Weekend Show – Rick Bensignor and Doc – Markets, Oil, Gold, Bitcoin, and War Impacts
This week was arguably the most volatile for markets in all of 2022 and that’s saying something consider this year has been all over the map. Russia invading Ukraine on Thursday sent markets down and risk off asset higher but half a day later everything had shifted drastically. There were a lot of markets that experienced huge reversals.
To make sense of this week we are featuring Rick Bensignor for an extended segment. Doc also joins us to share his technical outlook for the metals.
Be sure to go back through the week and listen to the many Editorials and Company Updates. We love hearing from all of you. You can email us at Fleck@kereport.com and Shad@kereport.com. Please send us your thoughts on the show and any companies you would like to see featured.
- Segment 1-3 – Rick Bensignor, President of Bensignor Investment Strategies joins us for an extended segment covering, Russia/Ukriane, oil, gold, cryptocurrencies, US markets and the Fed. We have divided the segments below as follows
- Segment 1 – The impacts on the oil price from the Russia/Ukraine conflict.
- Segment 2 – Gold and cryptocurrencies
- Segment 3 – US markets and the upcoming Fed rate hikes.
- Click here to learn more about Rick’s work.
- Segment 4 – Richard Postma, AKA Doc, joins us to dive into the charts of gold, GDX, GDXJ and silver. We refer a lot to the monthly chart which is posted below. Doc outlines the encouraging signs he is seeing for gold. We also discuss what it’ll take for the gold stocks and silver to have the bullish outlook as gold. This was also posted on Thursday as a Daily Editorial.
Exclusive Company Interviews This Week
- Allied Copper – Adding The Stateline And Klondike Projects With A 2022 Exploration Outlook
- Blackrock Silver – Exploration Update From Tonapah West In Preparation For Maiden Resource Estimate Next Month
- Libero Copper – Phase 1 Drilling Underway At Mocoa, Colombia’s Largest Undeveloped Copper Project
- Eskay Mining – Video Update – Recapping High-Grade Gold Results From The TV and Jeff Deposits
- Benchmark Metals – Recapping More Good Drill Results From The Lawyers Project, Including 118 Meters of 2.54g/t AuEq, And A Look Ahead To Resource Update And PEA
- Metallic Minerals – Both High Grade And Wide Bulk Tonnage Drill Hits Returned At The Keno Silver Project
- TDG Gold – Recent High-Grade Gold Drill Results At Shasta Provide Much Larger Potential On The Project
- Fury Gold Mines – Closing The Sale Of Homestake, 2022 Focus on Eau Claire With A Goal To Get To 2million Oz Gold
- Nouveau Monde Graphite – Developing The Most Advanced Graphite Asset In The Western World, A 3 Phase Growth Plan
I have not looked at the IAMGold quarterly numbers Terry, but what info do you think may be fishy?
Here is the press release on the Q4 and 2021 annual number for (IAG). Nothing jumps out immediately as off to me, but there may be something more specific you have in mind.
__________________________________________________________________________________________________________
There were comments made by some people we talked with about the cost overruns at Cote, but that is true of Magino at Argonaut, the Rochester Expansion at Coeur, and really most development stage projects at present due to due inflationary pressures and cost inputs on the rise.
The press release mentioned “Côté Gold project 43.4% complete and detailed engineering at 92.2%”
It also noted: “The Company continues to advance its strategy to prioritize an appropriate allocation of capital and resources between the Company’s existing mines and its Côté Gold project to generate the best return on invested capital while advancing Côté Gold to production.”
Despite the cost overrun, it looks like the project is well on track and proceeding at first glance.
Suprise beat on headline non-GAAP EPS for Q4/2021, explained by an impairment taken in 2020, which made 2021 number look so good.
Oh, I see what you’re saying… 2021 looked better year over year due to the impairment in 2020. Yeah, that does provide different optics in that kind of scenario, but why wouldn’t analysts have factored that into their estimates?
Thanks to all the KER guest contributors for another great week of daily editorials, company interviews with management, and another solid weekend show with Rick and Doc Postma.
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Also thanks to all the listeners of the podcast and radio show, and those members of the KER crew that post and participate here on the blog, sharing insights with our community. Ever Upward!
Gold Volatility Rises as War Adds to Ongoing Inflationary Fears
David Erfle – Friday February 25th, 2022
“The gold price rallied sharply on Wednesday evening as Russia initiated a full-blown military action in Ukraine. With financial markets entering panic mode, after the news of a war that Western politicians had incessantly warned being imminent, the safe-haven metal zoomed to the $1975 region into the early Thursday morning Comex trade.”
“But as gold priced in the Russian actions that most everyone was expecting, along with becoming extreme overbought on a short-term basis, bullion whipsawed to reverse nearly $100 lower by Thursday afternoon to test the $1880 support zone before stabilizing. A recovery on Wall Street became the catalyst to push gold back below the important $1,900 level briefly, where the safe-haven metal had been consolidating since last Friday.”
“Stocks reversed Thursday’s sharp earlier declines after U.S. President Biden placed several aggressive international sanctions against Russian banks and state-owned companies. Yet, after the gold dust settled yesterday, its price had closed back above the key $1900 per ounce level by the end of Comex trade.”
https://mailchi.mp/2008e67adba5/david-erfle-weekly-gold-miner-sector-op-ed-1600634
Feud With Russia Will Fuel Inflation
By Sean Brodrick on February 24, 2022
“If you like the 7.5% inflation print we saw in January, you’re going to love what’s coming down the pike now that commodity powerhouse Russia is moving troops into its neighbor Ukraine, which is also rich in commodities…”
https://weissratings.com/en/wealth-wave/feud-with-russia-will-fuel-inflation
Energy Shock: Ukraine Crisis to Push Inflation Higher
by: Stefan Gleason – Money Metals News Service – February 24th, 2022
“Fuel costs have already been soaring due to oil and gas supply constraints coupled with broader inflationary pressures. The national average for a gallon of regular unleaded is $3.55 – up 75 cents from a year ago. Some parts of the country are paying closer to $5.00 per gallon.”
“A new round of sanctions by the United States and its allies against Russia may end up costing U.S. consumers as much as Russian President Vladimir Putin. Russia is the world’s third largest oil producer and a leading supplier of natural gas to Europe.”
If Russia decided to not sell any of it’s petroleum products for 6 months, The Western World would be brought to it’s knees until they could find new sources of energy. Not something I contemplate happening but the effect on Russia’s economy would not be nearly as great.
The two most important factors that led to the demise of The Second World War was first the Russian Army, and secondly depriving The German Army of it’s oil supply. The Russian bear should not be prodded or poked. The Western World has forgotten how important it is to keep lines of communication open and to negotiate a fair agreement and than honor it. DT
Good thoughts DT. This situation could end up getting pretty messy for the energy sector.
Gold Stocks & War: Wild Technical Action
Morris Hubbartt -Feb 25, 2022 – Super Force #PreciousMetals #TechnicalAnalysis #Video
Gold trades lower amidst higher inflation and the Russian invasion of Ukraine
Gary Wagner – The Gold Forecast – Feb 25, 2022 #TechnicalAnalysis #Chart
“Today the BEA (Bureau of Economic Analysis) released the latest data on current inflationary levels vis-à-vis the PCE (personal consumption expenditure price index). The report revealed that inflation increased by 0.6% in January which is the largest yearly increase since 1982. January’s increase of 0.6% is an increase of 6.1% year over year. Recently the government CPI report (which includes energy and food) revealed that inflation spiked to 7.5%, also at the highest level since 1982.”
“Inflation is a double-edged sword affecting gold prices. Gold has been long considered a haven asset that protects investors from rising inflation. Concurrently, as inflation rises it puts more pressure on the Federal Reserve to raise interest rates, which have a negative or bearish impact on gold… Inflationary pressures will likely continue to spiral higher as the Russian invasion of Ukraine continues.”
Ira Epstein’s Metals Video (02/25/2022)
#TechnicalAnalysis, Gold, Silver, Copper, Platinum
Capital Follows Returns, Not The Other Way Around
Jesse Felder – The Felder Report – (02/23/2022)
“One of the simplest but most important lessons an investor can learn is this: capital follows returns; returns don’t follow capital. In other words, money comes into a sector only after it has had a terrific run in terms of investment performance. Furthermore, that influx of new money necessarily means that the run of terrific performance will soon come to an end…”
https://thefelderreport.com/2022/02/23/capital-follows-returns-not-the-other-way-around/
‘A Psychological Proxy For Things Being Out Of Control’
Jesse Felder – The Felder Report – (02/26/2022)
Out of all my short positions except for silver which I added again to yesterday. The commercial short position has grown enormously for gold but silver not as bad. Prepare for the “IDES OF MARCH”. Only one more trading day in February. The conventional market should rally yet early next week but then it will be another great short.
If the general markets bounce up a bit more next week, then I may short the general markets again using a few inverse ETFs. I had been periodically doing that on rallies over the last year, but unfortunately missed this big move down in the markets to kick off 2022. I could see the recent move higher just being a relief rally before another leg down, so I may take a swing at shorting it if we see a bit more lift higher.
As for the short you have on Silver, which we had discussed earlier in the week, that’s a heartbreaker for me as a big fan of Silver, and in particular Silver mining stocks. However, I appreciate you sharing your perspectives with us Doc here on the blog, and on the show of course.
If Silver does pull back, do you have a basic downside support level that you’d expect to short it down to? $22 – $21.41 seems like it would be good support to me, followed by $18.50-$19. Where do you think Silver could drop to?
March is starting Tuesday
Russian exclusion from SWIFT banking exchange might come on Tuesday
How would the Russia being excluded from the SWIFT banking system hurt Gold? Do you mean that since they’d be more financially isolated that they’d sell their gold reserves?
The Fed rate hikes are slated to start in March in a few weeks. Could those initially crimp the upwards bias in gold we’ve seen in 2022, and cause it to sell off instead?
It might trigger a general sell-off in the conventional market taking down everything
Oil is probably going higher followed by Gold
Hmmm… interesting thoughts Thomas. Everything in the bankster cartels is intertwined and interconnected, so there could be a contagion effect, but would merely removing Russia from the SWIFT banking system trigger all other countries to sell off? Who knows? We’ll see how it goes…
I still don’t see how removing some Russian banks from the SWIFT system will cause a market collapse in the West, but here is the news as mentioned above:
___________________________________________________________________________________________________________
United States, Canada, European allies move to block ‘selected’ Russian banks from SWIFT
By Adam Sabes – February 26
“The United States, Canada, and other European allies released a joint statement on additional sanctions being placed on Russia, which states that “selected” Russian banks are removed from the SWIFT financial system.”
“We commit to ensuring that selected Russian banks are removed from the SWIFT messaging system. This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally,” reads the joint statement from leaders of the European Commission, France, Germany, Italy, United Kingdom, Canada, and the United States, which was released on Saturday.
Just listened to Docs interview. Don’t know if I’ve missed it so I’ll ask here. Has Doc given a detailed account as to why he thinks the Fed will be more aggressive than most anticipate
I got the impression he felt that due to the really high inflation levels, and the fact that the Fed was so far “behind the curve” in getting rates raised, that they may be more aggressive than some are expecting, which would be a net negative for the markets. He had mentioned he felt this was their “last stand” to get things back in check (and I’d add retain any credibility with generalist mainstream investors).
If that is a misunderstanding, then I’m sure he’ll expand on what he meant about the Fed being more aggressive than most are expecting.
Yes I kinda got that out of what he said… I guess I was wondering why he thought they’d be able to go that aggressive. Between govt and personal debt levels any ultra aggressive rate hikes would be suicidal to the economy no???
Agreed Wolfster. If the FED is too aggressive then it would be wreckless, and usher in a quick recession. There is also waaaaaay too much debt on their balance sheet to raise it too much anyway or they’d implode the whole system. It is much more likely they’ll just do a series of consistent hikes until they reach the market tipping point.
Even a 0.5% hike, as some have postulated is not really that aggressive at all considering the FED funds rate is near 0, the 10 year treasury has been near 2%, and yet the CPI reading was at 7.5%. They are so massively behind at this point, that even 4 or 5 back to back 1% rate hikes wouldn’t even get us out of negative real rates or normalization. They are in quite the pickle, and the Ukraine situation has only muddied the waters further.
5 Gold And Silver Stocks With Recent Insider Buying
Gold Mining Bull – Seeking Alpha – Feb 25, 2022
1. Generation Mining
2. EMX Royalty
3. Equinox Gold
4. Minera Alamos
5. Santacruz Silver Mining
https://seekingalpha.com/article/4490649-5-gold-and-silver-stocks-with-recent-insider-buying
Yesterday I pulled profits on Aris Gold selling the position, and rolled that into adding a bit to a few different positions like Calibre, Galiano (into it’s fishing line selloff on a bad operations report), and Minera Alamos mentioned above. My personal view is that Calibre and Minera Alamos are 2 of the better run companies in the sector. As for Galiano, it’s a fixer upper turnaround story like Americas Gold & Silver, McEwen Mining, Superior Gold, and now Coeur Mining. It has had challenges, but dropping near 20% in a day was too good to pass on grabbing a tranche as it was a bit overdone.
Out of the other 4 companies aside from Minera Alamos mentioned in that article above about Insider Buying, I also have positions in Equinox Gold, Generation Mining, and Santacruz Silver, so nice to see management teams and directors buying shares in their own companies. Obviously I’m biased since I hold positions in them, but I believe those companies are doing solid work to advance their projects, which is why they have positions in my portfolio to begin with.
I think there is some acquisition coming for Aris Gold
Yes, that potential acqisition by Aris was another reason I sold now while I had a profit. Typically the acquiring entity sells off on that news, and because they’ll be taking on more debt or share dilution to do so (hence that recent news adjusting the terms of their gold note). That means I can likely buy back in after that announcement at a better share price. Also without any knowledge of project being acquired, it’s hard to know if it will be what I want to be invested in.
I have a little SCZ and noticed the following comment from Gold Mining Bull.
Santacruz is the riskiest stock to buy on this list as it carries a tiny market cap (US$84.5 million), and there’s uncertainty over when its Glencore transaction will close. Santacruz is also a high-cost silver producer, reporting all-in costs of $21.91/oz in its prior quarter. Beware of the risks of investing in a small silver miner like
Santacruz
Those are precisely all the reasons I like Santacruz Silver and why it has so much room to “surprise” investors to the upside.
SCZ has always been a higher cost producer, which is what gives it so much leverage during periods or rising metals prices. This is exactly why is smoked all the other Silver producers in the huge run higher in 2020 when Silver prices rebounded out of the March pandemic lows.
The transaction with Glencore gives them a big boy partner, 5 new Silver mines, 3 Mills, 2 exploration projects, and 2 power plants. That will easily move them up the profile to a mid-tier producer, while reducing down overall costs, and will greatly adjust higher their market cap.
People need to quit wanting what they don’t want (less risk). If they don’t want as much risk then buy a royalty company like Franco, or a large producer like Newmont. The whole reason to invest in Junior mining stocks is because they are quite a bit riskier and can also move quite a bit more to the upside.
Once all the analysts determine a stock is not risky anymore, then it is likely fairly valued at that point and won’t have explosive moves higher or beta against peer companies. What provides the leverage is risk being diminished at a faster percentage rate when metals prices rise, and we’ve mentioned for years on here that this is the attraction to the #BestOfTheWorst.
The other compelling driver for a company, as Rick Rule puts it is “Answering the unanswered question.” In the case of Santacruz Silver those unanswered questions (seen as risky by others) are what will provide the rerating higher. Unanswered questions like: When will the Glencore multiple mines & mills transaction happen? What will the new company AISC be? What will the new fair value market-cap be? — those are the same risks that could lead to the same out-sized rewards.
The recent insider buying in SCZ tells you where management and directors feel things are headed next. (which is often one of the best fundamental factors to watch for).
Valuable comments about SCZ for followers on this site. It is one of only a handful of small companies in their position, Impact(IPT) being another.
Also noted Bensignor’s comments on the energy sector and his lack of interest in gold.
Thanks Terry. Yes, both SCZ and IPT are seen as “risky” to some types of investors because they are smaller, higher cost producers, and are not in Canada or the USA for a “safer” jurisdiction. I’d point out that both companies have operated in Mexico for long time without incident, and with the support of their local communities. They’ve also both shown restraint and have found creative business initiatives to be the survivors over the last decade, in what have been difficult markets for PM miners.
Yes, both are smaller producers with higher costs (Impact has theirs down to around $17-$18 per ounce, and Santacruz is around $21 for now, but that will be changing and dropping once they bring on the 5 Bolivian mines). Whereas the Glencore transaction and significant potential on all those properties is the bluesky upside for SCZ; for IPT their bluesky is found in the huge number of exploration targets across their prospective land position. Impact’s properties are peppered with prior producing artisanal silver mines and old processing centers that they’ve still not even got to drill test yet, as well as some new gold and copper targets that Fred and team are excited about. I believe we’ll see a few drill hole zingers out of IPT this year, which can still move the needle on a smaller cap company like them.
I’m a big fan of both companies, Santacruz and Impact, for various reasons, as 2 of the smallest silver producers with other interesting value drivers, and they are both 2 of my larger positions out of close to 2 dozen silver stocks for those reasons. I’ve countered-balanced that risk with some of the “safer” silver names like Hecla, Silvercorp, and Silvercrest, but believe SCZ and IPT will continue to surprise folks to the upside and will grow into more respected companies over the next 2-3 years. Both have the potential to be very nice multi-baggers IMO.
Recent buying in Calibre Mining Corp. TSX – CXB
https://www.canadianinsider.com/company?ticker=CXB
We’ll be posting our interview with Calibre on Monday DT. Yes, I believe they’ve had some healthy insider buying as well. Nice to see.
Dollar Week : Breakout or Turn? : Bearish Wedge
https://saturationtiming.blogspot.com/2022/02/dollar-week_26.html
Thanks BDC – Yep, the greenback has been stuck in that gently sloping higher trading channel for a while, and it is hard to know which fiat currencies that the Dollar index is weighted against will race to the bottom fastest, but overall. Initially I though the US Dollar would roll over and head down into the high to mid .80’s this year, but it is starting from a point higher than I anticipated at this point in the .95-.96 area and I expected it to be closer to .90 about now and for the Yen, Pound, Kroner, Franc, Canadian dollar, and even the Euro to have gained some ground back to the upside versus the Dollar by now. It will be interesting to see how the Currency Wars wage on…
Dollar to silver ratio……… according to the usdebtclock…………. silver should be $3040……… 🙂
+3040
Hi, this is another really good video just put out by Crescat Capital, I like The Ker Report but Crescat Capital also provides a lot of great information for investors in Resource Stocks. They have branched out into some energy stocks and a short position in Tech. I hope you enjoy! Some of the stocks that Quinton talks about are also favorites of investors here at The Ker Report.
I think we are seeing a change in the national economy of The US. The Federal Reserve is having a hard time controlling the economy. Capital and labor are showing signs of unrest. Unions are making a comeback because the working public realizes the middle class has been sacrificed for the rich and privileged.
When there is a crash prosperity will change and it may not favor the rich and entitled anymore. I hope I am right. DT
Elite basketball players will be paid like hockey players, which is still pretty good.
Anyone watching the economics trends knew well in advance that we’d eventually get to this point where the central banksters cabal would eventually run out of options by doing the same “Brrrrr” playbook and printing ever more massive amounts of money to supply silly amounts of liquidity to the markets, which simultaneously spiked the amount of debt on their balance sheets, and by default created more and more inflation from the new money creation chasing a limited number of goods.
Now we are here, in 2022, where we are a few weeks away from the start of their long forecasted and pontificated rate hike cycle. How long will it go, how many hikes will they get in, and how high will rates go before the light goes on in even the dimmest bulbs that they are backed into a corner? (that remains to be seen…)
Oil has been stuck below important and rising resistance for the last month so the coming week should be interesting.
https://stockcharts.com/h-sc/ui?s=%24WTIC&p=W&yr=1&mn=7&dy=0&id=p76987712597&a=1114144478
Funny enough someone not sure who made a comment few days ago within the week when oil hit the top of the weekly channel and Glen responded parabolic blow off top or top.. now let’s see if my call holds 😉
I still think oil will make a record high possibly down the line but I’m clearly seeing a multi month correction happening and oil vs the following will lose its fight Xau, hui, gld, gold, silver, gdx, gdxj etc
Now I won’t discount docs scenario of a march idles but in my book it would be swift/ fast and only to help fill any remaining gaps left behind.
I do see a possibility of a retest of the breakout on the monthly gold candle which would and could possibly retest that 1775-1810 region but it would be quick and fast imo only to have the monthly candle on gold paint green with a hammer! That would and could mean April would be highly explosive.
These are just thoughts and some patterns in running.. Overall the bull is healthy and alive and I don’t see any Armageddon
Good thoughts on Oil / energy sector, and how it will stack up to other sectors Matthew and Glenfidish.
Check out the inside buying at Cantex
Fipke getting close to 20 million shares now.
The float is only 64 million- best I know.
Any thoughts?
https://www.canadianinsider.com/node/7?menu_tickersearch=CD+%7C+Cantex+Mine+Development
Cantex – there’s a blast from the past…. We had discussed it a number of times on the blog a few years back, when in 2019 Cudney and Warren Irwin were super psyched about (CD) and had pumped it up from $.69 to over $6.00 and over a $300 million market cap, which I had mentioned at the time was insane and waaaay ahead of itself valuation base on what they had found for zinc/lead/silver. Because the “big boys” liked it then it had to be great right? Only it wasn’t….. and was just another pump and dump with the stock falling from over $6 per share down to the current level of $.29 after having been diluted further.
Now, it may be that at the current $22 million market cap it is far more reasonably valued than when it was $300 million on hype and hubris, so it may be worth another look as the mineralization did look promising.
I still remember this capital raise at $6 a share and flow through at $6.52 per share as a major head shaker a few years back though:
________________________________________________________________________________________________________
Cantex Announces $10 Million Private Placement of Flow-Through Shares
@newswire on 1 Aug 2019
“Cantex Announces $10 Million Private Placement of Flow-Through Shares;
921,000 Flow-Through Shares will be issued as part of a charity arrangement at an issue price of C$6.52per Flow-Through Share for gross proceeds of C$6,004,920,and 667,000 Flow-Through Shares will be issued at C$6.00 per Flow-Through Share for gross proceeds of C$4,002,000.”
https://ceo.ca/@newswire/cantex-announces-10-million-private-placement-of-flow-through
Thx Ex for the info.
Yeah that deal looks extravagant at that level.
But the amount of insider buying and the % Fipke owns.
And still buying in the last two weeks
Makes me thinks something is brewing.
As well as this last hole just announced. https://www.stockwatch.com/News/Item/Z-C!CD-3208547/C/CD
I guess we’ll see what happens in the next 6 months
Good points Tony, and maybe something is finally brewing again with Cantex. I hope so, for the many trapped investors in that one, and really the sector could use a big discovery for Zinc/Silver to get the animal spirits moving once again. I’ll take a deeper look at (CD) soon, as the buying you pointed out does lend itself to confidence that good news may be on the horizon. I appreciate you highlighting that for us here at the KER and we’ll see how it goes…
Thought I would have a peep at the KER crew and see what the thoughts are during these volatile times. Specifically around PMs, I enjoy the various perspectives. My two cents worth: Fundamentals within certain markets and assets have been flipped on their heads or eradicated all-together.
Gold and silver for example have behaved curiously in recent years. Inflation has become well entrenched across the board in the last 12 months at a high level, yet gold has been somewhat muted in its response to these inflationary figures. Why is that? Also uncertainty and subsequent demand for safe-haven assets remain high. Again gold muted, so why? Fundamentals are only as reliable as the rational basis from which they are based on. If people ignore the fundamentals or dont believe in them then the basic principal of that fundamental is a mute point. Put another way: Sentiment overrides all other logic, whether correct or not. So if the masses are worried about inflation and subsequently choose to protect their wealth in other assets, how can gold sustain its long held fundamental as an inflation hedge or a safe-haven asset? It cant… Not least in the short term.
Now of course there are other factors to contend with (corruption, manipulation, competition, uncontrollables etc). However these variables also apply throughout other sectors. I guess one has to ask themselves whether they are a trader (short term player) or an investor (long term player).
Gold and silver are quite sensitive to the events of the world and can become quite the roller coaster. Which I guess is why it deters many from participating in the PMs space. Significant events affecting PMs can be viewed as short an long term “black swans”. A short term black swan for example is Russia invading Ukraine, the Reddit Wall St silver movement or Donald Trumps elctoral victory in 2016. These particular events play out in a matter of days. They are initiated by massive volumes of people chasing the market due to a perception of uncertainty or rumour… A FOMO like movement if you like. But without warning the bigger players cause a reversal (legally or not), the price begins to retreat and before long those who rushed into the market are now rushing for the exits. That same herd mentality movement that drives the price up also drives it down. This is the perfect environment for short term players (traders), particularly in smaller markets where the moves are exacerbated due to volume relative to market size.
A long term black swan would be the GFC or the covid-19 pandemic. With a time frame of months if not years this event has more variables but perhaps more margin for error. These events encompass not only all economic related factors but most of all lifes factors too, hence why they take longer to play out. Sentiment and emotion still plays its part in this environment but its not as extreme. So there will still be a flight to certain assets causing a price climb. There will also be that inevitable rush to the extis. However, rather than exiting to maximise profits this time its done amongst the back drop of margin calls and “forced” liquidity being fed by fear. Being a broad long term event, everything is affected by everything else (a definite con of globalisation and complex inter-connectivity). Due to its timeframe this is more the investor type environment. Rather than timing the market its time in the market. A safer bet for those not chasing a quick buck.
What has become apparent in all types of events is the sentiment overiding the fundamentals and technicals (one can argue sentiment and technicals are more closely related). Perspective and context are important though. Eg: Gold ultimately improved significantly price wise from pre-GFC to when the correction had run its course. Same applies when one looks at the price of gold as a comparison from pre-covid to now. Therefore what is ones position on the table: trader or investor???
Good thoughts as per usual Ozibatla and good to have you checking in on the KER crew and sharing your perspectives.
This line of yours nailed it in many respects: “Fundamentals within certain markets and assets have been flipped on their heads or eradicated all-together.”
It feels like we have been living in an upside down world the last few years, where real assets have struggled, and complete garbage raced higher and higher…. until some sanity is returning to valuations since the end of last year and the air is coming out of the speculative bubble at last….
We saw make believe tech growth unicorns with no hope of earnings for many years blast past real companies in valuations, endless speculation on vaccine stocks and biotech stocks in the health-crazed fear porn backdrop, the rise and fall of payment system stocks like Paypal & Square, the fad of “stay at home stocks” like Peloton, Shopify, or Zoom get decimated, the trend of insanely valued SPACS, surging values of jpegs renamed NFTs on the blockchain, another wave of Cryptocurrency mania, surging Meme Stocks like AMC, Gamestop, Hertz, Bed Bath and Beyone, etc… all went to nosebleed levels of speculative froth and irrational exuberance. Even the middle of last year most of these clueless speculators chasing hot money fomo trends, thought the ride higher would never end, that the dips would always be bought, and thought nothing would ever change…. (due to their misguided recency bias about how markets worked).
Since Q4 of 2021 we finally saw the large tree get shaken, and many of those “hot” speculative asset classes got chopped in half, or some are down 60-90% off their all time highs. A great deal of investor capital was just vaporized over the last 2 quarters, and went to money heaven. As a result, it is far less likely that people will be rushing into to push all these companies or collectible assets back to all time highs again anytime soon.
The bubble was was overdue to pop, and pop it has, with people point their fingers in many directions from the Fed removing liquidity by tapering and stopping their QE, to rising interest rates, to a global trend of central banks to start tightening (including the upcoming rate hike cycle in the US to kick off in March), to 40 year record high inflation figures, to lousy labor participation and companies struggling to employers looking to staff old jobs from a new crop of workers that don’t want to come back in a transformed job/work from home environment, to bad earnings report seasons, to now even geopolitical theater. For the first time in many years, even generalist investors are finally looking at how insane valuation metrics had become by the middle of 2021 and for the first time in a long time, the chickens are finally coming home to roost for many of the runaway speculative punters, that just had their clocks cleaned. Welcome to a 2-way market!
Now as for the Precious Metals, they’ve absolutely been boring, but both Gold and Silver have still held up at very good levels for the producers and developers overall, and one could argue that Gold sniffed out the coming inflation deluge back in 2019 and 2020 when it surged to new all time highs up at $2089. Despite all the bearish calls the last 2 years Gold did not rollover and break through the March 2021 double-bottom low of $1675 and head to the low $1600s, nor did it crash all the way down to the $1570 50% retracement some were convinced was inevitable, nor did Gold go back down crash through the pandemic low of $1450 as many thought just had to be retested. Silver not only has held about the $21.41 level a few times now, but never went back down to $18.50-$19, or lower back down to the $13 level from the pandemic crash low, that many suggested was also inevitable.
None of those garbage calls ever happened. Period.
Instead, Gold and Silver simply have consolidated their epic moves higher coming out the fall of 2018 and through the summer of 2020, over the last 18 months, and have formed the handle on the over 10 year Cup & Handle pattern in Gold. Even the moves recently (only attributed to geopolitics due to recency bias) missed the point that the metals were holding up and have been trending higher since last Sept/Oct due to financial reasons – mostly inflation and Fed policy. Gold was already up in the mid $1800s and heading higher, breaking through technical resistance levels BEFORE the Ukraine invasion even started up. Sure the metals got an additional boost from Russia invading Ukraine, but it isn’t like it went 50%-100% in value on the move… more like $50-$100 which is really nothing in the overall scheme of things.
If Gold, as the prime mover, has a corrective move for a few weeks as many expect to happen, and then bases and starts moving higher on the Fed rate hiking cycle and inflationary pressures, then it will eventually drag Silver and the PM mining stocks even higher to where they start playing more catchup and then outperform the yellow metal. We see that happen almost every time, and no, this time is not different.
There was already the technical set-up 5-6 months ago for the recent move higher in the PM sector to play out, regardless of what fundamental drivers would be pinned onto the move higher… and now we’ve been seeing it play out since Q4 of 2021 to present. The GDX bottomed that last day/week of September, as we’ve pointed out with Dave Erfle a number of times, noting it the week after it happened, and it has not tested that brief breakdown level to the mid $28’s since then, which is also very bullish, and has nothing to do with the recent geopolitical backdrop. Even the big boy miners like Newmont & Barrick, and largest royalty companies like Franco Nevada & Royal Gold have been getting a bid from generalist investors, which is what we see each time when the worm turns in the sector.
We are not out of the woods yet in the PM sector with an all-clear signal, and we may face a few more weeks or month of weakness as many have been calling for, but that will be one of the last good buying opportunities for those that waited and missed the last one back in Sept or the other one during tax loss selling in December. I’ve personally raised a bit more funds by trimming back some positions that have been running and finally have things up to about 5% dry powder to deploy should we get this corrective move during the “Ides of March.”
Wishing all investors here at the KER prosperity and good trading in the year to come. Ever Upward!
Cheers Ex. Good discussion!
We have switched from m patterns from august 2020 highs to w formation in monthly charts. It is clear to the trained eye that hui/xau both as small examples are in a w monthly formation. Folks we are headed higher and the denial train could not be better 🙂
Yes, always nice to see W-shaped double-bottom patterns forming… Good stuff.
Regarding concerns about open interest, a few things seem to be getting overlooked. Yes, it hit almost exactly the same number on Tuesday as it did at the November high at 611,000-612,000 contracts but the $100 drop in the gold price came afterward and accomplished a full 50% retrace of the rise since the end of January. So OI (open interest) has likely already come down significantly but we will get a better idea of current positioning next Friday (which will show the situation as of Tuesday, March 1st). However, it is more important to understand that the next major move in gold will come with OI breaking out to new highs and ultimately completely ruining our current sense of what is high and what is low. That’s exactly what happened leading up to the OI peak in January 2020 right before the scamdemic was unleashed. Not only did OI peak at just a hair under 800,000 contracts (30% higher than the current 611,000), it had exceeded the current level 6 months earlier and was steadily rising for those 6 months until it peaked near 800,000. One look at the volume on the following weekly chart shows that participation dropped after March 2020 and still hasn’t recovered. It was getting there in August 2020 when it slightly topped 650,000 contracts but that’s still a long ways from 800,000. Gold gained about $250 (17%) in the second half of 2019 AFTER topping the current reading of 611,000 contracts.
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=5&mn=0&dy=0&id=p10005572337&a=1060616958
Great points Matthew! We sometimes read things before hand and don’t have a step ahead of what’s really happening.
That’s a great summary of things! I have no doubt 100% we are headed higher monthly wise and that’s what matters. Also as you have shown the quarterly is in great shape. Like I’ve said you and graddy have the best charts and views imo two great masters of charting. Trying to reach and get there 🙂
Glen
JUST A NOTE………. I am sure a few of you …. Know ROB……..
Rob Kirby is in a hospital in Canada fighting for his life with Covid. The hospital has induced a coma and is forcing air into his lungs. He is stable but needs your prayers to come out of this. Kirby has been a regular guest on USAWatchdog.com (latest interview 2/12/22). Rob is a Brother and a friend. Please pray with all your heart for our Brother Rob Kirby.
In a hospital…induced coma…on a ventilator…sounds very bad.
I’d bet they gave him Remdesivir. THAT is what’s been killing so many covid patients.
How ignorant a remark, even for you Mathew.
Ignorant is an understatement.
Sorry boys, ignorant is the opposite of that remark. Grab yourselves a mirror if you’d like to see ignorance in its purest form. Chickenshits.
Matthew is right about Remdesivir. I would trust him before I would listen to Fauci and Gates.
I would not take Remdesivir for a million bucks.
Unfortunately he won’t get what he needs in a hospital.
Put him into a coma so he can’t speak for himself, pump him full of high priced drugs and submit the bill to government health care system, one of the best in the world.
perhaps you and Mattew can set up or at least prescribe an alternative for the poor souls infected with covid with an alternate source of treatment to the government health care system to avoid the purposeful poisoning that they conduct. Which is simply astounding. Nobody is safe.
Good doctors have already done so and have been vilified or worse by the corporate media and others as a result.
OOTB – Thanks for the note about Rob Kirby, and sorry to hear he is in the hospital in an induced coma and ventilator. Typically by that point it is not a good prognosis for recovery, and several of the “approved” drugs given to patients at that point, including Remdesivir (as Matthew pointed out), start shutting down the kidneys and other organs where the body essentially drowns in it’s own fluids. I hate to hear that things have digressed that far for anyone, and thoughts and prayers go out to his family and the audience over at USAWatchdog.
Ex…….. you are welcome…… I thought a few people might like to know….
Thanks for keeping us informed OOTB. I’ve listened to a number of his interviews over the years and read his written pieces, and still hold out hope that he can swing out of it if he has in fact stabilized.
Jerry noted!
Thanks also for all your previous post they don’t go unnoticed pal! Regarding Hospitalization it is 100% clear to me that remdesevir is 100% what is being given and that’s a fact as of last week which a friend notified me. You don’t have any choice either all behind closed doors and your not allowed in. I forget the other medications name for the anti inflammatory. All approved by yours truly Trudeau
To EX AND GLEN…….Thank you ……. and thanks for your hard work. as well,,,….. it is also appreciated…..
Excelsior, AEM took over KL 16 days ago and Tony Makuch became president of AEM. And now he has been removed. Anyone know what happened? Very odd indeed!
Hi Bonzo. Yeah, I saw that Tony Makuch just stepped down from the President role once the merger of Kirkland Lake with Agnico Eagle was just sealed up. He still has a lot of shares and likely just stayed for the merging and is gone. Many KL investors are disappointed and feel he sold out Kirkland Lake too cheap but I don’t personally see it that way (and people say that from the company being acquired almost every single time).
The merger makes a lot of sense in the kind of environment we are in where Barrick and Rangold merged and where Nemont and Goldcorp merged. In addition, he did a lot of rolling up into KL by merging Newmarket with Kirkland and Detour Gold with Kirkland, and while everyone didn’t understand those acquisitions at first, they ended up being the right call. In the end, the combined KL/AEM is likely the right call as well, and I like it as a combined company far more than Barrick/Randgold or Newmont/Goldcorp.
I guess now is the part where he rides off into the sunset filthy rich after a long adventure.
Excelsior, I heard that if KL had been taken over and Makuch had been let go that he was entitled to a $9 million golden parachute, but if AEM fired him for caUSE HE GETS NO PARACHUTE. SO maybe AEM found out something and let him go, saving 9 million. See what you can find out. I hope AEM didn’t discover any fraud by KL.
Like gold, silver has already retraced half of its 3-4 week move up.
https://stockcharts.com/h-sc/ui?s=%24SILVER&p=D&yr=1&mn=5&dy=0&id=p67415788274&a=937970450
Aside from hedging purposes, now is not my idea of an appealing time to short silver.
https://stockcharts.com/h-sc/ui?s=%24SILVER&p=W&yr=3&mn=0&dy=0&id=p81288414064&a=1118254442
In overseas trading Gold is back up to $1915 and Silver is up to $24.40.
Whether or not they’ll be able to hold onto those gains for a good monthly close in February once the Comex opens in the morning is another matter all together. It would be nice to see a monthly close in Gold above $1900, and really great to see a monthly close above $1921. We’ll see how it goes, but after seeing this pattern so many times, I’d expect to see a morning dump to push the pricing down below $1900 once again and prevent that strong monthly close from being painted on the tape.
Gold should be well over $2000 ……… with all the idiots in the world going for Putin….. JMO
Jim Wycoff had said the gold bulls were tired after massive run-up. The bargain hunters should be stepping up to take center stage
Hey Vlad only thing left to sell in order to reliquify is your gold horde. Sell it to China and get paid in rubles. Lots and lots of them.
Vlad you could also sell other stuff like oil to China at a discount. In addition to your excess reserves perhaps commit your future production.
if vlad can raise rates by 20%, powell should have no problem raising by .5% in March rather than quibbling over .25% considering the relative strength of the two economies.
Some up …some down. Paper counterfeit prices all green but means nothing. CNBC says gold is “safe haven” in their news feed bar. Someone will be assigned to restroom duty.
Ruble smashed, ATM lines around the corner in Russia and interest rates raised to 20%.
Good to see the manipulation stooges active in another Sector … Russia.
Stooges everywhere Lake…………. lol……… what a world………
Gold should be up today at least …..
$200……. just to start with…….. lol…….
On the brink of WW3…. and the morons keep pushing Russia….
Of course what good is gold in a bunker….. lol
$4 Quadtrillion in World Debt….. the banksters are having a field day as usual ….
Scumbags are everywhere, bozos are most places and stooges here and there. I should have been clearer.
Added to Heliostar HSTXF @ $.4435
Russia..almost a buy on the daily…this monthly chart shows favorable bullish volume characteristics…
https://tos.mx/BEChGhw
My account in -1.7% lock down all day. Nothing moving from shortly after open.
Close: EMOTF: -3.11%
All Others combined: – $425
At what point will they tell me my miners that have done nothing but go down or stay flat for a year….are overbought?
S&P, Dow, Nasdaq, Federal bonds, cash, gold, silver, and Bitcoin is where I am at.
Has anyone looked at the Q4/2021 numbers from Iamgold and thought there was something fishy?