest increased 41,000 contracts in 4 days. Roll over and DB selling helped cause some of it. Comex can issue as much paper as needed to keep $gold in check. They can flush price in seconds.
Miners have replaced less than half of mined ounces since 2000
Fed Jawboning For September 28, 2016
Yellen 10:00ET
Bullard 10:15ET
Evans 13:30ET
Mester 16:35ET
George 19:15ET
Markedtofuture – I picked up some more TUO today into this recent weakness.
They have to many good properties, good JV partners, and opportunities for an upside surprise on a drill discovery, not to have a few more irons in the fire.
Cheers.
Barkerville Gold drills 10 m of 14.59 g/t Au at Cariboo
2016-09-27 08:48 ET – News Release
Mr. Chris Lodder reports
BARKERVILLE INTERSECTS 14.59 G/T AU OVER 10 METRES COMPLETES PHASE I DRILLING AT COW MOUNTAIN
Barkerville Gold Mines Ltd. has released the final results from the recently completed phase I exploration and category conversion drilling program on Cow Mountain at the company’s flagship Cariboo gold project (CGP). Significant results are presented in the associated table. Drill hole locations are shown on a map and longitudinal section presented on the company’s website.
I have some shares in this company.
Nice CFS.
August 8th Osisko Mining acquired 17% of Barkerville from Eric Sprott.
Both stories,Barkerville and Osisko Mining keep getting better.
Agreed with the Osisko and Barkerville stories both continuing to get better.
From market watch.com
The world’s largest asset manager joined the chorus of investors warning that expensive U.S. Treasurys could pose a danger to portfolios as the Federal Reserve moves closer to a rate increase and the Bank of Japan ramps up efforts to steepen the yield curve.
“It’s time to rethink the role of U.S. Treasurys in portfolios, and specifically to be cautious of long-duration Treasurys,” wrote Richard Turnill, global chief investment strategist at BlackRock, in a Monday note. “The risk-reward landscape for long-duration Treasurys is shifting.”
Duration measures the sensitivity of a bond’s price to changes in yield. As bond investors know, debt prices rise as yields fall and vice versa. Duration estimates just how much bond prices will change as the yield rises or falls. The longer the maturity, the longer the duration and the more sensitive a bond price is to changes in yield. That means that a small rise in yields can have an outsize impact on the value of long duration bonds in a portfolio.
David Stockman discusses last night’s debate:
Chris Vermeulen on what is fundamentally driving the general market and why it is going to end:
http://etfdailynews.com/2016/09/26/heres-why-the-bull-market-is-quickly-nearing-its-end/
How Peter Schiff would have liked the debate to go:
(A little bit of sexism showing, even if true!)
Great comment on on the bond holder.
And suggestion for Trump.
Peter is spot on
“Insanity may last another 4 or 5 years.” Bridgewater calculates how much time Central Banks have left. Zerohedge
Post out of place….sorry
A commentary on the debate that has the most public comments…over 2,000 and climbing quickly!
https://m.youtube.com/watch?v=Psalw8CWcI8
Hey Al, Semi of off topic.. I dont follow the comments and stuff so I may be out of the loop.. But is there any way you can bring Gary Savage back on the show as a special guest like once a month? So kind of a regular “rare” special guest treat? Thanks!
The latest Gary Savage on YouTube:
https://m.youtube.com/watch?feature=youtu.be&v=mmkvrVpQtnA
He posts there regularly.
Scary graphs comparing DeuscheBank to Lehman:
http://dollarcollapse.com/money-bubble/blows-up-first-part-3-deutsche-bank/
Here’s the latest Jay Taylor Broadcast recording:
https://cdn.voiceamerica.com/business/010644/taylor092716.mp3
Includes NuLegacy Gold and then a discussion with David Stockman.
As usual an overview with Michael Oliver comes first…talking about Italy this time, and EU collapse.
For those that don’t want to bother listening to Jay Taylor, let me say that Michael Oliver, with his momentum analysis, is the best analyst of movements that I have read.
(and without bragging, I believe I read more analyses than anyone, certainly on this blog by an order of magnitude and I’m not joking.)
Michael Oliver believes he is seeing the first signs of Black Swans on the horizon.
Thanks CFS. I appreciate your insights, and think Michael Oliver is a sharp technician. He’d be a great guest to visit the KER once in a while.
Agree on that Michael Oliver would be a great guest to visit the KER.
I own shares in NULGF.
I bought mine when Mcewen bought into the company. (I have not checked if he still owns his shares)
Ex, remember offshore oil was discovered off the coast of India, so once that is developed, I do expect it to be used for transportation and power, but pollution is a problem in India (as in China) so I do expect mini-nuclear and solar to be used extensively away from the coast.
Whenever renewables are used, back-up alternative supplies have to be at least partly available, for when the sun doesn’t shine or the wind doesn’t blow.
I completely agree with all 3 points CFS:
1) “offshore oil was discovered off the coast of India, so once that is developed, I do expect it to be used for transportation and power,” – CFS
2) “but pollution is a problem in India (as in China) so I do expect mini-nuclear and solar to be used extensively away from the coast.” – CFS
–> “Electricity will be a mix of Carbon based power, Nuclear, and Renewable Energy sources (Solar, Wind, Hydro, Run of River, Tidal, etc….).” – Ex
3) “Whenever renewables are used, back-up alternative supplies have to be at least partly available, for when the sun doesn’t shine or the wind doesn’t blow.” – CFS
—> “Lithium, Nickel, and Graphite for batteries”. – Ex
I didn’t specifically mention back up power for renewables with these batteries, but anyone that has followed my comments on Lithium over the last few years know that “Backup Batteries” have been a key point I’ve mentioned repeatedly for one of the key fundamental drivers of Lithium/Nickel/Graphite-Cobalt, (beyond EVs, Laptops/smartphones/tablets/drones/rc cars&planes&Helicopters/powertools, medicine, and glass & ceramics).
I hope you know we agree, Ex.
🙂 Absolutely. That is why I mentioned I agreed with all 3 points you made.
I enjoy looking at all the different components of the Energy mix, and appreciate your updates on solar, wind, nuclear, Oil & Nat gas, and new technologies. Heck we’ve even reviewed Thorium reactors and Fusion before.
CFS – you da man.
Ocean Power Technologies Announces New Contract with the U.S. Department of Defense Office of Naval Research
PENNINGTON, N.J., Sept. 14, 2016
BAILLIEU HOLST RESEARCH
Galaxy Resources Limited (GXY) (GALXF)
http://www.galaxylithium.com/Investor/reports/160925BaillieuHolst.pdf
Don’t Believe Elon Musk on the Powerwall
By Maxx Chatsko Published September 27, 2016
http://www.foxbusiness.com/markets/2016/09/27/dont-believe-elon-musk-on-powerwall.html
The Future Lies In Lithium – Speaker
Sep 26, 2016
Guest(s): Chris Berry President, House Mountain Partners
Although he remains bullish on gold, House Mountain Partners president Chris Berry says he is really optimistic on energy metals like lithium and cobalt. “Despite the funk that a lot of the mining sector has been in for a while, it’s clear that the lithiums and cobalts will grow in terms of demand,” he told Kitco News at the Mines & Money event in Toronto. Berry is also the co-editor of the Disruptive Discoveries Journal and a speaker at the event, where he will be sharing his insights on how investors can look to get into the sector.
Spain Closes In on 50 Percent Renewable Power Generation
September 27, 2016
By William Steel
Trial Begins for German Storage Facility Built with Used EV Batteries
September 27, 2016
Making Money with Batteries
Battery energy storage is the hottest emerging technology in the renewable energy industry but are we beyond demonstration projects yet?
September 19, 2016
By Jennifer Runyon
Thanks for the post
Energy and Batteries. A brave new world that needs to stay charged.
Reasons why goldbugs might choose Trump for President:
(Condensed from Fortune Magazine:)
MDonald Trump is pitching himself as the best man for the presidency based on his track record as businessman, and his ability to surround himself with the “best” people—not on his knack for writing white papers. This, of course, means that it is important for voters to understand whom he is surrounding himself with, and what sort of ideas they hold.
With this in mind, Fortune reached out to Dr. Judy Shelton, one of two economists recently named to Donald Trump’s economic advisory team, and the only woman to hold that title. Shelton is a senior fellow and co-director of the Atlas Sound Money Project, whose mission is to promote the principles of sound money and raise awareness of what they see as the inherent problems of our current monetary system. Dr. Shelton first rose to prominence when she predicted the economic collapse of the Soviet Union in 1989, two years before it transpired.
As the article goes on to describe, Judy Shelton is in favor of a return to a gold-backed monetary system!
(In order to do so, this would either require much higher gold price or a partial backing or some combination of both.)
Lost in the hoopala of the debates is the fact that President Obama has vetoed the JASTA Bill.
JASTA is the bill that would allow the families of the victims of 9/11 to sue Saudi Arabia for compensation for their involvement with 9/11.
Some have called President Obama’s veto treasonous.
Tomorrow the Senate will vote on overriding this veto.
After the Senate the House of Reps will vote to override the veto.
Now is the time to be paying attention to how your Senator and Congressman vote on this veto override.
They must be held accountable.
Heavy lobbying by the Saudi’s
http://www.cnn.com/2016/09/26/politics/9-11-veto-override-senate-saudi-arabia/index.html
CEO Of Randgold expects supply deficits in gold:
http://www.iol.co.za/business/companies/randgold-chief-sees-gold-supply-problem-2073137
John Embry sees black swans approaching:
http://kingworldnews.com/john-embry-warns-global-implosion-edges-closer/
Rick Ackerman, from CA.
(Discussing the debate, plus….)
http://www.howestreet.com/audio/Ackerman_Rick_2016_09__27.mp3
The problem with Rick’s commentary, is that he hasn’t travelled the world and seen the numbers of Chinese students in foreign universities. There are millions of Chinese students on thousands of foreign (to China) universities. You cannot walk around any good university but be amazed at the number of Chinese students!
The LBMA/OTC options expire on Friday.
Tomorrow I expect they will let paper gold/silver rise as they still have until Friday to to drop prices for the LBMA/OTC options.
(And they only have limited physical metal.)
Cory, please note….a prediction of manipulation, or rather suspended manipulation for a couple of days.
Silver Prospect Generator: Grosso, CEO Of Golden Arrow, talks about his project http://radio.goldseek.com/nuggets/grosso.09.26.16.mp3
In Argentina
The latest Mike Maloney:
https://m.youtube.com/watch?feature=youtu.be&v=u5gpEHJemZA
Golden Arrow Announces Share Issuance for Services
VANCOUVER, BRITISH COLUMBIA–(Marketwired – Sept. 27, 2016) –
NOT FOR DISTRIBUTION IN THE UNITED STATES OR FOR DISSEMINATION TO OR THROUGH US NEWSWIRE SERVICES
(Still Never mind, eh!)
Golden Arrow Resources Corporation (TSX VENTURE:GRG)(OTCQB:GARWF)(FRANKFURT:GAC)(WKN:A0B6XQ) (“Golden Arrow” or the “Company”) is pleased to announce that the Company has received conditional TSX Venture Exchange approval to issue its common shares (“Shares”) for services pursuant to a contract for diamond drilling (the “Drilling Contract”) between the Company and an Argentinian drilling services company (the “Drilling Services”), (together the “Services”) on the Chinchillas Silver Project located in Argentina.
The Company will issue Shares for Drilling Services pursuant to the Drilling Contract to conduct up to a 6,400 meter diamond drilling program, for an aggregate cost of US$1,358,000. The parties agreed to the payment for the Services by way of the issuance of an aggregate of 1,117,900 Shares.
Thanks CFS, I m a big shareholder in GARWF
Violating the 4th amendment to the Constitution?….Big Brother is watching.
Not just social media.
https://m.youtube.com/watch?v=s5zOQTCkwUs
Your tax money at work by Emperor’s edict?
Franco-Nevada Moves Focus From Gold To This
Sep 27, 2016
Guest(s): David Harquail CEO, Franco-Nevada
OceanaGold, B2Gold face political uncertainty in the Philippines
MATTHEW KEEVIL SEPTEMBER 27, 2016
Austral Gold Announces Restart of Casposo Silver-Gold Mine Operations Following Release of Updated Mineral Resource and Mineral Reserve Estimate
Pure Gold Intersects 126.6 g/t Gold Over 3.7 Metres at the Madsen Gold Project
VANCOUVER, BRITISH COLUMBIA–(Marketwired – Sept. 27, 2016)
There is a battery metals section at the Toronto Mines and Metals Conference.
Thanks CFS. It looks like they addressed Pilbara in that piece responding to the Lithium fundamentals.
Orex Intercepts 57 Metres Grading 118 g/t Silver in Drilling on the Sandra Escobar Project in Durango, Mexico
VANCOUVER, Sept. 28, 2016
For any investors following the Uranium explorer Nexgen, it has been in a corrective leg down the last few months in Summer, but now that the Fall has arrived, and Uranium spot prices have dipped down to absurd levels, I’ve considered adding to my position.
I posted a chart a week or two back postulating that it may bounce off the 200 day EMA (which it did, but it has pulled back again. There is a trader Ty in CEO that posted the following chart, and it makes sense that we could be seeing a double bottom in NXE at present near that same place we expected the bounce the first time. Food for thought.
http://cdn.ceo.ca/1bunc88-Screen%20shot%202016-09-28%20at%202.00.46%20PM.png
Of course, if that support doesn’t hold then it could get ugly for NXE. Ty mentioned investors may want to watch for confirmation on taking out the recent high from the most recent mini-bounce off the 200 day, and that is sound advice.
Could happen as Ty suggests but I’d be very concerned about the gap below 1.20. It ultimately depends on the price of Uranium, doesn’t it? Thanks for posting.
The technical level he mentions would be a valid place to look for support regardless of the price of Uranium, but yes, if spot Uranium were to tick back up that would help the cause. Likewise if Uranium dove down any further then it would be a sucker punch to most of the miners and create a headwind for any new investors jumping on board.
If that support fails (double bottom) then it may gap down below $1.20 as you mentioned.
We’ll see how it goes……
Uranium, the most beaten up sector of all this millenium
Is that what they said at the last conference?
Osisko Mining completes $32.31M private placement
2016-09-27 09:41 ET – News Release
Mr. John Burzynski reports
OSISKO MINING COMPLETES $32.3 MILLION PRIVATE PLACEMENT OF COMMON SHARES
Osisko Mining Inc., further to its press release dated Sept. 9, 2016, has completed a bought deal private placement financing of 11.75 million common shares at a price of $2.75 per common share for total gross proceeds of $32,312,500. The offering includes the issuance by the corporation of 1.75 million common shares pursuant to the exercise in full of the option granted to the underwriters. The offering was underwritten by a syndicate of underwriters led by BMO Capital Markets.
Klondike Gold drills 11.93 m of 3.3 g/t Au at Klondike
2016-09-28 09:43 ET – News Release
Mr. Peter Tallman reports
KLONDIKE GOLD EXPLORATION UPDATE: NUGGET ZONE ASSAYS 3.3 G/T AU OVER 11.93 METERS, LONE STAR TARGET EXPANDED WITH DRILLING UNDERWAY
Klondike Gold Corp. has provided an update of continuing drilling currently at the Lone Star target and released diamond drill assay results from the Dominion target and the Nugget zone at the company’s Klondike project located near Dawson City, Yukon.
Globex Mining Enterprises Inc. to Webcast, Live, at VirtualInvestorConferences.com’s OTCQX October 4th Event
Stewart Thomson shares my view about what would happen to the miners if the stock market melts down…
“I’m getting a lot of emails from investors who are worried that gold stocks could get hit hard if the US stock market crumbles. Here’s the bottom line:
There’s no question that there appears to be more margin used in the gold stocks arena than the bullion arena, at the current time.
It’s a different situation from 2008. In 2008, hedge funds were forced to liquidate gold to meet margin calls caused by the OTC derivatives crisis.
Now, a loss of confidence theme is brewing, with the focus on central banks and government treasury bonds. That means that institutional money managers are much more likely to buy gold in a market meltdown event. Gold stocks can decline initially if the stock market crashes, but they will soon follow gold, and move higher.”
http://www.321gold.com/editorials/thomson_s/thomson_s_092716.html
Have a look at my post on 4 years ago……memories of Deja’s vu.
https://m.youtube.com/watch?v=trRDl47oTnQ