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Wrapping up the markets this week – US Markets and Gold

Cory
September 1, 2017

Doc is with me to wrap up the markets for this week. We look at the US markets and gold in terms of the Dow:Gold ratio. You can see that chart below. We also look at the weekly and monthly charts for the individual markets.

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Discussion
40 Comments
    CFS
    Sep 01, 2017 01:45 PM

    Have a good Labor Day Holiday Everyone.

    Sep 01, 2017 01:11 PM

    Doc, do you know which state in the USA has the most lighthouses?
    I enjoyed you tale of winning the cherry seed spitting contest but am suspicious of its veracity. It sounds like an urban legend to me and I have an M.A. in Folklore and Folk Medicine from Indiana U. and have been trained to recognize an urban legend when I see one.

      Sep 01, 2017 01:25 PM

      BB; it definitely was not an urban legend but possibly a “rural legend” since as far as I’m aware, cherry seed spitting contests have not yet invaded the purview of the metropolitan area. Most lighthouses—I would guess my lovely state of Michigan.

        Sep 01, 2017 01:40 PM

        Bingo, Michigan has the most lighthouses. But if you ask people who don’t live in the Great Lakes region they never would guess MIch. They work their way around the Atlantic and Pacific and Gulf coast states, and would never think about the Great Lakes or guess Michigan. Try it next time you’re in Florida.

    Sep 01, 2017 01:18 PM

    Was hoping to see PMs close the week with a good push but should be satisfied that it’s a controlled move, apparently void of a lot of speculators which can be a bad thing. Nice to see it held the week’s gains but didn’t produce any froth. That’s healthy and that’s good for the long run. IMO

    Sep 01, 2017 01:59 PM

    Strong Monthly Closes in Gold and the Miners
    David Erfle – Friday September 01, 2017

    “Despite most big money traders and fund managers still being on vacation, the gold price has broken and held above strong resistance at the $1300 level on a monthly basis. The GDX has responded in kind with a close well above the $24 level, which so far this year has been strong monthly resistance in the major miner ETF.”

    “A day after gold closed above $1300 earlier this week, the US election night high above $1330 was tested when North Korea fired a missile that flew over Japan and landed in the Pacific waters off the coast of South Korea. This geo-political move in gold has already been sold off, as the formerly strong resistance level (now support) of $1300 was tested and held a few days later. The GDX also tested and held the $24 level on the last day of August.”

    “A steady rise in SPDR fund tonnage in the GLD has also been seen in the past few weeks. Since the bull move in the yellow metal began early last year, the accumulation/distribution of physical gold in this ETF has been a good barometer for the near-term direction of the gold price.”

    “When gold closed above the $1300 level earlier this week, the very over-sold US Dollar made a sharp intra-day reversal after piercing strong long-term support at the 92 level on the cash settle index. However, the gold price has not been phased by this action and remains firmly entrenched well above the $1300 level, while the US dollar remains above the 50% retrace of the entire 2014-2016 US dollar bull move near 92.”

    “I believe a weak dollar and low bond yields, coupled with investors rotating some money into gold assets as a hedge against a bull market that’s in its ninth year, has placed a solid $1250 floor in the gold price.”

    “The key for gold will now be to hold the $1300 level and looking ahead, there will be a few potentially large gold sector catalysts. The next Federal Open Market Committee (FOMC) meeting will be on September 19-20, which will be followed by the German election on September 24th. We will also have the US debt ceiling drama to contend with and it will be coming to a head at the end of the quarter.”

    “The miners are also beginning to lead the metal again as the GDX has gained 17% this year versus a GLD gain of 14%, and the GDX is outpacing GLD by a 79% to 23% margin since the start of 2016. Gold and its miners are outperforming the S&P 500 this year and the period since the start of 2016. That’s the first time this has happened since 2011.”

    “The set-up in the miners heading into the last month of the quarter appears to be very bullish. As I have mentioned in previous articles, the odds were in favor of an upside resolution to the year-long triangle consolidation pattern in the GDX based on numerous junior gold stocks already trading at 4-year highs.”

    “I am now looking for a quarterly close at the end of September above the $1365 area for the final technical confirmation of a bull market in gold being firmly in place. Meanwhile, my subscribers and I will remain fully invested in the best of class junior developers and exploration firms as we patiently await this very possible outcome.”

    http://www.kitco.com/commentaries/2017-09-01/Strong-Monthly-Closes-in-Gold-and-the-Miners.html

      Sep 01, 2017 01:30 PM

      Agreed Excelsior. Its been a good week for PMs (hows palladiums move in the last 24hrs). The fact there was a retracement back towards the 1300 mark in gold and it held before closing the week above 1320 is a positive sign.

      I agree, if we can get a run towards the 1360-1370 level and it holds there, then maybe just maybe a PM bull is confirmed. Because from that level there appears to be some clear air before the 1500 level. Fingers crossed. Not looking too far ahead is key.

      Gold taking out the 1370 level or bitcoin hitting 5000, I wonder which occurs first?

        Sep 01, 2017 01:21 PM

        Good thoughts Ozibatla. Yes, we discussed it being normal and expected for Gold to backtest the prior resistance at $1300 to confirm it was now support, and that fact that it did and then bounced before the end of the week was solid performance, and quite constructive.

        I’d actually like to see keep the eye on the prize of last year’s high of $1377.50 and see Gold definitively close above that in the balance of 2017. That would mean putting a higher recent high on the charts for the year.

        After that there is more room to the upside into the high $1400’s.

        As for whether Gold will take out $1370 or Bitcoin taking out 5,000 – no idea which one comes first, but both seem inevitable. All in all very nice action lately in both.

          Sep 01, 2017 01:40 PM

          True! If gold takes out last years high and finishes the year above that point, it bodes well for a new bull. Also remember that last years high was on the back of the brexit vote so that could be interpreted as a short term uncertainty trade. The current move appears to have more substance to it. I have been fooled before though so I remain cautious at this point.

          If a gold bull market were to develop in the PMs, I personally would view it as a new bull as opposed to a resumption of the previous one.

            Sep 01, 2017 01:31 PM

            Yes the rise in Gold this year versus last year is more orderly, but until I see something different, the Gold bear ended in December of 2015, and the explosive action in 2016 had a number of factors, but mostly it was just extreme oversold conditions snapping back when the metals bottomed and started heading up, so there was much more to it than just Brexit which was merely a contributing factor.

            We started a new Cyclical Gold bull in 2016, within a larger Secular gold bull that stems back to 2000-2001, and those typically last 20-25 years and may have 3 or 4 cyclical bulls in them and 2 or 3 cyclical bears. I see 2000-2007/8 as the first cyclical bull, 2009-2011 as the second, and 2016-2020? as the 3rd cyclical bull within this larger Secular pattern.

            The reason I felt strongly that Gold would not make new lows this year and would in fact make higher lows, and project a higher high is that the Gold bull already started last year. It won’t go up in straight line though, and the 1 year length of the sideways to down digestion and consolidation of the Gold & Silver prices and miners was the sentiment wash needed to resume the uptrend. This is where I disagreed with certain posters here and elsewhere that we need some major washout to get things restarted. We don’t – the one year grind from last August to this August did plenty to wash out sentiment, and we’re off on the next leg of our cyclical bull. 1 leg up in 2016, then the long sideway/downward digesting leg 2, now the upwards impulse leg 3 (that will need to take out $1377.50 to be vindicated) and likely will head into the high $1400’s in 2018, then a 4th leg that will be a corrective leg down (but still make a higher low) in late 2018, and then the final wave 5 upleg into 2019 or maybe 2020.

            That’s my projection for the longer game, but I take each day, week, month one step at a time. 🙂

          Sep 01, 2017 01:44 PM

          Just viewed the bitcoin chart and its above $4900. Didnt realise it put another $200 overnight. I guess it wins the race I previously mentioned.

            Sep 01, 2017 01:44 PM

            Yep good thoughts. I think your point that gold isnt going to go straight up is pertinent as its important to have long term perspective when discussing bull and bear markets. During any one year in a bull market we may see 5-10% corrections and thats to be expected.

            Thanks for the analysis Excelsior.

      Sep 01, 2017 01:01 PM

      Mexico Snapshot: Six active juniors
      By: John Cumming – August 30, 2017

      http://www.northernminer.com/news/1003789098/1003789098/

        Sep 01, 2017 01:02 PM

        (HER) (HRLDF) – Heron ‘Breaks Ground’ at Woodlawn Project (Zinc/Copper)
        @nasdaq on August 29, 2017

        https://ceo.ca/@nasdaq/heron-breaks-ground-at-woodlawn-project

          Sep 01, 2017 01:05 PM

          Portfolio Update: Last Two Weeks Action (Catalyst Heavy)

          The Hedgeless Horseman – September 1, 2017

          http://www.thehedgelesshorseman.com/horsemans-portfolio/portfolio-update-last-two-weeks-action-catalyst-heavy/

            Sep 01, 2017 01:11 PM

            > Horseman’s portfolio
            Below is the current precious metal miners portfolio (Descending weighting):

            Novo Resources Corp
            GFG Resources Corp
            Dolly Varden Silver Corp
            Orca Gold Corp
            Otis Gold Corp
            Newrange Gold Corp
            Abraplata Resources
            US Gold Corp
            Kootenay Silver
            Cordoba Minerals
            Goldquest Mining
            Impact Silver
            Osprey Gold Corp
            Sage Gold
            Redstar Gold Corp
            Liberty Gold Corp
            Southern Silver Exploration
            Sandspring Resources
            Timberline Resources
            Americas Silver
            Telson Resources Inc
            Brixton Metals
            Fiore Exploration
            Kaizen Resources
            Sarama Resources
            Kirkland Lake
            IDM Mining Ltd
            Pure Gold Corp

            http://www.thehedgelesshorseman.com/horsemans-portfolio/

            Sep 01, 2017 01:12 PM

            Congratulations Shad on a nice week. Doing my recap I know your smiling.

            Sep 01, 2017 01:16 PM

            Hi JohnK – Yes, lots to smile about, and overall it’s been a very good week indeed. Lots of miners are on the upswing the last few weeks actually.

            Sep 01, 2017 01:35 PM

            JohnK – I posted a long message today over at ceo.ca where I showed just how many companies have been positive over the last month with a number of 10 company perf charts in Gold/Silver miners to show how well many performed over the last few weeks:

            https://ceo.ca/@excelsior?6dcd5770e66e

            Sep 01, 2017 01:59 PM

            Thanks for that Shad.
            I was thinking a list of silver producers with significant zinc credits,and ranking them.
            I really could feel the shift towards Gold and Silver from the pure Zinc plays starting mid week. Zinc prices are holding strong and anybody with a drill turning,the stocks are still in very strong hands.
            By far Silver was the stand out but I did notice those companies that started drill programs in July, the stocks for the most parts are in very strong hands.
            It has been nice to see money coming back into the PM’s. We could be in for a very nice ride.

            Sep 01, 2017 01:17 PM

            I was pretty jazzed about the moves in most of my Silver stocks over the last few weeks, and yes, there seems to be less interest in the “Zinc” stocks as of late, but most of their drill results will be reported in September. (actually September is going to be news overload month for drill results).

            I like the idea of ranking some of the Silver producers with large Zinc credits (and Lead has been trending higher as well). Many of the Silver miners only have 30-50% Silver and the rest of their value really is in Zinc/Lead/Copper/Gold. For some reason, Silver/Zinc/Lead or Zinc/Lead/Silver deposits are the norm.

            When we see the 3rd & 4th quarter results of these Silver companies (reported in the 4th quarter and 1st quarter of 2018), my expectation is lower cash costs and All-In-Sustaining-Costs due to these elevated Base Metals credits.

            Most of the Zinc companies available at present are really either larger base metals conglomerates like Hudbay, Vendanta, Glencore, etc… or smaller explorers/developers like Tinka, Vendetta, Fireweed, Pine Point, Canada Zinc Metals, Constantine, Heron, Arizona Mining, Callinex etc… There are very few Zinc focused smaller producers other than Trevali and Pasinex.

            It is for this reason that I believe most of the Silver producers or near term producers are sitting on a cash cow with all their immediate exposure to this higher Zinc/Lead prices and they are some of the best “Zinc” plays available. It will sure do their balance sheets much more good than the larger behemoths.

            Sep 01, 2017 01:18 PM

            So i remember you quoting “Who Moved My Cheese”I ordered it from Amazon and thinking how thorough you are I was going to be reading something at least 300-400 pages.

            Sep 01, 2017 01:48 PM

            Yes JohnK – “Who Moved My Cheese” is a great and transformative book for escaping the mindset that many get trapped in. However, it is a very short book and easy read. (I laughed at the disappointment in 300-400 pages imagined down to something under 100).

            Still, that book had more impact on how I solve trend change in business and in life than many longer and more complicated books.

            Sometimes its the little things in life that make the most impact.

            A rocket ship headed to the moon is off-course 97% of the time, but it only takes minor adjustments to get back on track.

            Realizing quickly that a trend that is being phased out or has straight up changed or moved, is crucial in spotting new opportunity, and for preserving capital from losses. When these sea changes come upon a sector or industry or even a smaller micro trend, responding in a way most likely to have the optimal outcome {instead of being stubborn, or resistant to change, or in disbelief, or angrily or violently opposed to the new trend] is the healthiest course of action.

            > Think of how most people have responded ore reacted to the clear Lithium/Cobalt/Manganese/Copper trends in fueling the new battery and energy storage movement…… people lose their minds over the topic…… They launch into weather reports and earth changes, but miss the point. The BATTERIES are getting made. Deal with it. Swim with the current…. or miss the opportunity

            > Think of the insane, irrational, and angry response to the concept of crypto-currencies. I’ve never seen so much arguing as the last year around crypto-currencies, and it isn’t coming from the main-stream public – it’s coming from precious metals and bonds investors. New paradigms are often scoffed out, then resisted, and then the idea proves out.

            > Think of how people reacted to legalization of cannabis businesses and stocks….. There were so many people that laughed at the first IPOs, then there were more, and then there were more….. Some thought it was just a phase, but there is a boatload of money that’s been dumped into, and while the legalities in the US may still play a factor, many countries are moving forward with both medical and recreational use, and thus there is enough momentum that real companies and opportunities have emerged.

            That isn’t to say to that every Lithium, Cobalt, Cryptocurrency, or Pot Stock will work out, and people that use that argument or limited belief systems are too irrational to talk to about these topics anyway. The point is that the overall Trend is happening, with their knowledge, and without their permission. People can choose to capitalize on new trends as they develop, or they can point fingers at the boogey man and how it shouldn’t be so. I know which camp I’d rather be in.

            100 years ago, one might well have said I just don’t like the idea of automobiles, they are noisy, they don’t love you back, they are technology hoisted upon the world, they’re a scam, and really only horse & buggies are the “correct”
            way for humans to travel…………. Critics probably laughed at the first autos, scoffed at them, said they’ll never catch on, and stated emphatically the world would never switch over to those wretched machines…….. Well we all know how that worked out and the rest of the world moved on, the opportunity and industries around the automobiles blossomed, and the cycles from early adapters all the way up to a mature market played out beautifully.

            Think of Social Media or smart phones, and App companies, and just how fast those phenomenon played out. There were doubters and haters the whole way up…..

            I think you’ll enjoy the book mate!

    Sep 01, 2017 01:38 PM

    Newmont Canada FN Holdings ULC Disposes of Securities of Novo Resources Corp.

    TORONTO, Sept. 1, 2017 /CNW/ – Newmont Canada FN Holdings ULC (“Newmont Canada”) announced that on August 31, 2017 it sold 11,830,268 common shares (“Shares”) in the capital of Novo Resources Corp. (“Novo”) (TSX.V:NVO) representing approximately 9.9% of the total Shares outstanding through a private agreement for proceeds totalling CDN$18,928,428.80 or CDN$1.60 per Share. Newmont Canada’s percentage ownership of Shares reduced from approximately 14.9% (17,760,000 Shares) to approximately 5.0% (5,929,732 Common Shares) as a result of the transaction.

    Newmont Canada has no current intention to acquire any Shares, but may, depending on market and other conditions, acquire beneficial ownership or control of the Shares or other securities of Novo whether through market transactions, private agreements, treasury issuances, exercise of convertible securities or otherwise.

    http://www.newswire.ca/news-releases/newmont-canada-fn-holdings-ulc-disposes-of-securities-of-novo-resources-corp-642496563.html

      Sep 01, 2017 01:09 PM

      So the idiots at NEM sold 10% of NSRPF@1.20 before it shot up to 4.70

        Sep 01, 2017 01:40 PM

        So did I Bonzo Barzini….. so did I. Maybe I should put in my application to run Newmont on a move forward basis. 😉

          Sep 01, 2017 01:08 PM

          I was thinking more along the lines of getting them a job with the government or even considering a Congressional run.

            Sep 01, 2017 01:19 PM

            haha! Good thinking JohnK.

          Sep 02, 2017 02:49 AM

          I thought NEM was doing a lot of good things since Gary Goldberg started running it. But I wish he had not sold the NSRPF.

    Sep 01, 2017 01:57 PM

    Crypto Weekly Recap
    Bitcoin +521.10 +10.69%
    Ethereum +42.28 +10.9%
    Bitcoin Cash +23.92 +3%

    Sep 01, 2017 01:43 PM

    Alacran could be tip of the iceberg, Cordoba says (CDB) (CDBMF)

    TRISH SAYWELL AUGUST 30, 2017

    “Since January, when Cordoba Minerals (TSXV: CDB; US-OTC: CDBMF) completed the first resource estimate on its Alacran deposit in Colombia based on 22 drill holes, the company has drilled another 45 holes, and in mid-August, unveiled a new 3,000-metre drill program to test high-priority targets to the south, northeast and down dip.”

    “We’re pretty confident that Alacran is going to get bigger than the 54 million tonnes previously reported,” says president and CEO Mario Stifano, referring to the inferred resource of 53.5 million tonnes grading 0.70% copper and 0.37 gram gold per tonne, or 0.95% copper equivalent.”

    “We’re well on our way to having a sizeable resource here,” he adds. “We think we will be able to demonstrate that we have a really economic ore body at Alacran. It’s exciting because the mineralization starts right from surface — so you have no pre-strip — and you’ve got great grades.”

    http://webcache.googleusercontent.com/search?q=cache:SkTQb9hDQnQJ:www.northernminer.com/news/alacran-just-tip-iceberg-cordoba-says/1003789066/+&cd=4&hl=en&ct=clnk&gl=ca

    Sep 01, 2017 01:04 PM

    (NMX) (NMKEF) Nemaska Lithium CEO Guy Bourassa discusses a range of topics, including the company’s Whabouchi project and Phase 1 Plant in Shawnigan.

    Shelly Kumar • August 30, 2017

    http://investingnews.com/daily/resource-investing/energy-investing/lithium-investing/nemaska-lithium-ceo-guy-bourassa/?as=1&nameplate_category=Daily

      Sep 01, 2017 01:05 PM
        Sep 02, 2017 02:28 AM

        Mercedes-AMG hypercar confirmed for Oz
        01 September 2017Greg Kable

        “The new Mercedes-AMG hypercar, known under the working name Project One, will possess a top speed exceeding 350km/h, the German car maker has officially revealed.”

        “Mercedes-AMG’s most ambitious road car to date will be powered by an advanced petrol-electric plug in hybrid drivetrain based around an Formula One derived petrol engine that operates in combination with four electric motors to deliver an overall output of over 736kW in its most performance orientated driving mode.”

        “The hi-tech driveline uses a heavily revised version of the electrically turbocharged 1.6-litre V6 housed in the Mercedes-AMG W08 EQ Power+ race car, as driven by Lewis Hamilton and Valtteri Bottas in the 2017 F1 World Championship.”

        “The former, developing 100kW, acts as an electric motor under acceleration and a generator to recuperate kinetic energy under braking, with the latter rated at 80kW used to electrically power the petrol engine’s turbocharger for instant response as well as to convert heat from the turbocharger into electrical energy for storage in the new car’s sophisticated battery.”

        “The battery used to power the Project One’s four electric motors is based on the same lithium ion cell technology found in the Mercedes-Benz F1 racer. Boasting four times the energy density as the battery used in the race car, it is mounted low towards the front of the floor structure, providing it a favourable front-to-rear weight distribution and low centre of gravity.”

        “Because of the F1 derived technology used by the new car, prospective buyers have been asking if they will require a support crew or dedicated lubricants to run it. My answer is always no. It will be a street car. You keep it plugged in in the garage. You fill it with fuel. That’s it.”

        http://www.drive.com.au/motor-news/mercedes-amg-hypercar-confirmed-for-oz-65052.html

    Sep 01, 2017 01:18 PM

    Silver Miners’ Q2’17 Fundamentals

    Adam Hamilton – Sep 1, 2017

    “The silver miners’ stocks have largely languished this year, grinding sideways near lows for months on end. This vexing consolidation has fueled near-universal bearishness, leaving silver stocks deeply out of favor. But once a quarter when earnings season arrives, hard fundamentals pierce the obscuring veil of popular sentiment. The silver miners’ recently-reported Q2’17 results reveal today’s silver prices remain profitable….”

    http://www.321gold.com/editorials/hamilton/hamilton090117.html

    Sep 02, 2017 02:58 PM

    My cheese is always getting moved!
    Anyway, does someone have a link to that excellent chart at the top of the article.
    Matthew is often the guy to post good big charts from stockcharts.

    Sep 02, 2017 02:05 PM

    This is a good development; the 30 year T bond just broke down to a new 35 month low vs gold and looks ready to plunge…

    http://stockcharts.com/h-sc/ui?s=%24USB%3A%24GOLD&p=W&yr=4&mn=3&dy=13&id=p70248912474&a=542652984