Hour 1 – Making Sense Of The Washout In Precious Metals Stocks
It was another crazy week and a historically bad week for the metals investors. Fear abounds but the close on Friday is very concerning. US markets finished strong but gold and gold stocks sold off hard.
On this weekend’s show I try to take a big picture look at the precious metals markets and determine when a good time will be to enter the markets again.
- Segment 1 – Jesse Felder kicks off the show with comments on the broad markets. We look ahead to what is to come by looking back in history.
- Segment 2 – Doc is with us again this week to share his thoughts on the charts for gold, silver, and GDX. This week has been very devastating for metals investors.
- Segment 3 – Chris Temple outlines the type of investors that were in the precious metals market before the crash. It tells a lot about why the metals have been hit so hard during this panic.
- Segment 4 – Joe Mazumdar wraps up this hour by sharing what he is recommending for precious metals investors. There are some great value plays in the sector but things are still very scary.
Exclusive Company Interviews This Week
- Revival Gold – The Exploration Plans This Year To Grow The Resource at Beartrack-Arnett
- TriStar Gold – Outlining the work with GoldSpot Discoveries to outline drill targets
- O3 Mining – Updating recent expansion drill results at the Alpha Property and a discussion on the Company’s cash position
- Novo Resources – Answering your questions on the recent share and land acquisitions
I cannot find any physical metal at anything close to COMEX prices, so how can those quoted prices actually have meaning ?
The Gold & Silver prices are set in the futures market, as that is what traders, technicians, analysts, funds, financial programs use. The vast majority of institutional or retail investors tracking Gold & Silver prices have no intention of ever accumulating the physical metal, but are interested in paper gold ETFs, Futures & Options trading, or how those prices will effect their mining stocks.
Spot prices are somewhat relevant to those buying coins and bars, but even then it is the individual companies premiums that dictate the prices to their customers.
The if they are set in the future…………That is Fortune Telling…..lol
Witchcraft………..lol, but, NO KNOW THE FUTURE…….. 🙂
Spot price are what every dealer in the market uses on the street…..as you say…
then there is no real time pricing………….CRIMEX, CME….con men…exposed… 🙂
Haha! I agree OOTB that the Futures Markets are trying to foretell the future…. but they are priced all day in trading vehicles, just like any other asset class, and those are the figures (for better or for worse) that most of the investing world uses… not the spot prices.
Futures prices won’t always match the spot prices though, and where people think metals are going, and where the spot prices actually go are 2 different animals. Most investment firms, hedgies, whales, or retail traders have no intention of ever holding the gold they trade electronically, so for them the most active futures contract is the metric to use.
Here’s a good site to see all the most active Futures Contracts in the Commodities space:
Bob Moriarty: The US Is A Paper Tiger At The End Of Its Empire
by Ceo Technician (@Goldfinger) – March 14, 2020
http://energyandgold.com/2020/03/14/bob-moriarty-the-us-is-a-paper-tiger-at-the-end-of-its-empire/
Ex….Ha,………but,……….this is the rub……….paper without settlement ……
and no delivery…….delivery in the future….maybe, if you close out the contract, and take delivery….
I can not disagree , …..what the market makers do…….unfortunately,
CME, CRIMEX, LBMA………decide the spot …….the cycle is everyday…..
London, the Crimex ……..I guess , I have been following Gata too long….
I know, Bill Murphy is a crook, they say…..Gata is a scam….they say.
Since…….I know the FED is a SCAM………a lot of the agencies are ran by the scam
makers……CFTC…….is political, and ran by the scammers….
Appointment is made by govt …which is running the scam……
Way to convenient ….to SCAM the Players……who think everything is a respectable game.
I know Bill and Chris very well and I can say that he does have some flaws, but, in my educated opinion, neither he not Chris are even close to being dishonest. You want to talk dishonest? Buy me a great bottle of wine some time and we will officially talk “off the record”. (Off the record will be witnessed by an attorney”)
What was the date of Bob’s article…………..
some additional comments could be added and updated .
Just to keep everything in order…….JMO
Goldfinger released Bob’s article today, and it was recorded yesterday on Friday the 13th. It was mentioned that they had talked exactly 2 weeks before on Friday Feb 28th.
Thanks for pointing that out. How time does fly!
I am going through the article….
Bob Moriarty: I think that cash is king right now. In terms of silver, the ratio got up to 105 to one,
Question…..I did not think it went that high…….101 was what I tracked….but, I did not track it all night….Is he correct, …..Just want to know, ….going forward…
Bob is a self professed guru and you always have to look at the rational behind that. Greed and being “all in ” to precious metals of any kind is akin to stupidity and greed! I guarantee you that Bob is not stupid.Depending on just how you define greed, I have no comment.
OOTB – Bob M. is correct, as per usual. I just pulled up the Gold:Silver ration chart and it closed at 104.60 and got as high as 109 at one point. Yikes!
Ex thanks……….Yikes is right…….109……cheap , cheap cheap…….
The Gold:Silver ratio spiked so much based on Silver falling out of bed and heading down so aggressively on Friday.
Cory, thanks for the interviews. Crazy valuations everywhere now
First Majestic US$5
Argonaut C$1
Time for lifetime buys?
There were some gold producers and developers that actually turned their ship around towards the middle of the day and rebounded into the close to turn green for a change. While the ETFs like GDX, GDXJ, NUGT, JNUG, GOEX got trounced on Friday, many of the smaller Junior miners not held in those ETFs or caught up in the selling swoon fared much better on the day.
Most encouraging was the after-hours trading (where I often look for bargains) on Friday. There were very few deals to be found, because many of the mid-tier producers and larger developers were surging higher in the after-hour sessions. The value-hunters were out and nibbling, which seems constructive moving into next week.
I injected more cash into my trading account on Friday, to add to my positions in (SILV) Silvercrest, (SVM) Silvercorp, (MUX) McEwen, (MMX) Maverix, and (AXU) Alexco . I considered adding to (AG) First Majestic and (USAS) Americas Gold & Silver, but didn’t want to blow my wad all on one day until we see how things play out moving forward.
After a terrible 3 weeks, the PM stocks are at least due for a small relief rally before the next round of pain. 🙂
I thought about MMX at C$3,50 😀
They have a nice portfolio, but seem to be still a very small royalty company?
MMX and USA had nice insider buys. Still wondering why at Argonaut has no insider buys.
Actually I only bought a Lithium play. Most of the lithium plays are also at crazy valuations.
(MMX) Maverix Metals Announces Record Financial Results for 2019 and Declares Quarterly Dividend
March 5, 2020
> Full Year 2019 Financial Highlights
• Record revenue of $44.7 million;
• Record attributable gold equivalent ounces produced of 26,668 ounces and record attributable gold equivalent ounces sold of 24,0212
• Record cash flow from operating activities, excluding changes in non-cash working capital of $31.3 million
• Record cash flow from operating activities of $27.7 million;
• Average cash cost per attributable gold equivalent ounce sold of $217, resulting in cash operating margins of $1,645 per ounce
• Adjusted net income of $9.2 million
• Net loss of $10.2 million as a result of a non-cash impairment of $18.9 million on the fixed payment agreement from the Amulsar project; and
• On March 4, 2020, Maverix’s Board of Directors declared a quarterly cash dividend of US$0.01 per common share to be payable on or about April 15, 2020, to shareholders of record as of March 31, 2020.
https://www.maverixmetals.com/site/assets/files/3749/mmx_nr_03-05-20.pdf
(MMX) Maverix Metals – #CorporatePresentation Feb 2020:
(13 paying royalty assets, 100+ total royalty assets) – [see page 8]
https://www.maverixmetals.com/site/assets/files/3748/mmx_presentation_february_2020.pdf
Still not know how to value royalty companies
$9 million income with $500 million market cap looks not cheap?
It’s a different game than producers. So it Is no so easy to understand what a good valuation for a royalty company would look like
Yeah, the Royalty companies are a different business model, and one needs to look at how the paying streams will increase or decrease over time, and which new royalty streams will be coming on line (and what is that worth to the bottom line), and which ones are still developing 2-3 years out (and what will they be worth).
They had Revenue of $44.7 Million and cash flow of $27.7 Million. The adjusted net income was $9.2 but they had a one-time non-cash impairment of $18.9 Million that needs to be taken into account, that won’t be there moving forward.
I like the bigger royalty companies like Franco Nevada or Wheaton Precious Metals but they are trading at P/E multiples so much higher than most companies, and Sandstorm & Osisko are like the Mid-tier royalty players. Maverix is much a smaller royalty company in comparison, but it is larger than Metalla, EMX, Sailfish, Abitibi Royalties, Golden Valley, Ely, etc..
I own Maverix, Golden Valley, and Sailfish, but would like to get positions back in EMX & Sandstorm and also get a position in Metalla. Those smaller royalty companies can move with much more torque like the Junior Miners, but have a far more solid asset base than any single miner, are diversified, and have relatively low spend rates with smaller staffs and minimal expenses.
Another reason I own Maverix, Golden Valley, and Sailfish is that I like their mining partners, the projects they have the royalties on, and believe there is under-recognized potential in those companies and projects, and thus the related Net Smelter Royalties on them.
Thomas, agreed about the Lithium stocks already being at crazy valuations. They were getting destroyed long before the Coronavirus or Oil production/price wars of late, and already represented great value.
The big stimulous bill spike a number of commodity stocks on Friday like Lithium, Uranium, Platinum, Zinc, and even some Copper stocks.
My overall portfolio was actually up in the green at a positive 1.5% on Friday because of the moves higher in the commodity stocks. Diversification is your friend in these kinds of markets.
It was refreshing to see ~green shoots in the #Lithium stocks Friday.
Symbol – #Lithium Stocks – Daily Change %
OWLI.CN One World Lithium Inc. +37.50%
ML.V Millennial Lithium Corp. +21.43%
CRE.V Critical Elements Lithium Corporation +16.98%
FMC FMC Corporation +13.70%
SYA.AX Sayona Mining Limited +12.50%
AAL.V Advantage Lithium Corp. +11.63%
GXY.AX Galaxy Resources Limited +10.42%
PLS.AX Pilbara Minerals Limited +9.38%
LI.V American Lithium Corp. +9.09%
PKX POSCO +8.46%
MIN.AX Mineral Resources Limited +7.50%
QMC.V QMC Quantum Minerals Corp +7.14%
XMG.CN MGX Minerals Inc. +6.67%
ORE.AX Orocobre Limited +6.31%
LAC Lithium Americas Corp. +6.13%
MMS.V Macarthur Minerals Limited +5.88%
NLC.V Neo Lithium Corp. +5.56%
LTUM Lithium Corporation +5.16%
ALB Albemarle Corporation +4.97%
SQM Sociedad Quimica y Minera de Chile S.A. +4.57%
NMT.AX Neometals Ltd +3.13%
LIT Global X Lithium & Battery Tech ETF +2.75%
PLU.V Plateau Energy Metals Inc. +2.38%
SLL.V Standard Lithium Ltd. +1.79%
BCN.L Bacanora Lithium Plc +1.32
I didn’t hear many folks discussing the very good day in the #Uranium space Friday.
Very nice to see some ~Green shoots in the U stocks:
Symbol – #Uranium Companies – Daily Change %
API.CN Appia Energy Corp. +40.00%
UEC Uranium Energy Corp. +35.31%
AL.V ALX Resources Corp. +33.33%
AAZ.V Azincourt Energy Corp. +33.33%
LTBR Lightbridge Corporation +12.77%
VMY.AX Vimy Resources Limited +11.11%
NXE.TO NexGen Energy Ltd. +10.75%
UUUU Energy Fuels Inc. +10.10%
SYH.V Skyharbour Resources Ltd. +10.00%
UWE.TO U3O8 Corp. +10.00%
BOE.AX Boss Resources Limited +9.76%
MGA.TO Mega Uranium Ltd. +8.33%
LAM.TO Laramide Resources Ltd. +7.69%
ISO.V IsoEnergy Ltd. +7.14%
URG Ur-Energy Inc. +6.49%
GXU.V GoviEx Uranium Inc. +5.26%
DNN Denison Mines Corp. +5.04%
CCJ Cameco Corporation +4.50%
NLR VanEck Vectors Uranium+Nuclear Energy ETF +2.98%
URA Global X Uranium ETF +2.49%
PLU.V Plateau Energy Metals Inc. +2.38%
U.TO Uranium Participation Corporation +2.11%
99,9% battery grade lithium is outstanding
Bought some – probably not a tenbagger as they will be bought by LANXESS before
Thanks Thomas. I’ve watched other investors discussing Standard Lithium, but don’t know much about how their extraction process works, and appreciate your thoughts and the link. I’ll look it over, but have seen a few of these companies that believe they can change the game in Lithium extraction from various sources (old batteries, oil/gas wells, old waste rock, etc…). The premise seems reasonable to me, but I haven’t seen any of those companies execute on a level that could really supply industry with the amounts of Lithium needed. Having said that I’ll check it out and keep an open mind on how their process works and their go to market production strategy.
Much appreciated!
The difference to others is that they have a major backing them
Their approach looks feasible. Otherwise LANXESS wouldn‘t give a credit
It will be interesting what the Opex is at the end
Thanks Thomas, I’m not as familiar with Lanxess, and I’ve been following the Lithium space since about 2011, but just for clarity, there are plenty of other Lithium companies with Majors backing them either with a direct stake, a JV, or a key off-take agreement.
In the Lithium space the big 3 players that owned most of the market were Albamarle, SQM, and FMC (now renamed Livent), but in the last decade there were 2 new Chinese conglomerates that burst onto the scene Tianqui and Ganfeng. Also, Posco is a 6th huge player for mining offtakes in the Lithium space, and JOGMEC the Japanese state run minerals company is very active.
Just a few examples of Lithium companies partnered with these majors:
Talison Lithium (Greenbushes) in Australia was the first company outside of the “Big 3” to make it into production, and they were acquired in a JV from Albarle & Tianqui.
> As a side note on Tianqui, besides all their Chinese Lithium mines and processing facilities, and their 1/2 stake in Talison/Greenbushes, they now own 26% of SQM, which is quite significant as a global player, making them a Major global player.
> Next Lithium Jr to make it into production was Orocobre (ORL) (OROCF) with their brine project and they have major Lithium offtake agreements with both Toyota and JOGMEC in Japan.
– In addition, Orocobre has a 33% stake in Advantage Lithium (AAL) (AVLIF) and a 75% stake in their Cauchari project.
> Galaxy Resources (GXY.AX) (GALXF) made it into Lithium production next as a Ltihium Jr, first in 2012 – but they ended up selling their amazing Battery plant to Tianqui, but then at their hardrock Mt Cattlin project, but their real value is in their Brine Sal De Vida project they scooped up from Lithium One back in the day, and they also have their James Bay pegmatite project. Galaxy has offtake agreements with Mitsubishi Corp and POSCO.
> The next Junior miners into production were NeoMetals (NMT.AX) & Mineral Resources Ltd (MIN.AX), but eventually NeoMetals sold out their stake to Ganfeng and Mineral Resources to work on downstream processing technologies. Ganfeng still has the offtake agreement from Mt Marion.
– In addition to Mt Marion’s project with Ganfeng, Mineral Resources Ltd has the Wodgina hard rock mine in a 40/60 JV with Albemarle (ALB)
> The next Lithium Jr into production was Pilbara Minerals (PLS.AX) (PILBF) and they have a significant stakeholder for offtake and JV with POSCO, and a 5% stakeholder in Ganfeng
> Bacanora Lithium (BCN) (BCLMF) was the next Jr Lithium producer to partner with majors where Ganfeng has a 26% stake in them, and an offtake agreement for 50% of their production. Hanwa from Japan (another big player in the lithium/battery space) has their other 50% offtake supply agreement.
> Altura Mining (AJM.AX) (ALTAF) was the next Jr Lithium company to make it into production and have offtake agreements with Ganfeng, Guangdong, Shandong Ruifu, and Lionenergy.
> International Lithium (ILC) has been mostly taken over by their partner Ganfeng at this point, and their projects are moving forward into production.
> Kidman Resources (KDR.AX) – had their large Lithium mine acquired by Wesfarmers, but I’m not sure if they ever moved it towards production as planned.
> Lithium Americas (LAC) is the next largest developer moving towards production. Originally they had a huge strategic stakeholder in (SQM) SQM [recently being positioned in by Tianqui], but then Ganfeng grabbed that position and now owns half the stake in their massive Cauchari-Olaroz project. (LAC) also has Thacker Pass.
> Nemaska Lithium (NMX) (NMKEF) is also one of the largest developers and near term producers that did a swan dive and are in credit protection after they grossly miscalculated the capital they’d need to go into production. While they are currently halted and in credit protection, it is obvious out of the ashes someone is going to restructure it and bring their Whabouchi mine into production. They had already build the trial production plant, and were building the main production plant when all this happened.
– For major partners Nemaska had FMC (now Livent) that broke it under the current situation, but they picked up battery & tech major LG Chem, Hanwa from Japan, and Northwolf for supply off-take agreements.
> Critical Elements Lithium (CRE) (CRECF) has a large development project and a few Asian suitors for their off-take product
_________________________________________________________________
I’ll stop there, but you get the idea. There are over a dozen Lithium juniors that have secured strategic stakes, JV parnternships, or off-take agreements with them and have a huge head start on any other companies. I’ll add Standard Ltihium to that list, and I’m sure there others could be mentioned.
*** Back in 2016 I publicly disagreed with with most of the Gold mining pied pipers that were dissing on the Lithium sector, and said there would only be the big 3 companies and they’d make up the supply deficit. I stated they were dead wrong and pointed out all of the companies listed above when they were developers and that most of them would make it to production and there would be about a dozen juniors that made it to producers.
Well, 4 years later, they were all dead wrong, and look at that – 10 of them 12 have made it into production, and the other 2 will eventually make it into production.
Most of the talking heads have no freaking clue what they are talking about regarding the Lithium sector, the miners in it, the production successes, the development projects of interest, and yet they made sweeping statements about the sector for years, that were dead wrong. They should keep their mouths shut about something they don’t know anything about, and stick to the gold miners, because so many investors missed the epic run in 2016 & 2017 in the Lithium miners listening to their misinformation, and while the space has consolidate and fallen with Lithium prices since late 2017 – late 2019, the sector had kept on moving forward and later in 2020 and moving into 2021 many of the survivors are going to thrive and are legitimate mining producers of a product – something 99% of mining companies will never achieve.
Thomas, after spending some time reviewing Standard Lithium’s overall strategy and their pre-production plant success, and their resources available, it does look like an interesting opportunity.
Thanks for sharing it as a stock to look into. Cheers!
Thomas – Yeah, as for the (AR) Argonaut Gold at $1.00, it’s just insane. It is my largest Gold position that I’ve been building since the summer doldrums of 2017 (1.90s – $2.10s) and in late 2018 (in the $1.40s – $1.20s), and I thought I was stealing it then. I’ve traded around the position for years and sold small amounts on rallies and bought some back on pullbacks, but my overall cost basis in AR is $1.52 (which I always felt really solid about. It is currently my largest Gold position, but I do have about 2 dozen gold stocks. To see it fall to $1.00 has been a painful position for me though just due to the weighting it has in the portfolio at 4.5%.
Yes, Argonaut Gold is one of the next companies I’m about to average down in next, along with Americas Gold & Silver, a little more K92 Mining. I want to add to most of my Silver stock positions as well, but just taking things step by step and waiting to see how things develop before deploying more capital.
I like the projects from Argonaut, but they still fail one of my criteria’s
I don‘t understand why management doesn‘t buy the own shares at these prices
I might get something wrong or management is not aligned with shareholders
Here are the SEDI filings of what the managers and directors of Argonaut are doing with the shares, and most are exercising rights for common shares, share options, or getting restricted or performance based shares. Scan down the page on the right hand side to see all the listings.
(AR) (ARNGF) Argonaut Gold Continues to Intersect High-Grade Gold Mineralization at the Magino Project Below the Planned Open Pit Reserves Defined in the Feasibility Study
by @newswire on 3 Mar 2020
MA19-016 with 11.0m @ 11.68 g/t Au;
MA19-020 with 6.0m @ 10.79 g/t Au; and
MA19-018 with 2.0m @ 17.26 g/t Au.
https://ceo.ca/@newswire/argonaut-gold-continues-to-intersect-high-grade-gold
Hi Ex, I probably got it wrong
I am confused that there is no buying in the open market at these low prices
At least they exercised some options. So there is some buying.
Thomas – yeah in reviewing that SEDI report there is substantial activity and accruing of shares by management and directors, and some converted to common shares.
They don’t list who their key stakeholders or institutional funds are that are cornerstone investors on their presentation, and that is where it normally shows managment’s stake, but based on the volume of shares they are acquiring, it looks like a respectable amount of exposure that management and directors have to the success of Argonaut.
There is a new presentation where San Antonio is not listed as Development Asset anymore (page 22). That might be a reason for the low price
https://s22.q4cdn.com/115151820/files/doc_presentations/2020/02/AR-CORPORATEDECK-MARCH2020-WEB.pdf
Yeah, I don’t think that has much to do with it Thomas.
Argonaut lost that permit on San Antonio about 3-4 years ago and have just been doing the court updates for years, like Bear Creek mining had with their Santa Ana project permitting issue. It was a lost cost in most investors eyes, and there was only an outside chance they’d be able to move forward. They already got hit for that years ago.
** The reality is there is a very sever market dislocation in the value of Argonauts 2 production projects and 2 development projects, and it will get rerated upward many multiples over the next 2 years.
The clear focus for Argonaut, outside of optimizing their 2 producing assets:
El Castillo complex, and La Colorada,
….are their 2 large development projects – Magino (the company maker) and Cerro Del Gallo (that they picked up from Primero during the raid on their assets and prior to First Majestic scooping them up).
While Cerro Del Gallo is a nice project and will be a nice 3rd mine with almost 2 Million ounces of Gold in the ground, and it has an after tax NPV of $175 Million on it’s base case, but $241 Million NPV at $1500 Gold.
However, it is really Magino that will take Argonaut’s production profile to the next level.
https://www.argonautgold.com/English/assets/development/magino/default.aspx
At Magino, Argonaut has 2.137 Million ounces of Gold proven and probable, and another 4.197 Million ouces of Gold measured and indicated for over 6 Million ounces of gold. Just that project is as large as 5-6 smaller Juniors parading around with $10-$100 Million market caps each.
>> Magino has an after tax NPV of $519 Million at $1500 Gold on their latest presentation.
When they get Magino into production in 2 years, then it will be time for a huge rerating, and honestly already is.
Just those 2 development projects at $241M & $519M are $760 Million dollars in value and that doesn’t account for the fact that they have 2 operating mining complexes at El Castillo and La Colorada that are fueling the company along and have been producing for years with plenty of exploration upside around them worth several hundred Million dollars.
On Friday, Argonaut Gold (AR) closed with a market cap of $180 Million dollars.
That makes no sense at all, and there are dozens of explorers and developers that may never even become producers with market caps double or triple that.
Argonaut is severely undervalued at present, and San Antonio has little if any to do with it.
On the last presentation they had San Antonio still as the next project to be developed. That‘s why I thought it might had an impact.
Thanks as always…..even if it is utter carnage…..I for one am taking advantage of the premiums that now exist in options and am writing covered puts on Canadian bank stocks….if I get exercised I will just write calls and not care if I own them as the dividend yields are now higher than line of credit rate
Why precious metals stocks down sharply? Look no further than the 3x levered Jnug. Down 65% in ONE DAY! Down 95% in three weeks. Gee, efficient market or overuse of leverage?
Yes, John Chew, seems those doing the forensic work after the fact are making the connection that those leveraged ETFs were the BIG “tail” that wagged the whole sector “dog” and dramatically exacerbated the selling in GDX, GDXJ, et al. Underscores the fact that the setup for the broader stock market could be the same in a worst case scenario. Many have warned about how these ETFs in the end are very illiquid if too many try to get out the exit door at once, and could cause an avalanche of selling.
So far on that score I have to say I’m rather surprised that with the VIX lately pushing 80 — EIGHTY — and the huge daily swings there has been little of that in the stock market, though there was in the gold sector and even – ominously–in the Treasury ETFs to some extent.
Dramatic moves like that showed up worse in the Russell 2000 and NYSE composite, fueled by their ETF equivalents.
To make money in these markets, you have to be a contrarian.
While some will see this as a crash, others will see this as an opportunity.
With the advent of the machines and the Algo’s, these markets in my opinion are no longer investable, but rather only tradeable.
The most important criteria being timing.
Ask yourself what didn’t go down this week? Answer DEBT.
Technically the monthly charts in Gold and Silver still look good to me.
I will add that it would be nice to hear the commentators give us a time frame every time they say they are starting to nibble or are recommending it’s time to start a position.What, Are these life time positions that you intend on leaving to your Grandchildren?
JNUG from 105.24 to 3.50 in 3 weeks.
5.16 is the A-B-C-D 1:1 extension,
3.73 the A-B 1:1.618 expansion.
Both numbers beaten.
Amazing.
The moves in the Gold mining ETFs were pretty telling, and honestly they held up better than many of the actual junior miners, since most of GDX and GDXJ are the Majors & Mid-tier producers.
> Here is the GDX chart which held up the best:
> The GDXJ Chart fared even worse:
> The JNUG Chart was epic destruction falling from $105.24 on February 24th, down to $4.47 yesterday on Friday March 13th’s close.
Friday the 13th… unlucky for some….
GDXJ REBALACE Q1
Posted on March 13, 2020 by EconomicAlpha
https://economicalpha.blog/2020/03/13/mvis-gdxj-rebalace-q1/
The following changes will go into effect on March 20, 2020 for GDXJ:
> Removing from GDXJ:
– Hengxing Gold
– Northern Star
>> Switching Out Tickers:
– Silvercorp Metals – switching out the Canadian ticker SVM for the more liquid US ticker SVM
>>> Additions to GDXJ:
– Americas Gold & Silver
– Alexco Resources
– Equinox Gold
– Fresnillo PLC
– Gran Colombia Gold
– Great Bear Resources
– K92 Mining
– Lundin Gold
– Merdeka Copper & Gold
– Silvercrest Metals
I own most of the companies on that list that are being switched into or added, with positions in (AXU) Alexco, (USAS) Americas Gold & Silver, [recently sold position in (EQX) Equinox], (KNT) K92 Mining, (SVM) Silvercorp, and (SILV) Silvercrest Metals.
I have mixed emotions about them being added to the ETF as it can create liquidity but it can have selling or buying that goes against the fundamental drivers of each unique company. At any rate I hope this March 20th date has GDXJ buying some of these stocks throughout the week, before this next Friday.
Here is a zoomable version of Economic Alpha’s highlighted download of the GDXJ revisions for March 20th, showing the additions. He didn’t highlight the switchout from the Canadian (SVM) over to the US (SVM) but the rest are easily visible on this spreadsheet.
https://economicalpha.files.wordpress.com/2020/03/mvgdxj_quarterly-review_2020-q1-2.pdf
There are 70 stocks in the current GDXJ, and there will be 73 stocks on the rebalanced GDXJ this next Friday. Sometimes we guest on the KER have issues with holding more than 10 or 15 stocks, but then they love to discuss the movement of GDXJ which has over 70 stocks.
I’d much rather build my own ETF, with my own weightings, skip many of larger sluggish companies, or stocks I just don’t think will be as good of performers, and manage it accordingly.
#BuildYourOwnETF
Ex, one would hope for a massive move up in the mining stocks in the next 2 months after bottoming but it’s difficult for me to believe that wnen i look at the long term charts. I would foresee more of a long bottoming process due to the virus impacting the society for some time and the impact it will have earnings of the conventional market companies. Then you have next year when govenment tax revenues will hurt. The money the government and Federal Reserve will have to throw at this pandemic and potential bankrupties and disruptions in the economy should be totaly massive. Investors will be scared out of the PM sector and the conventional market for some time. However, with the looming deficits, increasing debts, and massive money printing, the place to be will still be the PM space, especially gold. Buying over this year should begin to reward folks by the end of the year and 2021.
Solid points Doc for the medium to longer term, and I agree there is likely more pain to come.
For now, I put some money to work towards the end of this week for a small relief rally, that I will likely swing-trade right back out of to scalp some quick gains, and then move those funds back over to cash for the longer bottoming process you mentioned.
I did well positioning on Friday Feb 28th in a few positions and then selling or trimming them back on Monday March 2nd and Tuesday March 3rd. That is more my approach moving into this next week as we may see some bottom fisher come in an move some of these stocks back up a bit.
In addition, there are some miners at such ridiculous levels currently, that I’m just averaging into larger positions here and lowering my cost basis as they definitely aren’t overbought or pricey at these levels. I’m not really one that dollar costs averages into these volatile stocks every month, but I do like to average in on strong corrective moves over time.
If the process takes a few months to bottom out and some of these shares go down another 15-30%, then I’ll bring in some more funds and add another tranch, and then those will be my longer term hold core positions at that point. If for some reason they don’t go down much more and start climbing higher from here over the next few months, then I may even average up in some of them.
Whatever happens next, I definitely don’t believe the funds I deployed on Friday was buying at the top 😉
This reminds me of 1999-2002, but with a smash down rather than slow rollover.
AGREE 100% or maybe 99,99fine%………GOLD Phyz……..in the pocket, in your local safe account, no ones with sticky finger account……. 🙂
AGREE 100% or maybe 99,99fine%………GOLD Phyz……..in the pocket, in your local safe account, no ones with sticky finger account……. 🙂
That is directed to DOC>>>>>>>>>>
The positive thing about the collapse in the miners is that it was due to a general market panic. So any psychological relief has a higher probability of resulting in a snap-back move like we had in 2008 — and possibly better since the fundamentals are much better now.
Remember that price action makes the chart, not the other way around. For example, the monthly MACD was very ugly as the XAU bottomed in Oct 2008 yet those who bought anyway were rewarded with a 150% move BEFORE that MACD re-bought. Those who waited for the re-buy got a relatively puny 55% move before it was all over for many years.
Next week will tell us a lot and I wouldn’t be surprised if a lot of people get left behind since the pullback doesn’t yet have terrible implications from a very big picture perspective. The following monthly chart shows a backtest of the big breakout last summer as well as a backtest of the Feb ’16 breakout.
Fractal analysis indicates that a very large pattern might be in charge while most of us have been focusing on smaller patterns. The unprecedented volatility we’ve just witnessed seems to support this possibility as do the epic changes taking place fundamentally (stocks and bonds are going to require absolutely massive Fed interventions to avoid collapsing nominally).
I don’t know how to make the following chart accessible to those not subscribed to stockcharts so if anyone can, go right ahead…
https://stockcharts.com/h-sc/ui?s=GDX&p=M&yr=11&mn=3&dy=0&id=p70426635655&a=658316695
A strong bounce into the monthly and quarterly close would be very helpful to the “V” bottom possibility.
Good thoughts on the longer term pattern, versus the tendency by many investors to look at shorter term patterns. I agree that it is better to be in it, adding at lower levels, and capture the upside snapback, than to wait for things to prove they are going back up and miss most of the relief rally gains.
As for sharing the monthly chart, if you right click on on your Windows Accessories there is a “Snipping Tool” were you can screen capture any image (even if copying or print screen is disabled). Then you just save it as a JPEG, and then use that file to create a link that can be posted.
Thanks Ex. I copied it as a JPG and a pdf but have been unable to give it a link that works. When clicked, a few items from the page show but not the chart itself.
I’m inept when it comes to this stuff. Oh well.
I’m not that great at these things myself, and I’m sure there is an easier site to go to create weblinks from JPEGs, but I just use ceo’s site. If you go to their posting window and look to the right side of that dialog box then there is a folder icon. If you click on it, allows you download a file from your device, and then paste it as a link.
What I normally do is “paste” that link to the dialog box, then copy and paste it over to the KER.
1) Here is a link (created using this process) to a image of the Ceo.ca dialog box and note the folder icon on the right side.
http://cdn.ceo.ca/1f6t2ha-Ceoca%20dialog%20box%20folder%20icon.JPG
2) Here is another link, created using this very process, to the File selection box, once you have clicked on the folder icon in the dialog box:
http://cdn.ceo.ca/1f6t2m5-Argonaut%202020%20Capital%20Expenditure%20file%20selection.JPG
3) Here is a link showing the pasting of the “Link” into the ceo dialog box, once you have selected the file you want to post. (a JPEG of your chart in this case).
http://cdn.ceo.ca/1f6t2oo-ceoca%20pasting%20file%20link%20to%20the%20dialog%20box.JPG
4) Now just cut & paste that link created there, over here into the KER dialog box:
I’ll just use this file I’ve been playing with, which was a snip of an Argonaut Slide deck as reference, but could be a chart, or graphic, Excel file, or Word file, or Powerpoint etc…
http://cdn.ceo.ca/1f6t2sk-Argonaut%202020%20Capital%20Expenditure.JPG
This is an experiment. Matthew, I just right clicked on your chart, selected “Save As” and saved it as a PNG file to folder. Then I went to ceo.ca, clicked on the folder icon in the dialog box, selected that file, and created a link that I posted to that box.
Now I am going to try posting it below and hopefully we’ll be able to see what folks that don’t subscribe to stock charts, like myself, see in place of the monthly chart you are trying to show folks — the daily chart of GDX.
It looks like that worked fine, so you can skip the snipping tool step, and just right click, save as a PNG file, and then go from there.
I don’t know what my computer is lacking but the right click copy to PNG doesn’t copy the image. It just copies a few other random things from the page.
Your snipping tool did allow me to make a good copy.
As for ceo, do I need to log in to do what you outlined?
Here it is:
https://stockcharts.com/h-sc/ui?s=GDX&p=M&yr=11&mn=3&dy=0&id=p01789026327&a=658316695&cmd=print
I just learned something about stockcharts from someone at another site.
Thanks again for your efforts, Ex.
Boom! There it is. Well done Matthew. Now we can see what you are talking about on the monthly charts. 🙂
The quarterly Dow:Gold chart is very friendly to the gold space. As you can see, the plunge that began 20 years ago is now resuming. This is only the third time in the last century that Dow:Gold will approach 1:1 as gold accounts for massive imbalances…
https://stockcharts.com/h-sc/ui?s=%24INDU%3A%24GOLD&p=Q&yr=50&mn=6&dy=0&id=p82669845357&a=724703065&r=1584312437536&cmd=print
Monthly Dow:Gold looks very bad:
https://stockcharts.com/h-sc/ui?s=%24INDU%3A%24GOLD&p=M&yr=25&mn=0&dy=0&id=t2411053778c&a=507998967&r=1584313978498&cmd=print
This is supposed to be 100 years of Dow; let’s see if it works:
https://stockcharts.com/h-sc/ui?s=%24INDU&p=Q&yr=100&mn=0&dy=0&id=t5558335871c&a=682633946&r=1584326419273&cmd=print
Look at the following quarterly gold chart and you’ll see that the bear market we endured following the 2011 high was merely a countertrend move within a huge secular bull market. With two weeks left in the quarter, let’s see if gold can close above its Bollinger Bands for the fourth time in a row. I bet it can…
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=Q&yr=40&mn=0&dy=0&id=t1216290637c&a=673508560&r=1584328144507&cmd=print
Thanks for posting those charts Matthew – Nice to see you found the fix for posting the monthly and quarterly charts moving forward.
Overall, I’m a bit shell-shocked from the last 3 weeks, but still bullish on the PM sector for the balance of 2020 and 2021-2022 to continue on in the larger Secular Bull.
The solution was hiding in plain sight! 🤪🤦♂️
Btw, on the quarterly GDM chart above, notice that it just ended a streak of 5 higher quarters in a row. That was a first in its 26.5 year history.
True. It was overdue after 5 months for a corrective quarter or 2. Still a pretty impressive run.
I meant 5 quarters (5 months).
On 2/29/2020 the 1 month treasury note was 1.47.
Today the 1 month treasury note is .39
Doc so damage is done to gold miners, with all cheap money being poured back into arket will this cause inflation and how long before we see gold mining stocks breakout, 2 year, 5 years, we we’re suppose to see good gains in 2021, what is long term outlook.
Paul, see my thoughts up top below ex’s post. I guess those that poo poo the commercial’s short position and felt it was different this time were once again left with hat in hand. The short positions started unraveling the last 2 weeks. I bet when the report comes out next week they’ll really have unraveled. That won’t mean that gold/silver will suddenly spike right away again.
The problem with the COT reports is that they are never any good for timing. Yes, they look bearish at a top but they also look bearish way before a top so those who sell based on them leave a lot of upside on the table.
It is interesting and rare that the last two reporting periods saw the smart money do some covering at a loss for change.
JPM still needs gold much lower to cover their shorts
We all knew that if Recession or Depression should threaten serious consequences for business ( as is indicated at present) there was little doubt that The Federal Reserve system would take steps to ease the money market and so check the movement. They were accused of not doing enough in 1929 only this time the pendulum has swung much too far the other way. Debt is everywhere and they have just increased it exponentially. Like Jerry said, The Federal Reserve is the market. They won’t control it for very long and soon I believe they will fail with their fake market. DT
DT, I couldn’t agree more. The old money printing machine will have problems this time fending off carnage.
Always enjoy Jesse. Thanks. Here’s Peter Schiff with his comments from yesterday. Has some good comments about the bond market I didn’t know:
khttps://marketsanity.com/peter-schiff-discusses-trumps-coronavirus-bailout-and-golds-recent-price-action/
Recession coming, gold price to skyrocket like hot knife through butter – Peter Schiff
Mar 12, 2020 – Kitco News – Peter Schiff CEO, Euro Pacific Capital
“More monetary stimulus will come to prevent an imminent recession, and a larger money supply would be bullish for gold,” this according to Peter Schiff, CEO of Euro Pacific Capital.
“I think that people have got this wrong, everybody is looking at this event as deflationary, but it is actually the opposite. You’re going to have a reduction of production, so less supply of goods, and the world is going to be flooded with money,” Schiff told Kitco News
Peter really turns up the heat on Bitcoin hodl’ers at the end of that Kitco interview pointing out what most already knew, that Bitcoin did not act as one of the safe havens, but instead outperformed the general markets to the downside in a huge selloff (far more than Gold’s recent sell down).
3 month Bitcoin chart:
It is pretty clear that Gold, Long-term Treasuries, and the Yen acted as Safe Havens once again, but as the S&P, DOW, and NASDAQ sold off that Bitcoin not only didn’t act as a Safe Haven (just like it didn’t in the late 2018 market rout), but it actually outperformed the general markets to the downside in the panic selling.
The 1 month performance chart of these assets classes paint the picture pretty well:
Just how long has Mr. Shiff been saying that!
About 2 decades Big Al. (haha!)
Longer term I’m sure Peter will be right, as the Fed will decide to print more money to try and save the economy, and eventually it will hurt the US Dollar and our buying power. When the debt bubble does pop, and the dollar pulls down, then this will spike the Precious Metals during an inflationary period, but we aren’t there yet.
I personally seldom listen to Shiff or lot’s of others like him, with their messages of end of the Gov’t, dollar, etc. However, I do remember him 12-13 years ago on CNN, arguing with the announcers who were laughing at his worries and statements about the mortgage debacle facing this nation. He was right and they were wrong.
Big Al’s statement above about Shiff reminds me of the skeptics who still think Covid-19 is just “the flu”. Some people always have to learn the hard way! JMO
Agreed. SilverDollar. Schiff has been a broken record for some time, but he was spot on correct about the housing mortgage situation in 2008, and was spot on about the Crypto-craze ending in pain for so many when the bubble popped at $19,000 and sunk all the way down to $3,800, (and most other altcoins went down 90%-100% during that same time frame), and he’ll eventually be right about the giant Debt bubble popping, and as he mentioned the Coronavirus or Oil price wars are just the “pin” that will pop the debt “bubble”. The real issues from 2008 were not ever resolved, and have only been magnified.
While Peter is a broken record, rude talking over almost anyone that interviews him, and he’s a bit of a character, he is no dummy and his point is being ignored by most once again as the boy who cried wolf. Make no mistake about it the wolf is coming, and there is no amount of “normalizing interest rates” or the central banks printing to infinity that can stop it.
I got an interesting email from BullionVault today, in sum it said we suggest you reduce any cash balances with us to near zero either by buying bullion or withdrawing the money as while we can guarantee your bullion we can’t guarantee the banks who hold your cash in trust (Lloyds or Wells Fargo). “do not forget banks are in business to lend into a world of borrowers who, taken together, are now extraordinarily indebted and unusually fragile. This renders it impossible for anyone to assess with confidence the balance sheet of a modern bank.” Never had an email like that before…
A very telling concern that they have about the banking sector at present… and rightly so.
The Largest Financial Event Of Our Lifetime Is Upon Us – Raoul Pal of Real Vision
Nugget’s News – March 10, 2020 #VIDEO
“joined by Raoul Pal of Real Vision to discuss the latest developments in the global economy. The recent spread of CoVid19 has really exposed the fragility of global markets. We discuss stocks, bonds, oil market & OPEC, interest rates, property, currencies, central banks, retirement crisis, debt, banks, governments, Bitcoin, Ethereum, cryptocurrency & more. It now looks like a certainty many economies are facing recession, the world could be facing another global financial crisis, & if not contained it has the potential to turn into a wider economic collapse.”
attice Biologics $LBL $LBL.v shares rocket on stem cell therapy to fight coronavirus ! More than 200 per cent on Friday… From the PR:
AmnioBoost has potential for use in the treatment of ARDS, which is the principal cause of death in COVID-19 infection https://www.stockwatch.com/News/Item?bid=Z-C%3aLBL-2877711&symbol=LBL®ion=C
This kind of action is pure speculation. In a year, these stocks will probably be right back to where they began.
The Gold Contrarian Trade | Rick Rule
MoneyShow – March 9, 2020 #VIDEO
“Rick Rule, who manages natural resource and precious metals investments, breaks down the natural resource and precious metals investing environment. Rule is confident in precious metals and going higher. He sees it trading inversely to 10-Year Treasuries, which is at or near a long-term peak. He says that gold bull markets are periodic. His message is that in trading gold you are either a contrarian or a victim.”
Rick Rule | Gold Stocks Are Stocks; In a Panic, All Stocks Selloff
Sprott Media – March 9, 2020 #AudioInterview
Rick Rule on the price war in oil and the panic stock selloff.
It has been done before and it will happen again. ie. massive amount of money printing. Maybe it will be in the range of 10-50 trillion dollars this time – $4.5 trillion was announced already last week and the charade will continue.
By the way, I don’t think this is bullish for gold .. at least not for now. Bullion banks have been successful in creating sentiment damage to the psych of gold bugs and likes, I would think, metals would churn sideways to down for weeks and months to come?
Unfortunately I agree Calijoe regarding wrecking sentiment towards gold. These players have become so good at overiding technicals and fundamentals with their deception and underhanded techniques. Im not saying this will happen but I wouldnt be surprised if it did. With all the developments weve witnessed over the weekend, I recon global markets will awaken on Monday spooked and resume their volatility and possible margin selling. Gold will just be another asset caught up in all the mindless panic. All the various media platforms are so good at the fear mongering. Unfortunately not as good as the masses are at eating up this fear. And much like the irrational toiletpaper hoarding, people will just follow each other towards the same end goal without thinking for a minute if the end goal is what actually is either required or sufficient to fulfill their needs. Their movement is dictated by the simple feeling of being left behind and so ensues classic herd mentality. Fundamentals, principals, logic and beliefs are superceded by a fear of the unknown. We shall see tomorrrow I guess.
I think gold is due for a bounce and will be caught in a large range for awhile but the miners have probably already put in a major low. If there’s going to be a new low, it will probably have to happen tomorrow.
Just like greed-driven spikes to the upside, fear-driven spikes to the downside tend to reverse sharply and for the same reason: irrational money has hes been wrung out.
Pierre Lassonde essentially asked, “how can you not buy here?” and I agree completely…
https://kingworldnews.com/pierre-lassonde-3-14-2020/
The big breakout last June was never backtested until now:
HUI
https://stockcharts.com/h-sc/ui?s=%24HUI&p=W&yr=9&mn=11&dy=0&id=p04513266972&a=727374415
Maybe we’ll start tomorrow lower so the HUI can hit that blue support on the chart above. The daily chart supports that possibility:
https://stockcharts.com/h-sc/ui?s=%24HUI&p=D&yr=1&mn=7&dy=0&id=p62485061424&a=725860897
GDX fell all the way back to its Q4 2015 high…
https://stockcharts.com/h-sc/ui?s=GDX&p=W&yr=8&mn=3&dy=0&id=p68073313171&a=685496339
But the index GDX is supposed to track would have to fall 20% from here to do the same:
https://stockcharts.com/h-sc/ui?s=%24GDM&p=W&yr=8&mn=3&dy=0&id=p96798098941&a=727381853
It is just startling how far the miners pulled back and how fast. Good to see some support levels are present, but still it is such a large slog back up the hill….
This panic and margin-call induced plunge is so detached from the fundamentals that I think we will all be surprised by how quickly the miners snap back.
The loonie is all set to join in that snap-back move which is always a good thing. Check out Friday’s big bull hammer:
https://stockcharts.com/h-sc/ui?s=%24CDW&p=D&yr=1&mn=8&dy=0&id=p84741929657&a=569434196
Interestingly, SLV’s gap off the low last May has been filled to the penny (big/ask spreads are not part of gaps, in my book, in this case, that’s one cent):
https://stockcharts.com/h-sc/ui?s=SLV&p=D&yr=1&mn=11&dy=0&id=p81379219764&a=690799298
That is a good bull hammer on the Loonie, which does usually signal a bullish reversal.
Also that is uncanny how the SLV came all the way back to within a penny of the May 2019 launch pad. It’s almost as if computer algos are trading these markets. 🙂
Well I’m all for the miners having put in their capitulation low and surging off support, but many technicians feel that there will be more pain and a “lower for longer” situation play out.
Personally, I was a buyer the end of last week, and if there is a large snapback rally, I’ll have to consider trimming some back on that move, but maybe just part of the allocations I just put on, and then leave the rest to ride with the initial core position.
There are good technical reasons to expect new lows but panics are not your everyday declines and spikes tend to end without regard for the message being sent by any technical oscillator.
If this plunge was due to a structural/fundamental change, then I would worry about a protracted bottoming process in which prices might languish near the lows. This week will tell us a lot.
Vince Vaughn – Couples Retreat – “It’s the circle of life” , “Don’t Panic” …..
“You said NOT to panic!!”
Trumps tweets regarding the general stock markets: (humorous)
https://pbs.twimg.com/media/ETEdWfKX0AAhera?format=jpg&name=4096×4096
BREAKING: Federal Reserve cuts rates to zero and launches massive $700 billion quantitative easing program
https://twitter.com/CNBCnow/status/1239295444079071234
Dow futures fall 900 points even after Fed slashes rates to calm markets amid coronavirus outbreak
This is not 2013 guys. QE juiced the market then because PEs were probably half as high and the cyclical winds were in favor of stocks moving higher.
QE 5 might limit some nominal downside but the real beneficiary will be the gold sector.
Stock futures plummet — hit ‘limit down’ — even as Fed slashes rates; Dow futures off 1,000 points
Ok I must admit I didnt expect such a significant rate cut to go with a big QE program. A sign of the times. This may prop gold up for a little while.
@Goldfinger – “Fed Chair Powell’s opening remarks to this evening’s press conference after the Fed cut the Fed Funds Rate 100bps and launched US$700 billion in fresh QE:”
Powell says:
“The Federal Reserve’s role is guided by our mandate from Congress to promote maximum employment and stable prices for the American people, along with our responsibilities to promote the stability of the financial system. Today, we reduced the target range for our policy interest rate by 1 percentage point, bringing it close to zero, and said that we expect to maintain the rate at this level until we’re confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals. In addition, we took other actions to support the flow of credit to households and businesses.”
https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20200315.pdf
Bringing the rate to near 0 makes me think of the Dire Straights:
“That ain’t workin’ that’s the way you do it
Money for nothin’ get your chicks for free”
Al you do agree that gold and silver prices currently have absolutely nothing to do with total world debt divided by real ounces of refined gold or silver. Prices are mostly a matter of some ones opinion.
http://news.goldseek.com/CliveMaund/1584398946.php
Ok Clive says gold price is ready to plunge so it should rise handsomely from here…haha. It was only in February that Mr Maund was openly calling for gold to break it previous all-time high in the coming months and now based on the miners we should get ready for a plunge. I enjoy his chart analysis but the guys a yo-yo.
That was pretty funny Ozibatla. Do the opposite!
What a coincidence, Maund backs up what I said yesterday (above at 1:24pm):
“Having missed pretty sizeable rallies in gold in the past as a result of being deterred by extreme COT readings, we this time adopted a different and as it turned out more effective approach…”
Yeh Clive can be reactive rather than pro-active.
Gold has rallied a little on the Fed news. If it doesn’t do any better then this tomorrow, then it most likely is a counter rally and we should continue to fall over time. i wouldn’t be surprised to see $1400. Perversely, i could go with that since the PM stocks would be “stupid cheap”.
Doc, I really don’t want to see Gold break below the last recent low of $1446.20, or else it will break the trend of putting in higher lows in a bullish pattern.
It would be better to see it put in a low higher than that level technically to keep the uptrend intact.
These times seem to be extenuating circumstances Ex. So I personally would look for sentiment to override technicals and fundamentals, at least for the short to mid-term. With your technical assertion of higher lows, I agree. However it seems more likely than not that your $1446 figure will give way in the current environment that weve not seen since the GFC days. This may not be a nail in the coffin for gold though but it is certainly under selling pressure.
Well currently Gold is going up since the Fed cut the rates 100 points:
Gold currently up $26.60 to $1543.30
I understand theres a lag between communication here. Hence when I stated above that gold was looking vulnerable was immediately after it gave up $50 of its opening gain. I also acknowledge this can be attributed to volatility.
Its already looking to be a counter rally Doc with gold having given up almost all of the pop gains. I too now expect a fall back towards at least around $1400 (the range we saw the breakout last June).
Be careful what you wish for, as that would do significant chart damage for some time to come. I’ll have to fold up shop and be on the street corner selling newspapers if Gold breaks below $1400. As mentioned above it would be FAR better technically for Gold to bottom above the recent low of $1446.20.
Ohh Excelsior I dont wish for this to happen, I just have a nasty feeling. There is little rational out there at the moment, but panic in abundance. Unfortunately the metals arent immune to the panic.
Agreed. When the madness of crowds kicks in, all logic and reasoning goes out the window.
@ValueInvest – ‘Why being in cash for the long term is not a good position. It is better than holding stocks at the moment. But, interest rates are now zero. There is a good chance they may go negative (-0.5% or -2% or worse). If this continues for several years then keeping savings in cash becomes a losing investment. You pay 2% interest to the bank (instead of earning) when real inflation is 5-10%. This means losing about 10% of purchasing power per year on a savings account.”
“When people realize this, they know that they have to convert their savings into something tangible. This could be buying land or another condo or physical $gold and $silver. Many already are realizing this with central bank stimulus measures of the past 2 weeks. When the stimulus measures continue and become bigger, there will be a rush on physical $gold and $silver.”
“All physical $gold and $silver is now sold out, but it is not reflected in an increasing paper futures price. The disconnect between low paper futures $gold price and exploding physical $gold demand will not last. Why? Because large entities will take advantage of the arbitrage. It will self-correct to the upside. All it takes now, is for a large player (gov China, Russia, large bank) to buy large quantities of futures gold and demand physical delivery. The Comex will be forced to increase the paper future price, equal to physical demand or sell physical $gold at discounted prices to large entities. This is a losing business strategy (you are giving your gold away at ½ the physical price). The Comex may do this for a while and large entities will gladly take advantage of it. But this cannot last. ”
— @ValueInvest
@ValueInvest – “Paper $gold and $silver price in the futures market may remain low as stock market selling continues. But we now know that the physical $gold and $silver price is exploding higher. The decoupling between paper and physical price is starting. I am holding on to my gold and silver producers.”
@ValueInvest – “If you hold any $gold and $silver stocks, chances are you are not doing too well. The best holdings right now among your gold and silver stocks are producers of the metal. Those that make revenue and a net income. Even $silver producers are good, because many produce a large quantity of $gold as well.”
“$Gold is still very high. Many gold and silver producers are creating large free cash flow and net income right now. Their biggest cost (Crude Oil) is down significantly. High $Gold price and lower costs makes for a great net income. They will ride out and survive this crash, because they will not need to do any equity financing at ultra-low prices, or go into debt to raise cash to keep their business going. The more severe this crash becomes, the more opportunity for producers to use their cash flow to buy up bankrupt junior developers or explorers. It is a twisted logic, but smart producers pray for crashes like this. Now is when they make the most accretive $gold and $silver asset purchases for pennies on the dollar. Whoever is most skilled and decisive now will greatly expand its business, and will be the big winner when PM stocks rebound.”
“I hold $FR (Breakeven Buy Price $8, bought through dollar cost average buying in past several years) and I will not sell it, even if the stock goes lower, because $FR is making large revenue, a small net income and they have a large cash position. $FR its stock price has crashed down, but they will ride out this crash and may take advantage of it by buying up a bankrupt, but high quality project, just like they did with San Dimas. Primero formerly owned and operated the San Dimas mine, but the streaming agreement with $WPM was killing their business. They could not make a profit and huge debt piled up. $FR bought the San Dimas asset at a very accretive price, paid of the debt and renegotiated down the streaming agreement with $WPM. $FR turned a bankrupt San Dimas operation into its strongest and best performing silver mine. CEO of $FR, Keith Neumeyer, is an expert in these kinds of deals. The longer and more severe this crash becomes, the more opportunities will come for Keith to expand $FR.”
“This analysis does not just refer to $FR, but to every $gold and $silver producer that is making large free cash flow right now. Even though their stock price is down, their businesses are about to become much better. That is what value investing is all about, buy up and hold great and improving businesses at oversold prices.”
That was an absolutely great concept that @ValueInvest brought up to consider regarding the situation the Gold & Silver Producers are in; with high gold prices and falling Oil prices (lowering their costs).
Gold and some of the larger Silver producer with a Gold component will absolutely be able to cash up and then go cull the overpopulated universe of #explorers and #developers for the best deals. Most junior companies values have crashed, and the producers are building up their warchests in the current environment, and will be ready for the hunt.
Investors that only chase the explorers and developers should read that post up above, and then read it a second time.
Having made the point of how the Producers are actually in a pretty good environment with these higher gold prices and lower cost to bank some cash; it should also be noted that if investor can position in the high quality deposits that will be economic and sought after by the big boys, then there can be some nice 40-60% premiums in a good takeover offer for quick gains and a liquidity event to sell into. Just food for thought…
A valid point Ex!
Cash is Trash – Throw it Out says Ray Dalio – Explained
Jan 22, 2020 – Invest with Sven Carlin, Ph.D.
“Ray Dalio says that trash is cash and that one should be well diversified with a portfolio but that one should not own cash and cash similar investing instruments like bonds or certificates of deposit. ”
Markets Crash…What Happens Next? (Lawrence Lepard Interview)
MiningStockEducation – Mar 15, 2020 #AudioInterview
Gold stock fund manager and Austrian economist Lawrence Lepard provides his perspective on last week’s market crash and what might happen next. Lawrence discusses how the Federal Reserve might respond and what that means for the economy, general equities, gold and gold stocks.
Bitcoin down to $4816. It not doing well in this market volatility, and neither are most of the cryptos.
And again at some point early in the morning,gold sells off big time.
London…….scum bags……
Thanks Guys.
WE ALL LIVE IN INTERESTING TIMES.