Brien Lundin Commentary – Fri 28 Feb, 2020

After yesterday’s bloodbath for metals stocks here’ are some investing thoughts

Brien Lundin kicks off today by recapping the big selloff in precious metals stocks yesterday. It was major miners to juniors that all took a hit. Now it’s all about figuring out the best stocks and a good time to start buying.

Click here to visit the New Orleans Investment Conference website. I will be attending again this year and would love to have a beer with anyone in town.

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Comments:
  1. On February 28, 2020 at 5:52 am,
    OOTB Jerry says:

    Just another day in the salt mines……. 🙂
    Actually, gold is doing great……jmo

  2. On February 28, 2020 at 5:54 am,
    OOTB Jerry says:

    Anyone moaning here has not been around…the block….

  3. On February 28, 2020 at 6:05 am,
    OOTB Jerry says:

    Mom and pop…..just got a dose of reality…..the last few days…..anyone that got surprised this week was not paying attention for the last couple of years…jmo

    • On February 28, 2020 at 6:35 am,
      Ebolan says:

      Is the entire Neo-Feudal, Casino, Gulag, Plantation, Fractured Reserve, Debt Based economic outhouse finally collapsing??? All the “corrections” in the last few years have done is add more stories to the outhouse.

      • On February 28, 2020 at 6:40 am,
        OOTB Jerry says:

        I want the top floor……I understand there is gravity to this situation…. 🙂

  4. On February 28, 2020 at 6:16 am,
    OOTB Jerry says:
    • On February 28, 2020 at 6:23 am,
      OOTB Jerry says:

      Europe is going to be in a real hurt……more hurt ….this is really sad….
      MIC…..McCain….Kerry……Obama…Bush…Take the blame…

      • On February 28, 2020 at 6:32 am,
        Ebolan says:

        Time for a peasant revolt….damn Cantillon Effect

        https://youtu.be/uBa10O9tleA?t=53

        • On February 28, 2020 at 8:36 am,
          OOTB Jerry says:

          FREAKING GOOD tape………….everyone should watch this one….

          • On February 28, 2020 at 8:42 am,
            OOTB Jerry says:

            Boomers are going to go BR…….. DEBT is going to swallow them whole……..

          • On February 28, 2020 at 11:00 am,
            Ebolan says:

            It certainly is a corrupt world we live in…no denying that…yet sheeple….clueless.

    • On February 28, 2020 at 6:29 am,
      Ebolan says:

      Will the entire Neo-Feudal, Casino, Gulag, Plantation, Fractured Reserve, Debt Based economic outhouse is burning down…and on Trumpy’s watch…so we get commie burnie…see you at Dow 10,000????

      • On February 28, 2020 at 6:36 am,
        OOTB Jerry says:

        The Dow will cease to exist…….under Burnie……..there will be no money to invest….
        Did the Soviet Union have a stock market….State Owned….but, the last 3000 points up.of this market, no wait…everything from Dow 10,000 has been manipulated up…..free fake fed notes from the FED Bought and paid for……so, what is the difference……NO, fair market value…all hype….

  5. On February 28, 2020 at 6:31 am,
    OOTB Jerry says:
    • On February 28, 2020 at 6:32 am,
      Ebolan says:

      Watch out for that OOTP….???

      • On February 28, 2020 at 6:38 am,
        OOTB Jerry says:

        wonder what the P stands for………poo….or party…..lol

        • On February 28, 2020 at 6:52 am,
          Ebolan says:

          Must be from Commiefornia…streets paved with feces…

  6. On February 28, 2020 at 6:41 am,
    OOTB Jerry says:

    Dang…………….Silver just broke $16.999999999999999

    • On February 28, 2020 at 6:42 am,
      OOTB Jerry says:

      I stated earlier………this is a good time to buy phyz silver……jmo……..J THE LONG.. 🙂

    • On February 28, 2020 at 7:20 am,
      OOTB Jerry says:

      See DIck’s advice below…….I just got overly excited….I have been waiting to purchase some more silver at lower prices…… 🙂
      Now, DT, has talked me out of it…. 🙂

      • On February 28, 2020 at 7:24 am,
        OOTB Jerry says:

        I say this………because DICK, was the only one I recall ……that called a top of silver at $49……….only one that publicly reported it……forget MORGAN….

        • On February 28, 2020 at 6:57 pm,
          Dick Tracy says:

          Jerry, I like silver and platinum phyz, I just got my daughter to buy some of each. DT

  7. On February 28, 2020 at 6:53 am,
    David says:

    Worst opening of miners I have seen in 20 years. I suspect orchestrated aided by the TSX shutdown yesterday. TSX probably stirred up some panic that the algos willing to help along. Wonder how the Bogus COT is looking. Great day for paper metals fabricators.

    • On February 28, 2020 at 6:59 am,
      OOTB Jerry says:

      Bogus COT……spot on……..what a joke……

    • On February 28, 2020 at 7:38 am,
      Temple says:

      https://tmx.com/newsroom/press-releases?id=818

      Geez, it’s bad enough Da Boyz came out of hibernation and slammed the PM’s back down…but torpedoing a whole exchange?

      • On February 28, 2020 at 7:47 am,
        OOTB Jerry says:

        Hummm……..London Fix…….just on time…….
        I guess you did not read the report that Rickard put out this week…..

        • On February 28, 2020 at 7:49 am,
          OOTB Jerry says:

          Hope you are not claiming there is a real market ….COMEX , CME……hummm

        • On February 28, 2020 at 9:17 am,
          Temple says:

          Rickards…I’m still waiting for that breathtaking prediction to come true…that on Sept. 30, 2016…at 4:00 pm Eastern, no less…the US dollar would cease to exist and I’d have to use a new I.M.F. currency to pay my bills.

          • On February 28, 2020 at 9:26 am,
            OOTB Jerry says:

            So, are you saying this is a real market……and not controlled…..

          • On February 28, 2020 at 9:35 am,
            OOTB Jerry says:

            Does not make any difference…..to me at this point……..gold is going up….
            long term …..
            Richards has not been correct , on a few things…..Like everyone…..

          • On February 28, 2020 at 10:49 am,
            OOTB Jerry says:

            Just for fun………I am reposting ….
            https://dailyreckoning.com/how-gold-is-manipulated/
            I spoke to a PhD statistician who works for one of the biggest hedge funds in the world. I can’t mention the fund’s name but it’s a household name. You’ve probably heard of it. He looked at COMEX (the primary market for gold) opening prices and COMEX closing prices for a 10-year period.

            He was dumbfounded.
            He said statistically that’s impossible unless there’s manipulation occurring.

            I also spoke to Professor Rosa Abrantes-Metz at the New York University Stern School of Business. She is the leading expert on globe price manipulation. She has actually testified in gold manipulation cases.

            She wrote a report reaching the same conclusions. It’s not just an opinion, it’s not just a deep, dark conspiracy theory. Here’s a PhD statistician and a prominent market expert lawyer, expert witness in litigation qualified by the courts, who independently reached the same conclusion.
            Currently the price of gold is set in two places. One is the London spot market, controlled by six big banks including Goldman Sachs and JPMorgan. The other is the New York gold futures market controlled by COMEX, which is governed by its big clearing members, also including major western banks.

            In effect, the big western banks have a monopoly on gold prices even if they do not have a monopoly on physical gold.

            The easiest way to perform paper manipulation is through COMEX futures. Rigging futures markets is child’s play. You just wait until a little bit before the close and put in a massive sell order. By doing this you scare the other side of the market into lowering their bid price; they back away.

            That lower price then gets trumpeted around the world as the “price” of gold, discouraging investors and hurting sentiment. The price decline spooks hedge funds into dumping more gold as they hit “stop-loss” limits on their positions.

            A self-fulfilling momentum is established where selling begets more selling and the price spirals down for no particular reason except that someone wanted it that way. Eventually a bottom is established and buyers step in, but by then the damage is done.

            Futures have a huge amount of leverage that can easily reach 20 to 1. For $10 million of cash margin, I can sell $200 million of paper gold.

            Hedge funds are now large players in the gold market. To a hedge fund, gold may be an interesting market in which to deploy its trading style. To them, gold is just another tradable commodity. It could just as well be coffee beans, soybeans, Treasury bonds, or any other traded good.

            Hedge funds use what are called “stop-loss” limits. When they establish a trading position, they set a maximum amount they are willing to lose before they get out. Once that limit is reached, they automatically sell the position regardless of their long-term view of the metal.

            Perhaps they don’t even have a long-term view, just a short-term trading perspective. If a particular hedge fund wants to manipulate the gold market from the short side, all it has to do is throw in a large sell order, push gold down a certain amount, and once it hits that amount, these stops are triggered at the funds that are long gold.

            Once one hedge fund hits a stop-loss price, that hedge fund automatically sells. That drives the price down more. The next hedge fund hits its stop-loss. Then it sells too, driving the price down again. Selling gathers momentum, and soon everyone is selling.

            Another way to manipulate the price is through gold leasing and “unallocated forwards.”

            “Unallocated” is one of those buzzwords in the gold market. When most large gold buyers want to buy physical gold, they’ll call JPMorgan Chase, HSBC, Citibank, or one of the large gold dealers.

            They’ll put in an order for, say, $5 million worth of gold. The bank will say fine, send us your money for the gold and we’ll offer you a written contract in a standard form. Yet if you read the contract, it says you own gold on an “unallocated” basis. That means you don’t have designated bars.

            There’s no group of gold bars that have your name on them or specific gold bar serial numbers that are registered to you.

            In practice, unallocated gold allows the bank to sell the same physical gold ten times over to ten different buyers.

            It’s no different from any other kind of fractional reserve banking. Banks never have as much cash on hand as they do deposits. Every depositor in a bank thinks he can walk in and get cash whenever he wants, but every banker knows the bank doesn’t have that much cash. The bank puts the money out on loan or buys securities; banks are highly leveraged institutions.

            If everyone showed up for the cash at once, there’s no way the bank could pay it. That’s why the lender of last resort, the Federal Reserve, can just print the money if need be. It’s no different in the physical gold market, except there is no gold lender of last resort.

            Banks sell more gold than they have. If every holder of unallocated gold showed up all at once and said, “Please give me my gold,” there wouldn’t be nearly enough to go around. Yet people don’t want the physical gold for the most part.

            There are risks involved, storage costs, transportation costs, and insurance costs. They’re happy to leave it in the bank. What they may not realize is that the bank doesn’t actually have it either.

            Gold holders should expect these games to continue until a fundamental development drives the price to a permanently higher plateau.

            How does the individual investor stand up against such forces?

            In the short run, you can’t beat them, but in the long run, you always will, because these manipulations have a finite life.

            Eventually the manipulators run out of physical gold, or a change in inflation expectations leads to price surges even governments cannot control. There is an endgame.

            History shows manipulations can last for a long time yet always fail in the end. They failed in the 1960s London Gold Pool, with the United States dumping in the late 1970s, and the central bank dumping in the 1990s and early 2000s. The gold price went relentlessly higher from $35 per ounce in 1968 when the London Gold Pool failed to $1,900 per ounce in 2011, the all-time high.

            Price manipulation always fails. And the dollar price of gold will resume its march higher. The other weakness in the manipulation schemes appears in the use of paper gold through leasing, hedge funds, and unallocated gold forwards.

            These techniques are powerful. Still, any manipulation requires some physical gold. It may not be a lot, perhaps less than 1% of all the paper transactions, yet some physical gold is needed. The physical gold is also rapidly disappearing as more countries are buying it up. That puts a limit on the amount of paper gold transactions that can be implemented.

            My advice to investors is that it’s important to understand the dynamics behind gold pricing. Understanding these dynamics lets you see the endgame more clearly and supports the rationale for owning gold even when short-term price movements are adverse.

            Gold will win in the end.

            R

          • On February 28, 2020 at 11:10 am,
            OOTB Jerry says:

            Here is another article………..Maybe you did not see………CME RAISING MARGINS
            https://www.zerohedge.com/news/2020-02-28/gold-and-silver-prices-did-not-rise-back-coronavirus-threat-and-quiet-act-raising
            Chicago Mercantile Exchange (CME) raising margins on gold and silver futures.

          • On February 28, 2020 at 11:12 am,
            OOTB Jerry says:

            Now here is the interesting thing about this event. This event was nowhere to be reported in the mass media. Try Googling, “CME raises margins on gold futures, silver futures”, searching both the web and the “news” categories
            HUMMMMMMMMMMMM…….boyz like to have fun………

          • On February 28, 2020 at 11:16 am,
            OOTB Jerry says:

            This is a concern to me. Gold and silver margins were still at the lower levels on 13 January 2020 and then raised to the higher levels when I checked them again on 25 February 2020. The exact details of this gold and silver margin hike should be easy available online and also available at the CME’s website, but instead, opacity, not transparency, seems to be the rule of law when it comes to precious metal markets. As the CME raised margins on silver futures a ridiculous five times by a massive 68% in just nine trading days between April 26th and May 9th in 2011 to collapse silver prices during a raging silver bull that carried silver prices to $50 an ounce,

          • On February 28, 2020 at 11:18 am,
            OOTB Jerry says:

            OK………..everyone back to sleep……….. 🙂
            Need to rewrite my new chapters in the KER HISTORY BOOK…….

  8. On February 28, 2020 at 6:57 am,
    OOTB Jerry says:

    SMASH >>>>>>Stock market is in a shock………
    I bet it hits a $1000 down at close…Friday, and the week end surprises….

    • On February 28, 2020 at 1:41 pm,
      David says:

      Jerry:
      Very interesting stuff. Too bad regulators don’t care about manipulation…or should I say their appointed bosses.

      • On February 28, 2020 at 2:12 pm,
        OOTB Jerry says:

        Hello David……….thanks…………
        I just like them to know , we know…… 🙂

  9. On February 28, 2020 at 7:01 am,
    Dick Tracy says:

    I’m not sure what day the peak of the market had actually been reached. The enormous majority fully expected the Big Bull Market to go on and on. I was hoping I could spend the winter lolling on the sands of Palm Beach. Drinking corona at Freddy’s Anchor Bar, only the stool got pulled away from me. DT

  10. On February 28, 2020 at 7:08 am,
    Ebolan says:

    Feral Reserve….cut, cut, cut….print, print, print…will do nothing but make everything worse…

  11. On February 28, 2020 at 7:09 am,
    b says:

    So does this count as a “bloodbath”?

    Undoubtedly a good time to buy.

    Might be wise to wait till it ends tho, I dont know, this is my first evisceration.

  12. On February 28, 2020 at 7:10 am,
    Dick Tracy says:

    Beware of having a hair of the dog that bit you! Monday the markets might settle down and show a little to the upside, it’s Tuesday when you might hear a deadly silence in the morning and then a stampede of selling once again. The markets are very cruel, be careful at this time, don’t buy after the big dipper or you might be seeing stars. DT

    • On February 28, 2020 at 7:12 am,
      Ebolan says:

      May you live in interesting times…never a dull moment…

    • On February 28, 2020 at 7:17 am,
      OOTB Jerry says:

      Sound advice……….Dick the star gazer

  13. On February 28, 2020 at 7:21 am,
    David says:

    Bought a few Irving @ $1.43. I am running out of things to swap. Running out of miners with profits. Now down over30% overall. Now it looks lime a banker circus.

  14. On February 28, 2020 at 7:36 am,
    b says:

    cdn gold has lost $60…..so far.

  15. On February 28, 2020 at 7:39 am,
    b says:

    Wasnt it Egon Greyerz saying EVERYTHING will tank.

    Looks like he might have had an idea as to what he was talking about.

  16. On February 28, 2020 at 7:42 am,
    OOTB Jerry says:

    LONDON FIX just went in………….gold smashed down…..

  17. On February 28, 2020 at 7:44 am,
    Bill says:

    I don’t have much time to hang here…I did say last week a melt down comith incl PM shares. Hope you are all safe…

    • On February 28, 2020 at 7:50 am,
      OOTB Jerry says:

      Yes……..and Safe and sound……..thanks for the thoughts……..OOTB

  18. On February 28, 2020 at 7:56 am,
    Dick Tracy says:

    The professional analysts like Eric Sprott and Rick Rule are in the sauna. You can be a billionaire one morning and selling apps the next week. Those margin calls must be lighting up the switchboard. LOL! DT

    • On February 28, 2020 at 8:08 am,
      OOTB Jerry says:

      Not a good day/week for a call from a friendly….margin caller…..lol

  19. On February 28, 2020 at 7:57 am,
    Ozibatla says:

    Red everywhere. Too much to discuss at this stage. See how it all looks at the close. Gold and silver just pummelled in this bloodbath the likes with which hasnt been seen since the 2013 takedown. Panic selling everywhere not seen since the GFC. Hold tight guys!

    • On February 28, 2020 at 8:04 am,
      OOTB Jerry says:

      Ditto……………HOLD TIGHT……….

  20. On February 28, 2020 at 7:59 am,
    Matthew says:

    I bought quite a bit of IPT at .345 and BBB at .12 so far.

  21. On February 28, 2020 at 8:07 am,
    Matthew says:
    • On February 28, 2020 at 8:08 am,
      Matthew says:
    • On February 28, 2020 at 8:17 am,
      Marlborough says:

      Thanks Matthew. How much lower do you think this will go? And do expect a rally higher at any point?

      • On February 28, 2020 at 8:17 am,
        Marlborough says:

        I am referring to AXU, not SILJ.

        • On February 28, 2020 at 8:54 am,
          Matthew says:

          At 1.45, AXU is already up 18% of its low and there are good signs throughout the sector so we could easily already have the lows in place.
          How gold does from here is what matters most for all miners since silver moves with gold (whether it underperforms or not).

          • On February 28, 2020 at 9:21 am,
            Marlborough says:

            Thank you, Matthew.

        • On February 28, 2020 at 8:57 am,
          Matthew says:

          AG has filled that big June gap so I have to wonder if GDX will do the same.
          https://stockcharts.com/h-sc/ui?s=AG&p=D&yr=0&mn=11&dy=0&id=p84571225325

    • On February 28, 2020 at 5:03 pm,
      Excelsior says:

      At the end of the day I bought more AXU, AG, CDE, USAS, and some JNUG (which I would not normally hold over a weekend, but JNUG has gapped down so hard the last few days, that I felt like it was worth the high risk speculation).

      We’ll see how these trades go…

  22. On February 28, 2020 at 8:36 am,
    Dick Tracy says:

    There is no doubt that speculators who had looked on the prices of two weeks ago as too high are now deciding to buy again. I think for me I will sit this out, so much money has already been lost that surely it could not go on much longer! Don’t take what anyone has to say at face value we all have agendas. Think for yourself! LOL! DT

    • On February 28, 2020 at 5:08 pm,
      Excelsior says:

      DT I was a buyer of a few stocks at the end of trading, but mentioned I’d be buying when there was blood in the streets. My agenda is to buy in to weakness and sell into strength, but will admit that buying today is equivalent to trying to catch a falling knife. I’ll be watching the market open closely to mitigate trades that move against me, but if things pop, then I intend to scalp a few profits.

      • On February 28, 2020 at 6:45 pm,
        Dick Tracy says:

        Good plan Ex, you are a smart guy! I remember 2008 when I held and I would have been much better off selling at the beginning. Now I believe the crash will last longer and be deeper. DT

        • On February 28, 2020 at 7:15 pm,
          Excelsior says:

          I still believe that overall the PMs are in a bull market, and that despite this “sell everything” week being the worst one I can remember since the nosedive in 2013, that medium term and longer term the metals and miners will still outperform.

          Also the FED will be trying to prop up the markets next week and there are many rumors they may cut rates to ease the tension. Some of the US equities rallied at the end of the day after being down much more earlier on, and the NASDAQ closed barely in the green. I’m not sure we have another 2008 quite yet, but if the next rally fails, then it will be time to move assets out of the markets and get more defensive.

          I’m expecting a pop to start the week, and would like to think the selling in the miners will be seen as overdone at this point once people have the weekend to cool their jets. These snapback rallies can be nice trades for quick gains. Then again, I’m not sure how smart I am and may get my rear-end handed to me on a platter, but it’s a risk I’m willing to take.

          • On February 29, 2020 at 10:01 am,
            David says:

            Did some lucky trades that maybe lasted a few hours, but when the beat down came, I looked to add to IRV and LIO. I had some gains in Ely and took from it over a couple of days and added to those mentioned. Then I started to think about more Ely with its drop and bought Thurs not knowing there was a halt in Ely for news some time Friday or Thurs afternoon. To my dumb luck all 3 moved forward Friday. However, all the rest of my portfolio was repeatedly beat with a stick until they bled all over everything. Sometimes it is like golf and you only remember the time you got a “birdie”. Monday maybe my wife will be beating me with a stick.. again.

  23. On February 28, 2020 at 8:38 am,
    Ebolan says:
  24. On February 28, 2020 at 10:07 am,
    OOTB Jerry says:

    I am printing this on the virus…………there is a part that says……..Mulvaney also slammed the media for painting a narrative that the Trump administration is “scrambling” to contain the virus, noting that he briefed Congress along with top health officials six weeks ago. He accused the media of ignoring coronavirus until now, according to The Hill.
    NOTICE IT SAYS 6 WEEKS AGO……….
    I printed an article over the weekend………..which said……Gates knew about it 6 Weeks ago………..
    MAGA……hummmmmmmm
    https://www.zerohedge.com/political/mulvaney-says-coronavirus-could-disrupt-schools-transportation-says-press-peddling-false

    • On February 28, 2020 at 10:09 am,
      OOTB Jerry says:

      What was happening 6 weeks ago in the stock market………..hummmmm

  25. On February 28, 2020 at 11:23 am,
    Ebolan says:
  26. On February 28, 2020 at 1:17 pm,
    Ebolan says:

    Well boys, quite a week.

    Suckers and Poors down every day and worst week since the financial crisis…What in your opinion does next week have in store???

  27. On February 28, 2020 at 1:42 pm,
    CaliJoe says:

    What I’m seeing is a huge buy of GDX at close. Around 40 million shares

    • On February 28, 2020 at 3:26 pm,
      Matthew says:
      • On February 28, 2020 at 7:19 pm,
        Excelsior says:

        It was the same thing in GDXJ with a huge gap down on very high volume.

        I bought some JNUG at the end of the day, which I normally would not do, as it is very balsy to hold into the unknown, but I’m expecting a snapback rally at the beginning of next week and aim to scalp some profits for a quick swing-trade.

  28. On February 28, 2020 at 3:28 pm,
    RICHARD/DOC says:

    Well, I see GDX took out the January lows like I mentioned weeks ago. There will be tremendous buying opportunities again in the future. There is no hurry currently. Don’t catch a “falling knife”. It can be very painful.

  29. On February 28, 2020 at 5:00 pm,
    Bill says:

    Yup I warned gold stocks would get slaughtered. I hate gold bugs…they go down with the market. Out with the baby and bath water.

  30. On February 29, 2020 at 1:42 pm,
    OOTB Jerry says:

    Gold a Tier One Asset…….phyz……… some will wish they had it…… jmo