Robert Sinn – Goldfinger – Macroeconomic Factors To Watch And Strategy For Investing In Junior Miners
Robert Sinn, aka Goldfinger, founder of Trading Lab, and editor of Energy & Gold, joins us to share his macroeconomic outlook and strategy for investing in the precious metals sector. With regards to the extreme market focus on the inflation picture and how it’s trending higher or lower will affect the Fed rate hiking cycle and quantitative tightening, Robert is in the camp that we are likely close to peak inflation at this point, and that moving forward we should see the inflation metrics start trending lower as the year progresses. In addition, the economic weakness we are seeing in the housing market and the growing trends of companies laying off workers and rising new jobless claims in the labor markets, will also be two areas that the central bank will be watching closely for where they may need to ease up on their policy tightening. We review the historical data were gold has tended to perform quite well to the upside as the Fed pauses their hiking, and eventually reverses course back to cutting rates again.
Next we shifted over to the very oversold gold and silver mining stocks, where Robert noted it is as if they were pricing in $1450-$1500 gold, instead of where gold is actually trading in the low $1700’s. At this point, with the whole sector being so deeply discounted, any positive news or data that could move forward when the Fed eventually pauses their hiking, could unleash a big buying surge in the beat up mining stocks. We also review that the PM miners have raised a great deal of capital over the last 2 years and there are many company with big drill programs still underway, so there should be some new discoveries made that bring in a bit more excitement from investors in the sector. We wrap up getting Roberts thoughts on how he is managing his portfolio, and a few stocks that he likes in this environment: Endurance Gold (EDG) (ENDGF), Banyan Gold (BYN) (BYAGF), and Snowline Gold (SGD) (SNWGF). *
*Guests featured herein may have been compensated for their services in working with some of the companies mentioned. Robert holds positions in the companies mentioned.
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Gold Miners Priced For $1450 Gold As Global Economy Rapidly Decelerates
@Goldfinger – 12 Jul 2022
“Since mid-April, markets have been increasingly pricing in a bleak outlook for the remainder of 2022. This bleak outlook includes the Fed raising the Fed Funds Rate to north of 3.00% amid tightening financial conditions across the global economy. As the Fed tries to get surging inflation under control, financial markets and risk assets globally have paid the price.”
“UBS expects a new high headline CPI number to be reported Wednesday morning. However, the Swiss bank then sees inflation readings declining sharply into the first half of 2023. The UBS inflation forecast is supported by growing signs of disinflation across the economy, including in the Conference Board’s Index of US Leading Indicators.”
“US corporations are already feeling the disinflationary headwinds. The Citi Earnings Revision Index posted its second worst month in the last decade, almost on par with March 2020.
“The Homebuilder cancellation rate is surging to its highest level since April 2020.”
“Are you sensing a trend?”
According to Goldman Sachs Chief Economist Jan Hatzius, “There is no doubt that a labor market slowdown is underway.” The Fed is beginning to achieve its goal of reducing demand across the economy, in turn bringing down inflation expectations. It is likely that we will continue to see more evidence of this disinflationary trend over the coming weeks/months.
“The US Treasury yield curve has inverted, a strong signal that a recession may be imminent. In the last few decades, every time the yield curve has inverted a Fed pivot wasn’t far away.”
“It’s apparent that the global economy has been weakening significantly throughout 2022, and the Federal Reserve will be quick to pivot at the first significant signs of an imminent recession. Market based measures of inflation expectations show inflation moderating close to the Fed’s 2.5% objective by this time next year, as soon as a declining trend becomes evident in the inflation data that the Fed focuses on it will give cover to pause, and then to hint at a potential easing of monetary policy in the future.”
“Historically, the best times to buy gold since 2000 have been when the Fed is on the cusp of easing. Examples include 2001-2003, 2007-2008, and 2019-2020.”
“The seasonal trends for gold are powerful from early July through mid-September. In addition, the gold miners are so beaten down (-17% year-to-date) that they are already pricing in much lower gold prices.”
“I believe we are within 2-3 months of an important Fed policy pivot that will stoke a rally in precious metals and mining shares. Considering the deeply oversold condition of the precious metals sector and the favorable seasonal period that we are now entering, the market may be presenting investors with an unusually attractive buying opportunity with the GDX at its lowest levels since April 2020.”
https://ceo.ca/@goldfinger/gold-miners-priced-for-1450-gold-as-global-economy-rapidly-decelerates
Housing Expert: Homebuyers Are ‘Hitting The Brakes’
Ronda Lee – Tue, July 12, 2022
“Sellers, once in the driver’s seat fielding bidding wars, are reducing their asking prices, while more homebuyers are backing out of deals.”
“The housing market has absolutely shifted and buyers have been hitting the brakes in June,” Jeff Tucker, an economist at Zillow, told Yahoo Finance Live (video above). “It suggests buyers are finally including contingencies in the offers they made this spring, which gives them that possibility of opting out.”
https://finance.yahoo.com/news/housing-homebuyers-hitting-the-brakes-164548025.html
Blackrock Hits Significant Lithium Zone at Tonopah North
Energy & Gold – July 11, 2022
“Blackrock Silver Corp. (TSXV: BRC) is pleased to announce initial drill results from the Company’s scout-drilling program on the Tonopah North project located in West Central Nevada, adjacent to the Company’s Tonopah West project along the Walker Lane trend.”
“Blackrock has completed ten reverse circulation drillholes in the Tonopah North project as part of a scout-drilling program to test for the margins of the Tonopah caldera system. Drillholes targeted the ring structure which plays host to silver and gold mineralization on the Tonopah West project located immediately to the south and east; key structural projections from the Tonopah West project; and lithium potential within the Siebert Tuff.”
http://energyandgold.com/2022/07/11/blackrock-hits-significant-lithium-zone-at-tonopah-north/
http://www.wallstreetonparade.com
First article on the new stock market.
Corruption grows leaps and bounds. No politician does anything.
What would a real contrarian think of a headline like this from a media outlet like CNBC?
https://www.cnbc.com/2022/07/12/70percent-of-americans-think-a-recession-is-coming-how-to-prepare.html
A perfect spot for a significant bounce is nearby for COPX…
https://stockcharts.com/h-sc/ui?s=COPX&p=W&yr=5&mn=6&dy=0&id=p87577644014&a=792025091
Good COPX chart Matthew. I was just having a look earlier today at potentially getting back in to it for a trade.
Longer term, most copper miners are going much lower and Southern Copper is no exception…
https://stockcharts.com/h-sc/ui?s=SCCO&p=W&yr=6&mn=9&dy=0&id=p14884303401&a=683577631
I was approaching it more as a short-duration oversold relief rally in COPX.
Medium-term, I could see the copper producers struggling now that Copper has pulled back from it’s recent high over $5, now plunging down to around the $3.20s and $3.30s… If we are already in a period of recession with 2 negative quarters of GDP growth, and more slow economic malaise to come for the balance of the year or heading into next year, then that could be a further drag on Dr Copper and the commodities.
However, longer-term (2+ years out) I’d still anticipate Copper will get back up above $5 again, and blaze even higher for the balance of the decade maybe 2024-2030, as the commodities only really just went through their initial big leg up to kick off the commodities supercycle, and still have a long way to run as the commodities cycle unfolds and gets rerated compared to general equities, real estate, bonds, etc… Especially when viewed through the lens of an equal weighted commodity index (more so than the CRB which is heavily skewed to the Oil and Nat Gas space and not as instructive for the base metals or complex as a whole).
If recession should threaten serious consequences for the business community, there is little doubt that The Federal Reserve system will take steps to ease the movement. If we have a panic which many people now believe, stocks have not hit the bottom. Business is not To Big To Fail!
The recovery in the stock market does not look like it is going to come. The prices are still going down, the buyers aren’t returning, surely this is more than an intermediate decline. Now all the market pundits are talking about deflation, that is what I predicted all along. DT
Hi DT. Yes, it’s likely that after this dead-cat bounce is finished in the general stock markets, that they’ll roll over and make another leg lower. I’m looking for few good trading sessions or weekly closes in the general markets to potentially short them from a bit higher levels.
Gold Price Has Another 4% To Fall By Year End – Capital Economics
Neils Christensen – Kitco – Monday July 11, 2022
“The gold market continues to struggle following last week’s major selloff, and one firm warned investors that there is still more downside potential for the precious metal. In a report published Monday, Kieran Tompkins, commodities economist at Capital Economics, said that he sees gold prices ending the year 4% lower from current prices with a year-end target of $1,650 an ounce.”
“Rising real yields point to lower gold prices through the second half of the year, said Tompkins, adding that gold prices have fallen 15% from the March highs.”
“While the price of gold has fallen sharply over the past couple of months, including another small decline today, it still appears much higher than its typically strong inverse relationship with the yields of longer-dated US TIPS would suggest. We suspect that the gold price will fall further from here, as the usual relationship with TIPS yields partially reasserts itself,” Tompkins said in the report.
https://www.kitco.com/news/2022-07-11/Gold-price-has-another-4-to-fall-by-year-end-Capital-Economics.html