Comments on the US Dollar, Gold and GDX
After a couple questions from all of you I get Rick to comment on the recent moves in the US Dollar on the backs of Trumps comments. We also look at the gold chart which Rick is now even more bullish on. Also a quick comment on GDX since we have been discussing this lagging chart.
Click download link to listen on this device: Download Show
Silver is getting ready to smoke gold like it did last year…
http://stockcharts.com/h-sc/ui?s=%24SILVER&p=W&yr=3&mn=9&dy=11&id=p90569868485&a=501194637
Matthew,
I like Ag anytime the Ag/Au ratio is above 50. It has been so for awhile…. so I guess I am a big Ag fan. But when that ratio compresses it can move quick. Make sure to balance out between the two at predetermined levels. Take the emotion out of it and let the swing work to your favor.
Dennis, I’m pretty good at taking the emotion out of every trade in any sector. As for the gold-silver ratio, so much more goes into my enthusiasm for silver over gold than just being over 50. I prefer a much higher number unless other factors are in silver’s favor.
The ratio peaked over a year ago (already down 18%) and gold is going to fall for years versus silver.
The ratio will have to fall another 285 from here just to reach 50:
http://stockcharts.com/h-sc/ui?s=%24GOLD%3A%24SILVER&p=W&yr=6&mn=5&dy=13&id=p09392613927
+1
Correction: 285 should be 28%
Hi Mathew:
Looking at the $SILVER monthly chart again,I think the 2011,2016 monthly down trend line could be interpreted incorrectly. If you take the 2011 high and draw a trendline to the 2013 high and continue you would see that Siver has already moved above the long term down trend line.I don’t know why my annotated charts will not post or else I would post the chart.
That being said,I still expect to see technical buying coming in once physical Silver breaks the 18.52 resistance.
In your scenario is intra-day trading above 18.52 enough or do we need a close/weekly close?
Hi Dennis:
I would like to see two end of day closes above $18.52 .The point I was making with Mathew was that I watched a noted technician use the $18.52 level as the second reference forming the downtrend ,Instead of noting that the $18.52 was merely resistance in a new uptrend. Silver Bullion is one thing and stocks are another,I am still very cautious on the miners until I see a correction .
JohnK, I’m not sure I follow what mean when you say that the “down trend line could be interpreted incorrectly.” The charts above take a look at much shorter time frames. The steepest downtrend was indeed broken one year ago but that has nothing to do with the smaller trends.
Remember that there are trends/cycles/patterns within trends/cycles/patterns of all scales. For example, you can have a bearish 60 minute chart within a bullish daily chart within a bearish weekly chart within a bullish monthly chart, etc.
The dashed blue line on the weekly chart above at 8:56 shows that silver broke out of the downtrend that began last July. It is based on weekly closes.
Good points Mathew,I have been noticing various technicans trying to draw the monthly long term downtrend line from 2011 until 2016 using the July 18.82 high totally disregarding the September 2012 high.I’m just saying that there still are people with websites that are redrawing the monthly downtrend line.
I see now, thanks for the clarification.
Here’s a monthly chart which shows the line that you’re referring to. That big-picture breakout happened in April, 2016 on very good volume — the highest in three years.
http://stockcharts.com/h-sc/ui?s=%24SILVER&p=M&yr=16&mn=0&dy=0&id=p44021607943&a=515999153
Epstein morning TA:
https://youtu.be/ELxKkaZhk3U?t=32
The direction of the dollar is really going to depend on the French elections.
I have handful of long-term positions in small-cap gold miners of which two are well-known with solid managerial track records and proven reserves – Dynacor and First Mining Finance specifically. I understand that the price of gold hasn’t made substantial progress over the last many days, but it has firmed up markedly and appears to be in a clear uptrend. Can someone please offer an opinion about why the two equities that I mentioned have actually weakened by a few percent over this same period on anemic volume? I’m not expecting the shares to explode upward but there seems to be a somewhat uncomfortable disconnect where the buying mentality shows absolutely no exuberance whatsoever – in fact, the opposite. Why did people bid hundreds of dot-com stocks through the roof on perpetually zero earnings yet miners have to struggle even on days where the news looks brighter than it has in some time?
It seems par for the course as a number of gold miners are down the last few days or flat even though the metals have been going higher. Dynacor is a toll miner and the other other toll miners like Inca One and Montan Mining have had a similar plattern lately. First Mining Finance is a prospect generator, doing some mild exploration, but until more companies option off their projects or pay for them then they don’t have any revenues or exposure to upside in Gold prices other than optionality. The producers and advanced developers would have the most notable increases coming out of the starting gates, but even they have been muted as of late.
Psychology Rick.
Earnings dont seem to matter much any more.
Unless you believe the markets are manipulated.
Its tuff for people in N.America to want gold when the market has been climbing for years. Heck they wont give you a cupacoffeee for an once.
When people decide to get in (goes for anything) it will go up.
Right now, your before the herd.
If ya figure golds on its way up, its raining 10 baggers+.
As it increases more people will get interested.
Have to agree……on ….”as it increases more people will get interested”
we need at least $20-21 to get more attention,
I don’t hold Dynacor, so don’t follow it.
For First Mining Finance, I imagine it dropped because it was over-promoted by Neumeyer for several weeks. It also, if I recall has lowish grades, so needs higher gold prices to be profitable. I do own some stock and expect it will out-perform other gold stocks as gold approaches $1500.
(That was the way, I understand, it was set up. Like Seabridge. Or in silver, like First Magestic.)
Rick:
That blow-off in Dot-Coms was something to behold. We were treated to a great example of ‘the madness of crowds” IMO. All logic as you have expressed in picking your holdings (one of which I hold) disappeared and the emotion of fear that they were missing out took over. Some say we’ll see the same with the Jr. miners. If it ever happens, take some big profits and most of all, don’t look back!
Thank you B, CFS and Silverdollar for your input, much appreciated. I can’t believe how hard it is to make money and to sit through a major grind year after year even when you’re clearly making sound and logical choices with well-thought-out positions.
Rick:
The stocks have performed 100% the way they should.The one that has not performed is you. The answers are in furthering your education of the markets.
Thanks also to OOTB J.
The US just dropped the ‘mother of all bombs’ on an ISIS target in Afghanistan
The US has deployed the largest non-nuclear bomb in its inventory on an ISIS target in a remote part of far northeast Afghanistan, according to the Pentagon.
http://www.businessinsider.com/us-moab-mother-of-all-bombs-isis-afghanistan-2017-4
Never going to win a war in Afghanistan………maybe they are destroying the poppy fields and all the records before the new administration goes looking for the records.
Rick, I looked at Dynacor, to see if it was worth buying.
It seems to be a contract ore processor for other small mining operations in Peru.
That part of the business has a P/E of 18, which is acceptible.
They have 3 areas where they exploring, which will, it appears, provide a major potential for upside, if:
1. They make a good discovery.
2. The Peruvian government does not get greedy.
(This, I would put, as highly speculative exploration in good locations, but I know nothing of the management, which claims to behighly experienced in Peru.)
Dynacor earnings show no gtowth in the contract ore processing:
(Sorry if this table screws up)
Quarter End $ EPS Actual $ EPS Estimate # Estimates $ Surprise % Surprise Report Date
2017-03-31 (N/A) N/A N/A N/A N/A N/A 2017-05-09
2016-12-31 (N/A) 0.01 N/A 0 N/A N/A 2017-03-29
2016-09-30 (N/A) 0.04 N/A 0 N/A N/A 2016-11-11
2016-06-30 (Q2 2016) 0.04 N/A 0 N/A N/A 2016-08-12
2016-03-31 (Q1 2016) 0.02 N/A 0 N/A N/A 2016-05-10
2015-12-31 (Q4 2015) 0.01 N/A 0 N/A N/A 2016-03-29
2015-09-30 (Q3 2015) 0.03 N/A 0 N/A N/A 2015-11-13
2015-06-30 (Q2 2015) 0.02 N/A 0 N/A N/A 2015-08-12
2015-03-31 (Q1 2015) 0.04 N/A 0 N/A N/A 2015-05-13
2014-12-31 (Q4 2014) 0.05 N/A 0 N/A N/A 2015-03-30
2014-09-30 (Q3 2014) 0.06 N/A 0 N/A N/A 2014-11-13
2014-06-30 (Q2 2014) 0.05 N/A 0 N/A N/A 2014-08-11
2014-03-31 (Q1 2014) 0.02 N/A 0 N/A N/A 2014-05-14
2013-12-31 (Q4 2013) 0.07 N/A 0 N/A N/A 2014-03-28
2013-09-30 (Q3 2013) 0.08 N/A 0 N/A N/A 2013-11-14
2013-06-30 (Q2 2013) 0.02 N/A 0 N/A N/A 2013-08-14
2013-03-31 (Q1 2013) 0.08 N/A 0 N/A N/A 2013-05-13
2012-12-31 (Q4 2012) 0.06 N/A 0 N/A N/A 2013-03-28
2012-09-30 (Q3 2012) 0.07 N/A 0 N/A N/A 2012-11-09
2012-06-30 (Q2 2012) 0.03 N/A 0 N/A N/A 2012-08-14
2012-03-31 (Q1 2012) 0.05 N/A 0 N/A N/A 2012-05-14
2011-12-31 (Q4 2011) 0.02 N/A 0 N/A N/A 2012-03-29
2011-06-30 (Q2 2011) 0.03 N/A 0 N/A N/A 2011-08-15
2011-03-31 (Q1 2011) -0.01 N/A 0 N/A N/A 2011-06-17
2010-09-30 (Q3 2010) -0.03 N/A 0 N/A N/A 2010-11-15
Or it could be that they do only as much exploring as their income permits after paying workers and management.
CFS, their processing business is a nice touch because they sell that service to many other miners in the area. That way, they have an income stream no matter what the price of gold is and they are making money. The Tumipampa project that they own is of extremely high quality and they will be developing it. Management has alot of experience in Peru and it would appear that they have solid relationships with government. At $2.20 this company is will likely worth $5 quite easily if gold hits $1500 – my opinion. The stock is tightly held by ownership and the float is very small.
Thanks for info.
Jay Taylor recommended Dynacor, but no major analysts seem to follow it.
Wasnt Mr Taylor recommending san gold?
Recommendations might have to do with ad dollars.
They are on facebook:
https://www.facebook.com/DynacorGoldMines
and do give a profit/oz, which seems to have drooped slightly.
JohnK, I couldnt agree more with your topic of point being where lines are drawn by chart analysers. One can draw a line from any point to suit their bias.
Im certainly no expert but from what I can gather, the downtrend didnt really hit full swing in the pms until April 2013. If one were to draw a downtrend line from there, one could see clearly that the downtrend since that waterfall decline in 2013 has convincingly broken to the upside. The lower high trend from 2013 through to the end of 2015 is apparent and that pattern in the gold chart since that time has clearly changed.
It must be noted that I dont think weve seen the last of gold and silvers declines. Just a matter of how well they limit the damage. Hopefully some technical areas of good support have been built not too far below current prices.
Re: “One can draw a line from any point to suit their bias.”
Ozibatla, there are rules/practices that good chartists tend to agree on. Those who draw trend lines to suit their biases should stick out like a sore thumb.
Ozibatla :
Point well taken:
I was taken back after realizing what the person was showing on the chart. To be honest with you I completely forgot for a while what I was looking at.
It wasn’t until I saw Mathews post that I was zapped back to reality.
I have been really appreciative of the time Mathew has devoted to educating all of us here at the KE Report.
Between Excellsiors fundamentals and Mathews technicals, that’s a one two punch money can’t buy.
Good call John, I agree. Shout out to Matthew, I wasnt singling you out at all. And yes your right, those who suit their own agenda can be seen coming from a mile away.
I agree that a good chartist will adhere to good practice/rules
Here are my inflation model forecasts for March and April USA CPI:
The weakest model is Oil9. The others are quite consistent, using current oil and gasoline price action combined with EIA forecasts for oil and gasoline:
Month Oil8 OIl9 Oil10 Gasol11 Gasol12 CPI BLS actual
Feb’17 2.80 2.75 2.76 2.78 2.81 2.7
Mar’17 2.62 2.29 2.90 2.46 2.51 TBA
Apr’17 2.28 2.12 2.40 2.33 2.38 TBA
March CPI is to be announced any minute now.
http://1000gold.blogspot.com
Inflation forecast video (I hate doing PowerPoints!):
Wow, just got it posted minutes before Mar CPI is out. BLS website still has Feb CPI at the moment. There is some uncertainty in the model for March 2017 because oil price changes year over year were most steep in Jan and Feb 2017 (Feb’s was +75% calculated from monthly averages) and are falling off already. Thus inflation is predicted to peak in Feb or Mar 2017 given other factors not changing (no dollar crash, etc!)
An outstanding share! I’ve just forwarded this onto a friend who has
been conducting a little research on this. And
he actually ordered me dinner because I stumbled upon it for
him… lol. So let me reword this…. Thanks for the meal!!
But yeah, thanks for spending the time to talk about this subject here
on your web site.
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It is difficult for me to understand you point – Sorry!
Sorry, but I hesitate to give credit for the dollar drop yesterday to trump’s comment. I don’ think he’s bright enough to know how the currencies even relate to one another, although I’ve no doubt some of his advisors could have suggested to him to say something along the lines he did.
Miners still don’t believe gold has any holding power and consequently are holding back although HL and CDE, both silver/gold producers, had nice pops this morning. HL up 7%; CDE up 4%+. My bet on GPL is sucking hind teat, but looking for a longer term positive trend to develop.