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US Auto Sector and Broader Thoughts on the US Labor Market

Cory
August 2, 2017

This is a great overview from our friend Marc Chandler on what is happening in the auto sector and the labor market. The auto industry continues to look very weak but the question in my head is will this bring down the overall markets…

Click here to visit Marc’s website for more great post.

Charles Wilson, former CEO of General Motors before becoming Defense Secretary under President Eisenhower, once famously quipped that “what is good for the country is good for GM and vice versa.”   While the veracity of that claim has been challenged, the fact of the matter is that since the Great Financial Crisis, the auto sector (not just GM) played an important role.
The Federal Reserve helped jump start the asset-backed securities market with its purchases, and this helped facilitate an increase in US light vehicle sales. Consider that in 2009, the US sold about 10.43 mln cars and light vehicles.  It was the lest since the early 1980s.  They peaked last year just shy of 17.5 mln.   According to an economist at Brookings Institution, auto-related jobs accounted for 60%-80% of the manufacturing jobs created since the crisis.
It was a virtuous circle.  With the help from the federal government, which assisted the restructuring of GM and Chrysler through bankruptcy, and the Federal Reserve through the buying of asset-backed securities and low interest rates, the auto sector recovered.  Workers were hired, and cars were bought.
The risk is the cycle is reversing.  Sales have fallen in five of the first seven months, and there has not been a single month in which sales surpassed year ago figures.  Auto sales rose in July for only the second month of the year, but the 16.69 mln seasonally adjusted annualized rate was more than a million lower than the units sold in July 2016 (~17.75 mln).
Light vehicle production is set to decline, and this means more layoffs, and that in turn, creates few customers.  GM announced in North America it would produce 150k fewer vehicles in H2 than it did in H1.  Its inventory levels are high are around 104 days of sales.  It wants to bring this down to 70 days by the end of the year.  Ford says it will cut Q3 output by 34k vehicles.  Shifts are being reduced.
There is a shift in consumer preferences away from passenger cars, and toward SUVs and light trucks, but the slowdown in sales is significant.  GM sales in July fell 15%, which is the steepest decline in over a year.  Ford’s decline was the sharpest since last October.  Fiat-Chrysler sales posted the second largest drop of the year.    An important takeaway here is that the auto sector will likely be a drag on the industrial production and manufacturing output.  It cannot be counted on a tailwind for the labor market.
The main challenge with the US labor market is not job creation.   Although the pace of jobs growth has slowed, it remains sufficiently strong to absorb more slack in the labor market.  In 2016, the US created an average of 187k net new jobs a month.  In H1 17, it created 180k a month.  The problem for many American households and the Federal Reserve is that wage growth remains meager.
From the Fed’s point of view, headline inflation converges to core inflation, and core inflation converges to wage growth.  The weak wage growth is an obstacle to the achievement of the Fed’s inflation target.  There are many factors that shape the labor market.  One of the important ones that suggest that wages may not be rising because of slack is the participation rate.  The participation rate of men has fallen, and recently Yellen drew attention to the opioid problem.  The US is also one of the few countries in which the women participation in the labor force is also falling.
We have discussed research that found that composition of the labor force is acting to curb wage growth.  New entrants into the labor force, students and formerly unemployed, do not command high entry wages, while high earning baby boomers retire.  Recent research by a few academic economists found that a typical 21-year old’s annual earnings in 2013 were nearly a third less than the typical 21-year old employee in 1969.
We are also interested in the concept of “monopsony.”  If a monopoly is a single seller, a monopsony is a single buyer.  The idea is that in some places,  like in a town dominated by an auto or an auto parts company,  or a mine, there is little competition among employers and little choice for people seeking work.  This serves to keep wages down.     We will write about it later, but let us pique your interest in another angle of this over-determined problem.  Wages and benefits vary considerably between companies.  Just like the dual economy (core large and oligopolistic and periphery small and competitive) was mapped out, some work suggests a new dual economy is emerging, and those who occupy the new commanding heights are seeing productivity rise and wages increase.
On the other hand, it is a relatively new phenomenon for central bankers to advocate the need for higher wages.  This is true not only of the Federal Reserve, but also the BOJ, the ECB, BOE, and Bank of Canada.  The disparity of wealth and income has emerged as a potent political issue across the political spectrum.  However, governments are stopping short of help strengthen the only institutions whose raison d’etre is boosting wages and living standards: trade unions.  This is not an ideological claim but a pragmatic one.
It is a page from the New Deal playbook that many are ignoring and then are puzzled way wages are not rising faster.    Wages do not rise because employers are generous.  Nor do they rise simply because productivity rises.  Wages go up when employers have no choice but to pay more to secure a stable work force, and frankly, they still have a choice for the most part.  The earnings component for the July employment report may be more important than the actual number of new jobs created, within reason.
Discussion
94 Comments
    Aug 02, 2017 02:01 AM

    It is interesting to consider how the Auto Industry is doing if one follows Platinum and Palladium, due to their importance in catalytic converters.

    Here’s an interesting transaction that may revitalize a the troubled Maseve Mine that Platinum Group Metals holds:

    RBPlat eyes deal with PTM over Maseve
    28TH JULY 2017 – By: Natasha Odendaal

    “JSE-listed Royal Bafokeng Platinum (RBPlat) on Friday confirmed that it has made a conditional nonbinding expression of interest to Platinum Group Metals (PTM) for a “possible transaction” surrounding the Maseve business.”

    “The company has entered into discussions in this regard, which, if successfully concluded, may have a material effect on the company’s securities,” RBPlat said in a cautionary statement.”

    http://www.miningweekly.com/article/rbplat-eyes-deal-with-ptm-over-maseve-2017-07-28

    Aug 02, 2017 02:54 AM

    Gold holds near seven-week high as investors look to Fed

    Reuters – August 2, 2017

    https://finance.yahoo.com/news/gold-holds-near-seven-week-012516915.html

    cmc
    Aug 02, 2017 02:05 AM

    Cory, I could sure use a sanity check from the Doc if he can get him back on here. Thanks!

      Aug 02, 2017 02:45 AM

      +1

      Aug 02, 2017 02:11 PM

      Doc and I exchanged messages today and he will do his best to join me tomorrow for an update! Figures crossed.

        cmc
        Aug 02, 2017 02:22 PM

        That would be great. Good luck, Cory. I’m especially wondering if Doc’s view of the Charts has changed since last report and I am going to miss the train on the PM stocks, or are things still pretty much the same and there is time for more fishing at lower prices.

    Aug 02, 2017 02:08 AM

    When Everything Suddenly Lines Up

    by @Goldfinger on August 2, 2017

    “Suddenly everything I look at seems to be lining up and pointing to the same conclusion; equities are extremely vulnerable to a sudden and sharp correction. Here’s why:

    Sentiment is extremely elevated and has been elevated for the last few weeks. ”

    “Cash allocations have reached the lowest level (according to AAII Survey) since 2000. This means that investors are getting closer to being fully invested, which means there is less potential buying power available to drive stocks to higher levels.”

    “Market leading stocks such as AMZN Amazon and TSLA Tesla have begun to top and roll over (other leaders such as NFLX Netflix are beginning to show signs of running out of fuel):”

    “Rallies in the US Dollar Index have often coincided with equity market corrections. The US dollar is currently extremely oversold with an unusual extreme short positioning in US dollar futures:”

    “The Nasdaq-100 is exhibiting signs of running out of steam even after blowout earnings from Apple:”

    “And I could go on but you get the picture. Everything is lining up for an imminent US equity market correction. I have begun accumulating (morning of 8/2/2017) puts on the S&P 500 ETF (SPY) and a short position in the Russell 2000 (IWM). ”

    https://ceo.ca/@goldfinger/when-everything-suddenly-lines-up

    Aug 02, 2017 02:25 AM

    $ALK.AX key product markets #Gold #Copper #Zirconium #Hafnium #Niobium are recovering from their multi-year-lows and signal a return of focus to the company’s flagship project.

    Edison Research sees the valuation up by 16% and a fair-value at A$0.71 /sp (previously A$0.61) In the end, they see further considerable scope for upside in the form of commercial offtake and financing and A$2.00 as possible (page 9)

    http://www.alkane.com.au/images/pdf/Research-Reports/20170727.pdf

    Aug 02, 2017 02:38 AM

    This may be good news for companies in Peru as the space continues to heat up:

    Antofagasta opening exploration office in Peru by year-end
    Cecilia Jamasmie | 34 minutes ago

    http://www.mining.com/antofagasta-opening-exploration-office-peru-year-end/

    Aug 02, 2017 02:40 AM

    but here’s bad news for the Philippines:

    Philippines Says Open Pit Mining Ban to Stay Put
    Cecilia Jamasmie | a day ago

    http://www.mining.com/philippines-says-open-pit-mining-ban-stay-put/

      Aug 02, 2017 02:26 PM

      Kim Jong Un Is a ‘Son of a B****’ With a ‘Chubby Face,’ Philippine President Duterte Says
      Sofia Lotto Persio,Newsweek 6 hours ago 08/02/2017

      https://www.yahoo.com/news/kim-jong-un-apos-son-130556340.html

        Aug 02, 2017 02:15 PM

        Would have to agree…….. 🙂

          Aug 03, 2017 03:03 AM

          I’m not a big fan of either of those guys, but it did crack me up about how Duterte called out Kim Jong Un like that.

            Aug 03, 2017 03:21 AM

            Well Duterte…….is not trying to Nuke the world………… 🙂

            Aug 03, 2017 03:06 AM

            Yes, but he has police and even citizens killing anyone that may have broken a crime in the streets, and he is no ally of the US. He’s just another strong man tyrant.

            Aug 03, 2017 03:37 AM

            Good thing we have the 2nd Amendment …….

    Aug 02, 2017 02:42 AM

    MTS Metallis Resources is up around 40% today. Wowzers.

    Metallis Resources Inc. (MTS.V)

    $0.235 up +$0.070 (+42.424% gain)

    As of 2:22PM EDT. Market open.

    Aug 02, 2017 02:46 AM

    SGN at 6 cents was a great buy, thanks Matthew. DT

    Aug 02, 2017 02:59 AM

    I note a hint of pessimism in Matthew’s latests posts. If he has doubts about the sector, it must be getting ready to crater.

    Yeah, yeah, another buying opportunity (another lower low!) in an ephemeral “bull market”.

      Aug 02, 2017 02:31 PM

      I am uncertain about the short term but still confident about the 3rd and 4th quarters.

      Admittedly, the short term can inflict serious pain but I am not selling anything in anticipation that possibility. (I do trim individual positions and add to others all the time but my net exposure to the sector has, and will, remain the same.)

      The market is very good at wearing down almost everyone to at least some extent, so even I can be a contrary indicator when my stress is elevated. That’s why it pays to invest with your head and not your heart.

        Aug 02, 2017 02:41 PM

        Like I said, I am certain about the future too. I know for a fact the sun will burn itself out in 5.2 billion years. Time to start planning!

          Aug 02, 2017 02:51 PM

          You’re comparing my outlook for the next few months to 5.2 billion years out? Do you have A.D.D.? 😮

        Aug 02, 2017 02:50 PM

        Would really like to know what specifically spooked you. You are being a bit coy, and I have to admit it is a tad worrisome. It’s OK to be a bear, at least for now, and admit that you were wrong (in the short run)!

          Aug 02, 2017 02:54 PM

          One thing I have made clear since last year is that I am much more confident about the second half of 2017 than the first half. The short term has been consistently difficult and a little “weird” all year. That WILL change and probably soon (1-3 weeks).

            Aug 02, 2017 02:07 PM

            Agreed. Mid-August is a common turning point for the markets. I have been a buyer lately too.

            Aug 02, 2017 02:11 PM

            Agreed Dan, calgary. I’ve posted this a few times this year and 2017 has roughly followed this pattern.

            GOLD – 15 Year Seasonality Chart [2001 – 2015]:

            http://www.zealllc.com/c2015/Zeal061215A.gif

            Aug 02, 2017 02:14 PM

            Here’s the other Seasonality chart I’ve posted a few times in the past, but again, 2017 seems to be following this one for the most part. I don’t see any reason why that shouldn’t continue.

            Gold Futures – 20 Year #Chart ending (12/31/2015)

            http://charts.equityclock.com/seasonal_charts/futures/FUTURE_GC1.PNG

    Aug 02, 2017 02:34 PM

    EXK breaking down on the daily chart. New yearly lows are incoming.

    Does that look like a sector that has bottomed?

    Aug 02, 2017 02:35 PM

    (AMZN) Amazon Chart. Does this look to be support, or is more downside still in store?

    http://stockcharts.com/h-sc/ui?s=AMZN&p=D&yr=0&mn=3&dy=0&id=p65554675739

      Aug 02, 2017 02:36 PM

      To Infinity and Beyond!!

    Aug 02, 2017 02:39 PM

    EXK will likely gap down tomorrow, along with the rest of this godforsaken sector. The handwriting has been on the wall (flatlining GDXJ:GLD ratio) and the huge gap/black candle left behind on the $hui daily chart. You would have to be high on hopium to be bullish the sector.

      Aug 02, 2017 02:42 PM

      We are due for one more summer correction in the miners, especially if the US dollar rallies. The question will be whether the Dollar just puts in a “Dead Cat Bounce” or if it really is resuming an uptrend.

      If the dollar only stages a mild bounce here, then a correction in the metals may coincide, but be short-lived.

      Then if the Greenback turns back down after that and plumbs lower depths, then is should kick start the rally that typically starts mid August and heads up into October for the metals and miners.

        Aug 02, 2017 02:48 PM

        Well, this trip down is likely to take us down to the lower monthly bollinger band on the miners. There is a lot of air between here and there. Get ready for 17 or lower on GDX.

        Like I said, its going to be years before GDX sees its 2016 peak, if not longer.

          Aug 02, 2017 02:04 PM

          I’m more in the camp of just a minor draw-down here and then a surge into the Seasonally strong time of year, where there is a chance the 2016 high in gold could get retested, and that would be quite bullish for Gold and Silver miners.

            BDC
            Aug 02, 2017 02:30 PM

            Spanky:
            So far, this has been a trading zone market. If this continues to be the case, between 19 and 20 on the GDX (closer to 20) will prove to be a significant support area.
            However, the Dollar is bottoming, and may have done so today. If it closes tomorrow above the Monday open a needle spike low, similar to recent ones, will have developed. This would portend a trip up to 100 where gaps need filling.

            BDC
            Aug 02, 2017 02:46 PM

            Above s/b “…between 20 and 21 on the GDX (closer to 21)…”

          GH
          Aug 02, 2017 02:59 PM

          I agree, short term weakness seems likely, but think it will be measured in weeks not months. Still looks to me like a powerful up move is brewing.

          Spanky, if it could go from lows lower than here to its 2016 highs in ~6 months, on what basis do you feel so confident that it can’t happen again for ‘years if not longer’?

            Aug 02, 2017 02:36 PM

            Solid points GH…. and good question.

            Aug 02, 2017 02:27 PM

            The retracement from the 2016 peak has been too big in magnitude, IMO. If we had consolidated at a higher level, say HUI of 225-250, I would feel much more comfortable that another powerful leg higher was imminent.

            Looking at the monthly chart for $hui, with this size of retracement back to the 20 MMA, I think we are going to drop well below the 20 MMA to balance out the chart. There is way too much overhead resistance for us to rally from here. It would be completely unnatural.

            As I have said, we will tag the lower monthly bollinger on GDX before the upper. A trip down to 130-150 on HUI and then back up could play out over another year. Then another year or two just to make it back near the 2016 highs,

            See $sugar monthly chart from 1999-2006. $sugar didn’t take out its initial peak until 6 years later! Note the alignment of the MAs. They are just like HUI’s now.

            http://stockcharts.com/h-sc/ui?s=%24SUGAR&p=M&st=1998-08-02&en=2010-01-01&id=p69224103137&a=537728245&listNum=1

            Aug 02, 2017 02:26 PM

            Thanks for taking the time to unpack your reasoning spanky. I like hearing different perspectives.

            Personally I don’t believe it will take years for the mining stocks to break out, but anything is possible and it was interesting to hear why you thought that way.

            GH
            Aug 03, 2017 03:47 AM

            Likewise, thanks for explaining.

            “The retracement from the 2016 peak has been too big in magnitude” — I’m not convinced of this one. Yes, it was a large retracement–about 67.8%. But retracements of 75% or a bit more are not unheard of. James Flanagan has analyzed 200+ years of commodities market data to determine the historical parameters of moves like this. If I recall correctly the retraced DID somewhat exceed his parameters, so the rebound caught him flat-footed. But the overshoot was not very big.

            When I look at the monthly charts, it varies a bit depending–GDX and $XAU have been riding the top of the 50 month simple MA; $HUI has been below the 50 MA but recently retook it. And those 50 month MAs are now leveling and will soon turn up unless the price begins to fall. So I see them as digesting the huge move in 2016 in a subtly bullish fashion (it’s in the nature of consolidations not to tip their hand in an obvious way). The 200 MAs for $HUI and $XAU are rising and will be for a long time as well, which imparts a bullish bias.

            You may well be right about tagging the lower BB before the higher, but it’s not clear to me the shape that might take. The lower band is rising steeply, and if we fibrillate for another 2-3 months, touching it first might not entail much of a decline. And/or we get a very quick spike lower, like the $HUI in 2005, e.g.

            I’m dubious about the comparison of sugar to the gold miners. For one thing, the 200 MAs are very different. Also, given the tricky nature of TA, I like to consider fundamentals to help interpret the technical tea leaves. The fundamental monetary situation makes me big-picture bullish on gold and gold miners, while I have no idea what the situation was with sugar. The retracement in sugar after the 2000 peak was much deeper than it has been in the $HUI so far– ~88%, vs ~68%. A final point, consider the difference of the price movement around the 50 month MA after the peak–sugar dropped well below the 50 MA, while $HUI has hugged the 50 MA and recently retaken it.

            GDXJ has been the weakest, which is normal for juniors, and has presumably been exacerbated by the rebalancing of its holdings over the past few months. Still, have you noticed the picture perfect bull pennant formation that has recently broken out to the upside?

            http://stockcharts.com/h-sc/ui?s=GDXJ&p=M&yr=10&mn=0&dy=0&id=p56911644287&a=406207782

            GH
            Aug 03, 2017 03:49 AM

            When I find the interpretation of a chart to be uncertain, I look at the smaller time scale charts for clues. Again, there’s some variation between the $HUI, $XAU, GDX, GDXJ, USERX, etc., but they are all bullish. The $HUI is easily the weakest among them, but they’re all very bullish. E.g.:

            http://stockcharts.com/h-sc/ui?s=%24XAU&p=W&st=1980-01-01&en=today&id=p14975074271&a=412195855

            GH
            Aug 03, 2017 03:53 AM

            Or the daily chart:

            http://stockcharts.com/h-sc/ui?s=%24XAU&p=D&yr=2&mn=0&dy=0&id=p76433300309&a=537794529

            On top of a 200 MA that is flat-to-turning-up, and a recent bullish breakout of the wedge. Now we need to watch this daily downturn and how the price interacts with the MAs and this wedge formation.

            Aug 03, 2017 03:26 AM

            Solid points on the BB rising, and the 67.8 or 75 % retracements.

            While a short term turn down on a dollar rally wouldn’t be surprising, it should not be very protracted before a real rally starts in earnest.

    Aug 02, 2017 02:02 PM

    With 3 seconds left, I just got filled for IPT at .355 (but my average for the day is closer to .37).

      Aug 02, 2017 02:05 PM

      Saved by the bell….. Nice work!

      Aug 02, 2017 02:09 PM

      It’s headed to USD .25 as I said months ago.

      Aug 02, 2017 02:28 PM

      IPT.V Has everybody already forgot that January 23rd they reported drill core of 4.12m @1,613g/t Ag? It will be interesting to see at what point money flows return the Jr Ag expolrers. IPT.V included.

        Aug 02, 2017 02:39 PM

        +1 Agreed JohnK. I’m extremely interested in how IPT Impact’s drill program goes this year.

        Both Excellon and Maya Gold had out some good silver hits recently.

        I want to see Alexco & Brixton put out some stellar hits this year as well.

        Exploration can still move the needle….

    Aug 02, 2017 02:11 PM

    When have the miners ever rallied after such a sideways consolidation under their long term moving averages?

    Answer: never.

    They need to be destroyed before any rally is possible.

    Aug 02, 2017 02:23 PM

    Monthly stochastics are going to hit oversold before the miners bottom. I imagine there will be a significantly lower low before a final low is achieved. I think the lower monthly bollinger band will get tagged before the upper band.

    http://stockcharts.com/h-sc/ui?s=GDXJ&p=M&b=5&g=0&id=p57656047534&a=537697755&listNum=1

    Aug 02, 2017 02:36 PM
      Aug 02, 2017 02:42 PM

      The trend-line on AG is still moving up and at the end of that wedge a strong break upwards or downwards will come out of the energy compression, but my bet is on the updside breakout this fall. Until then most of these metals and miners will stay in the sideways channel.

        Aug 02, 2017 02:47 PM

        In the short-term, a dollar rally fueled mild downturn in some of the metals or miners wouldn’t surprise me, but I’m only looking for that to be short lived before the Dollar decides to plumb new lows.

        spanky – if the dollar does go down into the high 80s then that would be the catalyst to move gold to break out of the sideways consolidation and close beyond the 2016 high of $1377.50.

        However, if the dollar stages a longer term rally then the trend will be sideways to down in the metals and miners. I just don’t see what would cause the US dollar to stage that strong of a comeback.

      Aug 02, 2017 02:07 PM

      If this is a new bull market (it is), you shouldn’t be so sure that the monthly stochastics have to go to the same low levels witnessed in recent years. Take a look at the action in 2005 or even 2008:

      http://stockcharts.com/h-sc/ui?s=%24HUI&p=M&yr=16&mn=0&dy=0&id=p10033816872&a=537701585

        Aug 02, 2017 02:08 PM

        Stochastics have gone sideways for too long now for them to turn up from here. Maybe if we got an absolute explosion upwards into month end.

        The 2005 bottom came off a bounce of the lower monthly BB (20,2). 2008, well to say that was a one off would be an understatement.

        HUI doesn’t necessarily have to crash here, but August-September will likely wipe out most of July’s candle, if not break well below.

        And if the Fed actually reduces its balance sheet and the BoJ continues to bend over, I could easily see a new bull market in yen starting. Look at the monthly chart.

          Aug 02, 2017 02:13 PM

          Er meant to say new bull market in USDJPY.

          Aug 02, 2017 02:33 PM

          Re: “Stochastics have gone sideways for too long now for them to turn up from here.”

          Huh? They gotta turn up somewhere!

          As for 2005 and 2008, you’re missing the point. Both situations looked worse than today (2008 by a looong shot) yet the Stos did not go into the same deeply oversold readings that we saw during the recent cyclical bear market. So… I think it is a mistake on your part to conclude that the picture must get worse before it can get better.

          It is bullish that the XAU has not closed a single month below the 20 month MA since February 2016.

          http://stockcharts.com/h-sc/ui?s=%24XAU&p=M&yr=16&mn=0&dy=0&id=p53263273767

            Aug 02, 2017 02:34 PM

            Of the XAU’s 29 holdings, only Primero finished higher today:

            https://www.kitco.com/pop_windows/stocks/xau.html

            Aug 02, 2017 02:05 PM

            Crawling along a MA is not bullish.

            Aug 02, 2017 02:16 PM

            Matthew you raised an interesting point on which companies did well when that many stocks on the XAU were down.

            I looked at the Majors and NONE had an up day.

            The Mid-Tier Gold Producers on the other hand had a much more positive day:

            Stock Symbol / Mid-Tier Gold Company Name / % Chg

            GUY.TO Guyana Goldfields Inc. +9.76%
            DRM.AX Doray Minerals Limited +6.52%
            ACA.L Acacia Mining plc +3.47%
            NMI.TO KIRKLAND LAKE GOLD LTD +3.45%
            ORV.TO Orvana Minerals Corp. +3.33%
            KOZAL.IS Koza Altin Isletmeleri A.S. +2.84%
            DNG.TO Dynacor Gold Mines Inc. +2.83%
            OGC.TO OceanaGold Corporation +2.70%
            NST.AX Northern Star Resources Limited +2.67%
            CGG.TO China Gold International Resources Corp. Ltd. +2.41%
            KCN.AX Kingsgate Consolidated Limited +2.27%
            PPP Primero Mining Corp. +1.74%
            PRU.TO Perseus Mining Limited +1.61%
            RRL.AX Regis Resources Limited +1.03%
            SLR.AX Silver Lake Resources Limited +1.11%
            1818.HK Zhaojin Mining Industry Company Limited +1.10%
            DGC.TO Detour Gold Corporation +0.88%
            DPM.TO Dundee Precious Metals Inc. +0.76%
            ASR.TO Alacer Gold Corp. +0.47%
            AR.TO Argonaut Gold Inc. +0.45%
            SBM.AX St Barbara Limited +0.36%
            RSG.AX Resolute Mining Limited +0.19%

            Aug 02, 2017 02:21 PM

            As far as the Small Gold Producers there were a few that still had a nice green day:

            (I hold positions in 5 of these so today positive action was refreshing)

            Stock Symbol / Small Gold Producer Company Name / % Chg

            RED.AX Red 5 Limited +12.12%
            SGN.V Scorpio Gold Corporation +8.33%
            GSS Golden Star Resources Ltd. +7.85%
            MYA.V Maya Gold and Silver Inc. +4.35%
            MLN.V Marlin Gold Mining Ltd. +4.26%
            ORA.TO Aura Minerals Inc. +3.03%
            BLK.AX Blackham Resources Limited +2.70%
            AMI.AX Aurelia Metals Limited +2.63%
            SAU.AX Southern Gold Limited +1.79%
            MTO.V Metanor Resources Inc. +1.30%
            TREK.V Trek Mining Inc. +0.90%
            CAL.TO Caledonia Mining Corporation Plc +0.25%

            Aug 02, 2017 02:22 PM

            Spanky, it sure is bullish in the current context. We are looking at a correction following a triple in six months and that MA is steeply rising.

            Aug 02, 2017 02:26 PM

            A number of the Gold Development stories had a nice positive day of gains as well:

            Stock Symbol / Gold Developer Company Name % Chg

            WGC.CN Winston Gold Mining Corp. +14.29%
            NVO.V Novo Resources Corp. +11.48%
            TSN.V Telson Resources Inc. +9.84%
            NUS.TO Nautilus Minerals Inc. +7.50%
            PGM.V Pure Gold Mining Inc. +5.77%
            MQR.V Monarques Gold Corporation +5.00%
            GOR.AX Gold Road Resources Limited +3.25%
            GQC.V Goldquest Mining Corp. +3.23%
            RCG.V Resource Capital Gold Corp. +2.94%
            SBB.TO Sabina Gold & Silver Corp. +2.62%
            TMR.TO TMAC Resources Inc. +2.53%
            RUP.V Rupert Resources Ltd. +2.11%
            GOM.V Golden Dawn Minerals Inc. +1.89%
            HUM.L Hummingbird Resources PLC +1.89%
            THM International Tower Hill Mines Ltd. +0.97%
            PGLC Pershing Gold Corporation +0.96%
            AGB.V Atlantic Gold Corporation +0.68%
            DCN.AX Dacian Gold Limited +0.49%

            Aug 02, 2017 02:27 PM

            I’m not going to post the Gold Explorers as there are too many of them, but there were quite a few that still had a nice up day despite the metals weakness.

    Aug 02, 2017 02:35 PM
    Aug 02, 2017 02:21 PM

    Like I used to tell my sons “if the big head can’t control the little head”, you will never be a success in any endeavor in life. LOL! DT

      Aug 02, 2017 02:52 PM

      Nice advice Dick

        Aug 02, 2017 02:37 PM

        a double-header….

    Aug 02, 2017 02:45 PM

    Look at the $gold:$silver monthly chart. It’s in a new bull market, with all of the MAs bullishly aligned and rising. $silver is in trouble.

    Aug 02, 2017 02:46 PM

    $xjy monthly. Stochastics hanging off a cliff. Looks exactly like 2012.

      GH
      Aug 03, 2017 03:58 AM

      Just eyeballing the monthly $XJY chart, it’s in the balance and could go either way.

      I don’t see much similarity to 2012.

        Aug 03, 2017 03:12 AM

        If the monthly “full stochastics” were to turn back up right here, it would create a pattern I have never ever seen (flatlining for a handful of months just above oversold levels and then turning back up). Never say never I suppose, but I think we will get more red monthly candles soon to get the stochastics to oversold levels.

          GH
          Aug 03, 2017 03:06 AM

          May be that an upturn in the stochastics here is uncommon behavior, though I’m not so convinced of that either. We don’t get many samples on the monthly charts to help us gauge the probability. But the charts are fractal in nature, and an upturn of stochastics from this level certainly is not unknown on shorter term charts. As Matthew has pointed out, bullish behavior is for stochastics not to reach oversold, but rather to turn up around 40.

          Again, going to the shorter term charts, the weekly, while still in no-man’s land, has a bullish slant. It’s retaken the 50% level of the 2015-2016 upleg, as well as the 200 and 50 week MAs. MACD has just crossed above the 0 line. And it got good support from the fib fan and fib arc a few weeks ago. Regardless of time scale, when a bear phase is bottoming and turning back up, we often see exactly the pattern we see on the weekly yen chart–a sharp bounce up to the 200 MA, where it gets rejected, and then a sideways consolidation with smaller moves until the downward force of the 200 MA is dissipated. If a downward continuation move were in the cards, $XJY would have fallen harder upon its subsequent retests of the 200 MA. Instead, it has shown great tenacity, with two short, shallow pullbacks and now a fourth challenge of the 200 MA. Likewise it has tested the 50 MA three times in the past few months, and has shown more strength on each test. Not weak or bearish behavior.

          http://stockcharts.com/h-sc/ui?s=%24XJY&p=W&yr=10&mn=0&dy=0&id=p87146502292&a=443807618

            GH
            Aug 03, 2017 03:13 AM

            Similarly, $XJY has been challenging the 200 day MA, showing more strength each time. Uncertain, with a bullish slant. It needs to take out 91.88 and 92.32. If it fails to do that, then back down again. But even that could just be more back and forth in a sideways consolidation, or it could be more bearish in nature, only time would tell.

            http://stockcharts.com/h-sc/ui?s=%24XJY&p=D&yr=1&mn=4&dy=0&id=p89111481820&a=422635193

    GH
    Aug 03, 2017 03:17 AM

    A couple more bullish tell-tale signs on the daily GDX chart:

    https://likesmoneycycletrading.wordpress.com/2017/08/01/bullish-miner-pattern-changes/

    Aug 03, 2017 03:49 AM

    EXK is cooked. $2.00 is a natural target now.

      Aug 03, 2017 03:28 AM

      They put out a press release today showing how much they struggled or decreased in many metrics for last quarter. I would expect some downside pressure in $EXK for the short term as a result.