Weekend Show – Central Banks Start Intervening This Week, Have We Reached Peak Hawkishness and Investing In Gold vs Gold Stocks
Welcome to another KER Weekend Show. We now have Q3 behind us and it was not pretty. There was some light at the end of the week for PM stock investors however overall sentiment remains depressed. The Bank of England intervening in its bond market this week was big news and caused some wild swings. This brings up a major topic that we cover early on on this Weekend’s Show.
Let’s all hope Q4 is better for investors and the economy, but from what we’re hearing that might be a pipe dream.
Please keep in touch with Shad and I through email. We love hearing what you all think of the markets and companies that have your attention. Our email addresses are Fleck@kereport.com and Shad@kereport.com.
Shad and I are attending the upcoming New Orleans Investment Conference on October 12-15. We love to see you there! It’s a great way to meet company management and spend some time in New Orleans. Click the link below to register and please let us know if you will be there so we can meet up.
Click here to find out more about the conference.
- Segment 1 and 2 – Marc Chandler, Managing Partner at Bannockburn Global ForEx and Editor of the Marc to Market website kicks off the show by recapping the Bank of England’s move to intervene in its bond market to control spiking yields. This ties into a bigger conversation on central hawkishness and how different types of QE impact markets and economic data. Click here to visit the Marc to Market website.
- Segment 3 – Jayant Bhandari, Private Investor and Consultant joins us to differentiate between investing in gold vs gold stocks. The comment that gold has held up relatively well during this entire decline brought us to this conversation as gold stocks have crashed along with everything else. Jayant shares some straight forward metrics on what he is looking for in his resource stock investments.
- Segment 4 – We are replaying an interview with Brent Cook, posted on Tuesday. We focus on the overall health of the resource space. This includes a historical reference for the current market environment, key fundamentals he is looking for in stocks, jurisdictional breakdowns, metals he is more optimistic on and a few more topics! Click here to visit the Exploration Insights website to follow along with Brent and Joe.
Exclusive Company Interviews This Week
- Gold Bull Resources – Scoping Study At The Sandman Project Shows Near Term Small Scale Production Potential
- Signature Resources – Exploration Update With An Initial Resource On Tap
- Dolly Varden – High-Grade Silver Drill Intercepts From Stepping Out From The Wolf Deposit
- FPX Nickel – Scoping Study For EV Battery Supply Chain, Updated Resource Coming For Baptist and Drilling Concluded At The Van Target
- Golden Shield Resources – Drill Results From The Phase 2 Program, Including High-Grade At Depth, The Start of Phase 3 Program
- Exploits Discovery Corp – An Important Land Acquisition Between Newfound Gold and Labrador Gold, Drilling On Going At Titan Gold Target
- Petrus Resource – Update On Growth Strategy With New Debt Facility And New Wells Coming Online
BDC – Thanks for that dollar chart. The greenback has been one of the breakout stories of 2022, surging up recently over 114, but it is interesting what happened mid-week when the Bank of England pivoted and had to underpin their economic situation, the liquidity aspect, the Pound Sterling, and prevent the implosion of the margin calls that were about to hit their pension funds. As a result the Pound did a 180 move mid-week, and the Dollar pulled back on Wednesday, allowing the general markets, cryptos, and commodities to surge that day.
Do you think we’ll see another move back up in the buck from recent support, and if so do you have an upside target for the dollar? If you think it may keep trending lower, where do you think next support comes in? (would it be that green dotted line around 108, or would it be that red horizontal price support down around 105?)
Ex – Although the Euro is primary Dollar Index driver, on Friday another force became apparent. Probably the Yen.
Any target now is dependent upon the immediate move from here. If down, the possibility of Painting the Gap (Hash Lime Line) comes into play. If up, a Top Retest is expected, which could expand as seen in the Quarterly Chart just added (full extension unlikely).
Expansion targets: 115.65 (27.2%) and 116.00 (38.2%).
Last week Rick Ackerman projected a lengthy retracement followed by higher: https://www.rickackerman.com/2022/09/dxy-nybot-dollar-index-last112-98/. He may have an update tomorrow.
As mentioned previously, a non-linear break may trash all of our thinking. Beware flocking Black Swans. – BDC
Hi BDC, thanks for posting that link on The US dollar from Rick Ackerman. DT
BDC – Thanks for those further technical thoughts on the dollar, those upside expansion targets, and downside support lines, and the link to Rick A’s thoughts.
Sure thing; and “full extension unlikely” refers to the short term. After pull back the higher long term level may be hit, stretching things out somewhat.
Jayant Bhandari, he has a different viewpoint from many private investors and consultants. It’s not surprising that most so called investors/speculators lose money at this very complex game. It’s almost like a mystery novel with many twists and turns that continually keeps happening like a revolving door. Investing in mining companies requires a huge set of diverse tools as well as managing your emotions. Most investors just buy into one or two stocks, wait to make a fortune but end up losing most of their investment because they think it is so easy. Even knowing when to sell is a huge challenge that can make or break you, and that alone is only a very tiny part of the investing world. DT
Good thoughts DT, and agreed that it was nice to Jayant’s more candid and direct thoughts on the overall health of the junior mining sector, some of the incorrect assumptions or mistakes many investors make, and his thoughts on how to separate the good companies from the bad. We are blessed to have such great guests on the show and such solid contributors here in the forum.
Thanks to all the KE Report guest contributors for another great week of daily editorials, company interviews with management, and another solid weekend show with Marc, Jayant, and Brent.
Also thanks to all the listeners of the podcast and radio show, and those members of the KER crew that post and participate here on the blog, sharing insights with our community. Ever Upward!
Hi Ex, your show has markedly improved since the old days. Just taking the time to listen in to your interviews which are very insightful, requires a lot of attention and thought. If you aren’t receptive to change which is what we get here every week, from the exchange of ideas, you won’t do well as an investor. The best part is it’s free, not many things these days are free without giving out some of your personal information. That is the world we live in today. DT
Hi DT – Thanks for those kinds words and feedback on the KE Report show. Cory & I work hard to find new guests, but also keep in touch with the core guests and longer-term friends of the show.
We spend hours each day doing our own market research to be able to ask good questions, but much more importantly, we surround ourselves with many of the thought leaders that are good at keeping up with the changing market so that we can learn from the them and draw out their insights for all the listeners of the show.
We are really thrilled and blessed to have such a nice circle of influencers, economic pundits, technicians, newsletter writers, fund managers, and specialists that come onto the show and provide their experience and wisdom to the audience here.
Yes, the only constant is change…
I posted this rant on last weekend’s show, but had also posted it over at ceo.ca and got a number of responses both privately and publicly afterwards. It really ties into the discussion we had with Jayant on many aspects so, while a bit lengthy, it seemed relevant to post it here again for consideration, with a few added tweaks.
It would be great to get others thoughts and strategies for how they invest in the junior mining stocks.
As for what kind of exposure most people should have to commodities or gold, I’ll share a few ideas, but ultimately I believe all investing and which sectors people decide to get positioned in are 100% their own prerogative.
Nobody should be telling others what they should be doing — whether that is buying, selling, or going to cash, as it is an individual quest, and everyone has different risk tolerances, time horizons, and different styles or approaches to how they invest. It is much the same as music, or films, or food, where one persons favorite is despised by another, one person’s genre of preference is the antithesis of someone else’s interests. To assume there is only one clear action or path forward for everyone is the height of ignorance and hubris.
We hear these silly mantras all the time in many asset classes where someone urges all their fellow investors to go “all-in” because their pet stock is “going to the moon” (with rocket ship emojis)… or the converse “Sell everything and go to cash”. Then there are the mantras of the buy and hold crowd that don’t trade the stocks or sectors but mostly buy a position and just sit in it for better or worse like a bump on a log, (regardless of the technical or fundamental trends) with phrases like “buy right and sit tight” or “hold on for dear life” or “I’m never selling = diamond hands.”
The problems with being uber-bullish, uber-bearish, or perpetually neutral (but hopeful) is that they are not really strategies, and they will have people leaning the wrong direction a great deal of the time. The other issue that presents itself in the commodities space is that they are cyclical in nature and have their times where they are shunned, and also have periods where they get their time in the sun. However the issue that further compounds things is conflating the underlying stocks with their respective commodities, when that is simply not the case.
Often times, especially when stepping down into the Junior mining stocks that are explorers or developers, they can be completely unhinged from the trajectories found in their related commodities, and they really trade on the basis of their company’s individual success or failure, dilution from capital raises, key breaking news (good or bad), drill success, new discoveries, spending money on only marginal drill results, permitting wins or setbacks, community relations wins and setbacks, and on and on…
The reality is that most buy and hold value investors do not have the right thought process or approach when investing in any mining stocks, especially the explorers, prospect generators, and developers, but to a lessor extent even the producers. They try and extrapolate over the Jesse Livermore concept of “buying right and sitting tight” that works fine for blue chip stocks and general equities over longer time periods, or even buying physical metals. However, the error in thinking is trying to force those investing strategies on a much different cyclical and volatile sector like commodities that is more of a giant whipsaw and game of whack-a-mole. PM Mining stocks, base metals mining stocks, minerals stocks, or oil & gas stocks, especially the juniors, should be traded, and very few have been great longer term “buy and hold” type of equities for many years or decades at a time.
In my personal opinion, most people don’t have the stomach to trade the volatile commodities sector and the wild swings it has within a cyclical pattern, and they will get run over if they just sit there lifeless. Be it Oil or Nat Gas or Copper or Nickel or Uranium or Lithium or Graphite or Potash or whatever, most buy and hold investors are not really equipped emotionally or technically to trade either the futures markets or the volatile individual extractive companies, and while holding Gold or Silver for decades may be a good strategy for the actual metals, it is a terrible strategy for just plopping money in a few mining stocks and hoping for the best. Most investors don’t really have a system for the vetting process of individual names, and instead rely on tips from other investors, recommendations from newsletter writers, or just pick a few names they see being discussed as trending on different chat boards and forums.
For most investors that want to wade into the commodities sector, but don’t have the time to research each company in a sector, then I’d recommend getting any exposure by using an ETF for the whole resource sector, or an ETF for each individual commodity sector that they want exposure to. This takes the individual company risk (but admittedly some of the potential upside reward) out of the process, but it diversifies one across a basket of stocks and will capture the general trends of that sector. For those that enjoy the stock-picking aspect, there is always the option of building one’s own ETF in a sector, which is what I do personally, to pick the companies, the weighting, and number holdings one is comfortable with personally. This also allows one to actively manage their own basket or personalized ETF to make substitutions or change weightings whenever they see fit, as well as get spin out companies, and dividends when they happen.
As for Gold, it still makes sense for people to hold a small percentage of their net worth in the physical metal or have the physical held by a storage company in their name where they could actually still take delivery. Many suggest 5%-10% of overall net worth, but few actually have that allocation. Most people have 0% holdings in physical gold or silver, and then the die-hards really have much more exposure than that. Again, I think that is a personal call and wouldn’t presume to suggest what others should do.
Gold is a mostly uncorrelated asset class, and an “un-currency” in a way. It’s not the hottest speculative trade on the market and shouldn’t be thought of in those terms. Gold is a way to preserve wealth over longer periods of time as hard money. It hasn’t done that well as an inflation hedge over the last 2 years, because energy stocks were much more effective, but it did do well when the Ukraine war broke out, and it does respond over time to fiscal malfeasance and bad monetary policies. It is not really supposed to be a great asset class to trade or speculate on, as it is simply a good store of value and that is the role I see the yellow metal plays in one’s mix of assets. This is why comparisons between Gold and Bitcoin fail to hit the mark, as Bitcoin is so much more speculative and seems to be correlated to tech stocks, compared to Gold’s lone ranger role. Some investors do just fine owning no gold at all, while others have done well over longer stretches of times precisely because they had outsized weightings to gold, so there is no steadfast one-size-fits-all approach.
If people do want to speculate for outsized gains, then that is where the gold mining stocks (and all mining stocks) come in. However, investing in Gold and investing in gold mining stocks are apples and oranges and totally different risk profiles, volatility, and investing styles. People erroneously lump mining stocks or energy stocks in with the underlying commodities, and try to overlay the macro narratives on micro equites. However, in stating what should be obvious but apparently isn’t…. the commodities are actually on the periodic table and traded on futures markets as the hard assets the are; while the other group of mining stocks are actually equities and companies with many more risk/reward points around management teams, capital structure, access to capital, environmental, labor, fuel, permitting, social engagement in local communities, jurisdiction risk etc…
Investing in a gold or oil or copper junior exploration company is nothing like actually investing in gold, oil, or copper directly, and an individual mining stock and the related underlying commodities can have vastly different trajectories. The macro narratives that may apply to the individual commodity (like copper or gold) may not really apply meaningfully to a drill play explorer as they are 2 very different things, with different value drivers, and different strengths, weaknesses, opportunities, and threats.
This is also where some of the misunderstanding as to strategies and qualities of assets come in, especially with Gold. Gold is a buy and hold longer term or possibly even lifetime hold, that can be passed down to ones children or grandchildren. So “buy right and sit tight” works just fine for the yellow metal. Gold stocks are nothing like that, and again, most are not good buy and hold stocks for years or decades, not even the majors or mid-tiers. Sure there are periods in the past where that may have worked, but those are limited examples, and the harsh reality is that most gold stocks, like all commodity stocks, are companies, with their own qualities and trends, and they should be traded by accumulating weakness and selling into strength.
I’d suggest the that closest way for people to play mining stocks to capitalize on the macro trends of the underlying commodities is to buy royalty & streaming companies, with diversified baskets of income producing revenue streams spread across dozens of operating companies, but without the same inherent risks that the mining companies have individually. Buying PM royalty companies can still very much be trades, but they actually can be longer term buy & hold. Just pull up the charts for the last 20 years on companies like Franco Nevada or Royal Gold and they have performed more like the blue-chip stocks in the space with gradual value creation over time. The mid-tier and junior royalty companies though, are much more speculative and still best sold into strength and accumulated into weakness as trades.
Those that use technical analysis or follow the fundamental news on companies or individual commodity sectors very closely can spot opportunities to buy mining stocks low and sell them high, but it is a limited number of folks that actually put in the time, homework, and gain the skillsets to effectively trade volatile sectors effectively. Of course, this is true of any valuable skillset attained in life and doesn’t just apply to investing, as a great golfer, or great sailor, or great chef, or great teacher, or great artist puts in many years of work, accumulates both learned knowledge and experiential knowledge, and then comes up with their own system and process. Investing and trading is no different, and most people that try to do it casually as hobby, has it cost them like a hobby does.
Investing in mining stocks is more akin to speculating in biotech, or cryptos, or meme stocks, or other hot money sectors, where the gains can be explosive, but so can the losses, and those in the sectors need to pick their spots, cut losses quickly, and harvest outsized gains when things get too overbought to take their winnings off the table. This takes experience in recognizing technical patterns, watching momentum and sentiment, and being able to put their emotions in check, and execute trades swiftly and definitively with the conviction from gained experience. Even with all that experience, it is not an easy craft to master, and that is why most fail.
What I have observed in the last 23 years of my investing journey (having really gotten going trading individual stocks in late 1998/early 1999) is that most people that try to be “traders” (including many various newsletter writers or talking heads seen in the financial that are considered the pros or thought leaders in the sector) fail at actually trading the speculative sectors they follow. In most cases it is that they are not disciplined or systematic and go with their guts, or because they are permabulls always buying and never selling, or because they are slaves to their emotions of greed and fear.
Most are victims of recency bias, expecting the next 12 months or 12 days to be just like the last 12 months or 12 days, and very few have the foresight to pick up on developing trends and skate to where the puck is going to next. They resist actually buying assets when they are unloved and underappreciated and when the valuations are low (like at present, when they are actually most attractive), and fail to sell when things are overbought and frothy (like in the summer of 2016 or 2020 or all all the dozens of tradable rallies for 1-3 months that we’ve seen over the years).
As a result, I don’t think that most generalist investors or even most longer-term value investors should likely be playing in the commodities space, or biotech space, or cryptoverse, or meme stocks, or growth tech stocks; nor should they be managing their own money. Hell, 90% of most fund managers on Wall Street or Bay Street can’t even beat the underlying indexes over extended periods of time. It’s not easy.
Wow! Ex, that was another one of your great rants. I have to get some exercise a good long walk is the best for me. I drank a little too much of my favorite craft beer yesterday, “Amsterdam Blonde”. I usually prefer brunettes but this one heck of a good lager. DT
Much appreciated DT. Yes, I’m about to head out soon myself for a walkabout on the beach, but I’m bright-eyed and chipper after getting some good sleep the last few days, and even walking through a complex corn-maze last night with my lady out at a big farm. I’ve been drinking my fair share of water and healthy juices all this week, so I’ve earned an afternoon of delicious craft bears out in nature, looking out at the water and people playing in the sunshine. Cheers!
Great RANT…………….. SPOT ON,………………
Thanks OOTB. 🙂
Great meaningful ideas impeccably expressed ….Thanks Ex…..!
Professional writing is rare in this world…..
Many thanks Larry and flattered the ranting was of value. I greatly appreciate reading your thoughts here as well as your technical outlook.
I am going back to selling vacuum cleaners door to door. Not as risky as miners.
Great rant Ex.
Lake, if you shave your head and sell vacuums you could call yourself, “Mr. Clean”! DT
Good article Ex
I think a good advice is to be very selective
Be selective on the type of PM stock
If you want some safety and don’t take the risk to loose all, you should stay out of the explorers or only invest a very small percentage in them (difficult as you need to invest in many to have a match winner). Royalties and majors are the best place if safety is important
Explorers are the most speculative investment you can think about. You can make spectacular wins, for example I bought Probe Mines for 10 cents as explorer and it was taken over by Goldcorp for C$ 5 (500x what I paid). Even with this experience I decided to stay out of the explorers, because most of the time you will loose, you will need to spent a lot of time in research and if you have a big win it is often luck, because many things have to come together.
Be selective on the type of commodity
Each commodity has it own characteristics. To be successful you need to understand the characteristics in every detail. Copper is very different from Nickel. Nickel is very different from Lithium. Lithium is very different from Cobalt
I decided for myself to stay out of Uranium, because I think it is too dangerous. I think there should be also an ethical side of investing. I find copper difficult, because copper projects seem to require a long time to develop and in general have a large CAPEX.
Be selective on the management
– „Good management can create a great company, even with difficult assets“
– „Pure management can destroy a company, even with great assets“
Hi Thomas – Yes, agreed 100% about being selective, but that means different things to different investors based on their own unique criteria. In addition, I ‘d submit that many resource investors often do not have concrete reasons why the selected certain companies in the first place. It is far more common to see people dogpile into the flavor of the day, with only a surface level idea of why they did so.
In general, yes the royalty companies are more conservative bets, and they eliminate many of the individual company risks. Then after that the quality larger producers are a bit less conservative
but have stable revenues coming in and some pay dividends. Then moving down the foodchain further in risk one goes to the smaller producers, then developers, and then the explorers. As you mentioned the gains in explorers can be eye-wattering, but most (99%) will not ultimately have an economic project out of their portfolios, that actually gets developed into a mine.
As for investing in orher commodities mining stocks, there are some different nuances to know, of course; but it still boils down to finding undervalued companies with solid management teams and quality assets. That is the essence of it. I’ve invested in Copper, Nickel/PGM, Zinc/Lead, Rare Earths/Specialty Metals plays many times for a dozen years, but for me my biggest gains were in the energy metals of Lithium and Uranium stocks. After accumulating and trading Li stocks for many years in up & down cycles, I finally sold out of them all last fall as they got pretty frothy in valuations, and glad I did as many corrected down from those lofty areas. Uranium stocks are one of my favorite sectors to speculate in, and after Gold and Silver mining stocks, the U stocks are and have been my heaviest weightings personally. Different strokes for different folks I guess.
I am always impressed how many stocks you know and with how many commodities you are familiar. Your brain must be larger than mine 🙂
One more comment on management.
A management that was successful in the past is no guarantee for the future
McEwen Mining is a prominent example. With the last financings a lot of trust was destroyed
Sandstorm is now getting into the same route
Hi Thomas – Your brain is plenty big, and you have posted many thoughtful and insightful comments week after week, and year after year. As for how I’m able to follow so many sectors and companies, it is just that I’ve sacrificed a larger part of my brain filling it with information on the resource stocks. I wouldn’t wish that on anyone. Haha! 😉
As for management teams, as the saying goes… “Success leaves clues.” Most of the quality teams, that have been serially successful, continue to be serially successful in what that they do. It is like a sports start that is traded to a different team, but in general, continues to be great in their role. It is no guarantee though, as some players and some management teams were just in the right place at the right time previously, but then lose their shine. In general though, you are stacking the odds in your favor by betting on serially successful players in the space, and betting on the best jockeys when they switch to a new horse.
As for McEwen Mining, Rob is the CEO, and was serially successful in the past at Goldcorp, but that doesn’t mean the rest of the team at MUX was of the same pedigree, and clearly there have been challenges the company has had due to the actual projects they acquired, the prices they paid for those projects, but most importantly the ball was dropped in the actual development and move into mining or expansion of mining at those projects. It is the operational teams, 3rd party engineering studies relied on, and the execution of their strategies with regards to mining, production output, and keeping costs down that has been the issue. There have been personnel changes over the years to address some of those areas of underperformance, but they’ve become a “show me” story where the market has lost confidence in their ability to deliver, and so they need to prove that they can get things operating more efficiently.
As for Sandstorm, I saw all the gnashing of teeth from investors this last week with regards to that financing and some negative articles in response to it, but when one looks at the cumulative history of Sandstorm, Nolan and team have been clearly successful. They have assembled an enviable collection of streams and royalties over the last decade, so that is the main thing. However, I’d submit as a long-term holder and follower of this company that there have been several times and past chapters that have proven the fickle retail investors wrong, with regards to SANDs longer-term strategies. It is quite probably that this recent financing will be another example, as it likely will underpin a new royalty or streaming acquisition that the market just can’t see yet.
Think about when everyone was pissed about their Luna Mining deal back in the day. People doubted management, threw their hands up in the air thinking the goose was cooked. I took full advantage of that selloff to acquire more shares on the cheap into the perceived distress. Well, as we know, SAND restructured that deal a 2nd time with Trek Mining for an immediate win, and then when Equinox acquired those assets, Sandstorm has done very well over the longer term for the big win. None of the critics came back and said they were wrong.
There were a number of smaller deals just like that where people doubted their acquisitions of royalties by lending to certain companies that they did quite well on, as a return on capital, in hindsight as those assets picked up new operators and were rewarded by getting a nice return on the money if the royalties were bought back, or when stronger producers expanded those projects. None of the critics came back and said they were wrong.
Then there was the next chapter of Sandstorm Gold doubt about management with regards to what they did with Hod Maden. Really, that one vexed me as well at the time, and across the board most analysts felt they had increased too much exposure to that single project when they bought it, compared to their overall asset mix, and in the higher-risk jurisdiction of Turkey of all places. Those were fair critiques, because it did interfere with their branding as a diversified and safer royalty and streaming company to have so much risk and exposure to just 1 asset. However they ended up taking a lemon and making lemonade… which is what winners do.
Over time, Nolan and the team at Sandstorm have proven that was a smart transaction, and then reduced down their exposure to it recently by selling/ spinning-out most of the project while retaining the upside of the 20% gold stream until 405,000 ounces of production, and then keeping a 2% NSR on it after that. So once again their team delivered a very successful outcome on this, even when most, likely including them, couldn’t see exactly how things would resolve. That is what a successful team does – finds a winning solution. Again, None of the critics came back and said they were wrong.
Recently, Sandstorm hit the ball out of the park acquiring both Nomad Royalties, which was one of the best mid-tier royalty companies on the market and had plenty of upside growth in their portfolio, and also picked up a package of royalties from BaseCore (a subsidiary of Glencore) during that same transformational transaction. That was a fantastic longer-term win for the company, that most investors still haven’t properly digested or understood, and it speaks to management continuing to deliver.
So should all of those prior successes from Nolan Watson and the management team all be thrown out the window on a $1.5 Billion company because they decided to do a bought deal for $80 Million at a low point in the market?
No, that would be irrational, but most investors are irrational and instead are quite emotional. Look, the timing of the deal, when their shares are a the lowest point in 2 years is disappointing, and if it was only to manage just their debt, then I’d agree with critiques that they should have been raising at higher prices and throttled back their dividend instead (although that could disappoint larger institutional investors). However, keep in mind, that raising at higher prices might have interfered with them executing on the Nomad/Basecore deal, but I’ve not heard any of the critics consider that fact. The other thing is that if a chunk of the $80 Million just raised goes to a new acquisition that is far more accretive longer term, then it may very well be worth the candle.
None of the people slinging arrows at Sandstorm the end of this last week know what the larger plan may be, nor do they know why they didn’t do this raise earlier. Again, I’m guessing that doing the raise earlier would have messed up the great acquisition they just made of Nomad/Basecore. Also, I’m sure they considered the ramification of the recent capital raise as still the best option, because it gives them a little operational wiggle room and a means to more effectively service debt facilities in the process.
Paying down the debt makes sense, because their variable interest rates were at 3.5% and are projected to go up to about 8% if the Fed keep hiking rates. So it makes sense to throw more capital at that debt, to avoid the increased interest payments, but I’d agree with disappointed investors that the terms and timing of this could have been better. However, nobody a year or two ago would have predicted rates would have gone up so swiftly in 2022, so some of that is outside macro factors that have changed the gameboard.
However, if in addition to paying down debt, they do come out and execute a solid acquisition in the next 6-12 months, on the back of this new capital raise, that ends up being another longer-term value driver and win…. then just like all the other times, I’m guessing that none of the critics will come back and state they were wrong. 😉
We’ll see how it goes, but in a way, I hope Sandstorm continues to pull back as retail and uninformed institutional investors capitulate, as I’ll happily buy their shares if they go lower. Longer term, Sandstorm (SAND) (SSL) is a slam dunk win, and gradual gainer for the long haul. It is one of the few positions in my portfolio I spend little time worrying about, and one of the few that I actually plan on holding for years to come. To each their own…
Dr. Dick Tracy PhD
‘The Fed Is Trapped’
Jesse Felder – The Felder Report – (10/01/2022)
Are The Bond Vigilantes Back? Part Deux
Jesse Felder – The Felder Report – (09/28/2022)
Back in March, I wrote, “The long-term chart of the 30-year treasury yield may now be the most important chart in the world. For the past 30 years or so, the yield on the long bond has formed a fairly neat channel that has only been violated relatively briefly at times.”
“Below is an updated version of that chart and it’s clear to see that the 30-year yield has decisively broken out of its downtrend channel. This suggests that the bond vigilantes have finally been woken from their long slumber by rapidly rising inflation and a Federal Reserve that has fallen woefully behind the curve.”
“Fundamental indicators, however, like the copper-to-gold ratio suggest interest rates should actually be falling, not rising. And from a technical standpoint, the 30-year yield has now completed the projected target from its head and shoulders bottom pattern and is running into horizontal resistance that dates back to 2013 so the rise in rates may now be due for a rest. Longer-term, however, the breakout sends a “loud, clear signal” that the trend in rates has reversed. As a result, it appears the bond vigilantes may throw a wrench in the Fed’s plans for balance sheet “normalization” which could further challenge the central bank’s waning credibility.”
I thought The Federal Reserve was trapped many, many, years ago and said as much repeatedly here. On February 2, 1929, The New York Reserve asked Washington for permission to lift the New York rate, each time permission was denied. In those days they actually tried to curb speculative excesses in the system, but the politicians intervened. Not like today where they openly aided and abetted credit inflation. The result back then was The Great Depression, they are on track to now see The Greater Depression. DT😉
Bank Of America Strategists See Wall Street Rout Forcing Asset Sales
Michael Msika – Bloomberg – September 30, 2022
“Spiraling losses on Wall Street are now snowballing into forced asset liquidation, according to Bank of America Corp. strategists. The NYSE Composite Index, which includes US stocks, depositary receipts and real estate investment trusts, has broken multiple technical support levels including its 200-week moving average, the 14,000 mark, as well as 2018 and 2020 highs. Now accumulated losses could be forcing funds to sell more assets to raise cash, accelerating the selloff, according to Bank of America.”
– BofA strategists stay tactically bearish until Fed intervenes.
Stock market: 2022 is exposing ‘freaky post-QE financial system plumbing,’ BofA says
Jared Blikre- Yahoo Finance – Sun, October 2, 2022
The global research team at BofA Securities, led by Michael Hartnett, has navigated the curveballs thrown by 2022 far better than most. In their latest missive, Hartnett & Co. reflect on the “broken, freaky post-[Quantitative Easing] financial system plumbing” and throw down the gauntlet at the bottom-is-in crowd.
“We are tactical bears,” says BofA, recommending bets on lower stock prices and higher yields (particularly in the two-year tenor) into Halloween.
Oncoming Gold Stock Bull (Technical Analysis)
Gary Tanashian – Seeking Alpha – Oct. 01, 2022
– The sector fundamentals, including gold’s ‘real’ commodity adjusted price, are coming into place.
– The macro fundamentals, including gold’s ‘real’ stock market adjusted price, are coming into place.
– Daily chart technicals are another matter and despite the positive fundamental and risk/reward situation, technical confirmation is needed.
Oil and commodities in general will be correcting for a long time to come.
Thank you, Matthew.
Thanks for creating this chart.
Interesting note (perhaps): The pre-Covid price for oil was $53 [using the week of 17Feb2020].
This is very close to the mid line (~ $58) of your Blue pitchfork from 2009.
Brian, 53 also happens to be the level of the 61.8% Fibonacci retracement of the move off the 2020 low.
Here’s a quarterly look with 4 forks to consider:
Thanks for posting this chart, too; I’m just now starting to use pitchforks in my charts and I will take some time to really look at your technique/methods on this chart. Very helpful for a beginner chartist, such as myself.
What about natural gas, Matthew? I wonder what my Gazprom and Lukoil are selling for? They haven’t traded here since sanctions were put on Russia, but I plan to hold them a long time.
Bonzo, it appears to be at/near a daily chart/short term low but the weekly/intermediate term is less friendly even after 6 straight weeks lower.
Oil is down 29% versus gold since mid June and will go much lower.
I’m glad you noticed and that’s not a knock on you! I’m last post on oil over three weeks ago or more had us going down while everyone I could see was ultra bullish..
I’m glad you raised this up with your spectacular charts because it ain’t over.. This is precisely the fuel the miners need to engulf the bull! Strap your seats..
Stick a fork in the stock market versus gold. It’s over.
No that is not going to be an inverse H&S bottom…
There are a lot of things to like about American culture, it is easy to be critical. I really like American professional football. I just wish Canada and in particular Toronto could get a franchise in the NFL.
I am a huge supporter of The Buffalo Bills, I like their jerseys, the team colors are very patriotic red, white, and blue, but it is not just the colors I like, but also the way their uniforms are designed to accentuate those colors.
Any way I am betting on The Bills to go to the Super Bowl. Remember this is not investment advice. DT
How much is a Buffalo Bill. Is it backed by anything or pure fiat.
Right DT and I’m thinking about the great music created in America and all the stuff that goes around it. Not gonna be happy if Chinese get control of the airwaves and start playing their screetchy scratchy music 24/7.
Stopped taking football seriously in the ’80’s. Just colorful uniforms in action back and forth across the TV screen, that I can take for about 15-20 minutes at a time.
There was some strength in Gold and PM miners last week
Gold made nearly $50 from the low and PM miners had a good run
The DOW Jones on the other side broke through 29.000 and made a new 52 week low
Can Gold and Gold miners decouple from the General market like they did in 2009?
There seems to be a general pattern
Or do we need to see another low before Gold can move up like it did 1980 and 2011?
I posted this on last weekend’s show, but will also post this here as it is worth the review.
Here is a great research tool for those looking to review the 15 minute videos of the company overviews from the recent Colorado mining conference. There is an impressive list of companies that attended and presented, and just click on the “launch the presentation” links to cue up each video.
I wouldn’t bother with lithium here. Even “special” or undervalued situations are unlikely to do well in any sustained way.
The same goes for uranium although it is marginal more appealing.
Yeah, I’d agree that the big move already happened in Lithium, and as mentioned up towards the top in a response to Thomas, I harvested my gains in the Li stocks last year in the Autumn. There are a few special cases in the direct lithium extraction subsector that may still be of note, but as you mentioned, even then, much of the easy money has already been made over the last few years in the Lithium miners.
As for Uranium miners, it is similar to the Lithium miners, in that we already saw a big move over the last 2 years in the U stocks and the easiest money has been made, and I had cashed out by 85% from Sept-Oct of last year, just a little early as they peaked in mid November, but it was a hell of a run. I did start accumulating my positions back in December of 2021 – Jan of 2022, and caught another nice swing trade in the rally up though April. I trimmed some back but then bought back into them again in the summer sell-down of June/July. I’ve now pretty much got the exposure I want in Uranium miners, with just 7 portfolio positions, and when we see the longer duration term contracts start being executed with producers in the high $50’s – low $60’s there is likely still another wave higher to go, but maybe not as epic as the last few years rallies.
Longer term, if Uranium prices go north of that into the $70s-$100 price levels, there could still be some nice multi-bagger moves in the U stocks, but that may still be 2 years off. I plan on holding the positions I have until that move higher because that seems quite probable, but they are on auto-pilot for now in my portfolio, and I’m not really messing around with them much. If we do see a “sell everything” liquidity event hit all market sectors later this year or early next year, then I may add to them, and average down in that scenario; but for now, I am just treating my remaining positions as 1-2 year position-trades on the final leg higher in the Uranium sector.
Brixton decisively broke its 2 year downtrend and also closed above the weekly Ichimoku cloud for the first time since 2020…
The volume is also coming back on this trend reversal. Will be interesting to see if there’s some news in the next week or two
Yes I wondered about imminent news myself but it’s probably not necessary to explain the action lately considering their results so far. The company has a lot of irons in the fire with each showing great potential and plenty of news to come.
Well Jayant was upbeat as usual!
Jayant said he’s down 60%. That’s gotta be tough, discouraging.
I was glad Jayant came out and mentioned he was down over 60%, and he is surely not alone. There are some positioned in junior mining stocks, cryptos, biotech, cannabis, meme stocks, etc down 70%-90%.
Since my portfolio’s high water mark in early June of 2021, (where I was up over 400% off the March 2020 pandemic crash lows), my acount is now down 50%. I took evasive action at times to limit some losses and sell some portfolio dogs, and had a number of good base hits with profitable swing trades, or it could have been much much worse.
The last year has been brutal in almost every sector except oil & nat gas stocks, utilities, and consumer staples, but even those finally rolled over the last few months.
It’s always darkest before the dawn though. While we may still see a “sell everything” liquidity event hit the markets for one more big flush, most of the damage was already inflicted to the PM juniors over the last 2 years.
Some explorers are already trading at valuations at or near the company’s cash in the bank. Some development companies have gold ounces in the ground valued at $5-$10 per ounce, and they are trading 2-4 times lower than the sunk costs already spent on their projects . That is not an industry sustaining level. To Erik Wetterling’s point on Friday’s interview — mining is not going away, and no companies would want to spend a decade developing a meaningful project if these valuations were actually correct.
As a result, like Jayant mentioned on this weekend show, he knows when the tide turns that many of the positions he holds that are currently down 60% on will surge up 300%, recouping the paper losses at present, and providing nice future profits. This is the same cycle we’ve seen play out over and over again.
I am still in this market, but I don’t know for how long, when stocks turn down from forced selling you can’t get out fast enough. The best part is if you are in cash to buy the bottom and no matter how far resource stocks have fallen, if there is a washout in the conventional market and we are almost there you will here, a sucking sound that will take us down even more. The good news is we should bounce back first. DT
We had some kind of bounce back in Gold last week
And the Dow Jones is already on a 52 week low
How would the final washout look like?
Dow at 15000 and Gold down to 1500?
It depends in just how orderly or severe the next leg down is in the markets, providing we get the final plunge scenario.
We’ve had on a few pundits and technicians looking for a potential move down to $3200 in the S&P 500, and the mid $1500’s in gold. However we have had people on like Rick Bensignor, that mentioned a solid break below the $1675 support in gold setsup a retest of the $1450 pandemic low, or even a move back down to that $1370-$1375 support (that was prior resistance for years).
I don’t expect it to get that bad. Like Jordan has mentioned repeatedly, it will really depend on how severe and rapid the move down in the general markets is during the rest of the bear market.
Would be nice to get a technical update from DOC on the current status on this
Burkina Faso unrest/instability. West African Resources(WAF:AX) down 10% Monday AM.
SPY is already down 25% but is nowhere near its bear market low. September 2022 ended with it below its monthly Bollinger Bands for the first time since September 2008. Back then, this setup preceded an additional decline of 41% and 27% in October alone.
The Dow, NYSE, Nasdaq and Nasdaq 100 also finished last month below their monthly Bollinger Bands along with $USB, $UST, $USTU, TLT, JNK and HYG. The Dow Jones Corporate Bond Index Total Return ($DJCB) did as well and has a bearish P&F price objective of 316 (currently 377.63). Even the Real Estate Sector Index ($IXRE) did so which was also its first time since 2008. Its total decline back then was 77%. It will need to fall 66% from here to match that this time.
A lot of stocks have coasted to what seemed first class bargain levels. I think speculators are still playing this market, they haven’t seen a real bad break since the 1930’s, oh sure we have had what appeared to be bad breaks but The Federal Reserve has always come to the rescue.
Speculators have learned that when there is a bad break, it is a good time to buy. The margin accounts would tell the tale whether speculators are still coming into this market. Prices started to climb again last week but not in the conventional markets. Markets are very good at fooling people into thinking they are readjusting themselves into a secure position but no one who is a serious investor believes that stocks have hit bottom. DT
Trend Strength: https://tinyurl.com/4ypebbv9
New Month. New Quarter. New Hope.
NatGas Continues Bottoming
PMs Still Hovering
All PMs Max(7) !!
AGQ. Anyone saw H&S pattern on ZSL Short silver etf?
Great chart. Interesting H&S pattern – left-skewed and trending up within the apparent bear flag?
Michael Boutros (28.08 Gold & Silver): https://www.youtube.com/watch?v=8OP3EcBO_x4
He just got a call from Kitco (this morning)!
Added to Nine Mile today in order to be positioned if they put out some more good drill results.
With the spare change, I bought some Bayhorse. It has been a few years since I had any shares but there appears to be some interest and current price is about .035 US. Anyone been keeping up with them? At one time they had a potential large silver resource, but that is old info. If silver gets popular, then maybe this will go along for the ride…but they are reporting some interesting gold “sampling” which needs some drilling to rely on.
“Silver’s rally comes a few days after Oxford Economics touted the precious metal’s role as an essential asset in an investment portfolio.”
“The economic research firm conducted the study on behalf of the Silver Institute; according to the analysts, silver should be regarded as a distinct asset class and investors would benefit from an allocation between 4% and 6%.”
Yes, nice move in Silver today up about 8%. Back up to $20.55 on the silver futures market.
Silver looking good…………… IRISH will be pleased………… 🙂
Added a few to Brixton and GR Silver.
US Schwab having some technical difficulties today such as using the wrong previous day close and not showing any activity in Summa today. The end result is my account is zeroing out again. Some up…some down and some misreported.
(Example: Give the Canadian close to some of your OTC miners and see how they perform day to day)
Dollar Index : Fall 2022 : Pause : Gap Painting or Higher?