Investments In Ecuador Further Driving The Bullish Case For Metals Stocks

October 16, 2018

Chris Temple joins me today to share some updated thoughts on the investment environment in Ecuador. A recent further investment in SolGold by BHP is another positive sign for the Country. We discuss the opportunities that Chris is seeing in the area outside of SolGold a well.

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Click here to visit Chris’s site.

    Oct 16, 2018 16:06 AM

    The risk is to the downside for the miners over the next 6 months to 3 years. Every little rally gets the bulls excited. The sector is a sure-fire short right here and on any further strength.

      Oct 16, 2018 16:30 AM

      What’s happening now should hardly be lumped-in with “every little rally.” Countless charts across several sectors show that your shorts are anything but sure-fire. Here’s one:

        Oct 16, 2018 16:32 AM

        Here’s another:

        Oct 16, 2018 16:34 AM
        Oct 16, 2018 16:49 AM

        Generally speaking, the miners haven’t made a higher high in over 2 years now. To me, that strongly suggests a retest of the bear market low is coming soon and/or an extended basing period will follow. There is absolutely nothing bullish on the charts if you are looking for anything more than a swing trade.

          Oct 16, 2018 16:02 PM

          We obviously disagree about how to read and use a chart. For me, the evidence strongly suggests that the miners made a very significant low last month. We’ll see who’s right.

            Oct 16, 2018 16:43 PM

            What is a “significant low.” Is that a tradeable low? If yes, then I agree if you are willing to take the risk. Or is it something more? I hope you tell the folks buying here based on your prognostications when to bail too.

            Oct 16, 2018 16:05 PM

            It is something much more and of a scale that allows for plenty of getting in and out along the way if one wants to.

    Oct 16, 2018 16:35 PM

    Today’s pullback has been a gap-filling exercise. The closing price for GDX on 10/12 was 19.75 – today’s low so far is 19.76…

    Oct 16, 2018 16:40 PM

    Matthew –

    I would guess the same is true of USAS. Big down day, but doesn’t look too scary. It looks to me like it could be making one last backtest to the $2.30 area before it takes off. I took some profits in a few stocks this morning and redeployed. Glad I did. It still looks very much like a trader’s market to me and so I am taking profits when things jump and get extended above the 50 day. I might be leaving some on the table, but I am significantly reducing my cost basis in the process and still making a little profit.

      Oct 16, 2018 16:23 PM

      I am doing really well with RNX, I have been in and out a few times but so far my timing is spot on. I wouldn’t recommend this stock to anyone but most that like it are there for the gold find but RNC is rich in nickel and nickel went up 36% in one year. Nickel is the best performer of the base metals. RNC will not need money for awhile as they are cashed up. This stock has huge liquidity and hype, what gambler’s love the most. DT

      Oct 16, 2018 16:06 PM

      I agree that USAS doesn’t look scary but I’m not sure it will soon be as spunky as some of its peers. Here’s AG, for example:

        Oct 16, 2018 16:45 PM

        Thanks Matthew. One other question for you. What do your charts say about oil and the oil stocks (XLE?)?

          Oct 16, 2018 16:20 PM

          I see more downside for both along with stocks once this bounce is over.

            Oct 17, 2018 17:02 AM

            I would think that would be bullish for the precious metal miners profitability since that is their biggest input cost other than labor.

            Oct 17, 2018 17:57 AM

            Me too.

    Oct 16, 2018 16:18 PM

    +1 Charles
    Nothing to get excited about yet.

      Oct 16, 2018 16:04 PM

      -1 b
      That’s only true if you believe that there’s NEVER anything to be excited about. Otherwise, we have a high volume breakout for gold/GLD and the miners as well as the fact that the miners did extremely well while the stock market plunged. Historically, these items are bullish more often than not.
      The HUI moved up as much as 21% since bottoming a month ago while the average guy AND most experts continue to sell or sell short thanks to the phenomenon known as the recency bias.

        Oct 16, 2018 16:27 PM

        I’m assuming you said the exact same thing in December 2016.

        Sure, there was a large rally, but 50% of the rally was wiped out in 2 weeks. So you would have had to have traded it perfectly. Again, not denying the possibility of a decent swing right now, but there is no way a long term bottom printed in August in either the gold or commodities.

        If you aren’t calling “the” bottom, you should make that clear, especially for the people who are expecting some sort of long term buy and hold situation based on your posts.

          Oct 16, 2018 16:46 PM

          +1 JDSU

          Oct 16, 2018 16:09 PM

          The 12/16 low is nothing like the current one but it did precede a 21% rise for gold. Not bad.
          Watch for a weekly close above the 600 and 200 week MAs:

          Oct 16, 2018 16:05 PM

          Gotta say I agree at this stage. Yes volume is good and yes many miners have put in strong gains over the last week but when looking at a longer term perspective theres still plenty of work to be done. On so many occasions in the last couple of years, these sorts of small rallies have petered out all too quickly and reversed all gains and some.

          GLD has had a good breakout but still sits below where it was in July. Ditto for GDX on the 6 month vectors chart. Hate to sound pessimistic, but once bitten twice shy right?

          I hope gold in particular can do abit of basing at this point and then forge ahead. The rest should follow as a result. $1280 by years end keeps the year on year uptrend in tact from the December 2015 low.

          Oct 16, 2018 16:20 PM

          THE bottom was in Dec 2015 at $1045.40, and Gold hasn’t been anywhere close to that level or below it since that time, but it has made 3 attempts to break out, skewing things much more to the bullish side over the last 3 years than the bearish.

          >> Despite all the bellyaching about Gold not making a new high since the $1377.50, it has rallied up close to that level in 2017 to $1362.40, and then the 2018 high took that out at $1369.40, just barely missing the 2016 high.

          Bottom line: Gold packed on between $200-$300 since that 2015 bottom, and has been consolidating and then putting in mini-rallies since then. One them is going to carry it higher to break out that $1377.50 high from 2016, and then these silly discussions will be in the rear-view mirror.


          When Gold broke out in late December 2015, (after the first FED rate hike in 8 years) it took out many key moving averages and prior peaks & troughs, that hadn’t been taken out in 3-4 years….. Dead cat bounces don’t do that.

          The Gold & Silver miners took an extra month to bottom until January of 2016 to finally break out of the capitulation they were in, and they surged for 8 months until August of 2016. Many of the companies rallied 300%-1000% including some of the mid-size and smaller producers and developers, (not just rogue explorers). Those gains eclipsed anything investors have made in the general stock markets for the last decade for those that know how to trim the winnings when a rip-your-face-off rally plays out. Hell even those buying in late 2015 or early 2016 in many stocks are still up from those times if they just bought and held (which I’m not a fan of in resource stocks until it is a raging bull market that will be sustained. We may see something like that next year and the year there after where buying and holding makes sense for a period).

          Since the intial pressure release from the Precious Metals sector bottoming and then then that initial surge, there have been a few rallies each year, and many were quite rhythmic. The rallies after the FOMC meetings where rate hikes were triggered, many of which coincided with the bottoming during tax loss selling in December and into the seasonally strong Q1 Run. The rally out of late summer also provided nice 1-2 month rallies most years.

          People must have amnesia of what really played out the last few years, because they act like besides early 2016 that there was not any action in the sector, which is 100% bullshit.

          There wasn’t just a rally coming out of Dec 2015 into the Q1 of 2016. (Honestly for those with any memory or that have been around a while, remember that Dec -> Q1 rally was predated by false breakout rally from Dec 2014 into late January of 2015). There were also rallies in the PMs in Dec 2016 into –> Q1 2017, and out of Dec 2017 –> in the Q1 of this year. (ding, ding, ding)

          * News Flash – All of those were tradable rallies for gains in many PM stocks of 50%-200%, that dwarfed the gains of holding the general stock markets for entire years, so they are nothing to brush off lightly.

          ** It was not hard to trade those rallies either as the PMs had bottomed in mid-December every year and then rallied from late December into Jan/Feb over and over again. Yes, people had to buy in tax loss selling season (which isn’t friggin’ rocket science), and then sell during the spike in late Jan or mid Feb. Each mining stock is on it’s own journey, but many had rallies that would make most investors year if they simply acted on the seasonal trends.

          If investors in the precious metals sectors did NOT trade those rallies and just sat there like bumps on a log as buy and hold investors, or sat on the sidelines biting their nails waiting for the bottom to fall out, then they blew some of the easiest gains available in the sector the last few years. Those are usually the negative nancies we hear from on here occasionally that whine about the rout the metals have been in when they’ve missed rally after to rally that would outperformed most hedge funds on Wall Street if they’d just done that simple trade each year.

          >> I thought it was great when the technician trader, Goldfinger, over at asked this question this last December.

          @Goldfinger – “Is it really that simple? Buy $gold miners in December and make big returns within 1-2 months?”

          (my short answer back to him was: YES)


          Bottom line: The bottom was back in 2015 and there have been a series of rallies and corrections since then in the PM space, and many times where people following the news and developments in the mining sector could spot the producers, developers, or explorers that had wind in their sails. We posted tons of composite charts of Gold & Silver miners of all stripes that outperformed their peers in 2016, in 2017, and 2018, but most sat around griping and didn’t take any action.

          Whether the low in August we just saw marks an epic rally that takes us past the 2016 high or just marks, yet another, great tradable rally, the key is most investors have not gotten positioned during the weak periods (for fear of the bottom dropping out…… which it hasn’t in 3 years) and as a result, they miss the gains every single time. It would be funny if it wasn’t so tragic.

          We talked on here for months about positioning in late summer for that rally, and personally I thought it would come in late July but the bottom held off until mid-August, so I got positioned a few weeks early. Who gives a crap when the miners take off like they have the last 2 weeks. Once again there are plenty of stocks up double digits and it has all the appearances like there is more room to run for another week or so.

          People turn over money to their brokers or hedgies or mutual funds all the time to try and make 10-12%, so why people can’t see making 20%-50% in a short burst of time is way the hell better than tying up money all year long for 10% will always be a mystery. How about some of the explorers each year that have rallied 100-500%. How about so many of the producers that rallied 50-100% from last Dec to this Feb/March? How about so many of the Aussie stocks that have been making money hand over fist the last few years due to the currency exchange and price of gold they are selling in?

          The only ones crying are the ones that didn’t get positioned for these rallies, or that did return trips in these stocks, because they were “buying and holding” and rode them right back down. This market has rewarded the active traders the last few years, that embraced the seasonal trends, that used technical analysis as a tool for entries during oversold periods and exits during overbought periods, and for those that combed through the news looking for the stories that were getting attention and traction with the speculators.

          Whatever happens this year or next year or the year there after, the markets will ALWAYS be the same…… Opportunity mixed with difficulty. There are always bargains on any day of the week, always turn-around stories to invest in, and always companies that will get acquired for a 40-60% premium, for those that know how to spot those market inefficiencies and capitalize on them.

          Ever Upward!

    Oct 16, 2018 16:23 PM

    On UK financial forums I have seen many posts from people complaining that it is almost impossible to buy Solgold stock in London. Have seen this as far back as when Chris first mentioned it on here.

    Get the impression that the stock is being kept for the big boys.

    How easy is it to buy in the US?

    Oct 16, 2018 16:40 PM

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    Oct 16, 2018 16:52 PM

    solg volume was 160k today .70

    Oct 16, 2018 16:15 PM

    The yen is in sync with gold:

    Oct 16, 2018 16:41 PM

    Short or mid term, the PM stocks rule the day on upswings.
    The long term play with phyz has ruled.

    The price of gold bullion in 1998 at 300$ (20 years ago, to current date, 1200$) blows the miners out.
    Maybe a good guide to pick the mining stock on long term performance?

    Oct 16, 2018 16:47 PM

    Personally, no stock is long term.
    Phyz is

      Oct 16, 2018 16:20 PM


      Oct 16, 2018 16:59 PM

      +1 Chartster

        Oct 16, 2018 16:36 PM

        An Ounce Of Gold Has Always Cost The Same As A Suit, Here’s Why

        Oct 16, 2018

        Guest(s): Ani Markova Vice-President & Portfolio Manager, AGF Investments

        “Gold’s greatest merit is still its reliability as an instrument for wealth preservation,” said Ani Markova, Vice-President & Portfolio Manager, AGF Investments.

        “Gold is an asset class that investors should have in their portfolios to diversify them, especially at times when we see equity market volatility,” Markova told Kitco News on the sidelines of the Mines & Money conference in Toronto.
        Longer term, investors should depend on gold’s wealth preservation power, Markova said, citing gold price’s parity to the cost of a suit over time as an example of its steady relative value.

        “If you wanted to buy a men’s suit back in the 1930s, you probably would have paid about $16.95 for a good quality suit and you throw in pair of shoes for $3.25, which is about $20, and that was roughly the cost of one ounce of gold in the beginning of the ‘30s” Markova said. “If I look today, at U.S. dollar terms, we are at about $1,200 U.S. and if you walk into Harren Rosen suit for about that.”

    Oct 16, 2018 16:56 PM

    Why Conflicted Copper Shows Little Consensus

    Mickey Fulp – Mercenary Geologist | about 6 hours ago

    Oct 18, 2018 18:56 AM

    Here’s an Ecuador miner with Gold/Copper/Silver worth following:

    Toachi Mining Inc – Corporate Presentation:

    Oct 20, 2018 20:28 PM