Some Levelheaded Comments On The CoT Reports For Gold
Doc joins me today to address all the bullish comments around gold due to the CoT reports. It is true that the speculators are net short but the net position is so close to zero that the comments of a massive short covering run are not valid. We also discuss the yield environment in the US and how trade fears/wars factor in.
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I just got a newsflash that I wasnt quick enough to click on, Trump hit China with tariffs.
China will retaliate.
China cannot win this tariff war.
Sooner or later, and I hope sooner, they will realize that fact.
Doc, my sources tell me that if Cavanaugh is confirmed and Trump has a majority of support on the court, he will use his powers under the Patriot Act to round up all the traitors who have been trying to overthrow the government and try them in military tribunals. Comey, Brennan, Clapper, Lynch, Clinton, Obama, and many more will be arrested. If this happens how do you think the stock and gold markets will react?
Trump orders feds to declassify key FISA documents, text messages in FBI Russia probe
President Trump Monday ordered the declassification of several key documents related to the FBI’s probe of Russian actions during the 2016 presidential election, including 21 pages of an application for a renewed surveillance warrant against former campaign aide Carter Page, and text messages from disgraced FBI figures Peter Strzok and Lisa Page.
Canada is about to boom, its already begun.
People are a long way away from thinking about gold.
I agree with what Doc said a few months ago: miners washed out & not much downside.
(MMG) (MMNGF)Metallic Minerals Makes Multiple Vein Discoveries in New Mineralized Zones at the McKay Hill Project, Yukon Territory
“the 2018 field exploration program at McKay Hill was designed to:”
“advance existing high-grade Ag-Au-Pb-Zn targets on the Central Zone ridge, including the seven recognized vein structures, to a drill-ready stage;”
“and investigate recently identified target areas outside the Central Zone for potential new discoveries based on anomalies from high-resolution satellite orthophotography, geophysics and geochemistry.”
https://ceo.ca/@nasdaq/metallic-minerals-makes-multiple-vein-discoveries-in
As for the Fed Rate Hikes not having rallies behind them, with the exception of the 2 that were in the middle of the Summer Doldrums, all the other hikes have caused a gold rally afterwards as real rates are still very low and true inflation is running much faster than their hikes for anyone living in the real world.
First of all, the Dec 2015 hike, was the even that caused gold to put in it’s major bottom and ended the bear market. We don’t need to recap how bullish the first 8 months of 2016 were, taking out multiple key moving averages and prior peaks & trough.
Then the Dec 2016 rate hike marked the next period where the PMs rallied afterwards into the Q1 run of 2017 from $1124 to $1265.
Then the Mar 2017 hike caused an immediate rally into mid April of 2017 from $1194 to $1297.
June 2017’s hike didn’t have a rally and was in last year’s Summer doldrums.
However, Dec 2017 was one of the easiest trades of the last 2 years where we discussed the set up was perfect for PM rally during tax loss selling and the FOMC hike on Dec 13th kicked off a great rally in Gold and the PMs, where Gold rose from $1238 to $1365. (Do people just have amnesia??)
Then in March of 2018, the FED hike was succeed by a rally in Gold from $1306 up to $1369.40, which took out the 2017 high, and almost challenged the 2016 high.
Again, June’s hike this year was in the throws of a bad Summer Doldrum so there was no rally.
We haven’t seen a September Rate hike in over a decade, so it’s an unknown at this point, but there have been far more rallies after the hikes than pullbacks.
Also the one coming up in December, if like the prior 3 years in a row, should mark a tradable low and rally in the Q1 run of 2019.
For commentators to say we haven’t see Gold do anything since the first hike in 2015, means they either have not been paying attention, or they weren’t trading the markets and taking advantage of the multiple tradable rallies.
– the Dec 2016 hike into the Q1 Run of 2017 followed by the $141 increase in Gold
– the March 2017 hike followed by a $100 increase in Gold
– the December 2017 hike followed by a $127 increase in Gold
– The March 2018 hike followed by a $63 increase in Gold (which took out the prior year’s high)
It is likely if there is a rally after this Sept or Dec hikes that most of the traders will be out of the market, waiting for more validation, and miss more tradable rallies.
However, to discount the rallies we’ve already seen is silly.
It should be obvious, that many of the miners rallied in sympathy with these rallies and some of the better quality companies outperformed the metals on a 2:1 or 3:1 ratio.
This is why crabapple whiners that say we haven’t seen any action in gold since early 2016 are full of it. There have been multiple opportunities to trade the miners and the reality is most “investors” missed them all getting ready to get ready.
A great summary Ex. My only concern, or frustration to be more accurate is the good work gold in particular tends to give up during many periods, ie: pre rate hike period, summer doldrums, adverse PMs news, constant jawboning by central bank figure heads and so forth. I mentioned gold on its own because silver just flat out stinks right now. Its not putting in any good efforts of late.
So after many good periods where gold increases by more than $100 as you show, it then gives up much of those gains and we find our selves back near where we begun. Gold still sits comfortably above its 2015 low but if another take down in the order of say $60-$70 were to take place as we approach the Feds latest decision on interest rates then the yellow metal is left with less than a $100 gain over nearly 3 years. I know this is all hypothetical at this stage but you get my point.
It seems gold and the other PMs are never in the clear. This could all be the norm during the perceived early stages of a bull market but it is frustrating nonetheless. I understand I am speaking purely from a perspectives of physical PMs themselves and not the miners where there have been several profitable gains over the last 3 years but sooner or later both are going to have to go hand in hand one would assume.
Solid points Ozibatla. Gold and the miners have not been able to hold onto their gains, so it has been a traders market, not a “buy and hold” market, but that is pretty true across most commodities or currencies as well. Look at the US dollar it surged a few years, then pulled back, then surged a second time, then dove down hard, and now has rallied. Look at the Euro, Yen, Yuan, etc…..
Copper was up, then down, then up big, then pulled back down. Zinc, Lithium, etc…
Commodities are cyclical, and currencies or even cryptocurrencies bounce all over the place, so I don’t expect monetary metals to be any different.
Gold is the main driver of the PMs, and Silver will follow and outperform to the upside, along with the miners (like we saw in 2009-2011 or in the 2016 surge), but it takes a little while to get the momentum going back to the upside.
There is no doubt that Silver has not performed well, but the market has been in a sideways to down consolidation with tradable rallies to the upside for the last 2 years, so again, sitting on one’s hands like an “old turkey” has been the wrong call and that Livermore style of investing is more geared around the general stocks market, where old turkeys are rewarded over time in the utility, manufacturing, defense companies, insurance, and technology companies.
Silver and more importantly the mining companies will outperform the metals when a larger sustained rally unfolds, but it normally takes Gold making the move first to get the headlines and institutional money in off the sidelines.
However, in the mean time, there were a series of rallies the last few years that could have been traded in the PM miners, and really in many resources stocks. There were plenty of mid-tiers that would surge 50-200% on these rallies, developers with interest from majors that went up 100-300%, and of course, dozens of explosive explorers that shot up 500%-1000% for those that were paying attention and took action.
It’s the same thing for Uranium where there have been 3 great rallies the last few years where stocks went up 100-300%.
Copper had a great run where even larger companies were up 1-3 times. Zinc stocks put in great rallies from 2016-2017. Hell even Nickel stocks started getting a bid for the first time in about decade on the battery metals narrative.
Look at Oil, it plumbed $26 and has had a great rally up into the upper $60’s and many companies doubled, tripled, or more, and yet many just watched from the sidelines as record lows were put and it gradually climbed all the way back up.
Lithium stocks (white oil) rallied out of 2015, all through 2016, and into 2017, and yet most just mocked the sector from the sidelines while the main companies shot up 500%-1000%. Cobalt stocks started a little later and didn’t go quite as high, but many shot up to be 3-5 baggers. These trends were painfully obvious to see unfolding and yet, most didn’t take action, didn’t seize the day, and while they were trash talking the inevitable, these sectors rallied with their full knowledge, and without their philosophical permission.
The reality is that the Pot Stocks and Crypto currencies stole most of the headlines as new developing industries, and those pulled some of the speculative “hot money” out of the miners, but one could say that also affected bio-tech speculations as well. The reality was that may biotech stocks still had rallies though.
There are ALWAYS trades to be made in ANY sector every single day. What happens is investors want the entire sector to all do well, and that only happens during the most intense bullish runs where the rising tide lifts all boats. However, almost every sector has tradable rallies, there are always companies doing good work and optimizing their production, improving their development costs, or turning heads with exploration results.
It takes time, attention, focus, and keeping a pulse on the market to place a speculative bet in front of developing trend, but once it is obvious, the air comes out of the balloon again, before the next run. Speculative mining stocks make epic runs, and then end up giving back 50% 61% 78% or maybe make a full round trip giving back 100% of their gains. This is how it has always been, and always will be. Make hay while the sun is shining, take some profits, and rotate into the next unfolding trend.
It will be awesome when the whole sector rises to new heights, but until then it is a traders market, and that is why stay abreast of the fundamental macro drivers and company news is crucial to identify the right companies. Then one can use TechnicalAnalysis to look for good probabilistic risk/reward scenarios, and also look for good exit points.
May everyone have a prosperous end to 2018 in their trading and in life.
Talking Stocks Over Beers – Uranium Fundamentals
w/ Mike Alkin and Rob Chang
You may want to skip over the first 9 mins 45 second of preamble.
Well said! I agree it is a traders market at the moment. And yes commodities such as gold are all cyclical just like everything else. Sound advice. Its always good to hear others logical perspective amidst all the orchestrated fear mongering “click bait” that is prevalent on the web.
Thanks Ozibatla. Cheers!
Plenty of golf going on @ Hilton Head, South Carolina. Trump better practice up
Meanwhile in Venezuela…..
Maduro is raising the minimum wage to around US$20.00.
And Turkey sells off over a 100 tons of gold to prop up its currency.
(By the way, that minimum wage is per month, not per hour. Ouch!)
(EXN) (EXLLF) Excellon drills 2,781 g/t silver equivalent over 15.1 metres at Platosa and provides production update
by @newswire on September 18, 2018
“Underground drilling at Platosa continues to deliver great results,” stated Ben Pullinger, Senior Vice President Geology. “We are especially encouraged by the elevated gold values and significant widths encountered in the drilling at the 623 Manto in EX18UG434 and 435, which exceeded our expectations and are worthy of follow-up.”
https://ceo.ca/@newswire/excellon-drills-2781-gt-silver-equivalent-over-151
Doc what your thoughts on Uranium moving higher through 2019.
I believe President Trump will announce tariffs of 10% of more Chinese imports after the close of business today.
It appears to me he is looking at increased taxation income from tariffs as a temporary measure to reduce the deficit government spending. He appears to believe that China will reduce prices to maintain imports to the U.S., and thus it may be China that effectively pays the tariffs, not U.S. citizens. i.e. tariffs may not be inflationary to the U.S.