What would be a healthy pullback for US markets?
Doc helps us wrap up a shortened trading with comments on the US equity markets and a quick comment on oil. With US equity markets reaching over-bought territory and the VIX remaining at low levels we consider the potential downside upcoming.
We hope everyone had a great Thanksgiving!
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No doubt the last 5 years have been deflationary in commodity prices, which I would think has kept inflation in check overall.
Even so, my experience has been dramatic inflation, living in a South American country. I went back to the US for the first time in five years about a year ago, and the increase in the general price level was unmistakable as well.
Eventually commodity prices will go up again, and when they do I believe inflation will come unhinged. The charts suggest that phase may be beginning.
GH – I’m looking at things in a similar way. We’ve already started to see some increase in commodity prices in 2016 in Iron, Steel, Zinc, and now Copper. Nickel and Lead have also started getting a bid, so there has been a fair bit of interest in the Base Metals once again.
The other area is Food and Agricultural plays like Coffee, Sugar, Soy, Corn, Grains, Beans, Phosphate, Potash, other Fertilizers, etc… is due for mild price inflation over the next few years. This will add to the inflationary pressures or at least juxtapose the deflationary forces posed by a stronger dollar in comparison to other currencies.
Wild times…
If deflation in commodity prices lasted much longer than they had, most of the companies would have cratered, so there would have been epic supply destruction.
Sure, it is possible we may need one more deflationary rout to implode the mining and Oil sectors and really crush a number of the companies. That would create the kind of supply destruction that could no longer be ignored by the marketplace.
2016 has given investors a slight breath of fresh air and interest (and more importantly financing) started to flow back into commodities.
One can’t rule out that it may all have been a suckers rally, but to me it just seemed like a legitimate turning of the corner and not just a counter-trend rally.
Time to stay vigilant!
Good luck to everyone in whatever investing strategy you use.
These pieces from Haywood are long but they cover a lot of ground, and a number of sectors and stocks:
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HAYWOOD RESEARCH – Base Metal Prices Continue to Surge as Gold Falls Below $1,200 per Ounce
The Weekly Dig – November 25, 2016
Mick Carew, PhD, and The Haywood Mining Team
“Contrasting fortunes between the precious metals and base metals space continued this week, with gold falling below the psychological $1,200 per ounce level for the first time since February as continued commentary made the prospect of a U.S. interest rate hike in December appear more certain than ever. The price of gold has fallen almost 10% in two weeks since the unexpected U.S. election result, while gold mining equities have struggled under the weight of the falling gold price, with the S&P/TSX Global Gold index falling almost 20% since the election. This week, gold fell 2% while the index was down 4%. Silver (down 0.2%) and platinum (down 1.5%) followed suit, while palladium continued to move in the opposite direction, rising 2.6% this week. In contrast, the promise of greater infrastructure spending has continued to boost the fortunes of base metals, with copper continuing its recent surge, up another 7.7% this week, while nickel also rose a healthy 6.2%; lead (up 11%) and zinc (up 10%) prices have followed suit, spurred further by the recent closure of a number of lead/zinc mines including Century and Black Star (Australia), Lisheen (Ireland) and Brunswick and Perseverance (Canada). The S&P/TSX Composite index rose earlier in the week before levelling off after Wednesday, finishing at 15,075 (up 1.4%). Meanwhile, the S&P/TSX Venture Composite index continued to fall, down 1.7% and finishing at 735. WTI Crude prices were down this week, finishing at $46 per barrel. Finally, the UxC weekly spot price for uranium remained flat for the week amid the news of another earthquake and tsunami warning in Japan, finishing at $18.50 per pound….”
http://cdn.ceo.ca.s3-us-west-2.amazonaws.com/1c3hh9c-MMNov252016_CEO_secured.pdf
Wow, those “Comparables” tables in that Weekly Dig from Haywood up above are crammed with interesting info contrasting different companies at a glance.
Auryn Reports Remaining RAB Drill Results from 2016 Program and Identifies Two New High-Grade Boulder Trains at Anuri and Ridge Prospects
(Marketwired – Nov. 25, 2016) – Auryn Resources Inc. (TSX:AUG)(OTCQX:GGTCF)
MIF Nov. 2016: Novo Resources Corp. (NVO) – Dr. Quinton Hennigh
MIF Nov. 2016: Golden Predator Mining Corp. (GPY) – William Sheriff
When it cuts loose, it can go so fast it will make your head spin. I’ve already been through it, with general price levels tripling in ten years.
Washington Post Names Drudge, Zero Hedge, & Ron Paul As Anti-Clinton “Sophisticated Russian Propaganda Tools”
The desperate flailing of a mainstream-media struggling through the five stages of grief continues as no lesser unbiased foundation of the fourth estate than The Washington Post pushes ahead with its “fake news, blame the Russians” narrative for why their candidate failed so miserably.
Citing “two teams of independent researchers” (who surely have a substantial libel litigation provision) who found “Russia’s increasingly sophisticated propaganda machinery… echoed and amplified right-wing sites across the Internet as they portrayed Clinton as a criminal,” the Jeff Bezos-owned website names Drudge, Zero Hedge, and The Ron Paul Institute and countless other outlets among the “useful idiots” that true American patriots should be wary of.
“The way that this propaganda apparatus supported Trump was equivalent to some massive amount of a media buy,” said the executive director of PropOrNot, who spoke on the condition of anonymity with the Post.
“It was like Russia was running a super PAC for Trump’s campaign.”
The WaPo oughta be called the HoPo.
The HoPo long served as a CIA propaganda outlet:
https://www.lewrockwell.com/2016/11/no_author/forces-evil-treachery-deception/
Likewise, for Rockefeller/Council on Foreign Relations/Kissinger:
No proposal to restrict gold holding by individuals: Finance ministry
Following the demonetisation in a bid to crack down on black money, there were apprehensions that govt might impose restrictions on gold holding
Press Trust of India | New Delhi November 25, 2016 Last Updated at 20:38 IST
The government is not considering any proposal to restrict holding of gold by individuals, a top finance ministry source said on Friday.
Following the demonetisation of 500 and 1,000 rupee notes in a bid to crack down on black money, there were apprehensions among people that the government might impose some kind of restrictions on gold holding by individuals.
“There is no such proposal before the government on restricting domestic gold holding,” the source said.
There were reports that many people have converted their black money into gold following the announcement ofdemonetisation of high denomination currency notes by Prime Minister Narendra Modi on November 8.
The government had earlier denied that there was any move to digitise personal lockers in banks amid rumours insocial media that they would be opened in only in the presence of revenue officials.
http://www.business- standard.com/article/economy-policy/no-proposal-to-restrict-
Skarica’s interview seems a ‘helter skelter’ scatter brained discussion, but it took two sittings to listen and appreciate:
http://palisaderadio.com/david-skarica-even-trumps-best-policies-cant-stop-the-crash/
gold closed at $1183.60 above the $1180 line in the sand. I remain optimistic that over the next 2 weeks we may see a relief rally in in the metals off this support zone for a tradable opportunity.
If not, I’ll have to exit with minimal losses, but it seems worth the risk/reward scenario at this point with many gold & silver miners down 30-60% off their Summer time peaks.
This last week of November and first week of December is either going to painful or profitable for investors positioned in the Miners, but I put my money where my mouth is and have one final tier of dry powder in my trading account reserves, just in case things get really ugly.
Let the games begin…..
(BPGDM) Gold Miners Bullish Percentage Index – Chart showing very bearish sentiment:
http://stockcharts.com/h-sc/ui?s=%24BPGDM&p=D&yr=3&mn=0&dy=0&id=p49146034859
Based on that chart of BPGDM, and if prior bottoms in sentiment are reflected on the current pattern, then it may take through December to work this all out, with PMs faring well again in early 2017. That seems to match the prior 2 years where metals rallied at the beginning of the year. Many seem to think that is when the general markets may top out, and start a pullback, which would simultaneously spike volatility around the time that the Trump administration takes over.
I’m wondering about the stated intent of protestors to disrupt the inauguration. And now Jill Stein revealing she’s on the dark side, calling for a recount with $ she got from…where?
I don’t want to go overboard, but some chaos in January would play well into your thoughts above, Excelsior.
Yep, there is also the outside threat of another country testing the Trump administration’s response to a disruptive event in trade/terrorist act/reactive measure that may cause more volatility in January.
It looks like stocks in the general markets are chugging right along for now to record highs, but that could top out around the same time. Also, PMs over the last 5 years have fared well in Jan-early March, so that would be a time that has seasonally shown a safety bid for Gold when their is fear and volatility in the general markets.
Nothing goes straight down so gold is due for a dead cat bounce/rally and then we will continue down later on. The general markets should correct significantly in January when the vix should pick up.
See 2012. Also take a look at the yen from 2012-15. Gold about to give up all its gains vs the stock market in 2016.
A bounce will come to convince many the bull market is continuing but it is still a bear market rally.
That very well could be the case Paul L. For now my short-term interest is for a nice tradable bounce. Now if gold pulls back down and closes below $1180 next week then we are likely to just go down and test the Dec lows for gold.
However, if Gold dis start consolidating between $1180 and $1190 this week as support; then there should be a big enough relief rally to make a little coin on a little bump before it heads lower. It will come down to if higher highs are made on the rally (more bullish) or if it runs into resistance at much lower levels (more bearish).
It’s a very tense situation where Gold closed this week to say the least…. 😮
Lol at 20% pullback. We will probably never see a pullback of more than 5% ever again under the USD system.
That’s exactly the kind of talk that always appears when a major top is forming. Whether there’s a crash or “just” a grind lower, I believe that the coming bear market decline will be much larger than 20%.
What is your time frame?
That’s a very hard thing to call, but the cyclical bull (within the secular bear) is already the second longest on record.
If it continues higher from here without taking a break, I think we’ll see the high in December. Otherwise, I’d be surprised if it gets past Q1 of next year.
I’ve been saying this for the last 6 months. As soon as you see a dip. Some CB whether it be the BOJ, the SNB, etc will step in and buy.
5 to 10 percent in January and another bigger correction in the summer.
You boys see this? What’s next for the lamestream media?
CNN Accidentally Airs 30 Minutes Of Hard Core, Transsexual Porn
http://www.zerohedge.com/news/2016-11-25/cnn-accidentally-airs-30-minutes-hard-core-transsexual-porn
Grasping at straws continues. Is the elite agenda a civil war?
It’s Official: Jill Stein Files Petition For Wisconsin Recount
It’s official, the Wisconsin Election Commission just confirmed that a recount petition has been filed by Jill Stein just ahead of the 5pm deadline.
http://www.zerohedge.com/news/2016-11-25/its-official-jill-stein-files-petition-wisconsin-recount
Stein proves herself to be just another scumbag.
Looks-wise, she sure reminds me of Christine Lagarde.
Paul Craig Roberts nails it again:
http://www.paulcraigroberts.org/2016/11/25/trump-the-great-paul-craig-roberts/
“If Trump can defeat the oligarchy and save America, he can go down in history as Trump the Great. I think that this prospect appeals to Trump more than more wealth. Instead of trying to tear him down in advance, he should be supported. With Trump’s determination and the people’s support, change from the top down is possible. Otherwise, change has to come from the bottom up, and that means an awful lot of blood in the streets.”
Crazy. Yes, I saw that news release about CNN in several places today (ceo.ca, New York Post, Yahoo News, etc…) I think it was only in the Boston local area.
Well, they’re very liberal in Boston, so maybe they don’t have a ‘phobia’ about such things. 😮
funny
Haha that is hilarious Ebolan
Your attention is brought to the upcoming Conference to debunk the Global Warming stupidity:
https://www.freedomforceinternational.org/congress/3rd-congress-2016/
Righto guys, thoughts and opinions on where the pms go next week???
Whenever I hear discussions on oil prices, I quickly check the following monthly chart. While I’m ready to accept the notion that markets at new highs means hyperinflation, the state of inflation according to these charts is ‘nowhere to be seen’
Note the ‘golden mean’ long term average hovering way above.
http://schrts.co/6NpRNF