Recapping comments from Powell and Mnuchin, plus gold’s pullback and oil’s move higher
Chris Temple joins me today to address some of the market moving comments from yesterday afternoon and this morning plus take a look at the now volatile gold price and oil price. We start with Fed Chairman Powell and his comments regarding a possible rate cut in July and how this is not a guarantee. Next is Treasury Secretary Mnuchin with comments on a possible US/China trade deal that seems to have been taken out of context. Finally we address the pullback in gold and move towards $60 in oil.
Click here to visit Chris’s site. I highly recommend signing up for his newsletter.
Hey Bob, it should be working now. Sorry, uploading issues…
Thanks Cory. Working now.
This is just the kind of thing that can explain the chronically high gold-silver ratio:
Jeff Snider from Alhambra Partners: “LIBOR curve inverts for first time since 2008 (doesn’t mean we are repeating 2008, just that the negative risks are substantial).
https://kingworldnews.com/gold-pulls-back-but-what-is-happening-now-is-unbelievable/
All financial instruments deviate from the mean and ultimately regress to the mean. the range over the past 120 years for the g/s ratio has been about 16 to just under 100. Nothing has changed in the supply and demand for each metals that would justify a new way of viewing the ratio.
In short, a ratio of 93-1 is not a problem but an opportunity. The ratio will regress to the mean in time.
Mr. Moriarty is, of course, correct.
We have buying opportunities insilver and platinum and related mining stock.
Yes Bob, exactly right. It’s just a swinging pendulum.
https://pbs.twimg.com/media/DzDXL17WwAAmla1.jpg
Nice longer term chart of the swing highs and lows in the GSR.
The GSR would have to fall by one-third just to reach its 20 year average:
https://static.seekingalpha.com/uploads/2018/9/11/saupload_gold-to-silver-ratio-1.png
The 50 year average is probably more like 45 to 50. A return to either average will bring massive gains to the silver miners.
Bob:
I noticed your site put up a release on Lion One drill results. They looked pretty good. What’s your opinion where Lion One is heading in view of these results. Thanks in advance.
My “OPINION” is that it will be a 10-15 million ounce deposit at the end of the day. Alkaline deposits tend to be very big and very high grade. Management was doing a great job but thinking too small. Someone big is going to see the potential and will dump money on them. My biggest position right now is Irving because it will move the fastest and the most but Irving has a $115 million enterprise value compared to Lio with a $60 million enterprise value and a fully permitted mill. Buying Lion is like stealing and that situation isn’t going to last long. I do own a bunch and if I could free up more cash, it would be dumped into Lio.
Bob:
Thanks for the opinion. That helps a lot and puts thing in perspective. I also have Irving and the comparison is very helpful.
I was in Fiji 3 months ago in March. I did not visit Lion One.
My general opinion, however, is that I would not invest in any company in Fiji.
I was just not impressed with education/work ethic, etc.
Mr. Moriarty, however, knows much more about the specifics of Lion one.
CFS
Thanks for input. Bob Moriarty wrote a good article in April about Lion One. Mining not new to Fiji. Also, there are some quality experienced people involved. If Robert Friedland can go into the the Congo, then Fiji may not be so bad. Worth a shot it would seem. I would expect another article from BM on 321gold.
David, I agree. It is worth a shot and quality people are there to deal with the challenges. The education/work ethic that worries CFS is very likely no worse than a few dozen other places.
However, it is currently technically less appealing than many of its peers. If gold remains under pressure, you just might pick it up for under .60 cdn.
https://stockcharts.com/h-sc/ui?s=LIO.V&p=W&yr=3&mn=3&dy=22&id=p62434502910&a=673265855
*I do not own it.
Thanks Matthew for the charts. That helps with timing and price goals. If BM comes out with another article, that will probably pop the price by itself. Thanks everyone for the info.
Yes, I think Chris is right – if we get some wonderful deal out of the G20 the markets are going to go on, IMPO, a melt-up.
I suspect that would suck money out of britcoin and from gold also. The USD would probably rise. Copper – I wonder what would copper do then?
Probably a mere coincidence, but ratio of BTC (crypto gold) to LTC (crypto silver) is close to Ratio of physical gold to physical silver.
Re: Gold short-term pullback.
It was a Tuesday, surprised…..look at a calendar……close of COMEX options.
(Typical short term manipulation…..it only happens virtually every month.
Re: China.
I think it is possible that China will be deceptive.
Trump is demanding security of intellectual property rights. China gave lip-service already once to this and then pulled back; not wanting to actually change their laws and preserve intellectual property rights.
I suspect China will agree to preserving rights, but drag feet in actually implementing law changes, regardless of what they promise. And they will increase secretive theft of intellectual property (cyber theft, etc.) while claiming to be trading fairly.
They will do this in order to get tariffs lifted, and they will make a big show of buying US agricultural products, which because of crop failures, they need anyway.
I can’t believe they have back-engineered corn to produce the equivalent of US GMO corn.
(Violating intellectual property and potentially harming their population !)
The West – with all its short-term greed and lack of vision – is facing two giants who have timelines over decades and centuries to get what they intend to get.
China. Islam.
It is not going to end at all for the West.
I meant – not going to end at all WELL for the West.
“Chrislam” is in the works. Francis has expressed the need for Christianity to be merged with Islam (2017) and Muslims worship the One True God and that they are our brothers and sisters.
To intra-faith ecumeniclism, inter-faith ecumenicalism has been added.
Lot of ignorant folks out there…….
Muslims don’t believe Jesus was the son of God, but they do revere him as a holy prophet.
Papa is corrupt.
Christianity preaches tolerance…….the golden rule is incompatible with Islam.
Believing Jesus was a holy prophet doesnt get anyone to heaven
ditto buzz….
Lots of dip-buying in the miners despite the extremely overbought daily charts:
https://stockcharts.com/h-sc/ui?s=%24GDM&p=D&yr=1&mn=2&dy=0&id=p42202570390&a=577064562
We still aren’t that close to 2016 equity levels based on where the current gold price is.
Yes, and one very good reason for that, which no one is talking about, is the spiking gold-oil ratio from December ’15 to February ’16. The spike in the miners came right on the heels of that move since oil is obviously a very important part of a miner’s costs.
https://stockcharts.com/h-sc/ui?s=%24GOLD%3A%24WTIC&p=W&yr=3&mn=11&dy=6&id=p39602097836&a=673115429
Notice that the ratio slid about 40% between the summer of ’17 and the summer of ’18. The miners held up as long as they could since “markets are forward-looking” but ultimately had to reflect their new reality (with a plunge) before smart money would step in and put floor under them.
Good point. Thanks Matthew
If you want to see a potentially awesome setup technically for a PM stock, you should look at the monthly chart for Eldorado Gold. Look at the BBs–they’re as narrow as I’ve ever seen on a monthly stock. It appears the stock wants to explode.
Can’t get this one to play. The previous commentary plays fine but this one with CT will not.
Have refreshed several times and tried other browsers but still not working.