Craig Hemke from TF Metals Report – Thu 20 Aug, 2020

Gold and the summer doldrums

Craig Hemke is with us today to share his thoughts on the high volatility in gold and silver. It might not seem like it but we are in the middle of summer and traders are away from their desks. This is also contributing to the recent higher volatility for metals.

Click here to visit Criag’s site – TF Metals Report.

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Comments:
  1. On August 20, 2020 at 3:04 pm,
    cfs says:

    I think it went up to fast……so we get a correction…..no big deal.

    But then, I’m mostly hoping to maintain purchase power, not make a killing trading.

  2. On August 20, 2020 at 5:25 pm,
    Marty says:

    Twitter @Crescat_Capital for a presentation with Quinton H on Brazil Gold miner – Cabral Gold on Lawrence Lepard portfolio

  3. On August 20, 2020 at 5:51 pm,
    CFS says:
  4. On August 20, 2020 at 6:13 pm,
    Dick Tracy says:

    .

    • On August 21, 2020 at 6:50 am,
      Excelsior says:

      +1

  5. On August 20, 2020 at 6:17 pm,
    Dick Tracy says:

    I can’t post, oh well. DT

    • On August 21, 2020 at 7:01 am,
      Excelsior says:
      • On August 21, 2020 at 7:14 am,
        Dick Tracy says:

        Ex, thanks for the flood of reassuring statements, I wouldn’t mind coming back as Charlie Sheen in his golden years, but not now since the sheen is off. DT

        • On August 21, 2020 at 7:53 am,
          Excelsior says:

          DT, yes, but keep in mind he has tiger’s blood now. 🙂

  6. On August 20, 2020 at 6:37 pm,
    CFS says:
  7. On August 20, 2020 at 7:09 pm,
    CFS says:
  8. On August 21, 2020 at 6:19 am,
    cfs says:
  9. On August 21, 2020 at 7:03 am,
    Excelsior says:

    BBB Brixton is on sale this morning, below the gap from the break higher a few weeks back, for anyone that wants to add another tier here.

    • On August 21, 2020 at 7:08 am,
      Excelsior says:

      Really most of the Silver stocks are on sale this morning since silver prices have pulled back to the $26.40 level.

      As a reminder, ALL the Silver companies make money above $22 an ounce, so $26 is still a fantastic pricing level where they can plenty of money. Also the economics of most Silver developers look fantastic at $24, $25, $26 Silver.

      These Silver stocks are still greatly divorced from the valuations they should have at these prices and they are priced like Silver is still at $20-$21. In a year or two people will look back on these prices as dirt cheap.

      • On August 21, 2020 at 7:15 am,
        Rene says:

        Good point Exs, just been reading a lot of these Twitter experts and they make quite a compelling case for $21 silver in this ICL, looks like Docs price target for Endeavour is coming up soon

        • On August 21, 2020 at 7:49 am,
          Excelsior says:

          Hi Rene. Yes, even if Silver goes down to $21, that is still a very good price for most of the miners, and it is unlikely to stay there for very long if it does go down and retest the 2016 high of $21.23.

          If we think back to when Silver was stuck in that $15-$19 channel for so long, $21 sounded great. Now that Silver shot up to $30 it may sound low, but that is only because most people suffer from recency bias.

          It actually may be better if the Silver market rebooted itself from lower prices, as the miners barely responded once Silver got above $21 and headed to $22, $23, $24, $25, $26, $27, $28, $29, $30 Silver.

          Think for a moment how massive of a move that was, and we all normally expect the Silver miners to provide 3-4 times leverage to the moves in the metals. We didn’t see that outperformance this time, and it may be that most investors just couldn’t do the math to revalue Silver development projects at those higher prices or calculate just how much more profitable all the Silver producers would be.

          This was also complicated by the fact that for most of the 2nd quarter most Silver miners were throttled back or closed due to Covid 19 shutdowns and only got back opened up and ramping up again last month. As a result when companies put out their Q2 operational reports, many still didn’t factor this in and though, well the higher prices didn’t move the needle enough to justify their current valuations.

          As someone who follows a large group of Silver miners and read reactions in the company chat rooms at various forums or the comments from investors on Twitter or on Youtube video interviews, many investors were still viewing company valuations (and their future) through the lens of their Q1 numbers (when Silver dove down to $12 and was in a range of $12-$18 the whole quarter), or responding to their Q2 numbers like it was a normal market. There was nothing normal about Q1 or Q2 this year, and the Q3 numbers are going to surprise these people as the numbers have been elevated since July and the companies have been back to normal operations at the same time. Q3 will be the first time operations and pricing meet to re-calibrate where things really are.

          Maybe it would be best for Silver to head back to $21 and restart the move higher again, and let investors digest the move between each dollar increment in a more measure rise.

          As a comparison Gold went down in March to around $1,450, (when Silver went down to $12). Silver went from $12 to $30 which was a 250% move higher in just a few months. What if Silver went up 250% from $1,450 to $3,625 in a few months? Would the valuation in the miners have kept up?

          2020 has truly been one of the most bizarre years ever with the Pandemic, the personal and business lockdowns, riots across most major cities in the US and globally, the huge stimulus bailout packages, repo market madness and Fed intervention (now flirting with yield curve controls), massive amounts of new money creation, an onslaught of new trading accounts being created in the work-from-home environment, and now the divisive political climate heading into an election year with both sides promising to spend Trillions and Trillions more dollars.

          In the midst of all the chaos of 2020, Precious Metals have done well (exactly like they were supposed to), but the mining stocks didn’t keep up with rocket moves higher, and this was particularly evident with the Silver miners.

          After a corrective move plays through, I look forward to the great re-rating in the mining stocks, and where these valuations will move once they catch up to the moves in the metals prices. Maybe the first step will be watching the Q3 operational numbers get posted in October and November, where I expect them to be fantastic, and maybe then the lightbulb will go off in people’s minds about what Silver in the $20s does for almost every miner out there. As a result, 2021 and 2022 should blow everyone’s minds.

          Until then…. Ever Upward!

          • On August 21, 2020 at 9:26 am,
            Rene says:

            Thanks Ex for sharing your thoughts, much appreciated, very interesting times ahead…

          • On August 21, 2020 at 10:24 am,
            Excelsior says:

            Thanks Rene. Yes we are living in quite interesting times indeed.

          • On August 21, 2020 at 11:35 am,
            Excelsior says:

            Also, I forgot to mention with regards to (EXK) Endeavour Silver — yes, Doc’s $3.50 target is approaching, but I’ll confess to buying just a little bit today at $3.64.

          • On August 21, 2020 at 1:41 pm,
            Dan, calgary says:

            Good comments, IMHO I am starting to think that the price of silver and the cost of mining will meet around that $22ish level and start to rise again. I’m not sure where the price of the miners will go with light volume but the end of the month silver price nonsense could be the washout. Silver… the drama queen of minerals. Haha

      • On August 21, 2020 at 7:16 am,
        OOTB Jerry says:

        Suppression of the price of silver, ….just keeping the sheeple poor……better get the candy bars back out….. 🙂

        • On August 21, 2020 at 7:51 am,
          Excelsior says:

          Haha! OOTB – Mark Dice would approve of that message.

          > People Choose Free Candy Bar over Free 10 oz Silver Bar (Worth $150) in Experiment

          https://youtu.be/bYhTFz_SGw0

          • On August 21, 2020 at 7:52 am,
            Excelsior says:

            Trick or Treat – Free 100 oz Bar of Silver, or Free Hershey Bar?

            Mark Dice

            https://youtu.be/G8qGDun4puM

          • On August 21, 2020 at 8:18 am,
            OOTB Jerry says:

            Ding dong people are out hiding their faces,….how they going to eat any candy…. 🙂

  10. On August 21, 2020 at 7:21 am,
    OOTB Jerry says:

    Silver will look cheap….after sticker shock on median home prices….of $300,000
    https://www.zerohedge.com/economics/us-existing-homes-sales-soar-record-july-highest-14-years

    • On August 21, 2020 at 7:22 am,
      OOTB Jerry says:

      Wait till they get the real estate tax bill…..

      • On August 21, 2020 at 8:28 am,
        David says:

        It is always concerning when people lose their jobs, housing prices inflate and politicians raise taxes because no one is paying their old taxes because they would rather eat. Seems like the answer last time was “fraudulent robo signing” so property could be stolen by banks and corporations. I do not look forward to the end of owning Private Property. I have enjoyed it up until now.

        • On August 21, 2020 at 8:53 am,
          OOTB Jerry says:

          Ditto…….David……..I also, have enjoyed real estate…..but, I hate the tax bill…

  11. On August 21, 2020 at 9:16 am,
    David says:

    Second hit on metals. This week is over. Maybe next week.

    • On August 21, 2020 at 10:49 am,
      David says:

      I think they put out some bogus econ data and pumped the general markets and smashed the metals. Glad the economy is fixed. I would assume Buffet or someone paid off the debt.

      • On August 21, 2020 at 11:54 am,
        OOTB Jerry says:

        Since Buffet is an elitist card member with Gates…….anything is possible in the CON GAME….