Jordan Roy-Byrne - Technical Commentary on the Metals – Thu 16 Jan, 2020

What are the odds of the recent highs in gold and GDX getting taken out?

Jordan Roy-Byrne kicks off today by sharing his thoughts on the recent spikes and now pullbacks in gold. We also address the recent pullback in GDX. The overarching main question we address is if the recent highs in gold and GDX will be broken in the near term.

Click here to visit Jordan’s site and follow along with his technical commentary and trading.

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Comments:
  1. On January 16, 2020 at 7:39 am,
    OOTB Jerry says:

    The Germans are being contained on their purchases of gold……..

    • On January 16, 2020 at 10:43 am,
      OOTP says:

      Yes and now. It’s being called a war on gold, but that isn’t quite right. It’s a war on anonymity. You can buy, without limits, all the gold you want, but a record with your name on it will be kept. So the fear is that down the road the government could come to you and say: Hey we need that gold. Hand it over and we’ll give you paper in return. Or they could impose punitive “windfall taxes” on gold if you try to resell it, or a wealth tax, if it were to skyrocket.

      • On January 16, 2020 at 10:44 am,
        OOTP says:

        “Yes and no”, it should have said.

      • On January 16, 2020 at 11:00 am,
        OOTB Jerry says:

        Interesting , ….concerning your comments.
        I read or heard…….that Germans could only purchase $2000 , in lieu of $10,000, not sure if, that was totally, or just at each time of purchase..
        Either way……the idea, is the out right restriction and maybe , as you say the tracking, which is a switch, and that means , something is up……jmo

        • On January 16, 2020 at 11:43 am,
          Silverdollar says:

          Jerry:
          I have often thought that the possibilities for the German Gov’t were exactly the plan of the Chinese government when they were encouraging their citizenry to purchase gold. It cost the gov’t nothing but was available for their use in the future. Remember when S. Korea had it’s issues 20+ years ago, their citizenry freely gave their gold to the national effort? I don’t think Americans (those few who own gold) would be so generous to their government appealing for help! jmo

          • On January 16, 2020 at 11:48 am,
            OOTB Jerry says:

            I do not think , gold bugs are going to give the SCAMMERS any of their gold….
            The cabal needs to get a hair cut…..by a DEBT JUBILEE……..

          • On January 16, 2020 at 12:32 pm,
            b says:

            In Calgary, you need to provide identification for any gold purchase over $3000.00

            Selling requires identification and proof of residence.

        • On January 16, 2020 at 1:02 pm,
          irishtony says:

          Jerry…Here you go , all you need to know about Germanys reason for this new law.
          But money laundering is not the reason….its so they will know where to go when they want to steal it from Joe Public.
          https://www.zerohedge.com/markets/we-are-being-overrun-german-government-escalates-its-war-gold

          • On January 16, 2020 at 1:35 pm,
            OOTB Jerry says:

            Thanks Tony……..Govt knows where to get the gold….if, they know the citizens have 9000 tons……People at least know there is 9000 tons….I bet the American treasury does not have the 8000 plus tons at Ft Knox , they have kept the Americans in the dark since 1956….No one has seen the gold…..What a Joke….

  2. On January 16, 2020 at 8:23 am,
    Paul says:

    Jordan, you say you see correction/consolidation in gdx in short term but in past interview last month you were very bullish for miners in 2020, I assume you still are but not until 2nd half of year or maybe going into last qtr. ??

  3. On January 16, 2020 at 9:29 am,
    Fritz Bender says:

    I know our economy is nowhere near like Venezuela’s. However, I cannot get that parabolic chart that was a result of currency devaluation. Have we entered into a similar situation finally?

    • On January 16, 2020 at 9:38 am,
      Matthew says:

      The masses don’t know history or economics so they will insist on “doing” before they learn anything. So Venezuela is in America’s future to some degree but San Franshitsco for all is coming first.

      • On January 16, 2020 at 11:30 am,
        Silverdollar says:

        Matthew:
        I just received this article from my Son, who is 38 and recently retired. He did well with income and doesn’t spend all he makes. However, we see the future totally different when it comes to finances. I’m afraid he buys into the BS espoused by articles like this one: https://www.marketwatch.com/story/stop-worrying-about-where-the-stock-market-goes-from-here-and-read-this-post-2020-01-16.
        Comments please.

        • On January 16, 2020 at 11:58 am,
          OOTB Jerry says:
        • On January 16, 2020 at 1:23 pm,
          Matthew says:

          I’m with you in spirit because I believe your instincts will be proven correct in reality, i.e., stocks versus real money, gold. However, in “nominal” fiat-dollar terms (fantasy land), the article, and your son, could be correct. The dollar is going to come under increasing pressure in the years ahead in order to prop-up both stocks and bonds so the 2030 dollar will be just a shadow of the current dollar in purchasing power. That loss of purchasing power applies to stocks just like anything else. Notice that the Dow is approaching 3 times its year 2000 dollar value yet is still less than half of its year 2000 gold value.

          If your son understands that the gold price is by far the best measure of the dollar’s health (and CPI) over time, then he might see the folly in seeking nominal gains rather than real gains. I for one don’t like paying capital gains taxes on gains that aren’t real yet those who don’t understand money happily do so all the time while feeling like winners.

          Even most gold bugs have a blind spot when it comes to sound money. They believe that sound money maintains a stable purchasing power over time and that their money would buy what it used to years ago if not for the Fed. This is incorrect and the beneficiary of such a misconception is the Fed itself. And the government. The reality is that sound money gains in purchasing power over time since improvements in the way we do things happen continuously and make things both better and cheaper. For example, let’s compare the Ford Model T to a new Ford pickup. The Model T averaged roughly $600 during its 19 years of production (it cost more at the beginning of its run and less at the end). $600 back then was almost 30 ounces of gold. So, at $1450 per ounce (or even just $1000, for that matter), you could by a new Ford pickup today for 30 ounces of gold and it would be far superior in every single way. The 30 ounces buys a lot more pickup truck than it used to and the same goes for almost any other good or service since technology is deflationary (which is a GOOD thing, contrary to the propaganda). An ounce of gold was worth about 38 pounds of butter in the 1920s. Today, at $4 per pound, an ounce of gold is worth about 360 pounds of butter. So real money/gold didn’t sit still while the dollar fell for the last century, it went UP significantly. Who needs to take big risks in stocks when your savings do that? Steering the masses away from this reality, among many others, allows for more theft from every socioeconomic level in society without complaint while everyone is made worse off.

          So it is frustrating to watch half the population embrace politicians who promise to kill the golden goose by soaking “the rich.” The vast majority of rich people make life better for everyone by serving people’s needs so it’s ironic that the rich who would NOT be made worse off by the likes of Bernie are the very one’s who make life worse for everyone. The richest or the rich benefit by the destruction of main street’s self-made, entrepreneurial rich as it reduces competition. Less competition is a bad thing for society as a whole in multiple ways.

          Wealth is not finite which is why economic freedom elevates everyone. The nations with the most rich people have the richest poor people because it is a myth that “hoarding” wealth is a bad thing. Fighting for a level playing field (rule of law) and eliminating government favors for a special few would virtually eliminate real poverty.

          Sorry for the digressions.

          http://www.thepeoplehistory.com/20sfood.html

          • On January 16, 2020 at 1:51 pm,
            Excelsior says:

            Great post.

          • On January 16, 2020 at 2:12 pm,
            Silverdollar says:

            Wow, thanks so much for taking the time to create some wise comments and then sharing them with this board!

          • On January 16, 2020 at 3:57 pm,
            Matthew says:

            You’re welcome, Silverdollar.

          • On January 16, 2020 at 5:19 pm,
            JMiller says:

            Matthew,

            I do not disagree with what you said above but you would agree that gold has at times lost purchasing power over short, intermediate and may be even long-term time frames. For example, gold peaked at around $1900 an ounce in 2011 and fell to around $1050 an ounce by the end of 2015. Would you agree that gold lost purchasing power in that time period?

            Also people have said that gold maintains it’s value over the long term, which your examples above show that it does that and even more. What would you consider to be long-term, meaning how many years minimum? Thanks.

          • On January 16, 2020 at 7:08 pm,
            Matthew says:

            Yes, gold’s purchasing power definitely does go down from time to time. Nothing goes straight up, but gold possesses the most stable value (not necessarily price) of any asset out there. The key to understanding the significance of gold versus the dollar is that its fluctuations occur within a very long uptrend (5,000 years?) whereas the dollar’s fluctuations occur within a very long downtrend.

            An interesting and important aspect of gold’s declines is that they tend to coincide with declines in raw materials/other commodities. So a given decline versus the dollar usually does not translate to a similar decline in purchasing power in the real world. Instead, a decline versus the dollar often just represents a missed opportunity. In other words, when gold falls versus the dollar, much of the fall is often due to a strengthening dollar rather than weakening gold (less so, of course where spikes are involved as in 2011).

            Today, gold is actually worth 32% more CRB than it was at its 2011 $1,923 peak and 152% more than at its 1980 $873 peak. Perhaps more surprising is that it was even worth more CRB when it hit $1,045 than when it hit $1,923. In fact, gold was worth 53% more oil in February 2016 (with gold between 1061 and 1128) than it was at $1,923 5 years earlier. So the dollar price of gold says a lot more about how the dollar is doing than how gold is doing. As with all paper claims, a lot of factors can have a big impact on market value at any time, which spells risk.

            As for defining the long term, that’s a tough one because it is so subjective. Should it be the length of the average career? I don’t know. But I do know that a significant allocation to gold is a very good idea for the stock investor who wants to buy and hold his stock positions “for the long haul” through the good times as well as the bad.

            I know a retired Swiss currency fund manager who holds nothing but gold and U.S. dollars, 50% in each. He’s not worried about a thing and I don’t blame him.

            Gold is up 75 fold versus the dollar since 1930 so a “constitutional” million bucks is now $75 million. Now we know why it used to be a big deal to have just one million dollars.

    • On January 17, 2020 at 1:21 am,
      Excelsior says:

      Lyn Alden Twitter @LynAldenContact

      “The Fed added another $15 billion in treasuries to its balance sheet this week while continuing to decrease its holding of mortgage-backed securities.”

      “It’s not a year-end issue. It’s about financing the U.S. deficit during a lack of major buyers for those treasuries. ”

      https://twitter.com/LynAldenContact/status/1217928124819746816

  4. On January 16, 2020 at 10:34 am,
    Tom says:

    long KNSA

  5. On January 16, 2020 at 11:03 am,
    OOTB Jerry says:
  6. On January 16, 2020 at 2:21 pm,
    markedtofuture says:

    Thread by @drawandstrike: Amazing. The Democratic Party just suicided with it’s eyes wide open. Trump gets the Senate trial he wants, where hfy and expose all the Ukraine corruption Rudy Giuliani found. Remember, people STILL think Rudy G is just BLUFFIN…

    https://threadreaderapp.com/thread/1217515998410088449.html

  7. On January 16, 2020 at 2:39 pm,
    Miklo says:

    Doc, whats your take on WDO now. It got hit really hard yesterday and today we saw a great swing. You said it probably would hit 8,3-ish. Do you still Believe that?

    I am not a sub to Jordans newsletter but I am almost certain he was referring to WDO.

    Cheers!

    • On January 16, 2020 at 3:35 pm,
      Excelsior says:

      Robert Cohen, 1832 Asset Management:

      In a volatile gold market, “my job as a good stock picker is to own the stocks that I like to own with or without political events going on in the world.”

      “In North America, one of his favorite exploration plays is Great Bear Resources Ltd. K92 Mining Inc., SilverCrest Metals Inc., Mag Silver Corp. and Wesdome Gold Mines Ltd. are among other stocks that he likes.”

      https://www-bloomberg-com.cdn.ampproject.org/c/s/www.bloomberg.com/amp/news/articles/2020-01-15/gold-s-rally-seen-plowing-on-lifting-already-monster-cash-flow

    • On January 16, 2020 at 5:09 pm,
      Matthew says:

      The short term looks risky to me. It will obviously help if gold begins to move but I bet it will still underperform its peers for awhile. It is just very overbought.
      https://stockcharts.com/h-sc/ui?s=WDO.TO&p=W&yr=8&mn=8&dy=0&id=p91555661203&a=714149815

    • On January 16, 2020 at 7:49 pm,
      RICHARD/DOC says:

      Miklo, this is what you have to watch out for now. WDO is sitting right now on it’s 50 day SMA and EMA. The next 2 weeks are critical for it. If it closes a couple of times below these levels, it’ll probably correct for some time.

      • On January 17, 2020 at 12:07 am,
        Miklo says:

        Thanks guys!
        Well, as usual I did not exit at 10+ but at 9,04. My timing really sucks sometimes.
        I heeded Docs warning though and I will probably re-enter around 8. I guess it will see same development as Kinross and AGI; they both fell really hard and have been underperforming since.
        Do you guys see it below 8? Matts charts suggests that, the indicators sure are bearish…

  8. On January 16, 2020 at 3:33 pm,
    Excelsior says:

    An Information Advantage & Patience Can Lead to 10-Baggers in Microcaps

    @LucTenHave interviewed by Jordan Roy-Byrne •Jan 15, 2020 #AudioInterview

    “Self-taught speculator Luc Ten Have scours micro-caps and penny juniors to find companies with among other things, the right management and share structure. He then is extremely patient. He discusses the importance of share structure, management and how one can get an edge. He provides names of some companies he may own or is interested in.”

    https://www.youtube.com/watch?v=_VvJA_b9Er4

    • On January 16, 2020 at 6:05 pm,
      Dick Tracy says:

      Ex, I think this video provides some good advice for anyone starting an investment career in junior mining stocks.It all boils down to being a contrarian, easier said than done. DT

      • On January 16, 2020 at 11:53 pm,
        Excelsior says:

        Agreed DT.

        LucTenHave is one of the most savvy stock pickers and Jr miner investors over at ceo.ca. I’ve been reading his posts and following his trading successes since 2016 over there, and feel he is genuine, realistic, and an all-around professional and kind gentleman. I always take time to read his posts, picks, and sector or macro thoughts.

  9. On January 16, 2020 at 5:10 pm,
    cfs says:
  10. On January 16, 2020 at 6:31 pm,
    markedtofuture says:

    DoJ Begins Second Probe Into Comey’s History Of Leaking Classified Intel

    The latest investigation involves material that Dutch intelligence operatives siphoned off Russian computers and provided to the United States government. The information included a Russian analysis of what appeared to be an email exchange during the 2016 presidential campaign between Representative Debbie Wasserman Schultz, Democrat of Florida who was also the chairwoman of the Democratic National Committee at the time, and Leonard Benardo, an official with the Open Society Foundations, a democracy-promoting organization whose founder, George Soros, has long been a target of the far right.

    In the email, Ms. Wasserman Schultz suggested that then-Attorney General Loretta E. Lynch would make sure that Mrs. Clinton would not be prosecuted in the email case. Both Ms. Wasserman Schultz and Mr. Benardo have denied being in contact, suggesting the document was meant to be Russian disinformation.

    https://www.zerohedge.com/political/doj-begins-second-probe-comeys-history-leaking-classified-intel

  11. On January 16, 2020 at 6:38 pm,
    markedtofuture says:

    BREAKING:

    FBI & ICE investigators confirmed they’re looking into criminal accusations against Ilhan Omar.

    Charges include perjury, immigration fraud, marriage fraud, tax fraud, federal student loan fraud, & bigamy.

    She’s refusing to answer any questions or hand over documents.

    16 Jan 2020

    https://twitter.com/Education4Libs/status/1217904262145101825?s=09

  12. On January 16, 2020 at 11:49 pm,
    Excelsior says:

    There Is Still Time To Get Silver

    Hubert Moolman – Gold South Africa (01/16/2020)

    “Silver appears to be very close to an even bigger move higher. Most of the hard work of the double-bottom since 2015 is done.”

    “The coming leg higher is the one that will likely take prices to all-time highs. Below, is a long-term Silver chart:”

    https://hubertmoolman.wordpress.com/2020/01/16/there-is-still-time-to-get-silver/

  13. On January 17, 2020 at 1:14 am,
    Excelsior says:

    One Silver Jr Producer that is continuing to go through a fundamental transformation is (SCZ) (SZSMF) Santacruz Silver. For the last few years they’ve been one of the higher cost silver producers, but have done a lot to correct things the last few years.

    > In 2018, they divested 3 non-core properties to First Majestic, Marlin Mining (transferred over to Sailfish Royalties), and Americas Gold & Silver, so they could pay down dept, which was a wise move that they got little credit for at the time.

    > In 2019, SCZ had a great year in stock performance, but that is because they started dropping their AISC from the mid $30’s down into the low $20’s (and in Q2 had the AISC down in the mid $18’s) as the Silver price shot up from $14 to $19, bringing them closer to parity & future profitability.

    > In the second half of 2019, they purchased Carrizal Mining (private company) over Q3 and Q4, which gave them immediate production from a 3rd and more economic Silver mine in Mexico – Zimapan (which Carrizal had lease deal to operate). Santacruz is currently working with Penoles on a deal by year-end to just buy that Zimapan mine from them outright, and if successful, I’m guess Penoles will just retain a NSR on the property moving forward.

    > While most investors are only focusing on the net loss in Q3 and that is big part of why the stock sold back off through year end, they are missing the forest for the trees.
    Yes, Santacruz is still slightly underwater at present levels, but Zimapan added much more profitable ounces in a big way in Q3 and that is when Santacruz only owned 50% of Carrizal. By Q4 SCZ owned 100% of Carrizal and will be able to count 100% of the production from the Zimapan mine. That should help out for Q4 numbers, but definitely on a move-forward basis in 2020.

    In addition, the 2 older mines that SCZ operates got major facelifts in 2019. One thing that hurt the Q3 numbers for Rosario was 1-time investment in new equipment (but that was a 1 and done situation), and they’ve also changed the blending and veins being mined at Veta Grande for Q4 and moving into 2020. Again, due to recency bias, most investors just see those as higher cost mines, but both of those changes will help in Q4, but definitely will make an impact for 2020 and moving forward.

    ____________________________________________________________________________

    Here are a few of the passages discussing these improvements from the reporting on Q3 2019 numbers:

    Carlos Silva, COO of Santacruz, stated, “The 50% acquisition of Carrizal Mining in early Q3 of 2019 made an immediate impact to our production profile and bottom line by producing 606,589 silver equivalent ounces and generating mine operating earnings of $1 million. Further, consolidated production for Q3 2019 set a new quarterly record of 952,832 silver equivalent ounces. Consolidated production for Q4 2019 is expected to significantly increase as a result of Santacruz acquiring the remaining 50% of Carrizal Mining in early October.”

    “The Rosario increased unit cost is largely the result of a one-time charge for certain mine operations expenditures. Management is confident that Rosario will now begin to show improved operating results moving forward.”

    “We expect Rosario to become a consistent cash flow contributor by Q1 2020 and have changed the operating plan at Veta Grande with the expectation of further operating improvements.”

    “The Company expects a continued improvement to operating results moving forward at all three mines. At Veta Grande mineralized material from the Garcia mine and Armados vein is now being milled individually on a campaign basis and not blended. It is anticipated that metal recoveries will improve from this processing change and operating results improve.”

    http://santacruzsilver.com/s/news_releases.asp?ReportID=862060