Jordan Roy-Byrne – Copper Below $4, Energy Selling-Off, All This Pointing To Disinflation and Possible Recession
Jordan Roy-Byrne, Founder and Editor of The Daily Gold joins me to focus on copper and oil. Both of these commodities have pulled back in the face of bullish commentary and could be foretelling an upcoming recession and disinflation. Disinflation is what the Fed wants but a recession is not. We also look at the US markets, which are due for a bounce, possibly a large bounce, all within a bear market.
I see recession for sure……and it hitting before disinflation hits as opposed to the opposite.
An inflationary recession/depression is the most likely outcome. The situation is much worse than the 1970s.
Matthew, I’d love to understand what you see (as well as timing) playing out in the market for PMs, and why.
Do we see gold going up within the next 3 months, but then dropping from there as the overall market deflates down to extreme lows? What do you see to the best of your experience and technicals?
Your insight is appreciated.
Canuckski, bellwether IPT made a new low today which is consistent with silver’s lethargic action lately and makes me think the odds are high that silver will finally test its rising 200 week MA and very possibly its 2019 high. It remains a big picture bullish sign that the bears have had such a hard time pushing it down to those levels. Worst case is probably in the 18.80s. I doubt it will get there but even if it does, I think the sector will get moving higher by mid August. If I get that all wrong I bet it would be due to a crashing stock market. If stocks are just falling but not crashing, I think our miners can finally decouple like they did 20 years ago.
I expect more rate hikes and some confirmed ugly quarterly chart developments like an AMZN quarterly MACD sell signal to go with its broken 20 year uptrend.
XAU and QQQ 20 years ago:
The 48 month MA is similar to the 200 week MA but currently about 20 cents lower and both roughly approximate the 4 year MA…
Inflation in the things you need, deflation in the things you don’t need!
Middle class screwed in both our country’s.
A lot of the things we don’t need will probably just stop being produced since rising input costs will make profit impossible.
The despicable corporate media promoted the worst lies about all things covid and is doing the same about inflation and its cause.
In all countries of European descent…By design..It’s called Tikkun Olam
What are you STILL doing here? Why haven’t you sold yet?
In case you haven’t been paying attention, the stock market is rolling over and heading lower…. MUCH LOWER! And it will take your mining stocks with it.
A week ago Power said that the Fed isn’t trying to induce a recession, and today he said that a recession is a possibility. That’s all “the tell” you need. It’s OVER.
Sell you stocks NOW. You will need the cash, and that will be the only safe place to hide.
Cash is a wonderful place to be. It’s highly probable that the conventional markets will see at least a 50% fibonacci retracement and gold to test 1700. As mentioned in the past we will see a breakdown in many of the commodities but the bull market should remain intact. 2022 will be a year to remember since most asset classes will feel pain. Bought a “smidgen” of Argonaut today—-I couldn’t stand sitting on the sidelines so long again. AXU was spanked.
Doc, “was spanked” implies some outside force but I think AXU mostly did it to themselves.
IPT got mini spanked, almost 50% drop in share price in two months. I’m throwing that one in the kennel.
I’ve pointed out for years that I don’t like development plays and Pure Gold, Novo, AXU, etc, etc, have illustrated why. IPT gives big leverage to silver in good times AND bad but it is in no way like the developers just mentioned.
To see why AXU fell 41% today on huge volume, read this:
IPT broke down today on an unimpressive 102,000 shares traded worth about $30,000 Cdn. AXU’s volume today was worth something like $5 million US or 200 times as much (just a quick guess based on the price range and volume by the hour).
Matthew, those 102,000 shares were worth almost $60,000 just two months ago.
From June 2018 until today AXU has increased shares outstanding by 51%, CDE by 32% so they seem to have a reputation for diluting.
In that same time, IPT has increased shares outstanding by 73%, when they were supposedly more responsible and funding their operations from production.
All silver plays are down dramatically since their March top no matter their quality because silver is down dramatically. IPT isn’t down much more than Hecla, America’s largest silver producer. Downside leverage isn’t even close to 3x. The point of highlighting the fact that today’s 12% decline came on only 100,000 shares was to illustrate how untrustworthy the decline is since tiny money made it happen. When it topped in 2020, it traded 2 million shares, then 2 million more the next day and 1 million the day after that. A lot of small investors could have actually locked in a price that was 4 times today’s price. Do you think they could buy the same number of shares at .30? I don’t. In fact, it’s been well over a year since it even traded 1 million shares in one day. It’s getting marked down by irrational small money that can’t sit still when the pros leave them alone.
As for IPT’s share count, the fact remains that the company has been extremely responsible but you’re missing half of what you should be considering. If IPT management focused only on avoiding dilution at all costs, it could have done so easily but instead chose to “get while the getting was good” and raised $9.5 million at 95 cents, more than three times the current price. THAT is how dilution is avoided by the company over and over again. It takes smarts and discipline to raise money when everyone else thinks it will only go higher. The vast majority of managers completely screw up their timing because they are no different than their shareholders and decide that their shares are only going higher. Of course, they end up raising money at the bottom of the market over and over again. Had IPT raised that $9.5 million today, it would have caused 3 times as much dilution/cost 3 times as many shares. Perhaps you could show me a list of other companies that are 30 years old and have a float of only 145 million shares with no rollbacks/share consolidations/reverse splits.
If you don’t want IPT to raise money at all, you shouldn’t have bought it. The company is an explorer first and producer second. At least that’s how every investor (speculator) should see it.
I’m not selling my IPT but I won’t be adding just yet, either. I appreciate what you’ve said here today.
Gann Global is running a free metals podcast tomorrow. Sign up on 321gold.com under the gold-silver link near top of page. He gives a short presentation of the content to be discussed
FWIW: what would the largest ever QE do to a recession if it was aimed at infrastructure after they have artificially suppressed mining prices? Would that catch anyone on the wrong foot?
It would catch mining and commodity bears on the wrong foot. Even the stock market would probably rally for a couple of years. It’s amazing what a few trillion dollars of stolen money can do for a sick economy, at least briefly. Ultimately, it’s a great way to prolong the pain as FDR proved.
Sounds like a real possibility then … kick the can as long as you can no matter how far the economy is in the can.
Gold:HUI is on the verge of completing a bullish H&S pattern (bullish for gold relative to the gold miners). If it happens and the pattern is legitimate, the miners will probably plunge versus the USD, not just gold. This might be a clue that the stock market will crash in Q3. We should have a much better idea in the next two weeks, especially after Q2 has ended.
Maybe it is going to attempt to test its 2020 covid spike…
Hi Matthew great charts…yes gold will outperform hui until the reality of the PIVOT gets realized…imho
Hi Larry, I see multiple other factors as the cause of the recent and current pressure on gold/silver and the gold/silver miners. It’s a case of coincidence more than causation with respect to rising rates and the weakness in this sector since real rates are still massively negative. As I’ve pointed out many times, gold/silver and interest rates typically rise together and fall together. The metals fell hard while rates fell last decade and the opposite happened the decade before and during the ’70s. For example, silver closed June 2004 at 5.79 with the Fed funds rate at 1.03% and hit 8.23 that year after 4 hikes to 2.25%. The following year, there were 8 more hikes and then 3 more in 2006 by the time silver peaked in May at 15.20. Fed funds was at 5%. So, silver went up 2.59 times while the Fed funds rate went up 5 times. Today, the Fed funds rate is at 1.75% and still waaay below CPI so betting on a pivot now is to bet on something that has never happened in 70 years.
There’s a lot in play now including technical/cyclical problems for the metals in addition to the world transitioning away from 4 decades of falling yields which alone could account for the appearance that rising rates are bad for the metals. Most people today fully believe that rising rates are negative for gold so they are betting accordingly (and sitting in cash is included in such bets). Such people are no doubt having a negative but temporary effect on the gold sector.
To be sure, more short term downside for the miners makes sense but it looks premature to assume a longer term fall is inevitable especially on the basis that there is no pivot on the way.
While everyone watches for a break of the May low at 1785, I think it would be wiser to watch for a break of 1800 for signs of a problem for gold…
GDX spent the last two sessions failing at a fork resistance and now looks ready for a gap lower tomorrow…
Now SILJ can fill its May 13th gap…
SPX:HUI filled its monthly February gap and can now resume its fall…
Doc, these dregs aren’t getting spanked, they are being hammered and have been for the past year, while according to kitco gold is marginally up, roughly 3% for the year.
Yet the same posted babble gab goes on and on, holding out for the eventual payoff.
Jonsyl I like David Lin on Kitco but Michelle Makori seldom asks good questions so listening to her is a fruitless endeavor.
Yes, your babble gab goes on and on while you hold out for the eventual payout. Why don’t you do yourself a favor and sell?
yup a definite possibility, added some for a half position mid may when in fact gold was roughly 25 bucks or so lower than present, yet the collection of sector equities fail to hold, and have gone down by 15% by last count.
Best to sit still for now, Doc’s projection to 1700 area may come as gold’s sticky action around mid 1800 level may be a hook considering what the continued slide with sector stocks is doing,
But let’s see if an oversold pop happens first and go from there. If sector shares repeat history and underperform, it is likely I bail as I did following Urkraine pop. When you were having one of your nirvana moments for various dregs including of course your bellweather ipt, and of course much touted silver.
Whatever I do, it certainly won’t be the result of kitco drumbeaters talking their book and your postings.
Lol, you seem to have a real problem with IPT’s bellwether status. It topped in 2020 several weeks before gold and silver and all their related ETFs as well as the widely followed bellwether NEM. Then, in 2021 when silver, SILJ, etc, broke out to new highs, IPT did not do the same because it “knew” that the breakout wasn’t real. It even foreshadowed today’s new lows for SIL, SILJ, GDXJ and GOEX when it made a new low yesterday.
Don’t consider ipt a bellweather of anything, just another dreg you’ve hung your hat on in spite of its performance.
Judging by its price action dropping from 1.25 to under .30 cents today, in past year and half, it’s unfortunate you haven’t followed this past predictive value you describe it holds.
But as you point out with its new low yesterday predicting todays price declines, coupled with a another new low today then maybe the worst is yet to come. Good to see you finally in Doc’s camp for lower prices, perhaps 1700. LOL
I’d like to know why you’re so surprised by its drop when it has had much bigger declines several times. It fell from 3.14 to .11 following the 2011 top and from 2.50 to .17 following the 2006 top. The biggest drop of all followed the 1997 top when it fell from 4.25 to .03. Even the fall from the 2016 top was bigger than this one (1.28 to .19). What’s wrong with you?
FYI, IPT is a bellwether whether you consider it to be one or not. Facts trump opinions.
CRB:Silver bottomed in 2020 at 50% below its 200 week EMA and now it is topping at 50% above its 200 week EMA…
2 year yields dropping hard…Markets are saying bah…Let the freakin inflation happen…gold bullish…as Matthew said…maaaany other factors in the brew…but yield is significant factor
The historical record is clear, gold’s best moves happened when interest rates were rising and worst moves happened when interest rates were falling. The yield to fear is the one that is positive net of inflation and we are nowhere near that today so all is good. Gold just needs to finish up its correction.
looks like dollar topping..that is also gold bullish…glta
junk bonds rallying…could indicate risk on trades returning…glta
FEDS final reversal dead ahead…have no idea about this fellas record or credentials …
Traders are going to cash, lots of fear out there, I figured we would see this dead cat bounce for at least another three weeks, but so far the sellers keep selling. Maybe this is the time to be out, when you see everything getting really nasty, like they say, “When the going gets tough the tough get going”. DT
Good luck trading… where do you think this is heading… cdnx
another pivot aficionado….speaks…release the incurable inflation…
Inflation has already been unleashed, that’s why interest rates are rising. Inflation and rising rates are a package deal and it has never been otherwise. Throughout the 1970s, gold and interest rates went up and down together. When gold quadrupled by December 1974, interest rates went from around 4% to 13% and when gold corrected by almost half, interest rates fell simultaneously from 13% to 5%. Then, from 1976 to 1980 when gold rocketed up 8.5 fold, interest rates were hiked simultaneously 18 times from 4.75% to 15.50% (the 20% peak happened in March 1980 after gold had already peaked).
Is it different this time? Not a chance.
Hi Matthew…If you listen to the fella above…He outlines that this inflation is totally different in terms of macro factors….The inflation cannot be defeated like w Volker…The FED will reverse tightening eventually which will allow inflation to run and run wild…Hyperinflation?…anyways the new normal will be living w inflation grande…glta
Larry, I agree that this inflation can’t be defeated but it is incorrect to associate rate cuts with inflation. Inflation always comes with hikes because the market forces hikes when real rates go very negative. And make no mistake, they are very negative currently.
Volcker did not defeat inflation, the market did. The powers that be love to create myths in all fields just as you found out about the medical system.
Gold went up 25 fold in the 1970s which was actually more than it needed to in order to account for the inflation (of the money supply) at the time. Silver went up more than 35 fold. The cycle ended because it was time for it to end and not due to the scammers behind the curtain pulling their little counterfeiting levers. The Fed can and does manipulate the short term but it cannot stop the long term underlying dominant trends. That’s why no central bank in history has ever been able to stop gold from accounting for a central bank’s actions.
As long as the Fed funds *real* rate is so negative, net tightening is not happening.
The market will dictate the Fed’s actions and a pause may well be coming within months but it will be temporary, mark my words. The bond market has just begun a multidecade downtrend that will send gold far higher than most believe is possible because the dollar will go far lower than most believe is possible. [And I mean its purchasing power, who cares how many euros it’s worth?]
Your right…I have not fully internalized the explanation you just forwarded…..I am gaining on it though…thanks Mathew and glta…
Here’s a nice write up on Arianne Phosphate….