Dave Erfle – Will The Precious Metals Sector Just Bottom Out Of Boredom?
Dave Erfle, Founder and Editor of the Junior Miner Junky, joins us to discuss the how this long consolidation in the precious metals and mining stocks, since August of 2020, is quite similar to the large 2 year corrective move that followed the big run higher from January 2016 to August 2016. In addition to the soured investment sentiment and apathy regarding the mining stocks, causing them to drift down on lower volume, there are key levels to watch in GDX and GDXJ that are relevant.
Despite these similarities between the two periods, Dave outlines that actually the valuations in the gold mining stocks are more attractive now than they were in fall of 2018, after that consolidation period, because the producers have better balance sheets, a better gold price, better margins, and most of the quality junior companies are cashed up and still doing meaningful work to advance and derisk their projects. While most generalists are not paying attention to this sector, it is possible that if some upside momentum can get going in the sector once the Fed rate hikes get underway, that the sector may be in the process of bottoming into the boredom.
Good chart Matthew. It almost looks like a this 18 month corrective move since August of 2020 has made a large bull pennant formation, that would typically resolve to the upside.
Thanks, that’s my take. As pointed out before, both gold and silver have shown less weakness than might be obvious. Given the duration of the correction as well as the terrible sentiment, their technical performance has been impressively bullish.
I printed out this chart and in the morning, before the market opens, I am going to draw a breakout up line on it and leave it all day long. Going to have one good day this week.
Just remember that each price bar on that chart is a whole month!
“Fundamentally and technically, the gold miners have not been more attractive in many, many years…”
LOL
How many times has that been said over the past few years?
You people keep losing on these stocks while everyone else is making bank on stocks like Apple and Google.
Keep clinging to that dream, it will be the only thing keeping you warm when you have to move into the poor house.
Joe, that’s a monthly chart and the comment was in that context; the big picture. It doesn’t matter when it’s been said in the past or by whom, it is the case now. “LOL” 🤪
Most of the tech stocks on the Nasdaq are down 40-60% over the last month, the meme stocks have become creamed stocks lately, the Cathy Woods Arc Innovations “growth” and “tech” stocks that were the flavor of the day for generalists in 2021 are now decimated, Tesla cratered by 30% in January after dropping in December as well, the “stay at home stocks” like Zoom and Peloton have been destroyed, cryptos got chopped in half in the last 2 months, and even Netflix the “N” in the FAANG stocks was also chopped in half, so it isn’t like most of the general markets have been keeping people warm either Joe.
Your constantly bearish comments make it seem like only the PM mining stocks have seen weakness, when it is very much across the board, and many of the PM miners actually fared better than some of those “safe” and “lucrative” sectors have.
Facebook fell 23% in afterhours trading and is very likely to go much lower.
https://stockcharts.com/h-sc/ui?s=FB&p=W&yr=5&mn=6&dy=0&id=p28892593196&a=1107334427
Wow! That is a huge move down in Facebook in afterhours trading.
FB closed at $323 in the normal session, and then shot down to $251 in after-hours trading.
I’m not sure how warm that is keeping investors at night? That is sure to have an impact on some indexes and funds that have FB inside them.
PayPal has fallen nearly 60% since its peak.
https://stockcharts.com/h-sc/ui?s=PYPL&p=W&yr=3&mn=1&dy=0&id=p41377802035&a=1107343855
Thanks for that chart Matthew. Yes, Paypal is another good example of the froth being wrung out of the general markets.
NFLX has fallen 50% and could easily fall much further once this bounce is over.
https://stockcharts.com/h-sc/ui?s=NFLX&p=W&yr=3&mn=1&dy=0&id=p04901792039
GLD finished the day to the penny at its 50 week EMA. Notice the September and December bounces off of fork support:
https://stockcharts.com/h-sc/ui?s=GLD&p=W&yr=3&mn=7&dy=0&id=p25575565197&a=389024280
Nice charts Matthew. Thanks for posting.
Thanks Charles. Get a load of this monthly gold vs CRB chart:
https://stockcharts.com/h-sc/ui?s=%24GOLD%3A%24CRB&p=M&yr=25&mn=0&dy=0&id=t5768116652c&a=1106758426&r=1643773562249&cmd=print
I believe gold has topped for a very long time versus commodities (which bodes well for our miners) but I also believe it is now due for a long and impressive bounce versus commodities (which also bodes well for our miners).
That’s exactly the chart i have Matthew hence why I said February will should break out and March be even better. I agree gold will dip lower first before higher monthly gaps in some miners left behind.
Left you an email
The only way Doc can justify 90% cash, is in anticipation of a major market meltdown. I’m not too worried, I’ve rarely seen him even attempt to call a bottom
The Dow topped at fork resistance in November and January and bottomed at fork support last week.
https://stockcharts.com/h-sc/ui?s=%24INDU&p=W&yr=5&mn=0&dy=0&id=p13031269495&a=934676424
The Dow priced in real money is still down 13% from its 2018 high and over 53% from its all-time high 20 years ago.
https://stockcharts.com/h-sc/ui?s=%24INDU%3A%24GOLD&p=Q&yr=50&mn=0&dy=0&id=p25869032081&a=954530030&r=1643786503106&cmd=print
The Nasdaq 100 has already clawed back nearly half of its big fall and is probably just getting started.
https://stockcharts.com/h-sc/ui?s=%24NDX&p=D&yr=0&mn=5&dy=0&id=p97207491351&a=1106840505
It bottomed at Fibonacci fan support after registering a daily RSI oversold reading not matched in the last 3 years and 3 months.
https://stockcharts.com/h-sc/ui?s=%24NDX&p=D&yr=1&mn=5&dy=0&id=p18539925689&a=979061888
DIA:GLD is about to tangle with what should be significant resistance.
https://stockcharts.com/h-sc/ui?s=DIA%3AGLD&p=D&yr=1&mn=3&dy=0&id=p86260020926&a=1038000474
NFLX was cut in half versus gold is less than 3 weeks but is now bouncing from support after becoming oversold.
https://stockcharts.com/h-sc/ui?s=NFLX%3AGLD&p=W&yr=5&mn=0&dy=0&id=p24688454538&a=1101470276
The CRB is overbought versus silver as it backtests rising support-turned-resistance.
https://stockcharts.com/h-sc/ui?s=%24CRB%3A%24SILVER&p=D&yr=1&mn=6&dy=15&id=p67439463095&a=1077774311
Chile Assembly Debates Nationalizing Copper; Industry Calls Idea ‘Barbaric’
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Reuters – February 1, 2022
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“Chile’s constituent assembly approved on Tuesday an early stage proposal that could lead to the nationalization of the country’s copper industry, sparking an angry response from mining firms in the world’s top producer of the red metal.”
The environmental commission of the assembly, which is drafting Chile’s new constitution, green lit the proposal “for the Nationalization and New Social and Environmental Management of Copper Mining, Lithium and other Strategic Assets”.
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https://www.mining.com/web/chile-assembly-debates-nationalizing-copper-industry-calls-idea-barbaric/
(MUX) McEwen Mining: A Year Of Improvement With Guidance Met
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Taylor Dart – Seeking Alpha – Feb. 01, 2022
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“McEwen Mining released its preliminary Q4 and FY2021 results last week, reporting production of ~40,200 gold-equivalent ounces, a 29% increase from the year-ago period.”
“This helped to push annual production above 154,000 GEOs for the year, beating the company’s guidance midpoint of ~150,700 GEOs.”
.
https://seekingalpha.com/article/4483111-mcewen-mining-stock-production-guidance
Dollar Week : Deep Retracement
https://saturationtiming.blogspot.com/2022/02/dollar-week.html
Keep a close watch on NFP action this Friday.
Note ADP: https://adpemploymentreport.com/ …
Last year bad NFP numbers resulted in Dollar strength,
after similar ADP numbers had expended the negative energy!
Another source: https://www.dailyfx.com/economic-calendar
Yeppee……………… National Day of DEBT………..US….. EXCEEDS $30 TRILLION……. Have a great day…..
https://www.zerohedge.com/markets/us-debt-hits-30-trillion-first-time
here is my monthly gdx…no volumes of course…i am seeing big resistance on monthly weekly daily in the 31.20 range….i stepped aside until more clarity…i will pay up for that info….
After listening to this presentation, I took a 25% loss in Impact and moved the proceeds to Petrus that has been moving up for several days. My account is still showing the “some up and some down” qualities which I firmly believe is intervention and not lack of interest. Probably late today Impact will make a run for no reason. FWIW
Edit: I checked a chart and Emerita has had a 13-14 day 45 degree decline and was below the lower Bollinger band with an RSI about 38. The reason (valid) for this decline after 2-3 months of downward trend starting in Nov 21 is none that I can think of. I can make up stuff with the best of them, but waste of time.
Hi Lakedweller2 – We are working on talking with Petrus soon after Doc Jones brought them up in his interview (and actually we were supposed to talk to them today but had to reschedule for next week). We’ll likely come out with an intro interview in 2-3 weeks so stay tuned for that.
Great. Looking forward to the interview. Thanks for letting us know.
rumors of war…becoming real…look at /NG….it keeps charging higher on fears of russian supply line cessations….
SPQ : https://tinyurl.com/2vc9pznu
A possible top Friday morning.
Yes, war could break out,
but only if scripted.
Back in the Old Days (before JPM took over trading silver around 2008), when there was a threat of War or even a threat of disruption of oil in any country due to political or perceived political conflict, Gold and the metals would pop dramatically higher. Now any reason in existence could cause Gold to be negative.
After a few nice up days, RSX has turned slightly down and doesn’t know which way it wants to go.
Emerita, while collecting pecans at the bottom Bollinger, developed a Doji hammer looking thing with the RSI dropping to around 35. There you go…not sure where…but, there you go.
I am seeing NG Energy (stock) also wandering around the bottom Bollinger after an extended walk down.
You can’t beat them so…..
I’m also a little confused with Impact.
Terry:
Nothing wrong with Impact. Had it less than a month and tanked 25%. Also have had Petrus just a short time which has a 10% gain. Dave Erfle mentioned that his rule of thumb is to sell when 20% drop. But, he has suspended that rule recently and figures that we are close enough to a move, that the risk is less compared to his expectations.
I listened to that and have not seen the movement in any of the good plays consistent with the fundamentals and politics. Knowing that metals have become bad under all circumstances because of the threat to fiat currencies, and knowing that big money still hangs out in the corrupt world of oil, my chances of getting a positive result would be less likely in silver which is plagued by corruption since JPM took over after Lehman or whoever it was went bust.
So … not much rational trading thoughts, but a lot of effort to play off criminaliity on the near term.
Update: (only good for this moment in time): Gold/metals up, oil up, NG up; Impact down about 6% and Petrus up about 6%. 12% difference in Sectors that are green.
Another thought: Only one third of my portfolio green. Commodities up, Dollar Index down, General Markets Up.
Why is only one third of my portfolio green? Because it is a daily target by unregulated traders of one form of another. I don’t own the algos … I can only trade the trends.
Here is something else to ponder: why is Great Bear Royalties down today? Seems like it has a good future. Gold up today.
Reason: It was down Monday, Up yesterday so today it is down.
Ponder another: why has Emerita gone green 3 or 4 times today already. That is not unusual since November.
Get ready for anything………….. The New York Fed Has Quietly Staffed Up a Second Trading Floor Near the S&P 500 Futures Market in Chicago
https://wallstreetonparade.com/2022/01/the-new-york-fed-has-quietly-staffed-up-a-second-trading-floor-near-the-sp-500-futures-market-in-chicago/
What Leonard is describing is the Markets Group at the New York Fed, the only one of 12 regional Federal Reserve Banks to have its own trading floor; its own traders with Bloomberg terminals; its own speed dials to the major investment banks on Wall Street; and its own analysts that ferret out market-moving information from around the globe on a continuous basis. (Leonard was given an official tour of this area at the New York Fed on February 27, 2020, according to the “Notes” section of his book.)
What Leonard is suggesting on page 242 is that the New York Fed’s trading floor is no longer just content to sit close to the New York Stock Exchange in lower Manhattan. The New York Fed’s Markets Group has decided to clone itself with another trading floor that sits close to the Chicago Mercantile Exchange where S&P 500 futures are traded, as well as other futures contracts.
Why is that a bombshell? Because it suggests to Wall Street savvy readers that the New York Fed may be planning to use the futures markets to try to engineer a soft landing in an attempt to get itself out of the very serious mess it’s made that Leonard explains very convincingly throughout his book.
Jerry:
That is terrible news. That is not their job. Indefinite price suppression or forced liquidation through price suppression. Also, they are getting close enough to front run and spoof.
The criminals are undermining democracy piecemeal.
The real rate of inflation using traditional measures is around 15%, according to John Williams of Shadowstats. So it’s costing buy and holders 15%pa as well as the substantial drop in miner prices, to sit and wait for payday.
15% real inflation, and it has been going on for years, but unreported and falsely reported, is another major indication of the massive intervention in the metals market and mining industry. It is indicative of Regulators failing to control the Fed and Corporate corruption to the point that The Justice Department believes the problem is “Too Big To Prosecute” and is hesitant to try.
One of the Fed’s mandates being price stability, they should have been buying mining shares all the way down last year, providing some price stability since the owners of those shares are largely US citizens.
They have been only buying up stocks that probably set off managed money algos to keep the General Markets up to give the perception the economy is fine. Every President in the last 50 years has said the economy is fine and you can tell because the Dow is doing great. Of course, since the economy was doing not fine, they had to alter the financial data reports, alter accounting rules, keep regulators from exposing corruption and fraud, extend debt limits, bail out banks, Citizens United to create a fictitious person to prosecute, not break up failing corrupt banking institutions, buy media outlets, get rid of investigative reporters, fund politicians, etc so that wealth could be transferred by unaudited activities.
Precious Metals reputation for being a “safe haven” had to be destroyed.
Therefore price suppression through paper metals market were initially used and it appears from a recent Wall Street on Parade article that the New York Fed not only has a trading desk in New York next to the Exchange but one in Chicago they are moving physically closer to the Exchange for better access to the Commodity and S&P Futures Markets. Doesn’t sound like they have much interest in assisting Retail Traders.
Great comments…………lakedweller , and Terry………………
and the US> INC………….. is in for a rough ride…….. if, you are connected , you will do fine… and find yourself…. in the devil’s pit…………. 🙂 Thou shall not steal, and God hates a liar…, so , the lying stealing FAKE FED is in real trouble….,……..
GOTS…………… the system is in danger of failure,……but, not until, they surpass $50 Trillion, sky is the limit, and so, they thought in Babel ….
dxy just bottomed ..be aware…and to the penny of .786 retrace…opens opp for retest of recent high….shown on 240 minute view….https://tos.mx/0ReiOLH
This is going to be interesting because the intraday charts look very good for a low while the daily and weekly charts look ugly. As an aside, UUP illustrated today what I’ve noticed for years: that gaps should be measured from closing prices and not the intraday high (or low, for gaps down)…
https://stockcharts.com/h-sc/ui?s=UUP&p=D&yr=0&mn=9&dy=0&id=p55953888181&a=1107774983
Too bad I can’t show intraday charts. The very oversold 60 minute looks great for a low. UUP bottomed at the last/lowest pivot support and finished the last hour of the day above its KAMA on the biggest 1 hour volume in 15 or 16 months. It could easily retrace well over have of its decline even if this is just a bounce.
Fundamentally and technically, the gold miners have not been more attractive in many, many years and will vastly outperform gold once gold signals the end of the correction that began 18 months ago.
I doubt we will make it through February without a breakout considering this (monthly) picture:
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=M&yr=9&mn=6&dy=0&id=t8907418733c&a=1106660024&r=1643762744986&cmd=print