Phil O'Neill - MP1 Captial – Wed 3 Apr, 2019

Are The Summer Doldrums Here Already and Comments On A Couple Companies

Phil O’Neill, President of MP1 Capital joins me to shares his thoughts on the overall resource stock sector. What everyone is wondering is will the recent pullback in metals stocks be the early start of the summer doldrums. We also look into volumes in the sector and discuss how Phil manages his investments even when companies have little to no volume. To wrap it up we look at a couple companies. The first being Auryn Resources and the second being an oil company operating in Thailand – Pan Orient Energy.

Click here to visit Phil’s site and read his full report on Pan Orient Energy.

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Comments:
  1. On April 3, 2019 at 7:18 pm,
    Excelsior says:

    The Summer Doldrums can’t be here yet, as it isn’t summer. It just turned to Spring on March 22nd, so for there to be so many calls for an early summer doldrums is getting to be a bit much.

    As far as seasonality goes in Gold, there is typically a Q1 Run in Jan & Feb, coming out of the selling pressures during year-end tax loss selling, and for the last few years, the FED rate hikes.

    Then after the gold market gets overbought in late Feb and that is why so often there ends up being a “PDAC Curse” in early March. There are also many PM mining companies that rush to put out news for that show, which becomes a liquidity event for the sector (with rare exceptions when select companies actually do put out stellar news and surprise the markets).

    From late March to May there is sometimes a smaller “Spring Fling” rally, but it isn’t as epic as the Q1 Run, or the largest run out of the end of the Summer Doldrums and into the fall (sometimes in August, but typically in September). We currently still are in the window for the next 2 months to see gold build a base here or a bit lower and have another pop higher.

    Once traders get to May the “Sell in May and Go Away” mantra starts getting kicked around, and may have just become a self-fulfilling prophecy for so many years that have gone by in the past.

    Even though May is still the end of Spring, it generally is the time period that traders lighten up some trades for the slower summer season, with lower volumes, and many traders out away from their desks in June, July. This slower, sideways to down boring period from late May to late July/early August has been dubbed the “Summer Doldrums”, because it like the doldrums at sea with little wind and stagnant waters that drive sailors to madness.

    We are not in the Summer Doldrums at this point, but we’ve heard a few different speakers say back in March, around the PDAC, that there wouldn’t be a curse (even though the metals pulled back from before the event, through the event, and after the event). Now they are saying the Summer Doldrums came early in March and right at the beginning of April, but that is horse dung.

    The whole point of seasonality is to notice accumulation and distribution trends and patterns that tend to play out from year to year. Obviously, it is not an exact science, and things change from year to year as no 2 are identical, but at least respect the Season we are in — Spring!!

    Anyone that declares the Summer Doldrums came early in March/the first week of April, need to take a step back. It is April the 3rd….. NOT June or July, and we haven’t even had the Sell In May mantras at the end of Spring start yet.

    What will be interesting to watch is if the markets provide a nice pop in the Gold price while most are dazed and confused. The wildcard would be if Gold actually rose$70-$80 on a short-term rally and took out the 2016 high of $1377.50, because that may prevent much of a doldrum this summer.

    Gold still would have some work to do if it is going to break through that heavy resistance, but if it did, we’d see a sea change in the markets for the balance of the year, a tepid summer doldrums, and likely an epic Fall rally in September.

    Until then, all of these proclamations are putting the cart way in front of the horse.

    For now, we have seen text book Seasonality in 2017 and 2018 with Q1 Rallies being born out of the ashes of December rate hikes and tax loss selling, followed by PDAC curses in late Feb-Mar , followed by a Spring Fling Rally, Sell in May and go Away into the Summer Doldrums of June & July’s boring sideways to down action, and then a bottoming in the price of Gold in late July or early August, followed by a rally into September. The miners usually lag the moves in Gold by a month or so, an that is why it took GDX until September to bottom last year, when Gold had already bottomed in August.

    Gold has bottomed in July or August the vast majority of the years since 2001, with a few exceptions in outlier years like 2008 or 2016.

    For now, traders should take things one step at a time in 2019. We had a nice Q1 Run rally in Jan & Feb, and got the pullback in March around the PDAC. We have April & May to see if a nice rally pops on the radar and investors cherry picking around these levels may have a nice setup for swing trade over the next few weeks.

    Then when May is getting long in the tooth, it will be time to reevaluate if really is time to sell and go away and look at longer term charts to see how boring the Summer may end up being. Not all Summers are boring, and some are just whipsaws in a channel, where there are still good trade set ups.

    Let’s save Summer for when it gets here, and for now, enjoy the Spring. That is why there is St. Patrick’s day and Easter and all the holidays and traditions of the coming of new life. Let’s just hope a little new life and resurrection makes it’s way into the beleaguered resource sector 🙂

    • On April 3, 2019 at 7:19 pm,
      Excelsior says:

      Here is the 40 year Gold Chart from 1976-2015 for reference:

      http://www.321gold.com/charts/seasonal_gold.html

      • On April 3, 2019 at 7:21 pm,
        Excelsior says:

        Here is the 20 year Gold Chart, which is much more like how 2015, 2017, and 2018 played out, and 2019 seems to be moving along in a similar pattern…. for now….

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

        • On April 3, 2019 at 7:38 pm,
          OOTB Jerry says:

          Thanks for the charts…….

          • On April 3, 2019 at 8:09 pm,
            Excelsior says:

            Ahoy Matey!

    • On April 4, 2019 at 4:53 am,
      Wolfster says:

      It used to be that pot stocks had a seasonality to them based on when government hearings were…..that appears to be no more as the industry progresses…..the us pots are on fire……so much so I’m getting leary of the valuations again

      • On April 4, 2019 at 5:56 am,
        Excelsior says:

        I’m less familiar with the seasonality of other sectors, but with Gold there are decades of data points showing the seasonal trend patterns, like animal migrations, or the flowering of plants. Gold is money and a currency, and is liquidated or accumulated at certain times of the year rather rhythmically. Gold’s fundamentals do react to Central Bank policies, it’s relation to the Yen as the carry trade, and to the treasuries markets, in addition to being tied to religious holidays in China & India at certain times of the year.

        Obviously, one must look at the monthly, weekly, daily charts to get a feel for how each unique year will play out, that data is the most instructive for short or medium term trading.

        However, more often than not, there are periods where prices get depressed (like tax loss selling season prior to a rate hike, or the pullback after the Q1 Run in late Feb/March associated with the PDAC curse, or the end of the Summer Doldrums when Gold typically bottoms in mid-July to early August). Those are typically good times to be accumulating.

        For years many technicians with overly elaborate technical analysis, have been using different analogs, Elliot Wave, COT reports, and all kinds of other data points and scoffed at seasonality; but have been far more wrong-footed than simply buying into seasonal weakness and selling into seasonal strength. 2016 was an outlier year in that the Q1 run continued into Q2, but 2014, 2015, 2017, 2018, and 2019 thus far have followed the seasonality far better than most TA and pundits predictions I see on any board or platform or article.

  2. On April 3, 2019 at 8:30 pm,
    Excelsior says:

    The Yukon Mining Renaissance

    by Ceo Technician (Goldfinger) – 3 APR, 2019

    “A similar bullish case can be made for Canada’s next, and only, primary silver producer, Alexco Resources (TSX:AXR). Victoria Gold’s neighbor Alexco Resources is also on the verge of transitioning from developer to producer, with production set to commence in the fourth quarter of this year. In a recent phone conversation, Alexco CEO Clynton Nauman pointed out just how rich in silver Alexco’s Keno Hill projects are when he stated “there’s an ocean of 600 gram [600 gram/tonne silver equates to about 7.5 grams/tonne gold] material here (at Keno Hill)….”

    “With two new precious metals producers set to be in full production by year end, the Yukon is experiencing a mining renaissance. Not only are there new Yukon producers, but the Yukon is also experiencing an increase in the number of high-quality exploration companies that have highly prospective projects.”

    http://energyandgold.com/2019/04/03/the-yukon-mining-renaissance/