A Wait And See For Gold And Higher Levels For US Markets
Rick shares a recent gold trade where his subscribers got long but quickly got stopped out on. This now leads Rick to think there are still too many bulls and the market could benefit from a quick pullback. As for the S&P it is reaching close to a potential stopping point but if it can breakthrough watch out for new all time highs.
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GDX:GLD found some support at the KAMA today…
Weak action in the miners. Facing some resistance now at the 100 WMA. I have my doubts if they will even be able to clear that MA with authority. In any event, you still have the black candle on the $HUI daily chart, which taints this entire rally, even if they do manage to continue rallying over the next 8 weeks.
Absolutely no catalyst whatsoever. 2016 was nothing but a dead cat bounce after a monumentally oversold sector. While that could represent a major low, I think there is a very good chance that low is revisited in the next 12 months.
If you take a look at the GDX:GLD chart above, it should be clear why the miners look weak. They became overbought versus gold just as gold began to turn up from its decline versus the dollar so this action is neither significant nor bearish.
Your negative reading of the situation is shared by many and is no surprise.
My negative sentiment is not shared by many, though. No one gives a crap about this sector, long or short, since there hasn’t been a break out or break down yet. But I am guessing a break down is coming. Maybe gold manages to tag its 100 WMA, but that will be the end of it.
It’s just an ugly sector with absolutely zero catalysts. If anything, the miners and gold are wildly overvalued relative to the rest of the commodity complex.
Take a look at the GDX:GLD weekly Ichimoku cloud. It will be weak into October and that’s the best case scenario. More likely, it just breaks down completely here.
Mining News Digest
Tuesday 10 July 2018
Copper, nickel, zinc prices – plenty upside just to revert to mean
Even after two years of gains, industrial metals trade well below 10-year mean prices.
Silver looks cheap, but gold, crude may be fully priced already.
GCC getting hammered. This could be 4 weeks in a row closing below the lower BB on the weekly chart. While it is due for some sort of deadcat bounce, that is not bullish whatsoever. Lots of selling. no catalyst whatsoever. US stocks to head even higher relative to commodities. Opportunity cost.
AMZN about to break out.
Gary Savage sold his mining position and now expects an undercut low. I completely concur with him. $hui will be making a lower low, likely very soon. However, I think there is a real danger the mining stock get absolutely destroyed on this next leg down.
Track record of G-Man isn’t all that spectacular. He is full of adrenaline and bets on 3X etf’s. Was telling, “Every long position will be saved in bull run” I stopped following him. He’s good at cycle analysis but I don’t think that tool is all that reliable.
Actually his trades in the sector over the last 2 years have been near perfect.
I’m using a 156.96 target in HUI as a minimum downside objective, Spanky, but if this ‘Hidden Pivot’ support doesn’t hold, the downtrend could continue to as low as 133.37.
Gold and silver are money.
All central bank currencies are debtI’m buying lows in silver and platinum.
That’s fine. But if you are buying gold and silver as a speculator, you are about 10-20 years too early.
Buying gold now makes you 15-20 years late. Gold is up 5x since 2001 while the Dow is up a little more than 2x.
And let us not forget that since January 1972 gold is up 28x while the U.S. stock market is up 97x.
And if anything 1972 is the least arbitrary point to start the comparison as that is basically when Nixon closed the gold window. Gold has been an absolutely terrible “investment.” Savings vehicle–fine, but as a speculative investment, those numbers speak for themselves.
No Paul, let us not forget that there is a time to be in stocks and a time to be in gold.
Gold went up 25x in the 1970s while gold went nowhere. In the 1980s and 1990s, stocks went up 12x while gold went nowhere.
Correction: stocks went nowhere in the 1970s
No Matthew. In the 1980’s and 1990’s gold did not go nowhere. Gold went down 50%.
Whatever you say, Paul. There’s still no denying that there’s a time for each. Have you ever looked at a long term Dow-Gold chart? Gold absolutely CRUSHED the Dow in the 1970s and has smoked it since 2001 despite the action in each since 2011.
Btw, I erred in the stock market’s favor as well when I said that it went nowhere in the 1970s. The Dow actually fell from 1025 in 1973 to 577 and had another large decline just a couple years later.
The best reason to compare the stock market to gold is to see through the central bank’s sorcery. Contrary to what you’re led to believe through the effects of the Fed’s funny money, stocks do perform horribly for extended periods.
No Matthew, it is not whatever I say. It is the truth. And no the DOW did not lose 50% in the 1970’s as you are making it sound. The DOW on January 2, 1970 was 809.20 and on December 31,1979 it was 838.74. And when you include dividends, something that you do not get from gold, you actually made some money in the stocks during the 1970’s.
Have you ever looked at a long term Dow-Gold chart? Stocks absolutely CRUSHED Gold in the 1980’s and 1990’s and has smoked gold since 2011.
Thanks paul. You are correct in everything you have said here.
Paul, you just refuse to get the point. Stocks were a horrible place to be in the 1970s and gold was a horrible place to be in the 1980s and 1990s.
Considering the risks and real world returns, gold did better than you think. It is very unlikely that those who held stocks in the 1970s ended where they started. Most people don’t set out to match the Dow or any other index, the seek to beat the market. In doing so, they end up with plenty of bad holdings to go with there poor attempts at timing their trades. How many Dow-tracking mutual funds were there in the 1970s anyway?
Gold has very few of the risks that stocks do and most do not attempt to trade it once they have it.
In addition, the Dow’s components are always changing so its performance is misleading.
It’s silly to compare the two assets anyway. Gold is just money while stocks are investments. Why don’t we compare a gold stocks bull market to a Dow bull market?
One more thing, Paul. The Dow did far worse that you think in the 1970s because price inflation was soaring. Dow 800 in 1980 was worth FAR less than Dow 800 in 1970. For gold during the ’80 and ’90s, it was the reverse. That was a period of disinflation so gold’s performance wasn’t quite as bad as it appeared.
Still, my point remains that there is a time for one and a time for the other. That’s crystal clear. The blind devotion to stocks alone is not good for your financial health.
Just ask JMiller 😉
Matthew.
Please explain your comment that you made about me so I do not get the wrong idea.
JMiller, just teasing you since you decided to chime in with a meaningless comment.
Did Paul refute my point? No. But you can’t see that, can you?
Matthew says “Did Paul refute my point?”. How could he since you just posted it only about a hour ago. And since you brought up inflation, do not forget that gold also did not do as good as you think in the 1970’s. And gold even lost way more that 50% in the 1980’s and 1990’s when you factor in inflation. The average annual inflation rate in the 1980’s was almost 6% and in the 1990’s it was 3%. So gold lost something like 86% of it’s purchasing power.
JMiller, my point was made yesterday and it is beyond absurd to say that gold lost 86% of its purchasing power. Wow.
As for the 1970s, we know that the Dow crashed in real terms (and almost 50% nominally in ’73-’74) while gold went up many times no matter how you measure it. 25x makes up for a lot of inflation!
Matthew it is not absurd, it is a fact that gold lost about 86% of it’s purchasing power from 1980 to 2000. It lost over 50% just in normal terms. When you adjust the price of gold to inflation it comes out to about an 86% loss during those 20 years.
The median sales price of a home in the U.S. in 1970 was equivalent to 674 ounces of gold. Today, it is about 250 ounces. So gold’s purchasing power has gone up more than 2.5x by this measure.
Over the long term, no other asset is as safe OR as stable as gold. Most people miss this fact because they focus on price rather than purchasing power and don’t understand that the gold price says more about the dollar than it does about gold.
Thanks JMiller for “pinch hitting” for me while I was away. You hit Mattew’s pitches out of the park. And your one comment was not meaningless as Matthew stated. He is just being an ass.
Now for a complete picture of the purchasing power of gold versus stocks let’s use Matthew’s example of home sales prices. The median sales price of a home in the U.S. back in January of 1972 was $26,200 or the equivalent to 595 ounces ($44/oz.) of gold back then. Today, the median sales price of a home is $328,000 or about 262 ounces of gold. So gold’s purchasing power has gone up by a little more than 2x by this measure (741,434 divided by 328,000). Meanwhile the purchasing power of stocks since 1972 has gone up almost 8x (2,553,039 divided by 328,000).
you never want to be negative on gold. even though it has been miserable.
it seems as if the djia can rally 1,000 points easily from here….but that it when it typically gets sold off pretty good.
I feel generally bullish the djia…so expect a 1,000 decline.
Nah, it’s up up and away from here into year end. Just buy the dip. Zero risk.
“zero risk” – What a ridiculous comment, there are no 0 risk investments in equities.
Only a deposit product at a bank, or an annuity, or a permanent life insurance product with guaranteed returns have “Zero risk”, but that isn’t entirely true either as the bank or insurance company could still fail.
There are no zero risk investments.
AMZN is safer than a deposit product at a bank.
Spanky – that comment is just plain:
https://78.media.tumblr.com/tumblr_m1o63n4SLp1r7oljbo1_500.gif
Debt has not been a problem for a long long time. The issuance of new debt seems to not matter. All those worried about a debt collapse have been wrong. So I don’t think we should stay up late at night worrying about it. 300%, 400%, 500% of world GDP….seems as if there is no limit.
The amount of debt held in the world rose by the largest margin in two years during the first quarter of 2018, growing by $8 trillion during the first three months of the year, the Institute of International Finance reported Tuesday.
Global debt has now risen to more than $247 trillion, which is 318% of the world’s gross domestic product. Additionally, IIF found that global debt has risen by $30 trillion since just the fourth quarter of 2016.
“The pace is indeed a cause for concern,” IIF’s Executive Managing Director Hung Tran told Yahoo Finance during a call with reporters. “The problem with the pace and speed is if you borrow or if you lend very quickly … the quality of the credit tends to suffer.”
I disagree about debt…..It is causing problems. Interest rates have been kept low in order to service interest payments.
That ONLY works as long as Central Banks collude.
Failure of multi-bank sequential printing of currencies WILL result in distortions and ultimately devaluations.
VANCOUVER, British Columbia, July 10, 2018 (GLOBE NEWSWIRE) — Novo Resources Corp. (“Novo” or the “Company”) (TSX-V:NVO) (OTCQX:NSRPF) is pleased to announce that Ngarluma Aboriginal Corporation (“NAC”) has now signed a heritage agreement that includes 37 exploration license applications covering 6,645.4 square kilometers in the West Pilbara region of Western Australia (please refer to Figure 1 below). The heritage agreement sets out the protocols under which heritage surveys are conducted.
In addition, the execution of this agreement facilitates the process of granting the exploration license applications without undue delay. Applications can often take up to 12 months whilst heritage agreements are negotiated.
Novo’s overall tenement position covers five Aboriginal claim groups within the greater Karratha area. It is Novo’s intention to complete claim-wide agreements with each of the other four groups within the near future.
Silvercrest drills 1.5 m of 10,629 g/t AgEq at Chispas
Silvercrest Metals Inc. has released further phase 3 drill results for the Las Chispas property located in Sonora, Mexico. Stepout drilling of the Babicanora footwall (FW) vein has intersected additional high-grade mineralization. The Babicanora FW vein is subparallel to the Babicanora vein. This vein is approximately 30 metres north of the Babicanora vein in the northwestern part of the area and appears to intersect the Babicanora vein near Area 51.
Thats a heckofa hit.
Wonder if the Drug guys read the news releases.
That is incredibly high grade, albeit a narrow width intercept from Silvercrest. They have a good exploration team.
I read an article a few years ago, the author predicted the markets will go ballistic,parabolic, beyond imagination high.
The downside is the currency would have little value.
Guess thats what happened in Weimar.
People have been saying precious metals will go parabolic soon, since before Reagan was elected.
They will probably be right sometime, maybe.
I suspect the US will be on its way to third world status before that happens, though.
(That does not mean precious metals will not become more valuable relative to many fiat currencies.)
That last sentence was well stated CFS:
(That does not mean precious metals will not become more valuable relative to many fiat currencies.) That is really it.
For example, many of the Canadian and Aussie miners are selling against falling local currencies (helps labor cost) and rising local Gold/Silver prices (helps revenues). That is important to consider when picking jurisdictions, and not to get US dollar based Gold/Silver price tunnelvision.
No way silver bottomed last week with the CoTs looking so ugly. Maybe it has a week or two more to rally, but silver is headed much much lower.
EXK beginning its breakdown today. No way it clears the downsloping100 WMA. EXK and the whole mining complex is going much lower in the next 12 months. The silver miners will almost surely test or break below the 2016 low. That will be the time to buy. Not now, with all of the major long term MAs rolling over.
Below is a link to a Ron Rosen analysis on Bob Moriarty’s site. He is predicting a move back to the low $1,100s by the end of summer early fall which seems plausible and would bring about the pain Rick spoke of. My guess is the miners in that scenario would not be spared, but might not be as painful given their relative under valuation.
Here is the link that goes with the above comment.
As soon as the yen breaks down, the stock market will soar and commodities will tank. There is absolutely zero reason to think the Fed will stop raising rates or reverse policy. Raising rates at this point is causing capital to be sucked into US denominated assets.
Major breakdown in the yen ($XJY) on the weekly chart. multiple H&S patterns in play now. We’ve broken the neckline on the first one and the target is 85. After that, the gigantic h&S formed from 2015 projects down to about 60! Commodities, gold, silver and the miners are going to have a second leg down (first one was 2014-2015). Conversely, when the yen breaks down, the Dow and Nasdaq are going to head to the moon.
UUP set up to explode upwards on the daily chart.
Any day now we are going to get a major major break down in yen. When that happens, expect an absolutely monumental, sustained flush in the metals and miners.
I think it could go down some, but I also think the precious metals could decouple from the yen and fiat currencies in general. To me we are in very uncharted territory. A ship without a rudder heading into a water spout and tidal wave combined. In this environment I think we will see things that we haven’t seen before including changes in correlations that have been in affect for a really long time. The market will likely show it’s non-linear side in this environment.
No sense in betting on a correlation that has been in play for 30 years now to all of a sudden reverse course.
After the monumental fall from 2014, yen and commodities needed time to consolidate the massive decline. With the 50 WMA finally getting close to the 200 WMA in GCC (unweighted commodities), I would say the time for the next major leg down is due. This next leg down will completely discredit the last remaining hard money proponents and put a steak through the their hearts. The irony is, whenever the next major low is struck, it probably will mark the ultimate low for commodities.
The 200 WMA for GDX is still declining. There is way way more risk to the downside here. I’ll say this is classic bottoming behavior, but it usually means at least of retest of multiyear lows.
Buy commodities and gold and silver miners next summer at new lows.
What commodities will be at new lows next Summer?
Zinc, Lead, Copper, Nickel, Cobalt, Lithium, Oil have all been surging the last 2 years, so people have missed out if they haven’t had fishing poles in those ponds the last few years.
Do you think Uranium will be going to new lows below the double bottom at $18 put in 2017?
Will Potash crash even lower than it already has over the last few years, instead of building a base and moving back up?
Do you really believe Gold will be below $1045.40 next Summer, and Silver will be below $13 in a year?
Do you expect all commodites to suddenly crash to new lows below where they were in 2016 over the next year? Why?
Are you attributing the prices of the worlds raw materials on longer term index charts of all the commodities lumped together?
Is this all based on your views of where the Yen will be trading next summer?
Please tell us what spanky’s crystal ball has in store for all the commodities a year out.
The Base Metal Boom: The Start of a New Bull Market?
Nicholas Lepan – July 10, 2018 – The Visual Capitalist
Look champ, if you want to speculate in individual commodities, have at it. But I assure you, the general trend of the whole complex will eventually weigh on any given commodity in time. You can run, but you can’t hide.
I personally think we will break below the 2016 low in time. The CRB is probably heading back to pre-1972 levels.
spanky – I’d agree that in general that commodity complex can surge or pull back collectively due to currency fluctuations and macro-economic set ups, but nobody trades or invests in commodity indexes.
Future traders, options traders, and resource stock traders go at things one commodity or company at a time. People either trade Oil or Coffee or Soybeans or Gold futures, or Gold/Silver/Platinum options on ETFs, or people trade a particular Copper or Uranium or Lithium or Zinc stock or mining stock ETFs.
This isn’t a radical concept. Investors trade each commodity, ETF, or stocks individually.
Trump Tariff List Targets High-Tech Minerals That U.S. Needs
Bloomberg News – July 10, 2018
“Among them are rare-earths, an esoteric collection of minerals with strange names (yttrium, praseodymium), high-tech applications and a history of scarcity. They’re used in everything from hybrid vehicles to electronic gadgets and military hardware.”
Imposing duties will “bring home to the American public the reality of how much of what they use in everyday life contains these technology metals,” Jack Lifton, the Michigan-based founder of rare earth consulting service Technology Metals Research LLC, said by phone. “The Chinese mine the rare-earths, they separate them, they refine them. This is the long-term trend and a 10 percent tariff will not do anything to stir any domestic production in the U.S.”
“In December of last year, President Trump signed an executive order to reduce the country’s dependence on external supplies of what the government called critical minerals — including rare-earths, cobalt and lithium. That was aimed at reducing U.S. vulnerability to supply disruptions by identifying new sources, and streamlining regulations to “expedite production, reprocessing and recycling of minerals,” according to a White House statement.”
Great Copper:Silver chart from a technician at ceo:
____________________________________________________________
@Ty _ “$COPPER: $SILVER This ratio´s resistance confluence may indicate relative outperformance of silver in the months ahead.”
http://cdn.ceo.ca/1dkbg4m-Screen%20Shot%202018-07-11%20at%2010.25.47.png
Time to fill that gap! Personally I believe Copper will decline and Silver will remain relatively flat to fill that gap.
Short term, silver might fall more than copper…
I should have said that it might fall relative to copper.
Good chart. Thanks. Looks like there is a bit of an air pocket there.
Longer term, I bet you’ll agree that silver looks much more appealing than copper…
http://schrts.co/aoNwKj
Yes indeed. I took partial profits in my NSU given the copper chart. I expect it might go down to backtest the top of its base before the next move up. I was expecting a few more breaks of sunlight in the miners than what has occurred so I plan to take some opportunistic profits and build some more cash in the short term. All in all, I’ve been very patient and selective with much purchases in the silver miners so I don’t plan to lighten up on any of those.
I do agree. I took some partial profits yesterday on my NSU shares because I did not like the look of the copper chart and think it might go back down and back test its breakout point.
New 52 week low for GCC.
Look at that raging inflation. I’m sure the Fed is panicking.
$indu:GCC about to break out to new multiyear highs. Wow. Weekly MACD is pointed straight up.
Look at the *real* purchasing power of US stocks. Absolutely amazing. Crushing everything with absolutely no end in sight.
US stocks up almost 500% vs commodities in the last 7 years.
Never ever fight the Fed. Keep calling for a top please. Some day within the next 10-20 years you might actually be right. You know what they say, “Even a Mayan clock is correct twice every 100 years.”
Trump, The Awans, Little Debbie & A Navy SEAL Hero
The spotlight of this Operation Freedom Briefing focusses on the security breech of Congressional Democrats by the Awans and putting YOUR security in jeopardy.
https://www.youtube.com/watch?v=EwwsRNmuHKE&t=131s