David Erfle - Gold Market Commentary – Fri 6 Mar, 2020

A trading strategy for when fear and panic hits the metals stocks

Dave Erfle kicks off today by sharing his recent trading strategy for gold and silver stocks when we saw that rush to cash at the end of last week. With the gold price significantly higher but stocks still lagging there are a couple fundamentals that Dave thinks you should be paying attention to.

Click here to visit Dave’s site and learn more about his newsletter.


Comments:
  1. On March 6, 2020 at 6:03 am,
    Covid Kid says:

    You boys are up awfully early…

    • On March 6, 2020 at 6:52 am,
      Dick Tracy says:

      You Snooze You Looze. zzzzzzzzzzzzzzzzz! DT

      • On March 6, 2020 at 7:15 am,
        Covid Kid says:

        Hey, I’m an insomniac…so I never snooze or looze….

        • On March 6, 2020 at 11:00 am,
          OOTB Jerry says:

          EBO…………did you see this
          JPMorgan CEO Jamie Dimon recovering after emergency heart surgery

        • On March 6, 2020 at 11:00 am,
          OOTB Jerry says:

          EBO…………did you see this
          JPMorgan CEO Jamie Dimon recovering after emergency heart surgery
          NEW YORK (Reuters) – JPMorgan Chase & Co CEO and Chairman Jamie Dimon is recovering from emergency heart surgery done on Thursday morning, with two deputies taking over as he recuperates, the largest U.S. bank said.

          • On March 6, 2020 at 11:03 am,
            OOTB Jerry says:

            Silver hoard to much for a weak heart…………… 🙂
            THE Pressure is on………………

          • On March 6, 2020 at 11:05 am,
            OOTB Jerry says:

            He also battled throat cancer after a diagnosis in 2014 that sidelined him for several months………….
            HE is not going to be able to tell where the hoard is hidden…..

          • On March 6, 2020 at 11:27 am,
            Ebolan says:

            I posted on it yesterday. Said I you can be guaranteed he will get the best treatment money can buy…just like Lord Blanfeind and his cancer…these guys will live forever…banksters never die…they don’t even fade away…they just suck your blood until you die.

          • On March 6, 2020 at 11:27 am,
            Ebolan says:

            Did not know about the throat cancer, though.

          • On March 6, 2020 at 11:28 am,
            Ebolan says:

            Did not know about the throat cancer, though.

          • On March 6, 2020 at 11:29 am,
            Ebolan says:

            Dang…energy getting annihilated…low energy day…and I already thought there were too many low energy days…

          • On March 6, 2020 at 11:36 am,
            David says:

            I question the heart part.

          • On March 6, 2020 at 11:41 am,
            OOTB Jerry says:

            Arab Oil……getting sheikhed…………..

  2. On March 6, 2020 at 7:02 am,
    OOTB Jerry says:

    https://www.youtube.com/watch?v=wif9cUyEiw4
    CRASH,,,,,,,,,
    Gregg Mannorino

    • On March 6, 2020 at 7:03 am,
      OOTB Jerry says:

      Margin call…….check for a good buy on silver…… 🙂

      • On March 6, 2020 at 7:05 am,
        OOTB Jerry says:

        Phyz gold………going up…….said that last week………
        Silver is still controlled……by JPM.

        • On March 6, 2020 at 7:26 am,
          Dick Tracy says:

          Jerry, the western governments are starting to realize that some sort of gold standard will return. I think they are increasing their purchases of gold bullion in anticipation of this and are accumulating quietly. DT

          • On March 6, 2020 at 7:57 am,
            OOTB Jerry says:

            DT…….I think you are spot on………..

      • On March 6, 2020 at 7:17 am,
        Dick Tracy says:

        Chen Lin said that a big hedge fund is going under and we would find out next week. He was looking at trader’s charts and the surge in Palladium last week he believes was caused by short covering of palladium. Hedge Funds are honeycombed with each other, Hedge Fund “A” owns part of Hedge Fund “B” and Hedge Fund “D” owns “C” and “A”. They are so intertwined that each one is dependent on the other and their holdings are so vast that they don’t know what they have. When one falls many others start to break apart, and so goes the waterfall. DT

      • On March 6, 2020 at 8:53 am,
        Dick Tracy says:

        The silver to gold ratio is 97 to 1, the highest it has ever been.

    • On March 6, 2020 at 7:13 am,
      OOTB Jerry says:

      Gregg has been spot on concerning bond yields……..for over a year……
      https://www.zerohedge.com/markets/us-stocks-crash-red-week-treasury-yields-are-utterly-collapsing

      • On March 6, 2020 at 7:41 am,
        Paul says:

        David inflation is what will be the ultimate driver for gold miners next bull mkt breakout.
        With all the lowering of rates, QE type infusion, looking out in future we’re will we start to see inflation start to show itself. 2 years???

        • On March 6, 2020 at 11:48 am,
          OOTB Jerry says:

          David????????me not him………lol

    • On March 6, 2020 at 7:51 am,
      cfs says:

      Was not the Great Crash of 1929 blamed on lack of money injected into the system?

      The stock market is too high by historic measurs and, if enough people panic, will go below what it is actually worth.

      Such is life. But as oil goes down a lot, mining becomes more profitable.

      Anyone know of PDAC podcasts?

  3. On March 6, 2020 at 7:09 am,
    OOTB Jerry says:
    • On March 6, 2020 at 12:03 pm,
      Ebolan says:

      Low energy day. 🙂 But wait until all those shale plays go bust.

    • On March 6, 2020 at 8:04 am,
      OOTB Jerry says:

      That would be one of those fuzzy math questions…….for the dead heads at msn…like really dumb….

      • On March 6, 2020 at 8:05 am,
        OOTB Jerry says:

        Funny , that most of the sheeple can not do simple math……..

  4. On March 6, 2020 at 7:40 am,
    Matthew says:

    This pullback is not surprising or bearish. Last night I said: I’d guess that today’s lack of leverage has to do with anticipation of a pullback after moving up every day this week so far and running into resistance:
    https://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=1&mn=1&dy=0&id=p52421086575&a=724732716

    • On March 6, 2020 at 8:15 am,
      Ozibatla says:

      Yep the pullback is not surprising… Especially when someone dumps $700 million in futures on market right before job numbers release. Insider trading???

      • On March 6, 2020 at 8:20 am,
        Matthew says:

        The resistance being hit on the chart above made a pullback highly likely in the miners regardless of gold futures action but the gold dump might add to the downside in the miners. If so, it’s nothing but a buying opp in my opinion.

  5. On March 6, 2020 at 8:27 am,
    Bill says:

    Gold is looking toppy, at least in the short term, while silver has not confirmed its moves for months now and general sentiment is very bullish with virtually everyone expecting that gold “has to” go up if coronavirus news gets worse or if stocks drop. Neither is true.
    A hair from going short here…makes sense for a good retrenchment to purge the bullishness..

    • On March 6, 2020 at 8:47 am,
      Matthew says:

      Bullishness was purged last week when miners got hammered and gold plunged $100. How many here were buying at the lows last Friday or any day after? Not many is my guess.

      The virus is meaningless to gold, we have the Fed gone wild because of exponential debt growth and that’s what really drives gold. This is the best setup for gold in any living person’s lifetime if not ever.
      Today, GDX vs Dow got right back to its pre-crash resistance so today’s action makes sense from that standpoint as well as the resistance I pointed out last night.
      https://stockcharts.com/h-sc/ui?s=GDX%3ADIA&p=D&yr=1&mn=3&dy=0&id=p84724477931&a=699627862

      • On March 6, 2020 at 9:09 am,
        Excelsior says:

        Agreed Matthew, and I was definitely buying last Thursday and Friday and mentioned on here which companies I picked up, and also had a nice JNUG trade heading into this week.

        There may be more weakness for a bit longer, but buying the miners last week was good value in so many names. My only regret was not having more cash available.

        • On March 6, 2020 at 9:13 am,
          Excelsior says:

          One of the questions Brent asks Gwen, Jay, John, and his German pal, is what companies they were buying last Friday during the sell-off.

          All of them picked up shares in what they felt were the more quality companies that had sold down.

          However I agree with your point Matthew, that most tepid and fickle resource investors were likely doing more selling last week instead of buying into the weakness.

          As you stated on here a while back, most retail investors like to “Cry Low and Buy High,” versus “Buy Low and Sell High.”

          The pros were buying though.

          __________________________________________________________________

          Brent Cook asks “So, What’s Really Going On?” in a Panel Discussion at Metals Investor Forum

          #MIF – February 28 – March 1, 2020 in Toronto #VIDEO

          https://www.youtube.com/watch?v=0pni3OvDfdU

          • On March 6, 2020 at 11:26 am,
            Temple says:

            As I said last week and since, the buying/selling in GDX and GDXJ especially, and the companies for the most part that comprise them, had almost nothing to do with the Pied Pipers or their followers. This was all directional/”hot” money from OTHER investors and institutions that piled in…then quickly exited on margin calls and fear.

          • On March 6, 2020 at 11:45 am,
            Excelsior says:

            Agreed Mr T. They were the momentum funds and hedgies that were in for hot money, and then back out again on the market rout last week. It created an interesting opportunity to bottom fish last Friday, just like today’s action seems to have mirrored the sell off in the miners (even though Gold is hanging up there fairly well).

          • On March 6, 2020 at 11:47 am,
            OOTB Jerry says:

            Ditto on the gold………EX……..

          • On March 6, 2020 at 11:48 am,
            Excelsior says:

            It should be noted though, that the selling the end of last week and even today was definitely not limited to just the GDX or GDXJ (which are larger traders and funds), but it was across the board in almost all the Gold & Silver stocks, and with much higher volumes than normal, so it was fear and liquidation from MOST investors, not just the directional traders.

      • On March 6, 2020 at 10:05 am,
        Bill says:

        I think loss off confidence in Gov and system drive gold more so.
        Seasonality is passing. Oct to now is a massive move I doubt a flash $100 will purge the bullishness enough. The next bit will confirm.

        • On March 6, 2020 at 10:11 am,
          Bill says:

          Interesting that shares in HUI have same performance level / ratio to gold for going 6 years back.

        • On March 6, 2020 at 11:42 am,
          Matthew says:

          That loss of confidence stuff that Armstrong spews is meant to confuse. Gold very clearly reflects expansion of the Fed’s balance sheet even though it sometimes lags or even leads it. If confidence was the culprit, gold would return to the official price when things are going great but that obviously never comes close to happening.
          The Fed’s debasing of the currency does cause some to lose confidence but gold still reflects the amount of debasement rather than some random amount of lost confidence. If confidence were truly lost, it would be due to Fed printing and gold would not have a dollar price because the dollar would be worth zero.

      • On March 6, 2020 at 10:17 am,
        OOTB Jerry says:

        Ditto Matthew………onThe virus is meaningless to gold,

        • On March 6, 2020 at 10:36 am,
          OOTB Jerry says:

          Weekly gold looks good to me……….

        • On March 6, 2020 at 10:44 am,
          Bill says:

          That’s what I said ” that gold “has to” go up if coronavirus news gets worse or if stocks drop. Neither is true” The week before we shorted the mini meltdown. The media thinks the virus caused it…thats dead wrong. The DOW was off the charts over priced.

          • On March 6, 2020 at 10:50 am,
            Bill says:

            Interesting enough 4300 trade days my REIT has blow Gold away while throwing off a 5+% DIV

          • On March 6, 2020 at 10:51 am,
            OOTB Jerry says:

            Bill, who are you talking to……….?

        • On March 6, 2020 at 11:45 am,
          David says:

          Speaking of the virus being meaningless to gold…so are fundamentals!

          • On March 6, 2020 at 12:08 pm,
            Matthew says:

            Only in the short term, David.

      • On March 6, 2020 at 12:07 pm,
        b says:

        Last week was a good opportunity, but so is today.

        There are still shares selling for well under a dollar whose highs last spike($1800) were $10 or more.
        ith for example hit $15 and sells now for 60 cents?

        I have no idea of course, but the doldrums this year could still be the best buying opportunity of the year.

        • On March 6, 2020 at 12:37 pm,
          OOTB Jerry says:

          This is not going to be normal……..that went out the window………
          Gann Report was very revealing ………..

  6. On March 6, 2020 at 8:28 am,
    Marty says:

    MUST WATCH YouTube Bix Weir – Clif High 3/04/20 on COVID 19

  7. On March 6, 2020 at 11:45 am,
    OOTB Jerry says:

    Gold going for a higher high………to end the week……

  8. On March 6, 2020 at 11:47 am,
    Bill says:

    Matt
    Partially on balance sheet…i think multi factor on gold price.
    CAD price is flying compaired to USA gold….inflation is why…we have compleye insane idiots running Canada.

  9. On March 6, 2020 at 12:27 pm,
    OOTB Jerry says:

    MOST DO NOT HAVE A CLUE………………….
    https://www.zerohedge.com/markets/tips-volatile-market
    Just remember, most of those so-called expert were in grade school during our last market down turn.

    • On March 6, 2020 at 12:28 pm,
      OOTB Jerry says:

      Most will not survive…….if , rates for housing go back to normal…..like 5-7%

      • On March 6, 2020 at 1:07 pm,
        b says:

        Couldnt the mortgage be extended a few years?

        • On March 6, 2020 at 1:11 pm,
          OOTB Jerry says:

          Anything is possible …………real estate is going to be tricky going forward……
          I guess that is why Sam Zell said he is moving to gold………that was a few years ago.
          Nothing is real in the real estate market………flipper, go flipped…..price are not looking good in higher end………and anything cheap is selling…….Median price is $345,000, which most people young, can not afford…..

          • On March 6, 2020 at 1:16 pm,
            OOTB Jerry says:

            go to got………price to prices…….my fingers are slower than my mind…….lol

          • On March 6, 2020 at 1:31 pm,
            OOTB Jerry says:

            If, people are required to work from home….because of the virus…..a new tax deduction is now available and possible for all employees.. that work from home and are required to have an office……this will create a problem for the tax collector….less revenue for the IRS……

          • On March 6, 2020 at 1:35 pm,
            OOTB Jerry says:

            The IRS……..is less likely now,because of the VIRUS,….to go door to door to quiz people on their late or miss figured taxes…….everything snow balls……in this messy Virus

  10. On March 6, 2020 at 12:48 pm,
    CaliJoe says:

    At this rate, oil stocks are going to ZERO. Total insanity! I would even say, compared to gold miners, these stocks are looking better in terms of speculative play. I just don’t know what will take to turn this sector though.

    • On March 6, 2020 at 3:05 pm,
      Temple says:

      That’s an understatement…some very good companies down another 10 -15% today. Insane. A lot of money will be made on the bounce at some point.

  11. On March 6, 2020 at 1:00 pm,
    David says:

    Gold going up at close. I still have 5 figure losses in miners. Thanks algos.

  12. On March 6, 2020 at 1:07 pm,
    OOTB Jerry says:

    Looks like a great close for gold…….Monday should be interesting……

  13. On March 6, 2020 at 2:15 pm,
    jer alb says:

    Cory, what are your thoughts on the acquisition of Balmoral by Wallbridge, they say it is about expanding the land package but they acquired it all at a price way above market, with the consent of eric Sprott…….should we smell a fish here you think ?

  14. On March 6, 2020 at 3:17 pm,
    OOTB Jerry says:

    COPY CAT…………….he must be watching us here
    WOW! The “Bond King” Jeff Gundlach says gold is going a lot higher, doesn’t that mean bonds…and ALL other paper is going “a lot” lower? Do you understand? We assure you, if there is a “seizure” anywhere in credit, there will be a seizure everywhere. Please remember these words!

    “Gold Is Going A Lot Higher” – DoubleLine’s Gundlach Warns Of “Seizure In The Corporate Bond Market”

    • On March 6, 2020 at 3:18 pm,
      OOTB Jerry says:

      Like Duh…………

  15. On March 6, 2020 at 5:06 pm,
    Excelsior says:

    (TMR) TMAC Resources down 43.3% on this news today.

    Looking fugly, but I wonder if their share prices giving up almost half it’s value in just 1 day, after already plunging lower for the last year is really warranted?

    Some feel TMAC will get scooped up by a larger company, and some think it will go into credit protection, but they do have a nice asset and resources, and got the mine into production, so somebody with a clue will eventually pick this up for a song and dance and get things back on track.

    Like so many new producers they just didn’t get things running smoothly, but if they can’t do well with Gold in the $1500’s and $1600’s then they need a new operations team to run their mine and mill. Sprott coming in to give them a lifeline financing is quite reminiscent of what they did for Primero when it was a distressed producer.

    ____________________________________________________________________

    TMAC Announces Credit Agreement Amendment and Provides Update on Operations

    by @businesswire on 6 Mar 2020

    https://ceo.ca/@businesswire/tmac-announces-credit-agreement-amendment-and-provides

    • On March 6, 2020 at 5:10 pm,
      Excelsior says:

      “The strategic process was initiated to explore, review and evaluate a broad range of potential alternatives focused on maximizing shareholder value, including a potential sale or merger of the Company, joint venture of the Hope Bay mine, introduction of a new significant strategic shareholder or various long-term financing alternatives. Through the strategic process, the Company is seeking to support ongoing operational improvement, funding for near-term investment and long-term expansion at Hope Bay.”

      _________________________________________________________________________

      I’m going with another producer with a clue coming and taking this hot mess over. It could be an interested TakeOver play now that it was smashed down and is waiving the white flag…

      I may jump into this whipped dog next week once I mull things over a bit more with the idea that they are on life support and will likely get nabbed by one of the big boys.

      • On March 6, 2020 at 5:17 pm,
        Excelsior says:

        One poster over at ceo.ca had this to say, but I have not verified this statement:

        @BMW – “Shandong gold recently did a site visit. If you all don’t know who that is, I suggest you take a look at their story…”

        @BMW – “feel free to call IR and they will tell you the same”

        • On March 6, 2020 at 5:29 pm,
          Excelsior says:

          $TMR TMAC Resources – 5 year #Chart (not a pretty picture)

          http://schrts.co/uiHxdafu

          • On March 6, 2020 at 6:07 pm,
            Excelsior says:

            Could this be a bottom-fishing opportunity as a #TakeOver play, or is it down for the count?

          • On March 6, 2020 at 8:54 pm,
            Excelsior says:

            A nice response back from @Magee over at ceo.ca where I posed a similar question:

            @Magee – “@Excelsior, $TMR has a producing mill, 3,588,000 P&P ounces, 4,809,000 M&I ounces, almost 8.6mm total gold ounces. Plus, their last drill results going deeper than before at their high-grade Boston mineral resource “demonstrate the potential to add significantly to the high-grade Boston Mineral Resource base at depth.” Safe jurisdiction.”

            “I just can’t believe it wouldn’t have value to a bigger producer. With $111MC surely it has to be worth more even with their current problems?”

            https://ceo.ca/index?30d4104f8752

        • On March 6, 2020 at 6:38 pm,
          Ozibatla says:

          When one looks at the 5 year chart weekly chart of silver you will see two significant rallies (beginning of 2016 and middle of last year). Otherwise its alot of sideways movement. The $20-$21 range seems to be the same hard resistance that gold was experiencing around the $1360-$1380 area. It took gold 7-8 attempts to finally pierce and hold above this price range. Once this happened however, golds gains over the last 9 months have been impressive (more impressive than I anticipated). Perhaps silver needs another couple of attempts at the aforementioned price region before it gets going in earnest. Furthermore, maybe we need to accept that in retrospect whilst gold entered a fresh bull after the Dec 2015 low, silvers bear was not done yet. Hence it is behind in price development.

          Hopefully this coronavirus issue doesnt cause a long lasting issue throughout the world. If it were to begin to drift out of the spotlight in the future, people will then refocus on other issues within the global economy. This refocus will be targeted on low interest rates, increasing debt, over inflated sectors, bubble pops, slowing economic growth, etc etc. It is amongst this backdrop that I believe silver may play catchup, along with the PM miners. Fundamentally, this scenario bodes well for PMs. Perhaps better than the current fear driven sentiment that is causing margin calls, volatility, and pure safe haven investing on a short term basis.

          • On March 6, 2020 at 8:51 pm,
            Excelsior says:

            Good thoughts on the resistance levels in Silver, and how the 2016 high at $21.23 is a level, that once cleared, should ignite the Silver price higher, similar to when Gold cleared $1377.50 (it’s 2016 peak) last year and then has kept on trucking ever since then.

            I wouldn’t go as far as saying the bear market in Silver continued, as it did not make any further new lows below it’s late December 2015 Major Low at $13.62,and did take off like Gold in the first 8 months of 2016.

            However, Silver did make a large double-bottom retest of $13.86 in late 2018, so maybe this has all been a huge “W-shaped” double-bottom basing pattern, that will allow Silver to springboard higher moving forward. If so, then once Silver clears the $18.60-$18.70 resistance zone, and moves at $21.23 again, it could make it back up to the $23 area again in short order on the right side of the W.

            Here’s a 6 year Silver Chart showing all the price points of the peaks and troughs.

            http://schrts.co/RmnWWeGq

  16. On March 6, 2020 at 9:09 pm,
    Ozibatla says:

    Yes the W bottom is a good point and ties in with my observatoon of sideways movement. To suggest silver continued its bear was perhaps drawing a long bow but its muted moves throughout certainly would not leave one with confidence in labelling it a new bull either.

    If and when $21 clears, I expect $23 to be hit quickly. Its here I would anticipate some consolidation before silver makes a run at $26, which is an important number as it denotes strong support during the previous silver bull market. Here should act as some reasonable resistance. Of course, all this is just speculation. There are so many variables out there that act as a spanner in the works.

    • On March 7, 2020 at 5:52 am,
      Excelsior says:

      Yeah, I guess a long & wide sideways consolidation channel is the best way to look at Silver the last few years. It wasn’t really a bear market, as it never dipped below the 2015 major low of $13.62, but likewise couldn’t get back above the 2016 high of $21.23. It has bounced back and forth in that range ever since in 2017, 2018, 2019, and so far in 2020. I’m liking taking a step back and seeing it all as a big W-shaped bottoming sideways base building exercise, as it would imply much higher prices in the longer term.

      The first step is for Silver to clear $18.60-$18.70 resistance, then $21.23, and then it will get up and settle in the $23’s for a bit. After that the higher $20’s and $30’s come back into focus. Cheers!

      • On March 7, 2020 at 8:52 am,
        Bill says:

        Silver has yet to exceed its high of last September, and today closed at its worst level since December 23, which is a very bearish non-confirmation.

      • On March 7, 2020 at 8:57 am,
        OOTB Jerry says:

        I agree ………clear out $21……..and it is off to the races……..I think I mentioned this several weeks ago……In my segment boots on the ground… ” reporting at the local bullion dealer said, “his clients are wait for a pop past $21-22”
        The dealer handles a lot of high net worth clients….and been around the block a long time.
        Just info. not investment advice…… 🙂

        • On March 7, 2020 at 8:58 am,
          OOTB Jerry says:

          Message was for EX AND OZ……

          • On March 7, 2020 at 8:59 am,
            OOTB Jerry says:

            wait….to waiting…..and waiting and waiting………..lol

          • On March 7, 2020 at 4:51 pm,
            Ozibatla says:

            Cheers Jerry, thats interesting.

      • On March 7, 2020 at 9:15 am,
        Bill says:

        Nobody give a sh3t what I think but waaaay to dangerous of a market for dicking around…lots of cash I think….

  17. On March 7, 2020 at 9:29 am,
    Bill says:

    Thanks OOTB
    We are short junior mining stocks as a group.
    Gold is still looking toppy in the short term, lately trading mostly sideways if stocks dropped but falling fast when equities rallied, and that’s despite the surprise rate cuts earlier in the week with more major cuts expected. That’s also despite virtually everyone piling into gold and the U.S. dollar cascading.
    I think there will be a time when we’ll make astronomical profits on gold, silver, and related stocks.. It may not be soon however, and as history’s shown us when the world is ultra-bullish we’re usually best off on the short side. This may also be one of those times.
    Meanwhile, DGP posted its highest weekly close in almost 7 years.

    • On March 7, 2020 at 9:48 am,
      OOTB Jerry says:

      Bill……..just remember , we are all trying to make money,.I THINK…..and hopefully, give out some sound , thought out comments and advice……and for sure, we do not all agree on all the investment types…..JMO…….thanks for participating…….