Gold’s overnight selloff – Is this a buying opportunity or a warning sign for the bulls?
Erik Wetterling, Founder of The Hedgeless Horseman joins us to share his thoughts on the overnight selloff in gold and carryover to trading today in the stocks. Erik still sees a lot of “cheap” gold stocks out there but I take the argument that we’ve heard this for months and the trend remains lower. It’s a good back and forth discussion on gold.
Click here to visit Erik’s site to keep up to date on the stocks he is buying.
Erik, what did you learn about Foxfire and Aurion on your trip to Finland? Is there gold in Abisko national park? I looked for gold there in 1974 but found only reindeer.
I asked him that same thing Bonzo, but we are saving that Finland trip for the next interview. Stay tuned…
Hi bonzo!
I didn’t visit Aurion but did visit FireFox. I do believe there is a lot of gold to be found in the CLGB. I will be making a site visit article in the not too distant future. Main take away: FFOX are aggressive and Carl the CEO dreams of making 2-3 discoveries in the coming 5 years or so. Also the team is hungry and love their job. IE, certainly not a life style company!
All the best,
Erik
Thanks, HH. I hope that none of your companies on your site are life style companies.
Appreciate your honesty Cory.
Most people buy near the highs and sell near the lows. Avoid doing that and you’ll be ahead of most people. There is no need to concern yourself with nailing tops and bottoms. Just buy significant weakness and sell significant strength. Yes, that’s easier said than done for several reasons but it’s a must.
I’m with Erik and am glad this week started the way last week ended: sharply, decisively down. The technical no-man’s land we had been in is now over and Cory’s report on negative emails is perfectly consistent with a washed out market.
As already pointed out today, the silver stocks have bullish provided no downside leverage to silver for the last two sessions. That can change, of course, but it’s impressive considering silver’s plunge.
SIL:SLV
https://stockcharts.com/h-sc/ui?s=SIL%3ASLV&p=D&yr=1&mn=6&dy=0&id=p07501638181&a=1006390967
Good thoughts…
Happy to hear your thoughts Matthew. I was beginning to believe I might be crazy hehe.
Glad to hear that your TA is suggesting some kind of exhaustion as well.
All the best,
Erik
I don’t think Matthew, Erik , and Bonzo are crazy, unless you mean crazy like a fox. This is a good time to buy gold and silver. The communists running Biden will take gold to 8K and silver to $200 at the least.
BS HH,2000% since 2016,;unless all you’ve owned was KL @ $4, and NSRPF @$.05, ELRRF @ $.15 & NFGFF @ $.30. Take away Quinton H wins in KL & NFGFF, HE has a mediocre record the last 5 years. And if it weren’t for TAVI Costa, he’d be < mediocre.
Nothing personal Eric, I still appreciate your commentary
I’m sorry you feel I would lie to people. The exact number from Jan 1, 2016 in my oldest portfolio is 2,296.35% (I just checked). I can send you a screenshot if you still think I am lying to you.
The thing with compounding is that you don’t need to catch one 2,000 % returner. If you can average 60% per year from different no brainers it gets to 2,000% rather quickly. Said portfolio had NO 1,000% returner even.
… This is exactly why I have talked a lot about why I tend(ed) to go deep when the risk/reward was great (for the “probable” 50% returns”). Now the portfolio is too big and illiquid (PPs) for me to trade it like I used to.
All the best,
Erik
Erik, great points on achieving outsized gains by repeatedly finding and capitalizing on the risk/reward setups. There are many successful paths to fantastic returns, and they do NOT all involve going all-in on one or two stocks that become multibaggers, or finding only the winning explorers that go the distance to become a mine. Those are nice when they happen, but one doesn’t have to perfectly time everything or have a massive concentrated position in just 1-3 stocks to hit it big… far from it.
Even despite the recent weakness in commodity stocks (and in particular the PM stocks), my portfolio is still up about 4 times where it was during the Pandemic crash lows, but it did peak at a high-water mark back on June 1st. Personally those kinds of returns have me extremely pleased, and from that Pandemic Crash of March 2020 to present has been the best year and half in investing I’ve ever had… period (even despite having really nice performance runs in years like 2010/2011, 2016, and even 2019.
The reason my portfolio of 90 stocks is up 400% in during the last 18 months isn’t because every stock I hold was a 4 bagger (although some of them were during that time period). It it because different sectors (like the PGMs, or Uranium, or Lithium, or Copper, or Clean Energy) ran at different times, including selling the rips and buying the dips on Gold & Silver stocks while the market whipsawed.
While our investing approaches are much different (as we’ve discussed off-mic in the past), there are certain similarities worth mentioning. You are more of a value investor getting in early for a more buy & hold approach where you see a margin of safety and good upside, where as I like the more actively managed approach with lots of trading, but we both regularly capitalize and pull profits on gains that are not as dramatic as the big wins and then reinvest them again and again. We’ve discussed this before where profits of 20%-100% are still incredible returns, that put to shame most mutual funds and generalist investors, and I have no qualms about getting in, making 30% or 50%, then selling part or all of the position, and rotating into another stock that has more immediate potential. I also have no problem trimming a winner, waiting for a 20%-40% pullback and then buying right back into again, and again.
While there are some legitimate multibagger returns that we all seek of 300%-1000% gains, what a lot of folks don’t realize is you don’t need to strictly have a 400% gain in every stock for your account to go up 400%, you just need a lot of base hits that cumulatively add up to those kinds of gains. In a simplistic example, you could have everything in 1 stock that goes up 400% (which is likely insanely high risk), or you could invest in a basket of stocks, where some go up 30% some go up 70% and some go up 700%, but where you harvest gains, and redeploy into better risk reward set ups. Over time, the pool of funds inside one’s portfolio to invest gets larger and larger, and so from the initial capital where one starts from, to where it grows can cumulatively be a multi-bagger, even if there were no multibagger returns. I’m thrilled where there are triple digit percentage gains in companies I follow, but those are the icing on the cake, and my personal goal is continuing to get the base hits of 40% here, 80% there, 25% here, 60% there, adds up to cumulative portfolio growth.
It is a LOT of work though, and there are times where I do feel compelled to sell everything I own, and go all-in on one big exploration play for the big multi-bagger return, but I’m too risk-adverse for something like that.
Regardless of people’s investing strategy, risk profile, value investing versus actively trading, going for explorers, or developers, or producers, or royalty companies, focused on just 1 commodity or many, wishing the good people here at the KER good trading.
Still 9.5% cash. No stink bids hit today , maybe tomorrow
SLV has now filled at least half of its big December gap and is oversold for the first time since the covid crash well over a year ago (based on the daily RSI-14).
https://stockcharts.com/h-sc/ui?s=SLV&p=D&yr=1&mn=1&dy=0&id=p94400361742&a=676469893
Great interview and great individual thoughts. I can’t help thinking that the biggest issue is intervention in the markets and nothing natural. Doesn’t change the result, but it might change trying to interpret cause and effect leading to agenda/real purpose. Could be that Gold/silver/miners are not out of favor, but a threat to a failing alternative.
Thank you David!
Yes, it is hard to make sense of the paper gold/silver trading given that nothing makes sense out there anymore.. Or perhaps it makes sense because nothing makes sense hehe.
All the best,
Erik
I admire you having a strategy and adhering to it, Erik. I am adding today jr”s like NFG JAG KNT MAG GBR. if we get another drop my wishlist includes PAAS EQX. I wnder if the bottom is in at $1677 or will go to undercut low at $16.71 OR NEXT LEVEL AT $1566. A surge in buying will give the manipulators a religious experience! What I admire most about this site is the contributors that have a strategy and adhere to it and are with all integrity willing to share it. If you have faith in your strategy why would you perceive this manipulated takedown as any thing other than a buying opportunity? I am shocked at the number of people that have no strategy! In my opinion, these people should not be in the market if managing their own affairs. My memory goes back to that poor soul whose Dad invested a lot in VET for the great Dividend at the time. The energy sector tanked and this person whined that it was all J. Schachter’s fault that his Dad was in serious trouble. Their only strategy appears to be that of maximizing Dividends. Well, Energy went into the tank and without stop losses (strategy) in place’ he really got hurt. The wealth of retail strategies on the Korelin Report makes it the #1 must go to site for strategy and ideas in my opinion.
Thank you and happy to hear your like what I say FIH!
I can’t argue against picking up quality names like that! What calms my nerves is simply reminding myself of the fact that a) Everything goes up and down, b) Gold’s LT fundamentals are fantastic (both due to nature of the sector and macro tailwinds, C) A high quality project will always be a high quality project and that the only thing one can hope for is being able and having the stomach to buy something cheap… The rest is out of my hands!
All the best,
Erik
+1 well-stated buddy.
Erik, I’m also happy to have you back, thank you.
Glad to hear that Terry even though I feel like a broken record who just says “It’s cheap, I’m still buying!” :).
All the best,
Erik
This past week in gold
Jack Chan Posted Aug 9, 2021
Gold sector as represented by $HUI is now on a major SELL signal.
Short-term is on SELL signal.
Speculation is now in bear market values.
COT data suggests overall lower prices.
HUI GLD Our ratio is on BUY signal, barely.
USD is in the process of a potential cup with handle pattern.
Major support for gold now is the 200ema at just below $1600.
HUI major support is the 200ema at 240.
Long-term – on SELL signal.
Short-term – on sell signals.
Gold sector cycle is down.
I really dont like this guy. 😉
Yes, the daily weekly and monthly charts are on sell signals based on Chan’s use of MACDs but the more important quarterly and yearly charts are firmly on buy signals.
If last night didn’t mark the low, it could get worse for quite awhile.
We can only hope its not 20 years worse again.
7 million shares of GGO just came up for sale at 9 cents… ugh!
Considering where we are at in the correction of the sector, I bet it will be taken out relatively quickly. It is probably someone like Sprott who has a lot of warrants. He knows that he can either sell quickly to smart money at an important low or piece meal to dumb money at a higher price, which could take a long time. So, the appearance of that offer could be a sign that we are at or near the low. I’ve seen the same many times over the years.
I thought the puke point was over a week ago so I have already began rotating out of the pms and into alternative energy. I can’t afford to stay all invested in the pms until they decide to bottom. I still have IPT, SCZ, BBB and GGO but have reduced on GGO for now.
I get it. We all gotta do what we gotta do. I bought more IPT today at .51, .50, and .495 and beat the VWAP for the day by well over a cent.
Interesting Dan. I also hold IPT, SCZ, and BBB (but not GG)), but conversely sold some of my alternative energy stocks today, clearing out my holdings in the ETFs (TAN) and (PBW), to rotate the funds into adding to my positions in HL, KUYA, GG, JAG, and NWST. Mopping up some of the puke with clean energy profits. 🙂
Correction: (but not GGO Galleon). I do own GG Galane Gold and added to it today.
BTW, the stock I am rotating into is Etrion, ETX;
https://stockcharts.com/h-sc/ui?s=ETX.TO
As for the PMs I’ll be back in more wholly in a bit after the US dollar rebounds. I am bearish PMs mainly because of the low August volumes.
Of course buying low and selling high is the formula for making money. Easier said than done. Most everyone on this planet knows that all markets are manipulated and at least 80% of the trades are done with algos and computers. Valuations of ounces in the ground? Good luck. The limited amount of players in the futures market will guarantee there will never be a fair trade. All things in life are not fair, I’m with Cory, sometimes you will have to suck it up and go short to make money.
If PM prices are under pressure, keeping close stops on producers, while focusing on explorers, may be a useful tactic.
They will blow your stops with a “fat finger” trade.
If that’s the concern, when PM prices are under pressure, it may be best to sell.
Short this PM market at your peril, in my opinion!
I do not trade mining stocks any more. I use my physical precious metals as insurance against a worst case scenario that I hope never comes.
I purchased some more physical gold this morning.
I’m lacking certainty on where we are going near term with the shares. Just being honest.
The simplest strategy I have seen followed is BUY when your gut has a frozen football in it and SELL when your gut is euphoric with tickly little Butterflies are everywhere. In my opinion you have to have a strategy to get to those points. LOL! I’m really chatty today as this is a topic close to my heart. If good ideas on this site can help one old age pensioner from losing their life savings, God Bless All!
Absolutely! PM sector is to buy on breakdowns and sell and RUN on breakouts. Every time it has bitten my ass because I got greedy.
Great strategy FIH ! Buy the dips and sell the rips.
For example go to finviz.com under commodities and notice YTD coal is up 104.97 % verses gold down -8.88% YTD. You do the math.
I saw this post title on Kitco earlier today: “Gold, silver pounded on notions of tightening monetary policies”
It is all so insane – the FED can’t tighten because if it does the market will tank and there goes the 401Ks and IRAs of the US retirement system. Tightening will never occur beyond a percent or so. It just can’t happen. So, what happens when the masses realize that fact?
The masses never will. Trader Vic spelled it out how the pundits spin the story to fit the narrative.
There is so much cognitive dissonance going on these days, the general public does nothing more than look at there statements.
As long as the television endorses the false reality and keeps everyone’s eye off the ball, expect more of the same.
Yes, trader Vic kept it simple but right on target
DELICIOUS MICHELE MERCORI @ Kitco a must listen to chat with George Gilder, touting blockchain and equally Gold
PM prices usually inversely follow the Dollar Index, which is now rising.
A chart reversal may be unfolding, like a failed Gartley pattern.
If so, this will occur very soon — possibly by tomorrow.
“Usually” is the widespread perception but is probably only accurate in the short term. Right now, I’m not at all worried how the dollar might do versus the euro and a few others. In this environment, gold is king and the dollar is runner up. That’s why the two have been rising and falling roughly together for the last three years.
The gold chart is all one needs to see how the dollar is really doing in the real world.
https://stockcharts.com/h-sc/ui?s=UUP&p=W&yr=5&mn=2&dy=0&id=p38781130813&a=1006555731
The time to Sell was last Aug 2020 when I said I sold 80%. That’s when I went to hibernation.
All is well…
Also take notice on Finviz that Lithium is up 98.92% YTD. Finviz doesn’t even list the Baltic Dry Index anymore because shipping rates have gone parabolic. Follow the money.
Yes John K – many commodities and their related miners have a had a really good year as you pointed out Coal and Lithium, but look at the moves higher in Palladium & Platinum, Copper, Uranium, Oil, etc… Being diversified across a number of different commodity miners (like the PGMs, Copper, Lithium, and Uranium miners) really pushed my portfolio higher this year, and helped balance things out when the PMs were under pressure.
Many of the commodities have been taking a breather here over the last month or two, but medium to longer term they still have much further to run. From a long-term standpoint, the commodities are still very far below the mean as they relate to the general stock market indexes, so just a version to the mean should mean more strength to come across the commodities sector in the bigger picture.
version = reversion
Lithium Demand Is Shifting Into Overdrive
by Sean Brodrick | August 5, 2021
https://wealth-wave.com/wealth-wave/lithium-demand-shifting-overdrive/
An Electric Jet Start-up Just Signed A $1 Billion Deal With A Commercial Airliner
August 2, 2021
https://www.cnbc.com/2021/08/02/lilium-electric-jet-start-up-signs-1-billion-deal-with-azul.html
We need at least 5-6 posts from Spanky, I think that will mark a bottom in PM sector.
Here’s a reluctant +5 for that sentiment indicator. 🙂
“Just a reminder, when Greenspan was lifting rates off 1% on towards 5.25% in the mid 2000’s, the price of gold doubled. When Yellen started raising rates in December 2015 after 7 years at zero, gold bottomed. I know we are not debating rate hikes now, but rather the timing and pace of tapering but you get the point.” – Peter Boockvar
And back in December 2015, tech and general SM was not as overbought as of today. So all sectors benefited, not just PM. Not saying stocks can’t go up, but how high Apple and NVDA can rise from their already bloated valuations?
Peter Boockvar is spot on regarding Gold rising when the central banksters were hiking rates in the past. As mentioned below, I had asked Jordan Roy-Byrne about a scenario, other than a general stock market correction, where Gold could garner a bid, and he mentioned that if inflation kept growing to where it forced the Fed’s hand to hike rates earlier than scheduled, that this could underpin a move higher in the yellow metal.
We really haven’t seen major inflation hit pricing hard for the last decade or two, at least not in the problematic ways in which the government CPI stats are calculated. Unfortunately, those CPI data metrics are what most markets and trading algos are are keyed off of. If the inflation metrics end up not being transitory, but if there is a sustained trend of higher inflation readings, and if the Fed is forced into hiking early, then that may be impetus for generalists to park some funds into Gold and give it the juice to break out of it’s funk and power up to new all time highs once again.
One has to seriously consider whether the PMs are signalling a coming “transitory” disinflation period along with a significant stock market “puke”. We have now taken out that 20 month SMA of the BBs I’ve mentioned which is not a good sign for gold—we will in all likelihood close below that this month. Interestingly, the monthly chart for the bond market is signalling potential problems for that market in the coming month. Fascinating charts right now.
DOC,
When stock market pukes, I don’t think Fed would sit idle, They will ramp up bond buying program again and flood the system with fresh new money. If deflation gains control, it will wreak havoc to emerging market economies and as a result they will ramp up their own money printing program.
I agree—however, they’ll let it “puke” for awhile before they step in. When they do, that is the time when the PMs will have a serious bid again but we won’t see it this year.
We wont see a serious bid for PMs this year?
Why would anyone want to own them then?
Other than its always a good time to buy of course.
But really, no bid for the next 6 months?
B, the point Doc was making is that if we saw a general stock market “puke” for a while, before the FED steps in, that this would be the reason some investors would migrate some capital over to the PMs.
Gold would pick up some safe haven appeal again in that kind of environment, and that resonates with the view that Jordan Roy-Byrne has that for generalists to get interested in the PMs again, that we’d need to see a more substantial corrective move in the general stock markets.
When I had asked Jordan last week if there was any other path where gold could reverse course and trek higher, other than a general stock market correction, he conceded that if the Fed was forced to start hiking earlier than they wanted due to inflation not being just “transitory” then that could cause the precious metals to garner a bid as well.
Personally, I’d rather see that second scenario, where inflation heating up just a little bit more is the fodder for higher rates, and then this is what puts a bid in for Gold, versus needing to see a nasty stock market correction to get the bump in the yellow metal. I also believe that rising inflation scenario is a more sustainable scenario that just a market rout, but we’ll see which one plays out, or possibly even both of them play out.
Corey, If your so negative on gold, why do you pump all the Co`s that you do?
Dennis, I don’t believe Cory “pumps” companies. He may have CEOs on that “pump” their companies but I’ve never known Cory to consistently in anyway “pump” companies.
Agreed Doc. Cory makes it a point not to pump companies, but rather we focus on helping companies to get their news out to investors, and tell investors what the highlights of their news means to the company. Sure, the CEOs may pump their own companies (which is their job), but mentioning a company officer that they’ve done a good job executing on their plan, when they have done so, is not pumping.
I agree also. Cory has never pumped a company that I own…not once.
A must-watch if there ever was one: An honest expert schools a school board…
https://youtu.be/AUjkSaedN4g?t=900
Matthew, Dr. Dan Stock is a great Hoosier doctor that Indiana should be proud of. Fauci should be thrown in jail and replaced with this Hoosier doctor.
Fauci should be tried for crimes against humanity and then executed for his crimes. His crimes go back at least to the early ’80’s with the AIDS scam
Well, at last they are giving some attention…. to what is real about covid….
more good stuff, ….
Might have to post this over in the Orphan Section…
Those who paid the ultimate price…for the kill shot. And remember, VAERs under reports by 10 to 100x.
Matthew, are you taking any preventative measures such as increasing your vitamin D levels, taking Ivermectin, etc.
No, I’m not doing anything different than before the scam began. I take 5,000 to 10,000 IU of D3 per week when I remember to and not much zinc, usually 10 mg 2-3 times a week of zinc orotate (a chelated zinc). I try to take K2 (as Menaquinone-7) every day and I eat only once a day for the benefits of autophagy, stable blood sugar and lower insulin.
I think I would use HCQ for prevention and Ivermectin for symptoms but you probably know more about the pros and cons of that approach than I do.
It’s been nearly 18 months and I have still never worn a mask.
Is that a gooberment school? With that name it doesn’t sound like it but do they get goooberment money? If so, I bet they don’t listen to that doctor and what he said will go down the memory hole.
And speaking of going down the memory hole you can bet youtube will pull that video as soon as their algorithm comes across it. So I hope they put it up on bitchute or some other place.
The PMs have left me depressed. No new highs this year. The last 12 months have been quite frustrating. After the impressive run up in gold and silved last year we all knew a period of consolidation was necessary. However these takedowns are just undoing any progress made. It would seem the environment at the moment is not favourable for a serious bid on gold as doc suggests. Too many variables and market sensitivity for PMs to gain substantially at this stage.
Yes, sentiment was already low in the precious metals sector, especially the miners, after the long corrective move, and then when things bounced of the March lows in April & May, many technicians thought the breakout above the trendline resistance was the cue that things were taking off with Gold and the miners. We saw the larger producers and royalty stocks start to move at that time, which is also a good indicator, but then June & July were tough grinds sideways to back down again. So with the big selloff from the end of last week into this week, it just further tanked the sentiment and has many investors throwing in the towel on the sector (but this is also what happens at significant bottoming processes).
I pointed out the end of last week that if you back up the clock for the last 2 years that Gold still has put in a bullish series of higher lows, so as long as we don’t get a daily/weekly close below $1673 (the most recent higher low from March), then we still could see the yellow metal put in yet another higher low. We’ll see how it goes, as last night/early morning there was a spike down move to about $1677 that was testing that low, and it held and sent gold right back up above $1700 again.
We are definitely at a critical point for Gold to hold above that $1673 support, and if that breaks on a closing basis, then it would be more chart damage, than what we’ve seen in this most recent rout.
Until we see where this recent move bottoms, then it is still too early to call whether support will hold and we get another “higher low” in longer term bullish uptrend, or whether the March lows break and we see a bear market move developing.
While these corrective moves in a cycle can be depressing, Gold is still around $1700 and Silver is still in the $23-$24 range, which are both levels investors fantasized about for years, and where the producers are still making nice margins. As a result, I remain encouraged overall, but am feeling the sting like everyone else as we move through the pullback. If gold were to go down and break the Pandemic crash low of $1450 or the prior November 2019 low of $1446 then I’d get much more depressed and would concede we’re in a bear market at that point, but we are still a few hundred bucks away from that point, and not a point to wave the white flag at this point.
Here’s the chart and thoughts on Gold’s pattern of higher lows I posted on Friday:
It is most probable that Gold is still in the bull market that commenced when Gold double bottomed in the month of December 2015 at $1045.40, and has continued to trek higher since then in fits and starts, and got up to a new all time high last year of $2089, while continuing to put in a pattern of “higher lows.”
> In Nov of 2019 the low was $1446.20 (a “higher low” than the previous one of $1267.30) ,
> Then during the March 2020 pandemic flash crash Gold bottomed at yet another “higher low” of $1450.90,
> Next in March of this year it double bottomed down at $1673.30 which was yet another “higher low.”
> As long as wherever Gold finally bottoms is still another “higher low” above that $1673.30 then that bullish trend is still solidly in place.
Here’s a chart just looking back a few years and the trend of “higher lows” is clear:
Gold futures closed today at $1726.50 (so the fat lady at $1673.30 hasn’t sung yet)
Here is a Gold Chart that shows a consistent pattern of higher lows as the bull market has unfolded, from $1045.40, to $1124.30, to $1167.10, to $1446.20, to $1450.90, to the recent $1673.30.
Let’s just assume that the $1673.30 is broken soon to the downside (which would, in fact, be a more bearish signal in the short to medium term).
While that would not be as pretty of a scenario as holding here, basing, and then moving higher…… even then, as long as the bottom does eventually come in above the pandemic crash low of $1450.90, the bullish pattern has not ultimately been broken. So if we see $1620 or $1560 or even $15000, then it would be a downer for the PM sector, and one could argue a shorter term bear market would have occurred from Aug 2020 to that point, but within the context of a larger bull market.
Now if that $1450.90 or $1446.20 is taken out, then it may be years for the PMs to recover, and that would signal that the bull market did peak in August 2020 at $2089. However, barring that, the fundamental backdrop financially and politically has a lot going that favors a move higher in Gold, along with Silver…. for the medium to longer term.
I understand your perspective Ex but when comparing numbers, one can twist stats any which way to suit their bias to a certain degree. For example if we take into account golds high last year (dont quote me but around $2080) then we are currently not far off what is classically defined as a new bear market (20% below price highs). Whilst Im certainly not labelling gold as a bear, one needs to acknowledge that its price action since August last year has been disappointing. The majority of us here at KER and elsewhere for that matter were preparing for further gains in the ensuing 12 months but it has not eventuated.
Im actually not as disappointed with gold as I am with silver. When one looks at gold over the last 10 years, a price in the 1700’s is solid going. Silver however continues to lag comparatively speaking. Back in early 2014 silver was grappling with the $22 handle (not that far below current price) yet gold was around $1380, $1390.
I agree with your summary that gold is holding up reasonably well overall even in light of the recent down turn in price. By now though I for one was hoping gold was challenging new highs. By default anticipating silver getting a stranglehold in the $30s. Alas it was not to be. For me personally it just means more time in the market. As the saying goes: “Its time in the market as opposed to timing the market.
Good thoughts Ozibatla. As for the twisting of statistics, sure folks can twist them to suit their bias, but a pattern of higher lows on a chart, is simply factual data, and it is what it is and anyone can see that with their own eyes that looks at a chart.
Again, my comments were more about the larger term bull market still being intact in relation to the trend of higher lows. Until that changes, then the bull market that started in December of 2015, when the bear market from 2011-2015 ended, is still unfolding.
At this point we still don’t know if the March double-bottom at $1673 will be the confirmed “higher low” above the pandemic crash of $1450, or if that level will break to a different number to put in the sustained higher low for this part of the cycle. Again, even if Gold went down to $1620 or $1560, or $1500, then it would still be making a higher low above $1450, but it would be much more bullish, if the March level at $1673 held and was confirmed as the ‘higher low”, with this most recent rout the last few days being a test of that support holding. (at least it held overnight from Sunday to Monday when gold temporarily crashed down to $1677).
As for the classic bear market definition of a fall by 20%, I agree with you there, that what we’ve seen from the August 2020 high of $2089 to move to $1673 in March, could have been considered a smaller bear market within the larger bull market, based on that 20% definition. Again, this bear market view would be reinforced with a break below the March lows, but would be absolutely confirmed if those prior lows of $1450 during the Pandemic Crash, and $1446 from November of 2019 are broken. At that point it would be clear that the $2089 high from last summer was the end of the bull market that started in December of 2015, but I’m really not expecting Gold to get down that low and break $1450 or $1446, so it’s unlikely that the larger bull market will be threatened by this recent corrective move.
As for Silver, I’ve actually been far more impressed with it than Gold for holding up so well since last summer. Normally if Gold makes a big move up or down, then Silver will follow and then play catch up to outperform. As a result when Gold went from $2089 to the $1900s to the $1800s and then the $1700s and even $1600s, I’d have expected Silver to fall out of bed, but it mostly has held in a range between $22 and $28 (mostly in the $24-$26 area). Silver’s chart for last year has been much more neutral than Gold’s which has been clearly under pressure, so from that standpoint it has outperformed until very recently, and now it is selling off a bit harder.
Now from the standpoint of Gold taking out it’s all time high of $1921 to blast up to $2089 last year, then yes, Silver has disappointed by not being able to break out above it’s all time high of $49 so far, or even to get anywhere close.
So yes, that has been a bit disappointing, but keep in mind Silver more than doubled from the Pandemic Crash low of $13 and then surged up to $29, and Gold didn’t even double from $1450 or it would have surged to $2900+ to have kept up with the move that Silver had.
In the heat of the explosive moves higher from March of 2020 to August of 2020, I was also in the camp that it would be possible for Gold to make a new all time high again in 2021 after a pull back for a few months, (and I had thrown out September of this year as a potential seasonally strong period where this move could happen). I also mentioned last year that I felt Silver could get up into the mid $30’s in short order after taking out the $29-$30 resistance, and maybe even get to $40 in 2021, around the same time period of Sep/Oct. It does not look like that is going to be possible now (although there was that brief run back in February during the #SilverSqueeze where it seemed like it could break out above that resistance).
Yes, for now it simply means more time in the market as you mentioned, and for many investors patience is not their strong suit, and when other sectors like the general stock indexes, and tech stocks, and cryptos, etc… are still breaking higher and higher, then it frustrates people even more for not being more exposed to those sectors or the opportunity cost in being in a sector that has been sideways to down.
Luckily, many here have also been exposed to other commodities like Oil, Copper, Palladium/Platinum, Lithium, and Uranium, that have had really nice runs over the last year, and counterbalanced the sluggish moves in Gold & Silver. This year has highlighted again the importance of being diversified for me, as I also had exposure to other commodities that did run hard, as well as exposure to both the cryptos and clean energy for periods of time from last year to this year that had really nice moves as well. The only sector that really lagged bad this year for me, other than the PMs was the Cannabis & Psychedelic therapies sectors.
One last thing to point out is that even within the beaten down sectors, like Gold and Silver miners, there were still companies that bucked the trends and headed higher on good fundamental newsflow, so there were stock pickers that were still rewarded, but those were of course, the pearls in buckets mostly filled with empty oysters.
Ditto……….OZ…………..” The majority of us here at KER and elsewhere for that matter were preparing for further gains in the ensuing 12 months but it has not eventuated.”
As always a balanced opinion Ex. I agree with alot of what you say. I guess I was just venting some frustrations as I anticipated some nice gains in the PM sector for the second half of this year. It may still happen of course but my exposure suggests thats unlikely.
Yeah, I hear ya Ozibatla, and I also was preparing for a more robust 2nd half of 2021 in the PMs, and am open to the idea of Gold & Silver basing and putting in a bottom soon, and having a tradeable rally in the seasonally more supportive Sept/Oct area.
I’ve still done a bit of portfolio rebalancing the last few weeks to take a few tax loss sales to wash out some capital gains, and rotated those funds into beefing up the other positions I’m hanging onto and started a few new positions in companies I had missed that had pulled back. Also so far this week, I did fire off the rest of my dry powder into the downward swoon in the precious metals, as we’ve gotten down to an area where I’d like to see things hold here for that higher low potential (especially after back-testing the March double-bottom lows of $1677 and $1673 in the Sunday night / early Monday morning overseas trading).
With sentiment so bad in the PM sector, the concern I see here, is the same one I saw in March, that folks are throwing in the towel before the bounce. I added big in March into those lows down to the $1670’s, and sure enough we did get a nice tradable rally into April & May where there were some quick pickups in gains in a number of the miners, but most were not buying & adding in March.
It seems like a similar situation now, where most are exiting, going to cash on the sidelines, and are not buying the drawdown in the PMs here, and if we do get a bounce in late August heading into Sept & Oct, then folks will have missed another opportunity to buy low. It is not without risk, just like buying in March of this year was not without risk, or buying in March of 2020 during the pandemic crash was not without risk, but “buying low” is never “easy” as it does take truly being a contrarian and zigging with others are zagging.
For a more conservative approach, some like to see the bounce get confirmed before putting more capital to risk, but I’d sincerely ask most resource investors, if when they saw the bounce coming out of this most recent March lows, and things moved higher heading into April, did they actually buy on that confirmation?
Did those waiting for confirmation buy in mid April when the larger producers and royalty stocks started climbing?
If investors didn’t by in March for the double bottom, and didn’t buy the move heading out of March an into early April when the bounce got underway, and still didn’t buy in mid April, then did they at least buy in late April when the PM stocks all started moving?
If they missed buying low in March, or buying at all in April when the bounce was underway, were they able to catch any of the move into May where the PM stocks kept ratcheting higher?
Also, if they did catch the move from around the March lows and ride those purchases higher in April and May, did they trim any of those gains back in May or early June?
> I realize not everyone is an active trader, and not everyone likes taking the risk of buying into sector weakness, or selling into sector strength, preferring instead to be longer term value buyers, but even those types of investors should be interesting in accumulating on weakness, even if things end up heading lower for longer, where they can always add more.
Sure, maybe the recent weakness could just keep accelerating, break the March lows, and plunge gold down into the low $1600s or high $1500s, and we won’t know that until we have more time go by, but if folks are buying in tranches, then they can add more tranches down at those levels. It is interesting in that most investors are asking themselves “What if Gold, Silver, or these PM mining stocks just keep going down?” but when we are in corrective phases, they are rarely asking “What if this is selling and negative sentiment is getting overdone here and the PM stocks bottom, base for a while, and then start to rally going into the Autumn?”
The point being, even if folks don’t want to “try and catch a falling knife here”, a line that gets parroted at every bottom we’ve ever seen form, they could still be vigilant and watch for indications of basing and a turn in direction to jump on the trend change, but most watch it bounce for far more than just 10% or 15%, and many stocks will go up 30%, 50%, 70%, and then folks will say, “maybe I should get back in now….” For most investors, capturing that 30% or 50% or 70% in some of the more solid names in the space could be the difference in having a positive year or not.
In my experience observing the psychology of trading for 2 decades, but more focused on speculative penny stocks for the last 11-12 years, most investors are not positioned when the turns start (be it gold stocks, copper stocks, lithium stocks, uranium stocks, oil stocks, cryptos, whatever…). That is OK, as that is what makes a market, but even if folks don’t want to take the risks of trying to buy the bottom, they could still watch for the turns and get positioned when the hourly or daily charts signal that at least a short-term turn up is a potential, or has started. The reality is that most will fail to get positioned in time to capture the easiest (and significant moves) and then later complain about how the sector is so terrible. Even in the bear market we had in PMs from 2011-2015 there were still regular tradable rallies and gains to be made for those that were paying attention, but mistakes didn’t get bailed out in the same way that they will in a bull market. If we are still in a longer term bull market (which apparently is up for debate with many), then over time the bull market will bail folks out of any ill-timed trades.
Just something to consider when we see continued pressure and weakness that has worn everyone out. It is amazing to me how confidently folks were buying last year when the metals had ALREADY run big for a long time, but how hesitant they are to buying the same mining stocks now after a 1 year corrective leg, when those same companies are available to accumulate at far more attractive valuations. Again, that’s what makes a market.
What is Bonzo buying today? I cold not resist the bargains in Aurion and Snowline Gold.