Weak Earnings, The Fed Meeting This Week, and China Talks
Chris Temple joins me today to shares his thoughts on the weak earnings that are driving down the markets today. As we progress through this week we have a couple other major events that include the Fed and China talks which could drive markets.
Bears Do Their Bit to Keep Stocks Buoyant
January 27 – Rick Ackerman
“As expected, the Dow blew past the upper threshold of the wedge formation pictured here Friday, gapping well above it on the opening bar. We’d predicted a 250-point surge, but the Indoos did a little better, gaining 306 points at the intraday high. This price action confirms what we already knew — i.e., that stocks are incapable of leaping higher unless powered by the kind of short covering that usually turns up in the first few seconds of the day, if at all. What was interesting about Friday’s rally is that it didn’t sputter out and reverse within minutes. Instead, buyers kept at it for the next hour, peaking at around 10:50 a.m. This strongly suggests they’ll be back when the new week begins, even if unlikely to tip their hand right away, as they tend to do on Fridays.”
GCG19 – Feb Gold (Last:1302.50)
January 27, 2019, 5:04 pm – Rick Ackerman
“Gold took wing Friday, energized by weakness in the dollar. The $23 upthrust stalled almost exactly at the 1302.90 Hidden Pivot midpoint resistance shown, validating both the bullish pattern and a 1330.40 target we’ve been using for the last week or so. (Note: These numbers differ slightly from the ones given here earlier because the pattern’s point ‘C’ low changed.) The 1330.40 ‘D’ pivot will become our minimum upside objective if the futures can close for two consecutive days above p or trade more than $3 above it intraday. Traders please note that a pullback to the green line at 1289.10 from around 1310.00 would trip a ‘mechanical’ buy signal, stop 1275.20. Stay tuned to that chat room for further guidance on this in real time.”
When The Fed Reinstates QE-Infinity You Are Going To Want To Own Precious Metals
Bob Moriarty & Goldfinger: Jan 28th, 2019
> Goldfinger: “We’ve seen a nice move up in precious metals since the last time we spoke (Christmas Eve) and gold is currently knocking on the door of important resistance near $1300. Gold mining shares have also spent the last few weeks undergoing a healthy consolidation. What do you see for precious metals and mining stocks right now?”
>> Bob Moriarty: “I think that gold is the antithesis of the stock market right now. When stocks went down in December gold went up and two Fridays ago we saw gold get dinged about 1% while stocks rallied. I think a lot of smart people are sensing a crash is right around the corner and I think that gold and gold mining shares will soar when the stock bubble pops.”
> Goldfinger: “We’ve received quarterly earnings reports for many of the world’s largest mining companies and generally speaking they have been quite poor; BHP disappointed, Freeport lowered guidance, Barrick didn’t impress with higher than expected costs, etc. We are starting to see a trend of increasing costs across the mining sector – even a massive miner like Barrick Gold reported US$3.00 per pound all-in sustaining costs (AISC) for copper production which means that Barrick is losing money mining copper on an all-in cost basis. While their cash costs are considerably lower (around US$2.00/lb) which means they won’t be reducing production anytime soon, the fact is that many global copper producers aren’t really incentivized to find new sources of copper production with copper prices sitting at US$2.65/lb.”
>> Bob Moriarty: “Here’s the deal, prices go from extreme highs to extreme lows. The prices of commodities will often go below the cost of production and people will shut projects down which will help commodity prices go back up again. The cost of labor has gone up while grades keep dropping, this explains why costs keep rising. Now when I see a price of copper of US$2.65/lb and I see all-in sustaining costs of US$3/lb I know we’re near a low.”
> Goldfinger: “Considering the growing demand for electric vehicles and the rewiring of the global energy grid the future looks particularly bright for copper right now, however, you wouldn’t have guessed that by looking at the copper price chart:”
“The world is going to need a lot more copper over the next couple of decades. If Barrick can’t even mine the stuff profitably where are we going to find new sources of economic copper? Or I guess another way to ask that question is why aren’t copper prices a lot higher?”
>> Bob Moriarty: “It’s pretty clear to me that resource prices will have to move a lot higher and that would include base metals like copper and zinc. If copper prices remain below US$3/lb we simply won’t have enough supply to meet demand and prices will skyrocket higher in a very short period of time…”
http://energyandgold.com/2019/01/28/bob-moriarty-when-the-fed-reinstates-qe-infinity-you-are-going-to-want-to-own-precious-metals/