Brien Lundin Commentary – Fri 29 Jun, 2018

Gold – Due For A Bounce, But How High Will It Go

Brien Lundin joins me today to share his thoughts on the washed out gold sector. This time of the year is closing in on a typical bounce period for gold but will it be the 10% we have seen in the past?

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Comments:
  1. On June 29, 2018 at 7:56 am,
    bonzo barzini says:

    Hey saddle pals, don’t be so sure that the communist Obrador will win on Sun. My politically connected friend says his friends in Mexico say Obrador will not win. I sure hope he is right! Andiamo Denmark; beat Croatia!

    • On June 29, 2018 at 10:55 am,
      CFS says:

      There have been 132 local politicians murdered in Mexico this election cycle, and are currently 42 known taps into pipelines to steal oil; this being now a significant source of revenue for crime/drug cartels. (AP reports over the last few months) The corruption level in Mexico is frightening.

  2. On June 29, 2018 at 8:12 am,
    Matthew says:
  3. On June 29, 2018 at 8:21 am,
    Snowy says:

    It was said here before, but no one is selling their gold miners. Even less people are buying gold equities.. Commodities are 3rd rare investments compared to tech. I mean who in their right mind would even buy oil stocks over the dip in the FAANG stocks here? (Sarcasm)

  4. On June 29, 2018 at 9:00 am,
    Matthew says:

    SLV:GLD looks good…
    http://schrts.co/LpbXo8

    • On June 29, 2018 at 9:26 am,
      Charles says:

      Hi Matthew –

      A turn does look close, at least in the short term. The ADX still doesn’t look all that positive to me other than the red line appears to have put in a short term top. I’m not all that good at interpreting the ADX so if you see something else that I am missing let me know.

      • On June 29, 2018 at 9:36 am,
        Matthew says:

        Hi Charles,

        The bulls are dominant when the +DI (green) is greater than the -DI (red). However, with a trend strength reading of about 16, there is currently no trend for SLV:GLD.

        • On June 29, 2018 at 9:46 am,
          Charles says:

          Thanks for the explanation Matthew. That is pretty much what I thought as I have listened to Doc talk about the ADX a bunch. I thought the ADX was more of a leading indicator so I am surprised it appears to be lagging the slow stochs. I guess the strength line is positively diverging which I suppose is a positive.

          • On June 29, 2018 at 9:58 am,
            Matthew says:

            Yes, I consider it net positive but notice that there was little trend strength even at the recent high and the last significant strength we saw was to the downside late last year.

            The healthy move of 2016 saw uptrend strength peak at 40 while the 2011 blow-off top went over 60.

      • On June 29, 2018 at 10:08 am,
        Charles says:

        Oh that is interesting. I didn’t realize it measured the strength of both uptrends and downtrends! Very instructive. Thanks.

        • On June 29, 2018 at 10:13 am,
          Matthew says:

          Yes, if the green line is above the red line, the black line measures uptrend strength, and vice versa.

          • On June 29, 2018 at 10:27 am,
            Charles says:

            Makes sense. Got it. Looks like ISVLF might be putting in a double bottom from what I am seeing. It has hung out down at $0.29 longer than I anticipated.

          • On June 29, 2018 at 1:14 pm,
            Charles says:

            Its interesting, IPT.V chart looks slightly different than ISVLF. IPT.V has not breached the 200-day where it has on ISVLF. Also, today there was a while candle on IPT.V and a black candle on ISVLF. Gives a totally different picture. I guess given higher volume of IPT.V that chart gives a more accurate picture. On ISVLF in the last 15 minutes (I can’t see on stock charts, but I can see shorter time frames on my broker site) it looks like there was a fairly large order that took the stock down to the low, but it bounced right back to the high before the close. Can you see that on Stock Charts and if so what do you make of it if anything (bullish/bearish/ stop run/ nothing)?

          • On June 29, 2018 at 2:33 pm,
            Matthew says:

            I can’t explain the discrepancy, but neither stockcharts nor my broker shows any volume in the last 15 minutes (or almost 3 hours). Maybe it was market maker/broker activity.
            Either way, everything looks right — the U.S. closing price almost equals the Canadian closing price when adjusted for the currencies.

            I always give the edge to the Canadian listing when the U.S. alternative is the pink sheets or otc but both work for charting purposes and some investors might be better off looking at their holdings in terms of the currency that they use.

            ISVLF closed just below the 200 day MA but closed precisely on the Fibonacci based 233 day MA — down to the tenth of a cent. In my experience, Fibonacci MAs are often superior and such precision adds significance (positive/bullish in this case) to the price action.

            http://schrts.co/FrKP9e

          • On June 30, 2018 at 2:53 pm,
            Charles says:

            Thanks for the chart with the 233 day MA. It’s amazing how it stopped right on the line!

  5. On June 29, 2018 at 9:02 am,
    spanky says:

    There is almost 0 chance $hui put in a long term (as in multiyear) low yesterday.

    Yesterday it put in a black candle on the daily chart. It hasn’t left behind a black candle on the daily chart in probably 20 years. It certainly hasn’t left any behind since the January 2016 low was struck. So take that for what it is worth. Could this time be different-sure I guess, but it would be an absolutely extreme outlier IMO (like 1 in 1,000). We could rally significantly before it heads back down, so I am not trying to say you couldn’t make significant money trading it, but if you are looking for a long term buy and hold right here, you need to be prepared for at least a minor drawdown in the near future. FWIW.

  6. On June 29, 2018 at 9:34 am,
    spanky says:

    The $XAU’s weekly BB width (20,2) has basically matched the low it achieved only one other time in its 30 year history (back in 1995).

    Back then it proceed to produce a very large 6 month rally of about 50% (from a level of 100 up to 150 at the peak) before it rolled over into the epic bear between 1996 to 2000. It went from the peak of 150 to a low of about 40 in that span.

  7. On June 29, 2018 at 10:04 am,
    Matthew says:

    The Canadian dollar looks good…

    http://schrts.co/usFGk3

  8. On June 29, 2018 at 10:16 am,
    Matthew says:

    The miners continue to perform very well when priced in real money. XAU:GLD is heading for its highest close since January…
    http://schrts.co/AFCT1B

    • On June 29, 2018 at 10:44 am,
      spanky says:

      they are killing it in peso-terms.

  9. On June 29, 2018 at 11:19 am,
    Matthew says:

    ABX is looking very good…

    http://schrts.co/mJQhPf

  10. On June 29, 2018 at 12:10 pm,
    Charles says:

    Nice chart! This is a hopeful sign for the sector. ABX has been outperforming NEM since April and looks poised to continue doing so.

    • On June 29, 2018 at 12:22 pm,
      Matthew says:

      You can change the overlays for a different view, and, big surprise, it still looks great…

      http://schrts.co/45AmL8

      I agree, this is a good sign.

      • On June 29, 2018 at 12:39 pm,
        Charles says:

        I have a large position in ABX in my retirement account. Initially got into it in May 2012 at $40 per share (before I got enlightened by KER – ouch!). At the time my investment advisor did not have me in any gold and as a result I was hell bent on getting some exposure, but I overstayed which I think is a common mistake with folks not accustomed to the sector’s wild swings. I started averaging down in May last year with my last by in early March this year so I have a very strong vested interest in this pig turning around. I hope to ride for a while and then get out and into something better. Just goes to show these miners are more trading vehicles in my mind than long term holds.

        • On June 29, 2018 at 12:48 pm,
          Matthew says:

          Trading these things is definitely the way to go and I think ABX will be very good to you.

  11. On June 29, 2018 at 12:26 pm,
    Charles says:

    GDX:SGDJ cross has been positive for a while and looks set to breakout of its June consolidation. Looks like it could run into resistance at the February top which isn’t to far away.

  12. On June 29, 2018 at 12:30 pm,
    Bonzo Barzini says:

    EXK, AG, USAS, PAAS, AEM, GG, ALO, etc are up 3% today. They should be down if Obrador is going to win on Sun.

    • On June 29, 2018 at 2:16 pm,
      spanky says:

      That is faulty logic IMO. Silver was up today and the election isn’t over yet. It’s extrmely hard to say what has been discounted and what hasn’t. Only in hindsight will we know.

  13. On June 29, 2018 at 12:41 pm,
    Markedtofuture says:

    REALIST NEWS – Live Stream – More from the Guys at DigiByte 4:00pm EST

    https://www.youtube.com/watch?v=uTSzVd-fiPg

  14. On June 29, 2018 at 2:40 pm,
    spanky says:

    Silver CoT’s barely improved. Still a large net short position by commercials. I personally see another flush coming and this one will likely be extremely painful. The idiot small specs did finally reduce their net long position in a meaningful way though, but it’s irrelevant IMO as it is the commercial net short position that really matters, and as I said, it is still pretty high.

    • On June 29, 2018 at 2:45 pm,
      spanky says:

      We actually had a sort of similar situation out of the December 2016 low. Silver’s CoT’s weren’t wildly bullish at all. The way that excess was eventually burned off was that silver ultimately made a lower low than the December 2016 low in July 2017. If silver has found a low here, I would wager a buck it will make a lower low in 5 or 6 months.

  15. On June 29, 2018 at 2:51 pm,
    spanky says:

    $gold made an outside day up today. No swing low yet.

    I’m going to go out on a limb and say gold is going to get hammered Monday or Tuesday or both.

    No swing low, no dice IMO.

  16. On June 29, 2018 at 2:55 pm,
    spanky says:

    SILJ closed with a black candle today on the daily. Not the sign of some impending launch. Prepare for a whipping next week.

  17. On June 29, 2018 at 3:02 pm,
    spanky says:

    Yen ($XJY) closed at the low of the day and week. Terrible stuff. There is also H&S on the weekly chart and we are literally at or just below the neckline on the close. It projects down to 85.

    A yen crash will send US stocks moonward and gold and miners much lower.

  18. On June 29, 2018 at 10:57 pm,
    Ozibatla says:

    Gold due for an upturn… That maybe so, but I say with confidence that upturn stays within the recent range bound area that is maxed out around $1360.

    • On June 30, 2018 at 5:19 am,
      Excelsior says:

      I’m not convinced $1360 will hold Gold back as resistance on the next leg higher, and see Gold eventually breaking up through the much more important 2016 high of $1377.50 on the big move up.

      In fact, some pundits seem to have amnesia that in 2018 the high in Gold ($1369.40) actually already took out the 2017 high of ($1362.40), so Gold is much closer to making new highs that plumbing a low that is still $200 beneath current pricing.

      Sentiment is low in the metals, pricing is getting down to oversold levels, yet gold is still above the most recent low of $1238 (and nowhere close to the Dec 2015 low of $1045.40) so all the blustering bearish nonsense won’t last much longer. It’s quite possible the reversal will start in many sectors after today’s full moon madness as a turning point.

      • On June 30, 2018 at 10:44 am,
        Matthew says:

        I am confident that the next move up will take gold well above the 2016 high. The odds that that level will fall have gotten better, not worse. Most people get conditioned by their most recent experiences, which is why most people take a beating in the markets. It’s the same in any market. Remember all the brand new bitcoin experts who tried to explain how BC was so different and that the old guys didn’t get it? They were sure that BC was immune to technical analysis and probably still don’t realize that it has followed a very typical pattern.

        Regardless of scale, “three (attempts) and through” is a very common occurrence and gold has more than that phenomenon going for it. Time’s up…

        http://schrts.co/AxxbZw

  19. On June 30, 2018 at 5:15 am,
    Excelsior says:

    Cory & Brien – Really good interview here and cogent thoughts about the normal trend of the seasonality of Gold, and how after May the “Sell in May and go away” period moving into summer is sluggish, range-bound, and boring. = Summer Doldrums.

    Also as far as sentiment goes, it is the sentiment in the metals that is worth tracking for a turn. When sentiment gets to 10-15 on the Daily Sentiment Index it provides the ground for a turn. I agree with Brien that following the metals action can super-charge or stunt moves in the JR miners, and that this is a key driver, however, when the sentiment is so depressed in the Jr mining sector and investors feel like abandoning ship, those are absolutely the times to start bottom fishing.

    Lastly, I agree with the point that the larger bottom in Gold was in Dec 2015 at $1045.40, and that Gold has been clawing it’s way higher ever since then. The 3 scenarios Brien reviewed for the short/mid term were very reasonable paths forward.

    Cheers!