Craig Hemke – Short Squeeze Number 4 For The Precious Metals
Craig Hemke, Editor of TF Metals Report, joins us to review the macro factors behind the recent rally in the precious metals that kicked off the end of last week and had follow through all this week. Craig has dubbed this Short Squeeze Number 4, and discusses that the same technical trading patterns that occur near tops during bull markets, are very similar in an inverse pattern during bear markets at points where things get to extremes and then reverse the trend.
The discussion expands into a number of areas including Fed policy versus market expectations, other central banks tightening cycles, interest rate reversals, the US dollar weakness, the crypto crash and bitcoin weakness, the China reopening, commodities and base metals, COT positioning in silver, and that last week we saw the largest hedge fund short position in Comex gold ever, and so a short squeeze was overdue, resulting in the big moves higher we saw in both gold and silver and many mining stocks.
On the 1 year Silver daily chart, it is nice to see pricing reclaim the recent peak at $21.31, the prior significant lateral support at $21.41 (that was tested about 4-5 times over the last 2 years) on a closing basis.
In addition, Silver’s close today at $21.67 for the day and week, was also over the 200 day EMA at $20.99, and the 200 Day SMA at $21.51. Those are 4 bullish takeaways from today’s close here on Friday, despite silver closing down on the day.
I am back at the top of the range I have been bound in by for months. Just starting to get profits in new miners I have bought in attempt to break the range. I would expect to be hit before anything breaks out of the range and that probably would start with another down Monday.
Supply and Demand eventually will take over when supply is depleted.
Silver has been a bullish “done deal” for a long time though many price-based approaches don’t make that clear. The “loose end” had been gold itself if one needed to be very sure of the bullishness that had been setting up for months. That loose end no longer exists.
SIL and SILJ look fantastic and have been on clear buy signals for over a month. Both are up about 33% since their lows. GDX and GDXJ have lagged but are now catching up quickly. The bears around here have been clueless for months and probably remain so. The next “scary” pullback will probably start in the next week or two and I bet the bears will pop in to show us their foolishness yet again.
https://stockcharts.com/h-sc/ui?s=SILJ&p=W&yr=3&mn=11&dy=0&id=p55938385911&a=1105560657
GDX is now over 30% off its low. Notice that this big pitchfork provided the 2020 high as well as the recent low:
https://stockcharts.com/h-sc/ui?s=GDX&p=W&yr=7&mn=11&dy=0&id=p92195602269&a=947466265
Like Newmont and Barrick, Pan American Silver set a bear trap before reversing hard and is now up 15% since Wednesday’s low.
https://stockcharts.com/h-sc/ui?s=PAAS&p=D&yr=1&mn=0&dy=0&id=p86164010405&a=837525000
Take a look at GDX’s volume before and after the covid crash of early 2020:
https://stockcharts.com/h-sc/ui?s=GDX&p=W&yr=3&mn=11&dy=0&id=p85037736060&a=1240639104
Now do the same with SILJ and then tell me where you think the real action is going to be:
https://stockcharts.com/h-sc/ui?s=SILJ&p=W&yr=3&mn=11&dy=0&id=p60230060000&a=1289048193
Zinc was up 5.34% today and I have been doing add-ons to my position in Santacruz Silver Mining. SCZ is now my largest holding. DT
It’s a large holding for me too, it likes to move in 10 cent increments and is due for another soon, Imho.
Great interview, I think the cpi moved the market in tandem with the china reopening news to kick off a confirmation of a bull move in commodities to come.
Yeah, I’ve still got a pretty good position in Santacruz Silver, and over the last few years I’ve had a number of trades in it around the core position, but have maintained a very positive green position in for some time. I’m still curious to see how things look after a full year of production in 2023 from all the new mines, mills, and development projects SCZ acquired from Glencore, but I liked the company back when they only had 2 mines, and then eventually ratcheted down to just 1 (prior to the recent acquisition). All things considered, I still believe it is trading a stark discount to the value of all their resources in the ground, sunk costs in operating mines, development infrastructure, and even their own power plants. Over the next year or so, we’ll see if those assets get valued in a bigger way by the market, and what kind of optionality they may have to rising silver/lead/zinc prices.
OCGSF, Outcrop Silver has also outperformed in lock step to Santacruz
Yes. Good point Buzz. I’ve not followed Outcrop Silver that closely, but know a few investors that really love it and piled into it. Some of the Gold Ventures followers on Twitter are also very enthusiastic about the company, and it’s share price performance has fared much better than most Jr silver companies since the summer.
It is interesting to have seen another stealth M&A deal this week, that few are discussing… and once again it is in the royalty space. Maverix is being acquired by Triple Flag.
Maverix had grown into my largest royalty position, even larger than my holding in Sandstorm, but I wanted to see how it would grow over the next 2-3 years and was very bullish on it’s future.
I kept saying that whichever royalty companies scooped up Nomad and Maverix were going to be very well served, but had hoped that those transaction were still years away. I had stated that if Nomad and Maverix were to have merged it would have been epic. Then Sandstorm scooped up Nomad on the the cheap, along with Baselode Royalties from Glencore, and that dream was over. As a Sandstorm shareholder I’m thrilled as the Nomad assets are still underappreciated, but the combined company is a beast.
I mentioned to Brett at Metalla, that they should consider merging with Maverix as it had about the best growth profile out there, but it looks like that prize has now gone to Triple Flag, as they have scooped up Maverix on the cheap. Nomad and Maverix were my 2 highest conviction royalty picks, and now they’re part of larger entities with less potential torque, which is a bit a of a bummer, but the combined companies are quite solid for longer term value appreciation, and both have become the largest mid-tiers, moving into the smaller majors category.
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Triple Flag and Maverix to Combine: Building the Next Senior Precious Metals Streaming and Royalty Company
11-10-2022
https://maverixmetals.com/site/assets/files/5913/mmx_nr_11-10-22.pdf
The royalty & streaming space has been fascinating to me for some time, but all of my positions continue to be acquired.
– I was in Ely Gold for the Nevada growth profile – but then they were acquired by Gold Royalty Corp before they could spread their wings and fly…
– I was in Golden Valley Mines for the gross undervaluation in relation to Abitibi Royalties, which it incubated and spun out, and liked the number of strategic stakes and growing royalty portfolio on other projects — but then it was acquired by Gold Royalty Corp. This finally got the valuation matched up more equitably with Abitibi Royalty, and was a win, but short-changed all the coming growth that would have kicked in as the Malartic Mine got into mining in areas where the royalties would pay off… again, crimping the growth.
– I liked Sailfish for the Tocantinzinho royalty — but then they sold it in parts to Metalla and Franco Nevada, and now G-Mining is building the mine that ElDorado Gold could never seem to get around to. Sailfish had acquired Terraco Gold for their Nevada royalties, so that was another M&A deal.
– I liked Elemental Royalties for their growing cashflowing profile — but then Gold Royalty Corp did the hostile bid to try and take them over and I sold half, and then they merged with Altus Royalty and I sold the other half with that news breaking. I guess I need to take another look at that new combined company, as both were undervalued prior to the merging, but still, it was another M&A deal
– I really loved Nomad – but then, boom, scooped up by Sandstorm with little fanfare really
– I really loved Maverix, and now, boom, it is scooped up Triple Flag. Ironically, I was considering getting a stake going in Triple Flag, and it looks like now my Maverix will convert over to Triple Flag, so mission accomplished, but again, I don’t expect it to have as much torque now, as it would have in a stand alone fashion.
– I’ve still got a position in Metalla and have started a new position in EMX Royalty recently, but now I wonder when they’ll get nabbed as the space is getting consolidated very quickly. I could see either Franco Nevada or Altius Minerals having a go at EMX Royalty, and I’m not sure who the suitor for Metalla could be (Wheaton? Royal Gold? Osisko?). There is also Vox as another junior royalty company that may get scooped up soon (maybe by Gold Royalty Corp?).
Anyway, people like to postulate about M&A, and ask when we’ll see more, and I keep wondering, dang… don’t you guys hold any royalty companies, because there has been a crapload of M&A in this subsector almost every few months.
Ex,
Like you, I have a heavy weighting in the royalty plays, including Maverix. My fear has been that many will be picked off during the lower prices. I would have liked to have seen many standing quite firmly and maturely prior to be taken out at higher pricing.
All the best.
Agreed Canuckski. I was a little disappointed when Ely Gold got picked off by Gold Royalty, but really bummed when Nomad got scooped up on the cheap and now Maverix.
They would have had much more upside torque in a new bull market as junior royalty companies, with good growth profiles, than they will now as part of much larger companies.
Oh well, that is often how M&A deals go…. good assets get taken over during low sentiment and low valuations. Bigger companies like buying low too.
From the combined Maverix and Triple Flag transaction/merger:
The Transaction will combine two complementary portfolios of predominantly gold and silver
streams and royalties, creating a company that will:
• Deliver increased scale and enhanced diversification, with 29 paying assets and 228
assets overall;
• Feature gold and silver assets in good mining jurisdictions: by net asset value (“NAV”),
93% of the portfolio comprises precious metals and 82% is located in the Americas and
Australia;
• Strengthen Triple Flag’s already-robust organic growth pipeline in gold equivalent ounces
I was going to see about getting Maverix on the KER soon, but I guess I’ll work on getting Triple Flag on instead.
Cory better be careful, or a royalty company will scoop you up for your knowledge in this sector and in the producers, developers, and explorers. Maybe Sprott will take you out! LOL! Make me an offer I can’t refuse! Done! DT
Haha! Good one DT! 😆
Well, it was sure nice to see gold and silver close this week at higher levels. (much higher than the targets many technicians and pundits had been throwing out for the PMs as recently as a week or two back). At least for now, it appears the PMs are out of the danger zone.
As we had discussed on here and on the show since last month, it was encouraging to see Silver bottom at $17.40 and then start making a pattern of higher lows in bullish rounded bottom, closing today 25% higher at $21.67. Silver bottoming first was indicative, of it leading the way, as it also topped first compared to gold, and it was nice to see the Silver stocks climbing recently, and then eventually Gold got into the grove and marched higher by about $150.
The PMs may be due for a corrective move after this run, going into next week, especially if we see the dollar and interest rates move higher as headwinds, but still, it’s been quite a jolt higher. This is why people that are waiting on the sidelines to get into position once they see more upside traction, are going to repeatedly miss these big short-squeeze moves in the markets; just like they’ve missed most of the rallies over the last few years by being to bearish near grossly oversold levels, and then being out of position when rallies came. Savvy investors were deploying cash into the weakness while charts were oversold and the sector sentiment was so pour.
GDX, GDXJ, SILJ were only up mildly today in the green (less than a percent), but that is after quite a move since the middle-end of last week to the end of this week, where many mining stocks are up double digits over this time period, and a lot had individual double-digit gains just on one day of trading over the last 6 sessions.
Don’t ya just wish you had “Sold everything” and “gone running to Cash” the middle of last week after the FOMC meeting, like some of the contrarian indicators on here were suggesting was “right”? 😉