Ed Moya – Retail Sales Recap and China Eventually Reopening; How Sustainable Is This Market Rebound?
Ed Moya, Senior Market Analyst at OANDA joins us to recap the retail sales data from this morning that showed a fairly strong consumer. This also comes with China talking about re-opening. Both are leading to a rebound in the market but how long will this bounce last? We also discuss the strength in the energy markets.
Probably because I bought a “smidgen” early this morning. It really doesn’t need a reason since noone is interested in PM stocks currently and they and the metals will be under pressure for some time regardless of company specific news.
Cormark Securities adjusted their target down today in AXU from up above CAD $3 just last year, to CAD $1.20. With the stock closing at CAD $1.03 today, that doesn’t show much upside based on the way that analyst group is covering the company and some were grumbling about that today.
In addition, a few days ago company announced they were going to defer 2022 production guidance due to the reviewing a few potential scenarios for underground development based on supply line risk and availability of maintenance technicians.
The market doesn’t like uncertainty, so until Alexco can guide the markets on what they actually expect to produce in 2022 and on a quarterly basis for Q2, Q3, Q4 as they continue to ramp up operations, then many investors are bailing within the context of declining silver price. I actually added just a little bit to my AXU position today in the 8% selloff.
I’m glad I sold AXU and especially PGM when I did. Fledgling producers always seem to run into problems and sometimes big ones.
The hallmark of every important low is a complete lack of interest and thank goodness for that.
I pointed out Hecla’s long-legged doji candle on the day that it happened (at my fork support) and sure enough, the next day’s action looked the way it should have…
https://stockcharts.com/h-sc/ui?s=HL&p=D&yr=1&mn=2&dy=0&id=p07598227409&a=1163581562
Now let’s see if the bears can muster a retest of the low or even make a new one.
Stewart nailed it:
“Fiat currency is, by definition, socialist currency. The silly Gmen who eagerly embrace it define themselves as socialists.”
http://www.321gold.com/editorials/thomson_s/thomson_s_051722.html
That boy’s on a roll; the next one was even better:
“Feeding starving citizens is not socialism. It’s sanity. Socialism is insanity.”
It’s a valuable and beautiful thing when people can make a point with brevity and clarity.
Great quotes from Stewart. Thanks for sharing those Matthew.
Stewart has some good points. Government funds shouldn’t bailout corporate deficiencies but there is some merit in keeping people alive if there is a choice between those options. I would describe it as theft rather than socialism unless the government’s constitution prioritizes corporate interests over the tax payer’s. But, better thoughts than just blowing off the Constitution and supporting corruption. Call it theft or socialism, it is criminal if contrary to the law of the land.
Socialism IS theft AND slavery and is completely incompatible with our natural rights and therefore the U.S. constitution. Few understand that fact because few understand economics, history or, these days, even right from wrong.
Sold my new alexco yesterday and rolled into American Pacific. Although there is a lot of shortages projected for silver, it is hard to not anticipate JP Morgan’s intervention worldwide. Their greed can make things difficult.
axu and pgm now classified fledging producers?? Always have been
as with other similar dregs, in spite of kitco and gold bug promotion to the contrary for the past year or more.
Kinda late with the declaration when at multi year lows
Yes, in my book they are fledgling producers and I haven’t owned them in years because I don’t like most development stage companies either. This is far from the first time that I’ve mentioned I don’t own them.
Impact Silver is a small but established producer with a different approach and circumstances. It is not at all what I’d call a fledgling producer.
I no longer follow AXU but it wouldn’t surprise me one bit if it performs extremely well when silver finally goes up (as I think it is about to).
https://stockcharts.com/h-sc/ui?s=AXU&p=W&yr=3&mn=11&dy=0&id=p09861286534&a=719579713
I’ve wiped all these troubled companies off my watchlist, AUN, AR, ELVT are three others that are out.
Think I’ll trade options for the summer maybe on the SLV, liquid and tight bid/ask spreads.
But will keep my IPT. KTN getting cheaper..not sure about that one.
AUN and AR are two more that I used to own years ago. AR looks quite appealing now…
https://stockcharts.com/h-sc/ui?s=AR.TO&p=W&yr=5&mn=0&dy=0&id=p96345600536&a=1167174553
I’m keeping my KTN. That one simply needs a sign that convinces the market that silver is more likely to go up than down. It is currently like a “near the money” call on the metal.
Good discussion and thread here on some of the newer producers guys.
Matthew- I’d agree with you that both AXU and PGM are still fledgling producers because they both spent last year in 2021 trying to get ramped up to nameplate production and had challenges, stalls, and have disappointed in the marketplace. I’d also agree that Impact Silver would not be considered a fledgling producer as they’ve been in production for a decade now, and they are more of a special situation due to their exploration upside.
Jonsyl – I’d disagree with your statement that Alexco or Pure Gold – “Always have been…” No, they weren’t, and both of those companies only got into production last year and still haven’t sorted it all out to get up and running as projected. What they both were for years before that were solid developers, with high-grade assets and very promising drill results for years. I did quite well in both Alexco and Pure Gold since about 2016, with a number of trades in them each year and multibagger returns. It wasn’t until they actually moved into production that they ran into issues and tanked more in concert with tough PM markets.
Terry – Agreed that Elevation Gold and Aurcana have been punished for not getting off the ground as planned and they’ve nose-dived as a result. When Elevation Mining was Northern Vertex, they were actually doing much better and I did quite well on the company back then, but then they went out an bought Eclipse Minings Hercules project when they didn’t need to, and switched up the teams, and it’s been a trainwreck ever since then. As for Aurcana, they were so close to the end of the journey, but then Covid shut them down a few times having to send workers home and freeze operations, then they didn’t get the ramp up into production going fast enough and had to keep raising and diluting, and then they had the underground rock movement and underground collapse of some areas, and that was the final nail in the coffin. As mentioned yesterday when DT and I were discussing Aurcana, the likely trajectory now is that another company comes in and puts them out of their misery and invests the capital to get Revenue Virginius and Shafter running properly, or it goes bankrupt, and the debt holders get the assets and sell them to another company or capital group to relaunch it.
To Matthew’s point, there are plenty of challenges that can happen as companies move from development into construction an into production, and often the first 6-12 months can be a challenge for companies. Look at the issues Harte Gold had, or Sage Gold, or Red Eagle, or Rye Patch/Alio, or Americas Gold and Silver with Relief Canyon, or McEwen Mining at almost all the mines they’ve brought online. Or how about all the challenges Novo Resources has had getting Beaton’s Creek going?
it should also be pointed out that this isn’t always the case, as there are some companies that do get off the mat and make it into production unscathed and on-track – like Atlantic Gold or Calibre Mining did where they did a fantastic job. More recently both Mako Mining and Thor Explorations have done quite well commissioning, teething, and ramping up into production as advertised and are doing a great job. Also Minera Alamos is ramping up into production, as is I-80 Gold Corp and they appear to be on a good track, and have good teams that have done it before. We also just had Silvercrest on last week and Chris just mentioned they were finishing construction here in May on time and underbudget with extra money left over, and they have fantastic margins and their team already brought Santa Elena into production successfully in their previous incarnation, before getting acquired by First Majestic.
The point being that it is a bit of a crap shoot where some companies, usually with the teams with more experience building and operating successful mines previously, have done an excellent job bringing on new mines. Then there are other teams that seemed plagued with challenges, some of their own making (not getting the proper social license, bad or rushed block models, a poor understanding of the resource, not enough stopes available, etc…) due to poor planning, and other issues due to outside forces that are just risks all operating mines can have (injuries, floods/weather issues, increasing labor costs/ strikes, fuel inflation/cost inputs rising).
The real issue for most mines seems to be that they can’t get up to critical mass quick enough to bring in enough revenue to offset the debt payments and sustaining capital costs. That is what sunk Harte, Sage Gold, Rye Patch, and Aurcana, and that is what is still pressuring Pure Gold, Novo, and Elevation mining. Red Eagle failed because they didn’t understand the underground rock conditions and when things started getting unstable they realized they were using the wrong mining method, and tried to switch to a Paste & Fill method for more stability and get that plant going, but a day late and a dollar short. Rubicon failed initially because they didn’t really understand their nuggety deposit properly and had over-estimated the resource continuity.
As for Alexeco, they haven’t really failed like the others, but they are just waaaaay behind schedule, haven’t gotten ramped up into production fast enough, and thus had to raise capital again, which the market never likes. They still have one of the higher grade silver mines on the planet going into production, and unlike Aurcana, they actually have a good shot of getting re-rated as they dig out of the hole they are in currently. They’ve also continued to do fantastic with drilling and finding more resources, so I’m more optimistic on Alexco.
With Argonaut, it is much different than all these prior companies discussed, as they are a multi-mine mid-tier producer with years of experience, and they were taken down over the last year+ due to the massive cost overruns at their massive Magino development project. Keep in mind that for years Argonaut was one of the poster-children for one of the best run growth-oriented gold producers, able to operate successfully at much lower grades than other companies due to best practices on operations. They even took over Alio and showed that Florida Canyon could be run at a profit where both Rye Patch and Alio had failed previously at Florida Canyon. There were many years where I was banking it with well run growth-oriented producers like Argonaut and K92 and Wesdome, when other companies were sucking wind in the sector. What has killed Argonaut’s valuation is that inflation and cost inputs have risen, and apparently the teams doing the economic studies on Magino (a 5 million ounce development project that was supposed to double their production output and cut their costs in half) has now become an anchor around their necks. They didn’t just miscalculate the costs…. they REALLY miscalculated the costs and just put out another doozy of an update that it is now going to cost even more to fund the build of Magino. This is a shame because they were on the right track for many years with many projects, and this recent blunder took them out at the knees. It is similar to recent carnage we’ve seen in Iamgold, with their 90% cost overrun at Cote. As stated previously, we are likely going to see a lot of more of this kind of thing with other development projects as the inflationary pressures and rising labor costs affect the economics on these projects.
One more recent example is the Gatos Silver debacle, where they had a 3rd party company help them estimate their resources ,and then they messaged to the market that it may be unreliable and is likely far less than originally stated. As a result a $20 stock is now trading just over $3, so I recently picked it up (and had already swing-traded it for a nice 23% gain when that news initially broke a few months back). My thesis is that they are still doing pretty good operationally, and still have insane amounts of exploration upside, but most of the old legacy investors are royally pissed and crying foul, and everyone doubts them now. I see Gatos Silver as a likely turn-around story and that it can at least be an easy 3 bagger and get back above $10 per share from here, and likely more if Silver pricing cooperates later in the year or heading into 2023.
No rush in here for anything but a scalp trade for a day or two to keep the boredom at bay with gold sector, but will hold the third powder I entered end of April for my asortment including golds, some uranium an agri.
Hopefully we pop up back above 1850 from here to recalibrate first before another spill below 1800.
While there doesn’t seem to be any rush at present, and there is likely more slogging to go with the Gold and Silver pricing and sector sentiment. However, when these things reverse, the spikes up and rebounds can be quite sudden and catch many traders off-sides or out of position, and then they miss the easiest double-digit gains and have to start chasing things higher. It makes more sense to at least have some core positions in place to capture those relief rallies or the eventual trend change, but still have some dry powder to add to positions at lower levels.
As for the Uranium stocks, they are marching to the beat of their own drums lately, and most had very solid rallies today up 5%-10% on average. The U stocks are a great case study for what can happen in the resource stocks. So many people gave up on them back in 2016 and 2017 when the Uranium spot pricing double-bottomed at just over $17, when really that was the time to have been loading up, which is what I had repeatedly discussed back then, and did personally. There were still plenty of tradeable rallies from those periods of late 2016 through early 2020, for those that like buying low and selling high.
Then when the pandemic crash happed starting in late Feb 2020-April 2020 almost all sectors were taken out to pasture to kill, and I loaded up on the Uranium stocks realizing it was just a matter of time before things recovered and pricing had to move much higher to get anywhere close to the cost of production and incentivize new projects to come online.
Many Negative Nancy’s kept throwing cold water on the nuclear energy thesis and uranium stocks during that whole period, and meanwhile spot Uranium went from $20 to $60 over the last 2 years due to a confluence of different supply/demand factors, as was inevitable. As a result by the Fall of last year many U stocks were up 300% -1000%+ since their pandemic crash lows, and most investors whining from the sidelines missed the entire move higher.
Then when almost everyone, including the most ardent U bulls, admitted things had really gotten frothy by October/November of last year, and the best thing to do was lighten the load (which I did in Sept/Oct selling 85% of my holdings), many retail investors decided it was finally time to invest in the Uranium stocks… marking the top nicely and becoming a new batch of bagholders. It happens like that in all sectors every time… whether Uranium stocks, Cryptos / NFTs, Cannabis stocks, Vaccine stocks, Meme Stocks, Growth Stocks, Tesla…. whatever…
Then when things were looking oversold in the U stocks this late January and February, those same bagholders were saying the run was over, but actually it was the time to be accumulating, and gradually grew my holdings up over Nov/Dec/Jan/Feb to over 80% positioned again, and we saw another rally in Feb/March/April spiking the U stocks back higher again, which most traders missed again… both those that missed the big rally from 2020 to 2021 and those that bought the peak in late 2021.
We saw the exact same kinds of patterns play out in the Lithium stocks, where everyone scoffed at the narrative or thesis during tough periods, and then bought the tops during peak periods, and didn’t have the gonads to be adding to Lithium stocks during the pandemic crash, but that was the best time to be loading up and I had some of the biggest percentage moves (albeit on smaller position sizes) in the Lithium stocks from Spring 2020 to Fall 2021, by actually buying low and selling high. Again, most investors completely missed out on true 7-10 baggers+ because they were completely out of position, and listened to the wrong narrative of the doubters during the pullbacks, and didn’t have the vision to see where things were heading when it was blatantly obvious to anyone that spent more than a few hours looking into the supply/demand fundamentals or researched which companies had good deposits that would become the new junior producers. Both the Lithium and Uranium stocks blew away the gains in most other mining stocks the last 2 years because they are tied to the energy sector, where Oil & Gas stocks have also been blowing and going, so it isn’t rocket science, and yet most investors were completely out of position for some of the biggest fireworks in the resource sector the last few years.
Here’s the harsh reality – Most investors suck at buying low and selling high, and that is really the only thing that is within their control. It never feels good to buy when there is blood in the streets, and never feels good to sell when everyone else is at peak enthusiasm, but that is how one makes money trading an sector, especially one as volatile as the resource sector.
The current situation is eerily similar in the PMs to the prior tough periods in the Uranium and Lithium sectors. Right now, while everyone is bummed and hating on the Silver stocks and to a lessor extent the sentiment has soured towards Gold stocks, it is actually the ideal time to be acquiring them. I’ve added to positions in about 2 dozen PMs stocks over the last few weeks, and most of the people we speak with are not buying anything, liquidating to hide in cash, and are worried the bull market could be over. Now it’s a mixed bag in what I’ve personally added in the last few weeks where some companies have already rebounded a bit, and others have corrected down even further, but in 12-18 months, people are going to look back to this time wishing they’d have loaded up.
This is just like those times where so many bellyached that they regretted not loading up in late 2015 to early 2016, or in the fall of 2018 or even fall of 2019, or during the 2020 spring pandemic crash. Could things still correct another 20%? Sure. If there is an all-out market crash, nothing will be spared. However, the correction will end at one point. It always does. Then, after these PM stocks pop up 50%, 100%, 200%…. later this year, THEN they’ll start feeling more confident to buy once the easy gains have been made. Classic. Then if things go up 300%+ in 2023… then they’ll REALLY feel good about buying and will take some cash and put it to work and likely mark the next intermediate peak. I’ll be happy to trim some back during that time period and sell them some shares I bought during this period of time. Rinse and repeat. 😉
Ever Upward!
Well I surely suck at buying low and selling high. Convinced myself to mostly stay away from miners and go with SLV via options, which seems like a safer way to keep involved.
Looking at Superior Gold(SGI) website and it seems like they might be getting it together. Same with CXB and MKO.
Yeah, Superior Gold is another good growth oriented producer like Calibre, Mako, Karora, and I-80 Gold Corp. (SGI) had a rough patch for a few years, but over the last year or so brought in a new team with a better strategy to execute on, and look solid for 2022, but really 2023 and 2024 are the big growth years for Superior if everything keeps proceeding to their plan. I need to reach out and see about getting them back on the show again for an update.
Wow. Great synopsis and information Ex. Thanks. Timing great in view of the pundits being uncomfortable in projecting where we are going. Your perspective works for the near and long term because it is factually based.
Much appreciated Lakedweller2. Good trading to you sir.
I have a feeling that a white knight will come to Aurcana’s rescue and do a deal where they get more than 50% of their assets in exchange for a bail-out. The company Aurcana owes money to will be reluctant to put them into receivership because they aren’t in the business of running or selling two mines. DT
That would be the ideal scenario for all shareholders, and debt holders, and a better run and well capitalized producer could come in and really have a good run at it with the Revenue Virginius mine, with plenty of exploration upside, and then secondarily with the Shafter mine in Texas.
US, Canadian Companies Set To Soar On Russian Uranium Ban
Henry Lazenby – Mining.com – May 17, 2022
“United States and Canadian-based uranium companies are set to soar on a coming Russian production ban in the Western world,” GoldSilver.com’s senior precious metals analyst, Jeff Clark, told an industry event (VRIC) in Vancouver on May 17.
“Uranium is already in a bull market,” he told the VRIC conference. “Yes, those prices have come down just like the others have, but for fundamental key reasons such as supply-demand and growing political globally for uranium and nuclear power is growing,” he said.
https://www.mining.com/vric-us-canadian-companies-set-to-soar-on-russian-uranium-ban/
A tale of two uptrend resistance lines!
NatGas may breakthrough North.
PMs throttled: Southbound?
off the weekly /NG..the next ABC up 1:1 target is 11.55..no chit…and weekly looks perfect…wow….needs some time to build positions and bamm
One way to play these is via KOLD bounce corrections on the way up. These are proving to be very lawful, per Fibos and ABCDs. Then when sputtering, go BOIL.
BTW, BOIL/KOLD splits are coming next week.
There’s a chance that KOLD’s turn will last awhile.
If it tops yesterday with volume, $7+ is possible.
Wrong. Swing turn.
Is Target performance today warning of what’s in store for general markets. Last weeks spx lows worth watching.
Yes, such non-linear events may become commonplace.
Watch last weeks spx 3860 low, if it cracks then pull up close to the screen with your favorite refreshment for the next couple days.
The stock market is absolutely in a bear market and few investors today have any understanding of the fact that it is not like the bear markets they have experienced.
SPY made a new low today on a closing basis and the weekly chart looks perfectly bearish.
https://stockcharts.com/h-sc/ui?s=SPY&p=W&yr=3&mn=7&dy=0&id=p92311229766&a=1163034941
The Gold:HUI bounce today filled a big gap:
https://stockcharts.com/h-sc/ui?s=%24GOLD%3A%24HUI&p=D&yr=2&mn=0&dy=0&id=p46999977123&a=1070237347
RIO filled yesterday’s big gap and that is only a good thing. Now let’s see if it can fill Friday’s small gap.
https://stockcharts.com/h-sc/ui?s=RIO&p=D&yr=1&mn=5&dy=0&id=p29318683373&a=1162991910
Yesterday I said AR looks appealing and now it looks even better.
https://stockcharts.com/h-sc/ui?s=AR.TO&p=W&yr=5&mn=0&dy=0&id=p37148585051&a=1167174553
SPY:GLD is heading for a big fall.
https://stockcharts.com/h-sc/ui?s=SPY%3AGLD&p=W&yr=6&mn=5&dy=0&id=p78331116205&a=1015547995
Millions are learning the hard way that bonds are no safe haven when you need a safe haven most.
https://stockcharts.com/h-sc/ui?s=TLT&p=W&yr=6&mn=3&dy=0&id=p14732233997&a=1051398411
SPY has been terrible this year but TLT has been even worse.
TLT:SPY
https://stockcharts.com/h-sc/ui?s=TLT%3ASPY&p=W&yr=3&mn=6&dy=0&id=p48301150466&a=976582407
NFLX is down 75% in 6 months versus GLD.
https://stockcharts.com/h-sc/ui?s=NFLX%3AGLD&p=W&yr=5&mn=0&dy=0&id=p85226098768&a=1101470276
They should have switched from movie streaming to gold and silver streaming. Haha! 😉
Instead, they chose to stream the Bolsheviks’ agenda. Now “get woke, go broke” is in its infancy. The trend won’t end until those “woke” lunatics are as maligned and tiny in number as the KKK.
Unfortunately, we’ve seen a growing number of virtue-signaling woke lunatics over the last few years and yet their unhinged belief that they have the high ground is starting to show up in failed business ventures, sliding approval ratings of this administration, and changing consumer behavior. The faster these corporations and media outlets go broke after cramming wokeness down everyone’s throats, the better.
Eventually the free markets will pressure them in their pocket books, corporate earnings, and their spheres of influence. It’s truly amazing that a small minority of triggered victimhood consciousness extremists and whiners have been as successful as they have been in hijacking the mainstream media narrative, the social media narrative and algos, political narrative, corporate messaging, and entertainment. Clearly most regular people are not in that camp, and it is clear people are getting sick of the strawman attacks on anyone that dares to disagree with whatever the popular narrative of the day is. People are finally starting to wake up to the lies they’ve been fed for a long time, and that most news, has been fake news, for far longer than many would care to admit. At least the foundations of the wokesters outlets in the media, education system, and political system are starting to crack and destabilize, and one can only hope a more stable, open-minded, and tolerant narrative starts emerging to fill in some of those gaps.
Anyone know why AXU is down 8% today? I couldn’t find any news.