Doc is back to share his outlook on gold’s correction
Doc is back with us to share his thoughts on the correction in gold and commodities last week. June has been a tough month for commodities broadly but the selling pressure picked up after the Fed.
Upcoming Webinars – There are a lot of webinars coming up so stay tuned. The next webinar is Wednesday at 12-noon PT. I will be hosting TriStar Gold. Nick Appleyard, President and CEO of TriStar will joins me to recap the Castelo de Sonhos Project in Brazil and the work that is planned to de-risk (through a Pre-Feasabilty Study) and grow the current 2.2million oz gold deposit (indicated and inferred).
Was happy to repurchase all and then some of NFGFF in tranches last week 8.42, 8.28, 8, 7.72
NFGFF – my next exit point $13.58
Doc, do great minds think alike? I sold the rest of my USAS today at the opening@1.58 and then put the money into FFOXF@.278. So far, so good as USAS is 1.52 and FFOXF has been up to .32 Hooray!
Bonzo, USAS is certainly getting pummeled—-I can remember when it was a “darling” on this site. How some things can change. Technically, it looks like a good buy between $1.25 and $1.50. I’m waiting for our NSRPF to get below $1.75 and I’ll purchase some more. If we get further selloff in gold this week, the odds are heavily in favor of July being kinder to us but not as kind as May.
After being thoroughly disappointed with USAS, and concerned about their ongoing Mexican labor union disputes, I sold out of my position in March 18; and rotated those funds around to a few other gold & silver producers in March like Calibre, Equinox, and Wesdome. Fortunately this avoiding a big part of the recent drawdown the last few months, and it was wise to have shifted into stronger names making real progress.
Having voiced my displeasure with not just the Mexican Cosala operations on hold (due to illegal blockades and union disputes), but also in the choice to give Sprott 40% of Galena (good for the short-term / bad for the longer term), and the ongoing ramp-up challenges at the new Relief Canyon mine Nevada; it really does seem like most of the downside risks have been priced in at this point.
I actually bought some of the beat up USAS today as it looks like most of the damage has already been inflicted and it is starting to get priced for failure. With many of the flavor-of-the-day gold & silver explorers having valuations priced for perfection, it is still looking more attractive to me to pick up some of the beaten down producers or unloved developers as better value at this point. With regards to Americas Gold & Silver, it is unlikely I’ll build as large of a position in it as I had up until earlier this year, but it is certainly not over-priced here, and looks like a prime candidate for a turn-around story, similar to McEwen Mining (MUX).
And that’s why I’ll start to nibble down here pretty soon—-I believe it’s been over punished which usually happens when investors are disappointed.
That makes sense to me Doc. Yes, investors like to overly reward companies with too much blue sky in their valuations, but conversely, they like to overly punish companies with too much dark sky in their valuations.
USAS may still have a bit further to drop, especially if the PM sector continues to be under pressure in the near-term, but it is at a very attractive overall valuation for having 3 different PM mines in 3 different jurisdictions (Mexico, Idaho, Nevada). There are explorers without resource estimates or economic studies that are trading 2 to 3 times what they are, so odds are there will be a return to the mean in these valuations over time.
Of course, if they don’t get their ship turned around over the balance of the year, then USAS could just continue to drift sideways to down for some time. I’m betting on the fact that it is do or die time, and if they don’t get operations back on track in Mexico and Nevada, that there will be hell to pay with larger institutional investors.
The other option is they capsize and the ship sinks, however, I’d expect another mid-tier producer would come in and take them over before it got to that.
Fortunately I sold 75% of my USAS in March@2.06 and bought NFGFF which has tripled since then. I sold another 20%@1.70 and the last 5% @ 1.58 as I wanted money to buy some FFOXF.
Adios USAS! Good luck to those who own it.
Yeah, I said “Adios USAS” at $2.60 back in March, and bought back in today for a tracking position at $1.51, so it seemed like a good spot to start building a position again and say “Hola USAS.” 🙂
To Doc’s point, I’ll be looking to nibble a bit more in the $1.25-1.40ish area ($1.33ish) for a second tranche, and then maybe a 3rd tranche down about $.10-$.20 below that. The only thing that would derail that plan is if something worse happened at their Cosala operations, or if the Mexican government decided to make an example out of them for not accepting their labor union crony. Barring something like that, then I’d consider averaging into a position in 3 tiers down at these levels or 15-20% lower a good entry into USAS for the longer term PM bull market thesis. At one point, when gold and silver do really get moving again, then even the turkeys are going to fly.
I bought NSRPF @ $1.75, realizing they OWN a ton of shares of NFGFF
How is the Novo doing? You wanna wait til it gets closer to zero before stepping in.
The quarterly and yearly charts seem to be ignored by all but they leave the door open to surprising upside sooner than most realize. Despite superficial appearances on the monthly chart, this is nothing like 2011-12. In fact, the current situation gets even better and less like 2011-12 when you consider the technical and fundamental landscape of other asset classes including stocks, bonds, and currencies. There is really no comparison to any previous setup of recent decades.
The one hour chart looks good and the 2hr, 4hr and daily charts are improving nicely. The dominoes are likely to fall in our favor from here even if it’s in fits and starts.
https://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=1&mn=0&dy=0&id=p17867288448&a=975972276
Matthew,
What price would confirm gdx & gold has bottomed? Not sure if I should catch a falling knife but the fundamentals look so good. I can’t think of assets this cheap and hated other than oil producers.
35.61 would do it for me but so would another dip to below 33. 35.61 would be nullified by a new low.
Doc sure its all about seasonal changes, MACD and Bollinger Bands. The price fall in gold has nothing to do with bullion banks clearing out their short positions prior to Basel 3 implementation on July 1, or The Fed taking up the imaginary rate rise in 2 years time. No this is all normal trading supply and demand fundamentals. The only good to come of this is that most people now see the markets for what they are – a complete sham
I like what I see with the Canadian dollar. It probably won’t see a new high very soon but I bet its consolidation of recent gains will mostly or completely take place above 80.
https://stockcharts.com/h-sc/ui?s=%24CDW&p=D&yr=1&mn=0&dy=0&id=p52557449234&a=976992598
I added AEM & Barrick. They both give nice dividends.
If I’m the money manager, I’d rather buy some those dividend paying gold companies than speculate on NVDA or TSLA. Both have their place though.
I agree completely.
Taylor Dart thinks KL is the one to buy.
Kirkland Lake has solid fundamentals for sure for a senior gold producer, but I’d rather keep stocking up on the more speculative Fosterville South exploring all around KL’s Fosterville Mine in Victoria Australia.
There will still be some nice upside in the Gold Producers though, and I’ve had a nice run recently adding to positions in Calibre, Equinox, Wesdome, and more recently in Alamos Gold.
I’ve been holding out for a 2nd & better offer in Roxgold, instead of it going over to Fortuna, but if a superior offer doesn’t come in, then I’ll liquidate that position and add to Galiano, Superior, Aris, or Galane. I actually added a bit to Superior Gold last Thursday in the PM sell-down.
B2 Gold is another larger gold producer I’ve considered getting a position started in the last few months, but I opted for buying more Jaguar Mining last Thursday as well, because they are on a good operational track lately, pay a nice dividend, and have pulled back down nicely. After adding to that position last week, (JAG) is now my largest Gold mining position, even over-taking Argonaut Gold, but part of that is that I also trimmed back AR a few weeks back in mid-May.
Is anyone else seeing any other good value set ups in the larger gold producers after this recent drawdown in the PMs?
Interesting that you mentioned JAG—I just added a little to my position and plan on adding more since I believe it has farther to fall.
Yeah, I may have jumped the gun a bit buying JAG last Thursday, during the PM swan dive, but I wanted to focus during the panic selling on quality operators and impulsively went to them amongst others. If Jaguar keeps sliding down, then I guess I can add a bit more, but I don’t want to get too large of a position size in any one company.
Do you have a downside target you are looking for to accumulate more Jaguar?
I wouldn’t be surprised to see a bounce in JAG end of the week or early next week. Then we might move down again in early July and I wouldn’t be surprised if we can pick it up then in the $4.50 range. It looks like it wants to short term bottom on the weekly chart but on the monthly chart it looks like the MACD wants a little lower price before it bottoms completely. Anyways, I think any price down in this range is worth it.
That’s on the Toronto exchange—-on JAGGF we might get lucky to see $3.50.
Doc – Thanks for both those Jaguar Mining targets.
Had a look at JAG many years ago and it seemed wildly overpriced, maybe it was the darling of the goldbugs back in the day. Had a look today for the first time in years. Volume seems low and not much oc an options market but I’ll follow it.
I jumped in on Jaguar recently as well.
I had mentioned Fosterville South up above, currently exploring all around Kirkland Lake’s Fosterville Mine area, in Victoria Australia. Bryan Slusarchuk, the President and CEO of (FSX), and former President of gold producer K92 Mining (KNT), had some interesting macro comments on the precious metals sector today over a ceo.ca that I’ll post below:
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@bslusarchuk – “Gold has been bouncing as of late (with most of the bounces lower, as we all know). But, my view is (to use a well used phrase)….the gig is up. People are starting to understand the difference between allocated and unallocated positions. People are starting to realize the difference between paper gold and physical gold. Right now, it is a small group (including some of the world’s smartest investors with the planet’s best track records) but this understanding is not widespread. It will be at some point. The timing of when it will be widely understood is unknown but when the curtain is lifted……gold skyrockets. Until then, those of us involved in the companies need to keep driving the business plan forward. We can’t control the price of gold and can only control the execution of our business plans. But, when gold breaks out (and it will)….it will ultimately be too much capital chasing too few quality deals. And that is why you want to be early.”
The comments by the gentleman are quite appropriate and that’s why it’s good not to chase these stocks but just buy on dips and hold—it’ll be awhile before we get the next big move up and I believe that’s finally the one that has the chance to be parabolic. Patience is the key and it has been that way in the PM markets for some time. If the conventional market here (and the odds are good) continues to be pressured the PMs will also initially have trouble gaining traction. Our time this time around will not be the length of time we had to wait as regards the 2011-2012 bear market for the PMs.
According to stockcharts, this big cup and handle in gold would become LESS bullish if it goes deeper…
“The handle represents the final consolidation/pullback before the big breakout and can retrace up to 1/3 of the cup’s advance, but usually not more. The smaller the retracement, the more bullish the formation and significant the breakout.” The last sentence bears repeating: “The smaller the retracement, the more bullish the formation and significant the breakout.”
So far, gold has retraced about 40% of the cup’s advance but would be much less if we used a horizontal cup rim. The right side of the cup is much higher but I don’t see that as a negative just as it’s not a negative for an inverse head and shoulders bottom. In fact, it’s bullish if anything since it depicts underlying strength and a market that is raring to go. As for the duration, it should be just right by the time it completes with a breakout above the rim.
Matt,
Ramby
sold the farm (all gold and silver portfolio) on Friday and has shaken me up a bit.
I nave sold nothing. Too busy living my life….work has taken a front seat. Maybe this is a good thing and maybe it is not. The “impulse” move he was watching is now done and he is officially “neural” in his book. I just thought you might want to know. My head hurts…this is torture!!!
Confused – I don’t follow Rambus too closely, but based on the reports back from you, it seems like he flip-flops and capitulates from going all-in to all-out in the precious metals stocks about every 2 weeks. Haha! One minute he is waiting on new lows, and then the next minute, he is waiting on a breakout to new highs. If I was one of his followers, then I’d be thoroughly bewildered at his complete 180’s every few weeks.
+1
And I’ve mentioned this before ex.. I followed that guy way back then glad I stopped.. Found a good place here. As mentioned we have some very credible people in here but that’s just me speaking. Obviously you and Matthew leading the way
Glen
Makes sense Glenfidish. I’ve known of Rambus for years, first coming across him over at Gold tent, and appreciate that he’s a widely followed technician, so I’m not taking that away from him. Having said that, he’s been back and forth from all-in to all-out precious metals and miners repeatedly all year long, and seems to have been more reactive after the fact than anticipating the moves.
As you mentioned we are blessed to have so many savvy technicians on this the KER lighting the way for us all.
This kind of whipsaw market is actually quite good for swing-trading around core positions, using partial positions. However,, going all-in or all-out positions as Rambus has seems quite risky on either side of the thesis, and in reading over comments on multiple resource blogs like ceo.ca, stockhouse, hot copper, seaking alpha, along with comments on Twitter and YouTube, there are many investors that have gotten off-kilter with these moves and got too cute trading in both directions, like we all do from time to time. I didn’t trade things perfect this year, just like nobody did, but reviewing many technicians various analysis, and counterbalancing that with my own TA, I was at least selling some pm and commodity stocks in January, buying in late Feb-mid March, trimming again in May, and adding again last week and this week. Overall this action, based on both technicals and fundamentals got more traded right than wrong and ended up generating profits in a tougher sideways market. I have a lot of people here on the KER blog, as well as the technicians we bring on the show to thank for their insights, guidance, and experience and it is all greatly appreciated.
Together we are stronger and more well-informed due to all the ideas shared. Cheers!
Thanks Confused. Rambus is just following his risk management discipline. I don’t share his approach or concern and would bet that he will be redeployed in the sector within a month and very possibly within two weeks.
Matthew – I completely agree about the higher right side of the cup being more bullish in general, just like an inverse head & shoulders pattern – you want to see the right side higher, indicating more pent up bullish energy, as a lower right side of the cup or inverse H&S is usually meaning it will be a failed pattern, and break lower.
Even if the handle is getting longer and and less bullish, that larger 10 year cup & handle pattern should still resolve in bullish way in the medium to longer term, once the handle is finished. The big picture in Gold is still in the bull’s favor.
All things considered, I believe it is a perfectly bullish cup and handle. Even the intermediate picture is way in gold’s favor.
Agreed Matthew. It looks like a bullish intermediate to longer term setup, even if there is a bit more shorter term weakness to digest first. Thanks!
Big news in the Royalty space today and a nice pop in Ely Gold as a result.
I would have preferred if Ely had not comingled with Gold Royalty, and instead had itself acquired some of Sailfish Royalties Nevada royalties instead, but it is nice to see some consolidation in the smaller royalty companies.
It is still very likely that Sailfish get’s acquired as well, and maybe some of the other smaller ones (like Orogen, Trident, Empress, Abitibi, Golden Valley, Riverside, Globex, etc…), get swallowed up by some of the mid-tier royalty companies like (Maverix, Metalla, Nomad, Elemental, Vox, EMX, Altius, etc…)
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Gold Royalty and Ely Gold to Combine to Create a Leading Growth and Americas-focused Precious Metals Royalty Company
@newswire on 21 Jun 2021
https://ceo.ca/@newswire/gold-royalty-and-ely-gold-to-combine-to-create-a-leading
Here is the Corporate Presentation on the new combined royalty company:
https://www.goldroyalty.com/_resources/presentations/corporate-presentation.pdf
Some of the other mid-tier royalty companies really missed out on a great Nevada-focused royalty package, with some royalties already in production from Ely Gold Royalty (ELY). I’m a bit surprised that one of the Mid-tiers like a Metalla, Maverix, Nomad, EMX etc… didn’t consider merging with Ely Gold Royalty, instead of letting their good assets get scooped up into Gold Royalty Corp., who didn’t have nearly as attractive of a basket of assets as the others aforementioned.
I am on sabbatical having to fix and clean stuff in Texas. Not watching what is going on but here is what moved today in the ongoing, never ending alternating day scenario: Todays top performers: Emerita, Vizsla, Eloro, Tartisan Nickle, Group Ten, Sun Summit and Banyan.
Today’s losers and possibly tomorrow’s winners: E79, Labrador, Maple, Discovery, Granite Creek and Big Ridge. Same ol Same ol. Corruption sucks.
Hi David – yes another mixed bag of a day. However, you should have done well on Ely Gold as well, as noted above. You had a nice position going in Ely at one point, Right?
What do you think about this merger with Gold Royalty Corp?
No production at FSX. I want the filet, don’t want hamburger.
Low volume on JAG and illiquid options market.
Correct, FSX is an exploration company with projects around Kirkland Lake’s Fosterville Mine, but they are a high risk / high return drill play, not an established producer or a filet (yet).
The gold & silver producer filets in my portfolio are: Argonaut Gold, Equinox Gold, Alamos Gold, Wesdome, Calibre, Coeur Mining, Sierra Metals, Roxgold, Silvercorp, and some of the royalty companies like Sandstorm, Maverix, Metalla, and Nomad.
There are many more hamburger producers in my portfolio like Jaguar, Galiano, Galane, Superior, Aris, Northern Vertex, McEwen, Americas Gold & Silver, Endeavour Silver, Impact Silver, Santacruz Silver, Excellon Resources, Mexus, etc… that I believe, are lessor followed, have the ability to grow faster than the Seniors based on both fundamental improvements and improving metals price optionality, and while riskier, and not filets currently, I believe they could be delicious meal in their own right and have a more budget price entry point.
There are also newer producers that at this point would be considered hamburgers and some have start up challenges to overcome and are priced accordingly. However, these startup “fixer uppers” are also at more attractive entry points for longer term value increases like Pure Gold, Golden Minerals, Novo Resources, and Alexco Resources.
Then there are near-term producers in my portfolio like Aurcana, Minera Alamos, Thor Explorations, Gold Mountain, Lion One, Silvercrest, and Bayhorse that are waiting in the wings to graduate in the next 3-12 months into producer status. They wouldn’t be considered filets yet (well maybe Silvercrest would), but these companies are not in production yet, so I guess they’d still be hamburger, but very tasty burgers indeed. 🙂
Oops, I left Mako Mining off my list of new producers that got off to a slow start that I’ve got a small position going in it – again, currently a hamburger new producer, with plans to become a filet over 2-3 years.
Ely: I probably would be OK with the Ely merger but I already put all my Ely into Emerita when Doc Jones’ report came out. Ely had been dogging along in the mid-.80s so I threw it all at Emerita. So far a good decision. Labrador should do well today after the morning smash. I added on this AMs daily morning pull back. Added spare change to Maritime but their drill results not as exciting as Great Bear and Vizsla’s. Emerita had a good start before the morning smash but a lot of its price movement in the last 30 mins of the regular markets. Trend has been to lower price so I assume managed money can feel good. Emerita hot an all-time high for me this AM and rumor has it, potential good news coming. First time I have heard that.
You guys have fun as I need to get back to my “paint up fix up job”.
Geez Louise…Emerita on 22% run up on no news.
I see they are giving The Fed another shot at stand-up comedy before Congress today.
The only thing keeping me from having another “even” day is…emerita. Other than that the bullion banks are doing God’s work as usual.
BAD news from Equinox – another blockade
https://www.equinoxgold.com/_resources/news/20210622-EQX-PR-LosFilos.pdf
defending the monthly chart for trading…excellent…lmao