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With yields down and inflation running hot why are the precious metals being ignored?

Cory댊
July 15, 2021

Craig Hemke, Founder of TF Metals Report joins me for a discussion on the big picture environment for precious metals. All PM investors have heard that declining and negative real rates are some of the most significant drivers for metals. But why then are PMs being largely ignored during this period when yields are dropping and inflation continues to surprise to the upside?

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

Discussion
53 Comments
    Jul 15, 2021 15:34 PM

    The 50 week MA on GDX has started to curve down. It strongly suggests that the bull market has either topped or we are setting up for a cyclical bear market that could last another year or two. Every time the 50 week MA starts to do this, it is never good. This is true across most stocks and indexes.

    Obviously anything can happen, but in almost every instance the above is true. GDX needs to get moving and now. The recent post-FOMC slam down was extremely damaging to its near term prospects. The key will be whether it can explode well above the 50 week MA soon. A gentle retest won’t be good enough.

      Jul 15, 2021 15:44 PM

      The 12 month moving average also has turned down, also extremely suggestive that a major top was made in August ’20. The bull is either over or the miners are going to make lower highs and lower lows for many months if not years.

        Jul 15, 2021 15:55 PM

        It could be still salvageable, but GDX needs to rally bigtime into the end of the month. I would want to see $37+ by close of the month. That is a huge ask, bordering on a miracle..

      Jul 15, 2021 15:43 PM

      Magnus, excellent observation—it’s one of the indicators I’m watching closely.

        Jul 15, 2021 15:37 PM

        If what Magnus is saying is correct, we have two options with metals/miners: (1) play in the space with short term trades up/down, and (2) hold onto miners/royalty as very loooong term options on the price of gold. Doesn’t sound like Gold at $2700 or so in the next 18-24 months……Am I missing something?

    Jul 15, 2021 15:40 PM

    I’d great if miners gap up and leave an island reversal pattern.

    https://ibb.co/ZfmsLTW

    Jul 15, 2021 15:08 PM

    Gold miners had its move last year and top in August. Now miners peaked when gold was looking at a steady price above 1800, but with the last 8 months going down and now maybe solid bottom in gold might be 1750??? Miners going nowhere for long time until either inflation fears are back for real and we won’t know that till next summer. If Biden kills economy with his tax hikes then miners will get beaten down with stock market sell off. We won’t know that till fall, so doesn’t look good for gold miners to make new highs at least till next summer, it will trade in range but you better have cash in case gold and miners disappoint again and if they get caught in stock sell off everyone that was saying buy dip from an 8 month consolidation are going to puke.
    If you can buy and hold looking out 2 years you will benefit but if your gold miners portfolio will take big draw down in short term.

    b
    Jul 15, 2021 15:09 PM

    Gold to fall to $1,750 by year end – Bannockburn Global Forex
    Neils Christensen Neils Christensen
    Thursday July 15, 2021 16:23

    https://www.kitco.com/news/2021-07-15/Gold-to-fall-to-1-750-by-year-end-Bannockburn-Global-Forex.html

    Jul 15, 2021 15:38 PM

    As long as this Golden cross is holding, I’d like give benefit of the doubt to miners.

    https://ibb.co/RPhN7TB

      Jul 15, 2021 15:24 PM

      Last month’s action was devastating to the longer term picture. GDX needs to put on a massive rally into month’s end. I personally don’t see the catalyst for that. It may not be the end of the bull market, but there could be a year or more of lower highs and lower lows from here.

        Jul 15, 2021 15:45 PM

        August could be another problematic month for the PMs.

          Jul 15, 2021 15:18 PM

          It feels like the Fed is in total control. It doesn’t matter how much they print.

          Most silver miners are still below their 2016 highs, some well below, thanks to the last 2 months. That says it all.

    BDC
    Jul 15, 2021 15:41 PM

    Crypto kills the Gold story.

      BDC
      Jul 15, 2021 15:47 PM

      Aug 2018 – Mar 2020 – Mar 2021 trend line.
      Gold remains in a bull run while above this.

    Jul 15, 2021 15:31 PM

    All the bearishness around here is bullish/good because it excessive considering the picture.
    SLV weekly:
    https://stockcharts.com/h-sc/ui?s=SLV&p=W&yr=3&mn=0&dy=0&id=p32058980406&a=992649623

    Jul 15, 2021 15:49 PM

    No doubt the miners are extremely oversold. The question is, whether they can recapture the 50 WMA and stay above it for a couple of months. But still, a downsloping 50 WMA has always been a warning that lower highs and lower lows in the coming months are probable. Maybe it’s different this time.

    Jul 15, 2021 15:50 PM

    Important lows always happen when the weekly and monthly charts look ugly. That’s just the way it is.
    Gold and GLD both closed today below their 200 day MAs and are at Bollinger band resistance so a pullback tomorrow should not be surprising BUT both gold and GLD managed to close above their upper Bollinger band resistance which is always a sign of strength. In this case, I believe it is a better show of strength than average since that BB resistance is pointing virtually straight down in gold’s case and was pointing virtually straight down just yesterday for GLD (now it’s flat, which is a step in the right direction).
    Whichever way it goes, the daily chart is bullish so a pullback will find plenty of buyers. I’d like to see both; a pullback followed by a strong reversal would be perfect.

    https://stockcharts.com/h-sc/ui?s=%24GOLD&p=D&yr=1&mn=0&dy=0&id=p44360611730

    Jul 15, 2021 15:02 PM

    Our odds for tomorrow look pretty good for gold but it’s more important that the miners show some strength.
    GLD weekly:
    https://stockcharts.com/h-sc/ui?s=GLD&p=W&yr=3&mn=9&dy=0&id=p91880918624&a=992663034

    Jul 15, 2021 15:18 PM

    GDX just had its best close since the day before it gapped down one month ago. So, on a somewhat stealthy closing basis, it has now confirmed its double bottom.
    https://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=0&mn=11&dy=0&id=p61529887913&a=992667819

    Jul 16, 2021 16:38 AM

    I’ve been out of pocket the last few days, busy with family, but just now am reviewing all the news on the takeover over of (KOR) Corvus by (AU) Anglogold Ashanti. This was one of the most predictable takeover’s I’ve seen, and one of the easiest ways to make a quick premium on the gold mining stocks in 2021.

    ___________________________________________________________________________

    Corvus Gold Receives Non-Binding Offer from AngloGold Ashanti Ltd.

    by @nasdaq on 13 Jul 2021

    https://ceo.ca/@nasdaq/corvus-gold-receives-non-binding-offer-from-anglogold

      Jul 16, 2021 16:39 AM

      I realize some investors may snub their noses at positioning in mining stocks for a takeover (like making a 30% or 40% premium is not worth their time). LOL!

      It is interesting that many folks would pass on such an easy win, while they are waiting for the PM sector to rebound, when the move by Anglogold Ashanti was pretty clearly telegraphed with the 90 day window of time and clear interest in making a move on Crovus.

      Yet, at the same time, many PM investors are down in the dumps, having their own doldrums, because their mining stocks aren’t moving that much or are heading lower. It makes little sense. Why not make 30%+ on a fairly safe takeover play while one is waiting for the explorers to potentially hit with drill news, or for the sector to turn around and put some life back in the producers and explorers?

      I don’t understand the aversion to positioning in a stock once a 30% or 40% premium is in the cards, because that just isn’t ENOUGH of a return for folks? (Yeah, OK, that is better than most generalist investors will do all year in the mutual funds, and anyone with 2 brain cells to rub together or that understands investing would be thrilled to make those kinds of returns).

      I’m not suggesting a takeover win like that is the reason we are investing in the higher torqued miners, where we all want some multibaggers, just merely dispelling the myth that “positioning in high likelihood takeovers isn’t worth their time” or “is not worth the wait”. (??) There have been plenty of times I’ve positioned in solid projects run by good companies that have pulled back, or solid projects run by crappy companies that have been hammered down, because they are a high probability target for a takeover, and have had great returns doing this getting positioned 2-6 months before the takeover happened. (Newmarket Gold, Silvercrest, Klondex, Richmont, Avnel, Gryphon, True Gold, Marlin, QMX Gold, Eastmain, Alio, Northern Empire, etc…) and now it is happening with Corvus, as predicted. In most of those stocks I was only positioned for a few months before the takeover news was announced, and I bought in specifically because the stocks were top class and ripping to the upside, or totally beat up and asking to be taken out of their misery. (on that note, I was also positioned in TMAC for the takeover, but then was worried they may actually go bankrupt and sold, but then they got taken over regardless. So I missed that one in TMAC by being a bit too defensive of the risk, but had the right idea and was in it briefly right before the takeover, because it met the same criteria).

      Sure there are times where I’ve been in companies, figuring they’d get acquired and didn’t I didn’t like the news or deal when it hit (like the recent takeover of my Roxgold position by Fortuna), but I still made money on it, which is way the hell better than losing money on a mining stock, and in the case of ROXG, I’d already had a fantastic run in Roxgold for some time, so the takeover was just the final chapter in a good run, but they got grabbed a bit earlier than I’d have preferred.

      It’s the same thing here with Corvus, I’d already had a nice 40%+ gain in it off their recent good drilling news, and just stacked the 30% takeover premium on top of that. Could it have gone even higher this cycle without getting taken over? Sure it could, or it could have gone lower. At least with a takeover you get a clear win and liquidity event and can rotate those funds into another opportunity.

      Are there investors that seriously would shrug off a 70% gain in a PM stock in a few months, at a time when many stocks are down 30%-60% losses, just because it is a MERE TAKEOVER play?

      That’s nonsense if so, and no wonder so many investors don’t make money investing in this sector, or any sector for that matter.

      I point this out because we hear or read so many people (even prominent talking heads) that diss on investors positioning in takeover plays, and then simultaneously whine about losing money in their “superior” stock picks when the sector is under pressure.

      Then there are the longer term buy & hold investors of a stock, that may grumble on a takeover, but that is because they didn’t limit their losses in a stock on the way down, and/or didn’t average down when a stock was dragging along the bottom.

      There are 2 times when a stock get’s taken over by the big boys –

      1) When it has turned it’s ship around and is ripping higher (like Atlantic Gold, Silvercrest, Teranga, Kaminak, Northern Empire, Gryphon, Claude, Integra, Roxgold, etc…) — Or in this case Corvus.

      or

      2) When it has a good project but has been pummeled in shareprice by market doubters (like Klondex, Richmont, Avnel, Marlin, QMX Gold, Eastmain, Alio, etc…)

      The big boys like to buy when there is “blood in the streets” as well, so it’s silly that investors think they are the only ones that want to go bottom-fishing for deals. It is odd that investors are surprised when a stock gets scooped up for a 30%-50% premium, at a point when a company is hovering near a low price range or low valuation. Why would that surprise anyone? That is exactly when many companies get acquired, and is a good time to position in good projects held by struggling developers or producers.

        Jul 16, 2021 16:45 AM

        I’ve written on the KER about this likely takeover by Corvus by Anglogold Ashanti about a half dozen times and anyone that wanted to could have jumped in front of this trade for an easy upside premium. Hopefully a few investors did and just made some easy coin on this takeover news.

        ______________________________________________________________________________

        > On May 6, 2021 at 12:45 pm,
        Excelsior says:

        “I’ve been waiting to see if would be AngloGold Ashanti or Coeur that started to make their move on Corvus, as they are all exploring there together in Nevada and all 3 companies seem to have some stunning results going on.
        I bet Corvus will get taken over before the end of the year, and it is looking like AngloGold Ashanti just stepped up their game…”
        ______________________________________________________________________________

        > On May 21, 2021 at 1:43 pm,
        Excelsior says:

        “This was notable news earlier this month from Coeur positioning in Victoria Gold. I thought they may get more of a stake going in Corvus Gold, due to their proximity to Sterling project in Nevada (that they scooped up from Northern Empire), but AngloGold Ashanti beat them to the punch on Corvus taking out a 20% stake and blocking them from considering other transactions for 90 days. It is looking like AngloGold Ashanti may make a move on Corvus for a takeover in the next few months, so I’m holding onto my Corvus for that potential news but will then sell into that even (if it plays out that way). I was willing to hold onto the Corvus if Coeur moved on them, since I already hold a position in CDE.”
        ___________________________________________________________________________

        > On May 27, 2021 at 7:27 pm,
        Execelsior says:

        “Nevada has a bunch of projects that could be consolidated as well. I had just opined a week or two back that Corvus, Coeur, and Anglogold Ashanti are all working feverishly to drill out projects on adjoining land packages. Initially I was thinking that Coeur may make a move on Corvus, to consolidate their projects. I was in Northern Empire a few years back when CDE took over their Sterling project, and this very close to Corvus’s Lynnda Strip & Bullfrog projects next door, so it seemed like a good union. However, then Anglogold Ashanti started drilling on the other side of Corvus and hitting paydirt, and now they’ve taken the traditional 19.9% strategic stake in Corvus, with a 90 day clause preventing KOR from doing any other major transaction, which has tipped their hand that they are likely going to takeout Corvus (and I’m guessing in the next 3 months).”

        “Then it begs the question of whether Coeur will keep developing Sterling as a stand-alone project, or flip it to AngloGold. The point being consolidation of projects makes a great deal of sense for the larger producers to ensure they have the mine life and scalability to make these projects worth the candle for them.”
        ______________________________________________________________________________

        > On May 27, 2021 at 7:32 pm,
        Excelsior says:

        “Personally, I’d like to see Corvus run on good drilling for a while longer before AngloGold Ashanti makes a run at them, but if they pull the trigger over the next few months, then I’ll take the easy 40%-60% on a takeover offer, and rotate those funds into the next development story. Rinse and repeat.”

        __________________________________________________________________________________

        > On June 24, 2021 at 3:47 pm,
        Excelsior says:

        “Well, I’m sure AngloGold Ashanti’s mouth is watering when they keep seeing Corvus hit long economic intercepts like this. By the end of this year I’m guessing that Corvus is taken over by AngloGold Ashanti, but until then I plan on enjoying the ride…. 🙂 ”

        ___________________________________________________________________________________

        > On July 7, 2021 at 12:27 pm,
        Excelsior says:

        “Speaking of buying and Anglogold Ashanti…. I’m hoping they buy out Corvus in the next 2 months. If so, I may hang onto the AU shares if KOR gets nabbed.”

        > On July 7, 2021 at 9:50 pm,
        Excelsior says:

        “Hi Mike. Well, like any trade, there isn’t a once-size-fits-all answer, because it depends on where traders got positioned as to how happy they’ll be at a buyout scenario.
        Personally I got positioned in KOR at $1.92 4 months ago, and KOR closed today at $2.71, so the trade is already well in the money for me at this point. If a buyout was announced tomorrow at let’s say a 40% premium from here to $3.79 then I’d be thrilled. I’d have the option of pulling profits for a nice gain, pulling partial profits and letting the rest convert over, or letting the whole amount convert over. I’d likely opt for pulling partial profits in some of that gain, and letting the rest convert to AU shares, in this hypothetical example.”

        “Most buyouts are in the 30-50% premium zone, so if that happened from present levels would be a nice upside in a short time frame for any investor that got in lower than current prices. That is a much better return than most generalist investors will make all year in their mutual funds, and I personally anticipate we may see something as soon as the next 60 days from Anglogold Ashanti making their move on Corvus. That’s just my personal opinion and definitely not investment advice.”

        “Really it would depend on someone’s goals with why they positioned in a stock and if they feel the acquisition robbed the company of much more upside, that won’t be the same in the combined entity. I still think there could be some nice upside after the takeover if shares converted over to AU, for the reasons previously mentioned to Matthew up above, and to his point on the rerating potential in Anglogold Ashanti to get more in line with valuations of other senior companies.”

        “There are however times, where investors feel the companies future gains are robbed during takeovers, as the larger company picked off the smaller company before it really has a chance to spread it’s wings and fly higher, or like in the example of the recent acquisition of my Roxgold position by Fortuna, I just didn’t see many synergies with the business combination, and would have liked to have seen a larger West Africa focused gold producer do the acquisition instead. If Semafo or Teranga would have acquired Roxgold, before they themselves got swallowed up into Endeavour Mining, then I could have gotten excited about those business combinations.”

        “For me personally with Corvus, I entered the stock 4 months ago based on their great drill results, and that they were happening in tandem with both Coeur Mining and Anglogold Ashanti both drilling like crazy right next to Corvus in Nevada on their respective properties. I figured KOR could run higher based on just drilling success, and also postulated that either CDE or AU would make their move on Corvus in a year or so. When Anglogold Ashanti just took that larger strategic stake in Corvus and put in a 90 day hold on Corvus doing any other major transactions with any other company, that showed their hand in my opinion.”

        “At this point with a 41% gain in place, and if another 30%-50% gain was stacked on top of that, then I’d be very happy with those returns on an investment in a 6 month period of time. If a different investor did something like buy into last summers peak over $3 hoping to get a multibagger, and then got taken out for a 30%-50% premium, then they may not be as excited. It’s all relative.”

          BDC
          Jul 16, 2021 16:44 AM

          Excelsior on Corvus: https://postimg.cc/JG1bzFDT

            Jul 16, 2021 16:42 AM

            Thanks for that chart BDC.

            Yes, Corvus had a nice run leading into the takeover announcement.

            BDC
            Jul 16, 2021 16:29 AM

            It became a breakout/pullback buy at about 2.60 — similar to an ATHBO (All Time High Breakout). Wish I’d seen it …lol.

          Jul 16, 2021 16:45 AM

          Ex, PGM looks like it could go lower and it may be a takeover target, what do you think? You just wrote the book on takeovers, I’m sure you have some wind left for Pure Gold Mining. It just keeps falling, and the sharks will be circling.

            Jul 16, 2021 16:51 AM

            AngloGold Ashanti owns quite a few shares of Pure Gold, I’m sure they are watching this one as well.

            Jul 16, 2021 16:57 AM

            Hi DT. Yeah, it wouldn’t surprise me if one of the big boys made a move on Pure Gold while they are under pressure in valuation, but still have all the gold in the ground and sunk costs of all the infrastructure in place for all the production operations. Anglogold could be the suitor down the road, but they’ve struggled more than other seniors over the last year as far as valuation, so it would surprise me if they moved again into another acquisition in the near future, as their hands will be full with Corvus.

            It could be that another larger producer, wanting to diversify into Red Lake, could make a move on Pure Gold though. Mark O’Dea and the Oxygen Capital Group usually are receptive to a takeover as an exit strategy in their companies (like Frontier Gold, True Gold, etc…) and they already merged Sun Metals and Serengheti into Northwest Copper. I’m sure they plan on having Discovery Metals and Liberty Gold get acquired as well down the road once they complete resource estimate updates, and another round of economic studies.

          Jul 16, 2021 16:07 AM

          Thanks Ex, I always appreciate your timely reply’s.

    Jul 16, 2021 16:58 AM

    The reason I don’t trade right now (for almost a year) is the never ending pattern of my portfolio (including changes and substitutions) of alternating days of individual stocks up and/or down resulting in day after day of a wash portfolio (except Emerita until recently). Recently Emerita has gone to an alternating pattern indicating it was possibly under the radar of the algo activity until making progress beyond status quo of the others. In summation, it appears clear to me for my account that the daily wash is the product of “electronic intervention” making the charts a reflection of a self fulfilling prophecy of an orchestrated non-human process. Due to the on-going intervention and predictability retroactively, humans go into a holding or exit pattern and the machines continue with the predesigned program. It is a fraud and falsehood for the purpose of “painting charts” in advance and thwarting free-market interest…again as they have done for years in order to sustain the unreality of the General Markets.

      Jul 16, 2021 16:11 AM

      For a moment to moment visual of intervention, go to investing.com and follow the Gold, Silver, Copper, Platinum & Palladium “paper charts”. This is where the process originates in triggering electronic trading programs. Whether the intervention starts at 2:00 AM EST in London or is hit right before/ after open in New York or out of the blue. When it comes it could be a large dump, a large dump that blows stops, a series of consecutive dumps, a flash crash due to an excessive dump (my account lost about $50,000 in one paper move yesterday, and I quickly hit reset and it was up $8,000. Fat Finger?). Except for Emerita yesterday, the other 40 stocks were down $300. Another wash.

        Jul 16, 2021 16:20 AM

        Ask yourself why the Fed “jawbones”. Is it to affect market direction or trigger algos to affect market direction consistent with the Fed’s often false narrative.

        Jul 16, 2021 16:54 AM

        Look at Palladium at open. Big red candle. Look at Gold early morning before open.

        Jul 16, 2021 16:58 AM

        Platinum is a good example: looks like a hit right before open with follow on candkes into and after open. I can’t trade before open. Who could that be?

    Jul 16, 2021 16:27 AM

    If the charts are predetermined electronically, what is to say there can’t be a counter intuitive move contrary to the charts. That makes the game within the game more of a challange.

    Jul 16, 2021 16:28 AM

    Challange = Challenge

    Jul 16, 2021 16:23 AM

    How in the world does gold go down, with a world in conflict……. hummm

      Jul 16, 2021 16:28 AM

      If the Fed lost credibility, could Wall Street transfer as much wealth on a daily basis without drawing Regulatory attention. The answer might be yes, but they can’t take the chance that the gravy train turns into the train to prison.

      BDC
      Jul 16, 2021 16:32 AM

      Crypto kills, or at least mutes, the Gold Story.

    Jul 16, 2021 16:55 AM

    How do you leverage my silver dollar in my sock drawer? It is easy to leverage cryptos just like the fraudulent paper comex. You create more paper than physical or create an ETF or mutual fund, or some other entity that creates leveraged derivatives and then say they are more liquid or hack proof. You create another lie, but no one can leverage my silver coin in my sock drawer without committing a crime. But, it appears there is no one around that finds crime distasteful except victims.

    Jul 16, 2021 16:24 AM

    What is Bonzo buying today? I could not resist the sale going on in DOLLF and Novo.

      Jul 16, 2021 16:05 AM

      I bought Kootenay and SILJ. Glad I bought more Galleon yesterday but I probably should have bought more than I did. We’ll see if it offers the same deal again.
      My recent HMY position is still up about 7% while my new AU position is up about 3%.

      The Canadian dollar is looking for a low near the confluence of four pitchfork supports. A strong loonie is a good sign for our miners.
      https://stockcharts.com/h-sc/ui?s=%24CDW&p=D&yr=0&mn=7&dy=0&id=p13022684746&a=555201949

      Jul 16, 2021 16:09 AM

      Bonzo needs to pull out his wallet again. According to my account, sale on in Emerita, Great Bear, Eloro, Novo, Discovery, Fosterville South, Bitterroot, Group Ten, Summa, Great Bear Royalties, Amex, Blackrock, Copper Lake, Sun Summit, E79. Bluestone, Silver Sands, New Age, Banyan…just to name a couple. Couldn’t have anything to do with those candles appearing around 9:00 or after in all the paper metals on Comex. Must be a bunch of legitimate sellers hedging and looking to get a lower price. But, possible the afternoon will change. I will take a look at fundamentals and see if there is something that already exists that may make a difference…like a Grand Jury.

    Jul 16, 2021 16:20 AM

    Hi Matt,what are your thoughts on the New “South Zone” Galleon just uncovered?
    Any idea what this could add to the resource estimate?
    Cheers

    Jul 16, 2021 16:32 AM
      BDC
      Jul 16, 2021 16:49 AM

      It may be ratcheting higher after closing a downside gap: https://tinyurl.com/f3fhhsc

      Jul 16, 2021 16:28 AM

      The news this morning was “dollar higher after upbeat US retail sales data” but it looks pretty lame and did not reverse its daily MACD sell signal.
      (UUP used for live quote)
      https://stockcharts.com/h-sc/ui?s=UUP&p=D&yr=1&mn=0&dy=0&id=p00449423350

        BDC
        Jul 16, 2021 16:43 AM

        That big gap in mid-June will eventually be filled (when?).
        Other gaps shown in UUP do not appear with spot prices.
        This may be due to some ETF effect — or market hours.

          Jul 16, 2021 16:49 AM

          When it comes to currencies, I’d guess it’s due to the forex market, which never sleeps. In the case of the HUI, however, there’s some other reason since gaps used to show and now do not. That change happened pretty recently and might be an effort to hide gaps from casual retail investors.

    BDC
    Jul 16, 2021 16:38 AM

    Seniors holding. Juniors not.

    Jul 16, 2021 16:40 AM

    Hi Poko, I have no idea but the potential for something very significant is there, as the CEO pointed out.
    It is true that “a bird in the hand is worth two in the bush” and we have a bird or two in Galleon. The question now is what kind of bird. Is it a bantam hen or a golden goose?
    The potential seems to be great based on the info so far but I’m not a geologist so it would be nice if one would chime in after taking a look at data.