Dave Erfle – Mixed Economic Data, Range-bound Precious Metals Prices, And Poor Investor Sentiment Requires Patience And Due Diligence
Dave Erfle, Founder and Editor of The Junior Miner Junky, joins us to review the mixed stew of recent macroeconomic data points, the range-bound precious metals sector, and his technical and fundamental outlook on the markets. We review the reaction in various markets this week to flurry of economic data from company layoffs and hirings slowing contrasted against yet another “better-than—expected” NFP jobs report, the unemployment rate rising, the debt ceiling political theater coming to the expected end, and the probability of all this leading to the Fed doing a more hawkish pause at the next FOMC meeting.
Gold and Silver have further whipsawed in a trading range, and Dave provides support and resistance levels he is watching in the yellow metal, in GDX, and in GDXY. We wrap up by diving down into the junior PM mining stocks, which have continued selling off, even on good news and key milestones. The Junior Mining Junky reiterates why investors need to exercise patience and spend time on resource company due diligence during these time periods, analogous to other sluggish periods before big rallies took the sector higher.
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Nomura Blasts ‘Fiddling’ Fed: Blowing Financial Asset Bubbles Again While Inflation Crushes Low-End Consumers
Friday June 2nd, 2023
“The Fed perversely ‘needed’ a hot NFP print because this cross-asset risk-premium purge / cross-asset price rally is about to become a ‘wealth effect’ problem for them again. But, for now, that warning from Nomura’s Charlie McElligott is falling on FOMO traders’ deaf ears as stocks soar with hawkish rate hike expectations…”
” This all being driven, according to the Nomura strategist, left-tails are turning into right-tails / non-events, so all of that “forced” (over) hedging we have been discussing for the “debt ceiling x-date US govt default / regional banks profitability crisis = credit crunch / hard recession”-calamity scenarios are being unwound, and perversely then acting to propel Assets higher – to the chagrin of risk-bears, recession-doomers and hedgers alike.”
“Risk-premia is violently disappearing, as is most clearly seen in US Equities “Vol of Vol” / with VVIX collapsing from 111.5 to current ~85 level over the past week alone, as a pure expression that “Crash” / Skew is being offered back to the Street from clients unwinding their bleeding hedges (VIX Calls / wingy SPX downside being purged).”
Debt Can Kick Moves Gold Towards the Key $2000 Level
David Erfle – Friday June 2nd, 2023
“After a healthy 7% gold price correction of a $465 move higher since the November low at $1620, bullion is already knocking on the $2000 door again. The sharp move higher in the safe-haven metal this week has been fueled by a debt ceiling deal, along with several Fed governors hinting of a rate hike pause during the upcoming FOMC policy meeting later this month putting pressure on the U.S. dollar.”
“To begin the week, Gold Futures sold down below support at the $1950 region overseas while the COMEX was closed for the U.S. Memorial Day holiday. But since coming within $4 of the all-time high at$2089 in early May, June Futures ended the month down just $17 by the COMEX close on Wednesday.”
“With recent drama over the raising of the debt ceiling coming to a head, the U.S. House of Representatives passed a bill on Wednesday to temporarily suspend the debt limit through December 31, 2024. This came after President Joe Biden and Republican House Speaker Kevin McCarthy agreed to cap some federal spending in order to prevent a default.”
https://mailchi.mp/147666259fe8/david-erfle-weekly-gold-miner-sector-op-ed-1601962
BRICS Is Marching Towards A Unified Currency
By Imran Khalid – Mail & Guardian – May 30, 2023
“Amid the palpable anticipation, and the transformative discussions, we are witnessing the ascent of a momentous topic that promises to redefine global financial dynamics — the inception of a unified Brics currency. The formation of a collective currency is expected to be the most prominent subject of discourse when the leaders of the five emerging nations convene in Johannesburg in August for the Brics summit.”
“Recently, South Africa’s Foreign Minister Naledi Pandor emphasized the potential of a departure from the dominant role of the dollar, highlighting the possibility of empowering other nations. She has aptly recognized the inherent challenges that lie ahead, asserting the need for comprehensive discussions on the matter. ”
https://mg.co.za/thoughtleader/opinion/2023-05-30-brics-is-marching-towards-a-unified-currency/
May Jobs Report Shocks Economists: ‘The Strangest Employment Report For Some Time’
Josh Schafer and Jared Mitovich – Fri, June 2, 2023
“The US labor market continues to surprise. Data from Bureau of Labor Statistics out Friday showed there were 339,000 jobs created in May, topping Wall Street estimates for 195,000. This marked the 14th-straight month that job creation came in above what Wall Street economists had expected and the largest monthly increase since January.”
“The data sent stocks higher on Friday as investors continued to expect a pause in the Federal Reserve’s interest rate hike campaign will be announced later this month.”
“Following this report, many Wall Street economists suggested the uptick in the unemployment rate to 3.7% and the deceleration in hourly wages — which rose 4.3% over last year compared to 4.4% in April — as signs the Federal reserve is beginning to see the “better balance,” Federal Reserve chair Jerome Powell has frequently referenced. Others, however, were shocked by the jobs numbers”
https://finance.yahoo.com/news/may-jobs-report-shocks-economists-the-strangest-employment-report-for-some-time-173324175.html