Jordan Roy-Byrne – More Short-Term Pain Before Longer-Term Gains In The Precious Metal Sector
Jordan Roy-Byrne, Founder and Editor of The Daily Gold, reviews some of the technical support levels he is watching for in gold, silver, and the precious metal mining stocks, as the sector continues to correct. Now that the $1980 support gave way in gold, he is looking to the 150 day moving average, as well as the 20 month and 40 month moving averages as key support levels in gold. As mentioned last week, the picture in silver and in the GDX are a bit more concerning, but he notes that the 200 day moving average in both is now sloping upwards, and thus could offer a good support level to watch on both charts.
With regards to the longer-term bullish setup in the precious metals, it really comes down to getting past the noise of the debt ceiling debate, and the Fed pause rhetoric, to see how quickly the macro data erodes further pointing to a contracting economy and recession in a few months. This will provide the catalyst for the Fed to take action and start cutting rates, which will be a positive factor for gold, silver, and the PM mining stocks. The other factor to watch is whether the general US equities suck in a bunch of new buying to markets higher, which could pressure the PMs, or whether they continue to erode allowing gold and the mining stocks to further diverge.
Wall Street Ends Down As Debt-Ceiling Clouds Hover
By Lewis Krauskopf, Shreyashi Sanyal, and Shristi Achar – Reuters – May 24, 2023
“Wall Street’s main indexes ended lower on Wednesday as talks between the White House and Republican representatives on raising the U.S. debt ceiling dragged on without a deal. The lack of progress on raising the U.S. government’s $31.4 trillion debt limit ahead of a June 1 deadline, with several rounds of inconclusive talks, has made investors edgier as the risk of a catastrophic default looms larger.”
“Federal Reserve policy was also in focus. Stocks held their declines after the release of minutes from the Fed’s May 2-3 meeting, showing that Fed officials ‘generally agreed’ last month that the need for further interest rate increases ‘had become less certain.’ Investors expect the central bank to pause its aggressive rate hiking campaign at its June 13-14 meeting.”
“Elevator Down”: Goldman Desk Trader Warns ‘Our Flow Has Dramatically Changed’
May 24, 2023
“Top-down, things have materially changed for asset allocators in recent weeks with 6-month bills now offering (risk-free-ish) returns higher than the S&P’s earnings yield for the first time since 2001…”
“While short-duration bonds offered an ‘alternative’ for the first time in decades, the S&P 500 has trodden water for two months between 4100 and 4200, amid good, bad, and ugly news increasingly frustrating bulls, bears, and everyone in between…”
In roaming various blogs, other than investors believing that drop in prices is to be blamed on each company, there seems to be a general acceptance of the drop of phony paper prices as a fact of current value as opposed to the phony prices being orchestrated to support a false narrative.
I am sure this gives managed money a warm feeling. It might even result in a wave of hostile take overs when miners are defenseless at these artificial low prices.
Lakedweller2 – great point on the line you penned: “…other than investors believing that drop in prices is to be blamed on each company,”
I was perusing a number of company blogs over on ceo.ca, on youtube, and over on Steve Penny’s site, and it is interesting that when almost the whole sector is correcting, so many with myopic tunnel-vision into just a few of their pet stocks, seem to believe it is isolated to just their holdings. Those same investors then proceed to blame management, blame insiders for not buying to support the shareprice, blame manipulation, blame the deposit, etc…
Look, very few stocks are immune from price declines when low volume selling sweeps across the whole PM sector. It is also normal for the highest torque companies that can run big to the upside, to also fall big to the downside during corrective periods. To play the company blame game (unless there is a legitimate situation of chronic mismanagement) is for investing wimps and whiners, that probably shouldn’t be managing their own money in the first place.
This is where using actual chart data or sentiment data, or scanning back to look at the whole sector is of value, rather than assuming it is only happening in one stock and that it is purely the CEO’s or Directors fault, or that there is something wrong with the project. Also, if the pattern of news releases has been one of value creation, but the price is selling down, then it is actually making for a more compelling risk/reward setup for adding to a position.
If someone has seriously done their due diligence, and picked a company specifically because of the stellar project/management team/risk-reward opportunity, then it seems ridiculous to then attack those very same things just a short while later, just because sector sentiment is low and there is a correction across the board underway.
Rarely do I read those investors on company boards admitting that it was actually their poor decision making (as the actual investor and person responsible for their own success or failure) that was the real issue. They point the blame finger at everyone else, but it was they that chose a poor entry point when a stock was way overbought, or they failed to accumulate that same stock when it was at a far more compelling price and far oversold. Investors should take full responsibility for their very own trading buy/sell decisions. Period.
It’s not easy out there right now. We’ve seen some companies put out stellar drill results, resource updates, and cross key milestones to little or no fanfare. We were laughing with with a few company management teams on calls over the last few weeks when they put out some fantastic drill holes that their whole team was stoked over, and then the market sold them off by 3%-5% for creating a liquidity event. Eventually, when sentiment and momentum shift in the PMs, it will be the reverse of that, where even not so great news gets bid up higher, but until then, we just need to power through this corrective consolidation leg, and look for spots to accumulate weakness. Cheers!
This too will pass. However, they are getting carried away with the fear covering up fraud.
Note: I am all in favor of irrational up markets with unjustifiable gains.
(IAU) (IAUX) i-80 Gold set to join Russell 3000® and Russell Microcap® Indexes
24 May 2023
While gleaning through the ceo I 80 comment……
I say this….
FTSE Russell is wholly owned by London Stock Exchange Group.
Just interesting ….. 🙂
OOTB – Thanks for the heads up there on the Russell is owned by the LSE. I didn’t realize that either.
Entire system is one big CON JOB…. just have to figure out the players…
RSI Emo: 22. The AI does not know how to deal with the greed of humans.
Yes Gold doe’s protect Your wealth … Back in 1976 , My Wife & I bought 25 Soverigns , for £65 each. Now the same Soverign in the UK today costs between £350 – £400.
It is a long term game….. Irish, you are spot on…..
And I thought you were just into Silver…. 🙂
TUT_TUT , Jerry , You should know , that you never put all your eggs in one basket . But i prefere silver to gold.
When did you sell them?
Hi Brumple . Never sold them , will pass them on to my Children
A friend spent 32+ years working for one of the auto companies here. About ten years in, he noticed how many of his co-workers were working crazy hours to get promoted. He decided that wasn’t worth the toll on one’s health, and looked into investing. Rode the wave in gold from 1974 to 1980, helping to build his retirement savings. He has a position in gold now.
I built positions on miners and paper gold when it was about $350/oz. Still have them. Currently awaiting shipment of a few Krugerrands, my first venture into physical gold. Also have a small stash
of pre-1965 silver dimes and quarters.
Jekyll Island Author Declares Revolution
For those that think the “cabal” can be overthrown G. Edward Griffin says there is some hope.
Have to get to the HEART of the Beast…… clipping their wings will do ZERO…..
Family affair…..for generations…. everyone should already know that one….
There is always hope,… but, a lot of work required, …a lot of work has been
done here, to wake up the sheeple…. Pretending the FAKE FED is anything
more than part of the cabal,…. is stupidity.
HUI day…normal bounce area is area 238.5 the .618 retracement……then if that fails ,likely…expect the bottom of breakout bar to be hit…https://tos.mx/QWMRREH
Santacruz remains halted in Canada while the OTC continues to drop. The blogs have no insight and the only thing the company has said is they need more information from Glencore to complete financials. Based on really nothing to go on, I have added a few more at .179 US, but if anyone knows more >>>
One person was trying to put it on Bolivia, but it appears it has been considered pro mining lately. Crescat even went to the point of buying their own Silvermine. There was a fat finger algo trade that evidently blew all the stops, but that would just be criminal activity and that appears to be acceptable to regulators.
Same story…different Rigger!
The fact that BlackRock is now a huge holder of the PSLV Silver ETF has confirmed that they are loading up on physical silver.
It also proves that they are the NEW Massive Silver Short in the “Managed Money” category on the COMEX derivative market.
It’s the SAME game that JP Morgan played from 2008 to 2016…Short the COMEX Silver price and take delivery of Physical Silver!
RIG ALERT! BlackRock Tries Rigging Silver Below “Moving Averages” to LOAD UP ON PHYSICAL! (Bix Weir)
I figured out an immediate solution to extending the “Debt Ceiling” so we can move on to future budget issues:
Before Default, The Federal Government can publish a list of priority payments of pending debts upon default, and put “corporation debts” last to be paid.
You want to see miners turn around quick?
Is it legally possible to prioritize debt payments?
I am not sure if it is legal or not, but if you have insufficient funds to pay debts, some will be paid before others just by default. My expectation, because of Fed and Wall Street being inseparable from the US Treasury, they may be thinking they can control the printing press. I would think the President could issue an Executive Order and Comgress or the Supremes would have to override. Congress could never arrive at a decision based on who owns them and the Supremes should not be allowed to micro manage budgets. In the meantime, pay bills through the Treasury as the Executive Order dictates. It is the Executive Branch’s job to request, spend and audit funds approved by Congress. Funds may be earmarked for a specific program, but I doubt anyone has a list of priorities for payment. The President might even have Emergency Powers authority that would allow him to do it.
It may come as a shock to Central Banking, but human life may have a priority over Corporate profits.
I guess you could put the “USA USA” in bankruptcy and force it into Bankruptcy Court (which is no longer funded) by Congress (who are no longer paid) and have a Federal Judge (Retired One that still draws partial retirement….maybe) and decide fair and equitable percentages of available funds and if he needs a job with JP Morgan, they may get a priority payment for their corrupt services that got us into this mess.
For a worst-case scenario for Silver (maybe a 50% probability?)
Looking at the Daily Silver Chart (Spot), I am perceiving a bull flag pattern emerging that would see Silver bottom around $US 21.00-ish (mid-June). This would be about a 20% drop from prior high (26.10-ish). This is based on an ANALOG bull flag pattern from 3Feb to 10Mar which saw Silver drop about a 20% from prior high.
This scenario might fit the tracement back to the bottom rail of a pitchfork; the MACD and RSI patterns may also be similar within this projected trend
Jamie Dimon Warns Of 7% Fed Rate, Banking Crisis, Bleak Commercial Real Estate
Tue, May 23, 2023
“The U.S. banking crisis, which has claimed a few victims since March, is the direct result of the Fed’s fight against high Inflation. Uncertainty about the health of regional banks and rising yields in the money market led to a steady outflow of deposits, bringing banks’ balance sheets to their knees.”
“We’ve never had QT before. It just started, okay? And you see huge distortions in the marketplace already. We’ve never had the Fed in the market like this with that RRP program that Jeremy mentioned ever. They have $2.3 trillion basically lent out to money funds. And I don’t know the full effect of that. And obviously, that’s a direct deduction from deposits are rolling out it made sense to do.”
According to Dimon, the current situation will inevitably lead to banks raising the bar for lending. Especially in the commercial real estate sector, things are looking increasingly bleak. That’s because, according to Goldman Sachs) economists, 80 percent of those loans are made by regional banks. That is, from those institutions that have suffered the most from the monetary policy of the Fed and the outflow of capital. As CNN reported, Dimon said:
“You’re already seeing credit tighten up because the easiest way for a bank to retain capital is not to make the next loan,”