Jordan Roy-Byrne – There Is Just No Bearish Case For A Major Leg Lower In Gold Right Now
Jordan Roy-Byrne, Founder and Editor of The Daily Gold, joins us to discuss both the fundamental and technical factors that demonstrate gold, silver, and the PM mining stocks have clearly bottomed and are in a new uptrend. We start off discussing the continued recent move higher in gold and mining stocks, and where short-term resistance may come in for the metals, GDX, and GDXJ.
While we may see a mild corrective move to digest these recent gains, Jordan feels those people still expecting a final wash out to new lows in the metals or miners are ignoring tons of obvious data, and that there is not a bearish case to be made for the precious metals right now. He provides the technical, fundamental, and inter-market analysis rationale for his conviction that we are starting a very bullish period and likely a new secular bull market in the PMs in real terms.
Click here to visit Jordan’s site and keep up to date on his market outlooks.
Gold is Outperforming Everything
Jordan Roy-Byrne CMT, MFTA – The Daily Gold – December 30, 2022
“Gold’s performance in real terms is important for two reasons. First and foremost, it tends to be a leading indicator of the Gold price. That is instructive when Gold is rebounding but has yet to gain real traction or momentum. Secondly, when Gold strengthens in real terms, it indicates mining margins are likely to strengthen. ”
“In the chart below, I plot Gold against the various asset classes and foreign currencies at the bottom.”
Gold Is Continuing The Rally It Began In Early November, Yet It Seems Few Gold Bugs Are Recognizing What’s Going On.
Brien Lundin – Golden Opportunities – January 4, 2023
“As I noted last month and many times over the years, gold tends to bottom around mid-December and, while most investors are distracted by the holidays, it begins a rally that continues well into the next year. This time has gone largely according to script, except for the fact that gold actually began moving higher in early November. ”
“But what’s really amazing is that few of the avid metals and mining investors seem to be aware of what’s been going on. Part of this is due to the fact that the mining stocks, from the majors down to the juniors, have not been responding to gold’s rally. That may be changing today, as there’s a lot of green on my screen right now, and the major gold-stock indices are all up over 4%.”
Still, as I noted on Twitter this morning…
“One of the more interesting truisms of investing is that a market is often loved least by those who know it best. Thus, you’ll find few in junior mining who recognize that we’re in the midst of a major metals rally.”
It’s nice to see 2 back-to-back days where the Precious Metals sector has been solidly in the green to kick off 2023.
We commented yesterday that most gold and silver stocks were up to kick off the year, and now it has been followed with another profitable day in the PM sector. Really this is just a continuation of the move we’ve seen the last four months in Silver, and the mining stocks, and for the last 2 months in Gold.
GDX closed up 4.25%
GDXJ closed up 4.83%
GOEX closed up 5.03%
SIL closed up 4.09%
SILJ closed up 4.77%
“That beats a sharp stick in the eye…”
I remember 1987. These times rhyme.
Palladium back to its tertiary role?
With Platinum back on the rise
prices may cross this year!
Rivalry between Sea-based (Lea) and Land-based (Mackinder) geopolitics may be driving events. Increased tracking (and acquisition) of floating targets, made available through better technology, is equalizing the two. No longer are structures on land the only ‘sitting ducks’.
This is a funny graphic showing investor psychology and their interest growing only once prices have moved higher. It’s demonstrating the point with Oil at $70 versus Oil at $120, but the same point could have been made with Silver at $17.40 versus $24.40 or Gold at $1620 versus $1860.
The madness of crowds is endlessly entertaining and psychologically fascinating.
Many juniors haven’t hardly moved yet. Keep an eye on Defiance Silver. Should DNCVF blast higher during next 3 weeks, I’ll feel a lot more comfortable about being back in the saddle.
DEF had one heck of a blast higher today and was up almost 26%. Defiance Silver was my top portfolio mover today, so I’d say that was a pretty good leverage for a junior.
Among GDX, GDXJ, GOEX, SIL, and SILJ, only SILJ has failed to take out its December high but will almost certainly do so tomorrow.
Relative to dollars and silver itself SILJ is again a strong buy.
I bought SILJ on last week’s pullback as well as yesterday’s pullback from its morning high.
The bearish case would likely be that the central banks which raised rates (primarily the fed) don’t cut interest rates as soon as expected and inflation slowly goes down, which means the higher short term yields become higher and higher in *real* terms. Gold sells off as real returns on short term government bonds become just more attractive.
That may be more of a later in the year consideration though. But if January 12th CPI announcement comes in softer you could actually see gold sell off on increased real rates. It probably won’t, but *if* gold starting to respond poorly to CPI coming down, that would be the kind of thing I’d watch for. Growingly attractive short term *real* rates as an alternative safe haven might turn out to be a bearish factor for precious metals.
DL – Good post on the potential bearish case for the PMs. There is always the potential of both the bull and bear case in all markets, and it is helpful to consider things from both vantage points.
I went with Jordan’s proclamation that “there is no bear case for gold” in the title of this editorial because he was so passionate about that particular answer and in laying out all the constructive data points stacking up for a continued growing secular bull market in the PMs.
However, we’ve seen Mr Market throw many investors a loop and blindside expectations in all sectors over and over again. It is normally the times when folks are so convinced things can only resolve in one way, that they end up not playing out that way.
Personally, I think the probabilities are that Jordan is correct and that we have seen in the lows in both Gold at $1618 in early November, and Silver at $17.40 in September, but nothing is carved in stone or bulletproof.
We’ll be airing a segment with Doc Postma on the weekend show this Saturday where he lays out the potential bear case for PMs in the medium term, to provide a different outlook on things.
If people recall, Jordan was actually moderately bearish on the PM sector in 2021 and much of 2022, and has only become more bullish on the sector in the later half of last year, so it was just nice to hear his enthusiasm in this interview for the sector so many of us have long exposure to.
Jordan’s right, there is no bear case. We’ve just been through a paradigm shift that has caused most people to overestimate the importance of Fed hikes as they relate to gold. Old misconceptions die hard especially when the old “coincidence vs causation” problem makes an appearance.
Silver gained 27% following the 75 bps hike on September 21st even though there was another 75 bps hike in November and a 50 bps hike in December. If hikes are bad for gold they should be worse for silver.
GDX gained 33% since Sept. 21st.
Could “most people” include managed money algos that are programmed to reflect “traditional” ways of thinking. If so, I would think that might explain the disconnect of some miners and physical.
I enjoyed the interview and largely see any bearish disapointment as a possibility just to keep tabs on only.
Fortunately the levels are really clear. GDX under 27.50? GDXJ under 36? Gold under 1785? DXY over 106? Basically if the dollar rallies and gold and gold miners go back under the 2021 price range, I don’t want to be long. If that doesn’t happen and prices hold, I want to be long. It’s good to buy failed break downs (which has happened) but failed break outs can be horrific, so keep tabs on whether or not we are above or below all that price action from 2020-2021 and what the dollar does from here.
One thing Jordan Roy-Byrne mentioned in the interview was covered by his previous work. The actual interest rate cuts are when the big moves happen. I like that we are possibly front running those and those will be catalysts for further upside, but it’s always possible to be too early. That he correctly identified over the past year that the thing to wait for is the *actual* cut. His charts on that are fantastic.
+1 Thanks for those additional comments DL.
The stock market is going to collapse versus the gold/silver miners.
Brixton Metals came out today with a news release at 7:30 am. I will post the link but quite often my post goes into moderation when I combine the link, and then I must send e-mails.
“Brixton Metals Drills 709m of 0.34% Cu Eq including 362m of 0.44% Cu Eq including 102.15m of 0.61% Cu Eq at its Camp Creek porphyry target, Thorn project. This is a step-out hole of over 400m. It sure looks like a big discovery. As usual it is sell the news. DT
Hey DT…..Matthew and I discussed the results yesterday elsewhere….I don’t want to speak for Matthew and make assumptions but I felt we both had the same feelings about the results despite what appeared a different opinion. The intercepts didn’t have the wow factor that gets the momo crowd jumping in but the overall theory and thesis is proving out as they step out wider….. and more news in 2023 will keep things moving forward
I’m very thankful to have arrived back in Australia over Christmas and gained access to all kinds of useful media which was unavailable in China. Feel very badly for Chinese people who are restricted from being better informed.
I wonder how many gold bears realize that gold finished 2022 FLAT despite 7 rate hikes of .25%, .50%, .75%, .75%, .75%, .75% and .50%. Conventional stocks on the other hand were decimated and it’s not over.
Agreed Matthew. Also Silver finished 2022 higher than it finished 2021 and was actually in the green on the year.
All things considered, the monetary precious metals held their own last year in the face of one of the most aggressive rate hiking cycles we’ve seen in decades, while most other sectors of the general equities, bonds, and the cryptoverse crapped the bed.
Gold and Silver preserved wealth over the last chaotic year, where most sectors destroyed wealth, so once again the PMs did their job in one’s portfolio of assets.
Markets to Fall Into Blind Panic- John Rubino
Talk about wow drill results.
That is impressive for Magna Mining. We’ll have to get them back on the show for an update soon.
The 30 day bollinger bands need to tighten up across the metals sector.
I think silver will find support at the rising 30 day moving average and could spend a week or two bouncing around that average. That should give enough time for the bands to narrow in and provide the energy for another leg higher.
Added to FSM @ $3.40
If I’m going to crap on impact when it doesn’t move up with other silvers and the price of silver I have to give credit when it shows resilience on a day silver is down.
Guess I should have waited for the close…🙄
It is the thought that counts and you can now hold those thoughts about Impact for another day. On the positive side, Magna is hanging on to the “green” but it is still early as the last 5 mins before close is before us. 🙂
Magna’s day today. Let’s see if they can hold it with today’s sector blitz. Great drill results … I added but it wasn’t easy.
Maybe important also is that “sell the news” was not effective on depressing the Magna price. Also, there may be a slight squeeze going on as there was some increased short activity in the explorers before today’s activity.
Hi Lakedweller2. I spoke with Erik (the Hedgeless Horseman) today about Magna, in addition to a few other mining stocks catching his eyes — actually we had 2 different conversations today, and we had a few challenges while recording, so I’ll be editing that this evening and releasing that interview tomorrow. Stay tuned!
Looking forward to it. We will see what happens tomorrow, but with the hit on everything but Magna and Fireweed today, Magna has moved to my biggest % gainer in total. … Maybe tomorrow all the rest will shine!
Thanks for the notice that the Horse is in the building. 🙂
I sold Brixton on the news. There’s still a Bull case there but I look for very specific results out of the drill bit that maybe 1/1000 miners hit. This way I can HODL and not necessarily worry about the volatility in the price. I’ll keep an eye on it to see how further drill results look.
Feel free to enlighten us when you find that 1/1000 play
Big pop in Fosterville South.
Minimal volume (now) above .35 — DYOD.
I’ve gotta say, this interview above was the most animated I’ve ever heard Jordan when he responds to the question about some analysts still expecting another wave lower in the precious metals and mining stocks. He really lays out a ton of reasons why he feels the bottom is in for the PMs using technical analysis, inter-market analysis, and fundament analysis.
Very much worth the listen for those still hanging out on the sidelines in cash, because if we do see a mild pullback in the sector, it sounds like it will be of the bull market variety (shorter in duration and depth than many still waiting to deploy capital are hoping for).