Ed Moya – Will We See A Bounce Soon In These Oversold Markets Or Is There More Pain In Store?
Ed Moya, Senior Market Analyst at OANDA, joins us for a broad discussion on the overall pressure remaining in most market sectors, and if we’ll see a further relief rally. When discussing what the drivers for a change in sentiment would be, Ed points out that most investors are waiting to see some significant change to the inflation picture to the downside or if it will remain at these persistently high levels. The trend in inflation will also inform how Fed policy may shift moving into the latter part of this year, if they need to stay the course with further rate hikes, or if they eventually slow down the tightening cycle and reverse course.
We review different sectors from tech, to energy, base metals and other commodities, and the US dollar, within the context of these macroeconomic factors effecting consumer demand, GDP growth, and the looming concerns of a recession on the horizon.
Click here to visit the OANDA website and keep up to date on Ed’s daily note.
Ex, I’m concerned that it’s not over in the slightest.
I share that same concern Doc. Time to batten down the hatches…
Ex your back, I listened to an interview where they mentioned Frank Giustra was a founder of Lionsgate Entertainment. They filmed “Mad Men’, my favorite series. Speaking of mad men Frank and Ian Telfour are behind Aris Gold and they are looking to take over two mid-cap gold producers in their quest to build a million ounce producer. This is the team that started Wheaton Precious Metals so you better pay attention. DT
Telfour should be spelt Telfer, DT!
Hi DT. Yep, I was out traveling remotely in nature with my family that was visiting. It was nice getting away from the glowing screen for the week, but I checked in occasionally to read people’s comments or view their charts when I would drift back into cell range.
Yes, I’m quite familiar with Aris Gold and have traded in and out of it a few times, and discussed their fully stacked board of directors a few times here on the KER blog. Aris was one of the dozen or so positive gold trades I’ve had in 2022, and I’m angling to get back into a position once things stabilize a bit more in the sector. I’m a bit concerned with Colombia as a jurisdiction though, especially after the recent election, so was happy to take the gain when it presented itself. Cheers!
Go to gata.org and find in the list of articles a presentation by The Vault where Bill Murphy and Andy Maguire talk about silver manipulation. Refresher on who the good guys and bad guys are and the extent of manipulation permitted by the US Gov.
(About the 10th article dated Jun 24)
Doc, what silver price are you expecting? When would you feel comfortable going all in? Or does it have to do more with timing and resolution to leverage and liquidity in overall markets?
Sorry to butt-in and you can disregard what I say, but The Fed has been intervening in markets for years with the help of the member banks. It is getting worse as they can’t cover the debt or cure inflation.
Kicking the can down the road by massive bailouts (future debt against the people) is getting stretched. The Fed works in the interest of the banks and not retail. When the Banks are on the same side of the trade that investors are, we will see a move… but only when it is in their interests. The move in silver should have come years ago. But that presumes fair markets which do not exist and are enabled by Gov Regulators. Doc might be able to provide a price off the charts they give us… but they can alter the charts at will.
The Fed’s actions are in the charts. It doesn’t matter if patterns are the result of the free market or cronyism (moral or immoral behavior), the implications are the same.
Right now the sector is mixed. For example, the XAU, SIL, SILJ, GDXJ and GOEX all took out their September lows while the HUI and GDX have not. In addition, ALL of those mining ETFs and indices have taken out last month’s lows while silver and gold themselves have not. So, the picture is not clear at the moment. Are the weak miners foreshadowing a breakdown in the metals or are the metals’ relative strength telling us not to trust the bearish message from the miners? I think the answers are coming soon and that either way, an important low is not far off.
I could be wrong, but I think only a massive deflationary plunge(temporary) will make the Fed change course. However, I am Canadian and even if the Fed stops raising interest rates and reinstates massive bond buying Canada will have to continue to raise due to a crashing dollar and a different central bank mandate. Canada’s inflation will be greater than the USA in my opinion. I suspect the US will have a stronger currency than just about everyone. So I also look at silver in CDN dollars, but US sentiment in silver will drive the mining stocks which is why a bottom in us dollars is of interest to me.
Feel free to butt in, thanks for the comments
cdn loonie should have had a stellar rally with what happened with commodities and particularly oil. An absolute dud.
Your chart skills are the dud. The loonie bottomed a month before oil in 2020 and then the two rallied together for over a year. As happened in 2016 and 2017, the loonie topped well before oil did and is now likely to bottom ahead of it as well.
There’s a good chance that the USD will ultimately (after a correction) go much higher but it will be due to a chronically weak euro.
Your currency has corrected perfectly bullishly from its overbought 2021 high and I have no doubt that it will head higher again along with the gold sector.
Hey Steve….I’m a Canadian as well…interested in why you think inflation will be worse here than in the US….
daily /GC…minimal test of support would be 1813 area that lowest TAS profile bottom….If volume is sufficient from the selling then the 6/14 swing low breaks …then we are dealing w Fibonacci expansions and TD9 breakouts to anticipate support zones below..initial support looks to be 1780 area…..glta
I think inflation will be worse in Canada because we don’t have the reserve currency and rely on the USA for a lot of produce. Most products at Canadian Tire are made in China who is going to pass on price increases due to their inflation issues. There will be shortages all over the world due to supply chain issues and we will do better than Europe, but in theory the US is capable of being self sustaining.
I would like to be pleasantly surprised and have the CDN dollar rise with the USD.
Thanks for the response Steve. Always intrigued what others are thinking…..I see us struggling with inflation mostly due to our “go to the money tree “ leader. Their solution to inflation is to give people more money to help them through the inflationary time after having given them more than enough during the pandemic. A never ending cycle as long as they are in power.
The dollar is the senior reserve currency but the loonie is also a reserve currency. Since it is tiny (about one-tenth the M2 money supply of the US and less than one-twelfth the M1 money supply) compared to the dollar and natural resources are just beginning a huge bull market, the loonie has significant upside. The fundamentals and history are aligned with the clearly bullish technical big picture.
Both currencies are going to keep falling in purchasing power but the dollar is going to fall faster which will allow the loonie to close the gap on it. The loonie became more valuable than the dollar in 2007 and 2010-’11 and is very likely to do so again. I’m guessing it will take a year or more to reach the .90s but then will have another pullback/correction so parity with the dollar might be several years away.
I should also note that Venezuela could be the wealthiest Country per capita in the world based on it’s resources, but it suffers from bad Management. I hope Canada Management will improve, but right now we are anti-pipeline and anti-oil and gas. Our population is only starting to wake up to our bad governance. Hopefully it will change, but I expect pain first economically.
For those who consider IPT the gold sector bellweather. A penny stock with zero interest investor interest.
It has a long history of moving ahead of the metals and even big miners, including Newmont. Including topping and bottoming ahead of them as well as more subtle leadership. I’m not surprised that you don’t get it or grasp that the price chart you put up is not evidence to the contrary.
daily dollar….false breakdown…..minimally retest of previous june highs….interesting….chaotic markets, because no one knows what the future has in store…glta….i certainly do not….am I scared…no…but very concerned…
IMHO…the good news is that amerika still has tons of talent…to pull us through all obstacles…lmao
Here’s an article against owning mining shares. Thankfully, I’ve had physical for 20+ years. The guy is saying if you buy mining shares, don’t forget to sell them when you have a profit! I’m guilty of not doing that. I guess I was always waiting for the big one………..which to date has never come. OMI
that is the truth about miners…..one needs to take the money….earnings growth becomes eroded by the very reason you buy the underlying gold ….inflation of operating costs….glta
Agreed guys. It’s much better to trade the miners than for longer term holders. There are ample opportunities every few months to buy the dips, and sell the rips, even during intermediate bearish periods, and yet so many try to extrapolate out performance over long periods of time, which is not the ideal way to play the sector and hasn’t been for decades.
These are already very volatile stocks in the resource sector, the bob up and down with the metals prices, and with then the individual issues have compounded volatility from their own company fundamentals based on drilling, developing, production, cost inputs, changes in jurisdiction politics, weather patterns (drought, rain seasons, fires, drilling on ice, mushy conditions after the thaw, etc…) , personnel changes, changes in key investors/company stakeholders etc…
These are not blue chip Dow or S&P 500 sector leaders, so all the Jesse Livermore quotes have not been a good fit. Then there are those investors more worried about tax treatment of short-term gains versus long-term losses that are more worried about 10%-20% taxes on profits, than even making profits at all, and hold for the exact wrong reasons as a result.
There are plenty of times when resources stocks (gold, silver, copper, zinc, nickel, pgms, uranium, lithium, etc…) have surged 2x – 10x over short 3-8 month periods, and that is where the outsized gains are made through buying into weakness and selling into strength. Rinse and repeat.
Interesting long term copper:
It is definitely going lower.
Agreed on going lower. $3.30 is a given. https://kimblechartingsolutions.com/2022/06/doc-copper-pattern-suggesting-another-huge-decline-is-to-be-expected/
Silver can now test/pierce its 200 week MA without taking out its early May low…
I’m guessing the dollar has 2% or less potential upside from here before it finishes forming an intermediate top.
Wow, AXU has engaged a fork that I thought would never be seen again…
Relative to IPT, AXU is at a level not seen since 2008 (a new 14 year low).
Is this a sign for a similar drop in ISVLF to fill that weekly gap? News driving the decline is pretty stock specific, but ISVLF is looking pretty weak so it wouldn’t surprise me.
The sector is definitely at risk for a capitulation plunge and given Impact’s low volume lately, it could fall a lot in such an environment. Looking at the Aussie miners lately, that plunge might be imminent. Still, even in that worst case I’d be somewhat surprised if Impact went that low.
By the way, I did get some IPT today at .285 Cdn.
Bitcoin is hanging precariously at fork support. When it goes, sub10,000 will be on its way.
‘Wealth Destruction Has Been Massive This Cycle’
Jesse Felder – The Felder Report (06/25/2022)