Dave Erfle – Shorting The General US Equities As A Portfolio Hedge, Technical Outlook On Gold
Dave Erfle, Founder of the Junior Miner Junky, joins us to provide his technical and macro outlook on the general equities and precious metals space. We start off discussing the short inverse ETF on the S&P 500 that Dave deployed when it went up and backtested it’s 200 day SMA, to hedge against any portfolio risk he could see in his resource stocks in the event of a larger “sell everything” type of correction. He noted the island reversals seen on many general equities markets, and a number of macroeconomic drivers from the Fed just about to step up their reduction of the balance sheets through quantitative tightening, to the “crash season” in Sep-Oct in general markets, to the worsening inversion of the yield curve.
Next we pivoted over to his technical outlook on the gold price, and Dave noted that $1740 had gapped up off the downtrend line, then come back and filled that gap earlier this week, and now is bouncing higher again. A monthly close in August above $1750 would be ideal. On the downside support, we discussed the significance if the key $1675 level were to be tested once again, and if it would negate the larger PM bull market by making a lower low, or if it would simply be a big bear-trap instead.
We wrap up with a look at the mining stocks, that while rallying the last few weeks on lower volumes, have turned down earlier this week, and there doesn’t seem to be much enthusiasm or positive sentiment in the sector at present. Dave again highlighted the inflationary forces that hit the largest gold producer and bellwether stock, Newmont Mining, after a very rough quarterly operations report. He also pointed out how it is a big component in the ETFs, so it will be important to see it turn higher for generalist money flows to come back into the sector again for a more meaningful move higher.