Dave Erfle – Levels To Watch In Gold And Gold Stocks As We Head Towards Month End
David Erfle, Founder and Editor of Junior Mining Junky, joins us to discuss the market correction in many sectors, but in specific the precious metals sector since the middle of last week. The discussion touches on many aspects from Fed policy, to inflation, to ongoing war in Ukraine, to the lockdown of many Chinese cities. Dave shares what price levels he is looking for as support and resistance in gold, GDX, GDXJ, and silver, and what he’d like to see to end the week and month by this Friday.
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Price Quality: https://tinyurl.com/yc794bru
Stock Curse: PMs Endure Downside.
NatGas & Oil Still Buoyant.
Just looked at the paper metals future markets and I’ll be darned if they haven’t started out green again. Almost makes me think it is something in the water of the US markets that is poisoning the cattle. But there I go thinking again.
Paper Gold hit right before open. Normal intervention.
In 4 minutes, account has been negative twice and positive once.
5th Day of same performance almost to the same time of day.
Dip buyers might do well with HYMC Wednesday
Awhile back I mentioned non-linear thinking.
By this I mean a break unseen in history.
A new monetary age may be upon us.
Agreed BDC. A new monetary age is upon us indeed.
Ex, the Dollar is streaking now. The bulb burns brightest …….
As the saying goes… “The light that burns twice as bright burns half as long.”
(SGI) (SUPGF) Superior Gold Intersects 83.2 g/t Gold Over 3.2 Metres As It Opens The 1.6-Kilometre-Long Western Mining Front At Plutonic
April 27, 2022
– Drill hole UDD24885 intersected 83.2 g/t gold over 3.2 meters, including 208.7 g/t over 1.0 metre
– Drill hole UDD25060 intersected 203 g/t gold over 1.0 meter
– Drill hole UDD25059 intersected 4.3 g/t gold over 11.9 meters
https://superior-gold.com/news/superior-gold-intersects-83-2-g-t-gold-over-3-2-me-122637/
(CBI) (CRUCF) Colibri & Option Partner Samples 51.5 G/T Au And 2270 G/T Ag At the Diamante Gold & Silver Project
27 Apr 2022
https://ceo.ca/@newsfile/colibri-option-partner-samples-515-gt-au-and-2270
They have now hit my account for -50% and it will take a double to break even to where I was in January.
Sorry to hear that Lakedweller2. I’m down about 21% in my portfolio from where it was just last month (when it was trending higher), but only down a little over 7% year to date. No fun losing money… but this too shall pass after this corrective move has played through.
Personally, I elected to take a few more ill-timed trades for tax losses this week, and may buy back into them again after wash period is over. My plan currently is rotating those funds into other stocks that have been hammered down or to fortify other positions I like while things are back on the clearance rack.
Short-term things are still in the corrective move, and there may be more pain in store, but medium to longer-term, we’ll likely not see these prices again in the mining stocks for a long time as the sector will be moving much higher.
I don’t think it is a statement on the quality of my stocks, but an issue of timing. I believe a large part of the overall theme going on is the banks are trying to keep retail in the General Markets to be bag holders. If true, then all alternative investments must be discouraged. This too will pass.
That’s a really good point Lakedweller2 — on the most difficult thing to get right being timing, more so than the equity traded. I’m very happy with the vast majority of the stocks in my portfolio from a fundamental basis, and most of the mistakes made were in timing, or not paying attention the to the technical setup when placing a trade.
Gold Targets: 1862, 1850
Nix with weekly close above 1890.
AXU down 8 days in a row. Essentially cut in half over 5 weeks. The head and shoulders on the daily chart projects down to about .80, and at this rate it will get there in a couple of days, lol.
It is getting extremely oversold though on the shorter timeframe RSI, and I would expect it to at least bounce before getting to .80 in time. That would actually represent the neckline of a giant H&S on the weekly chart established by the lows in 2018 and 2020.
Every time I determine what I think is a ludicrous price target on the downside, AXU manages to easily exceed my expectations.
I actually added to my AXU position due to how silly the sell-off in it has become. All the high-grade silver is still there, the operations are still ramping up, more discoveries are still being made, and I see it as a good way to play leverage to the silver space, as the only Ag producer operating in Canada.
After getting pummeled in 2021, I expected that the silver miners would be dead money until late 2022 or early 2023. Obviously everything that has transpired over the last couple of months supports that thesis.
While I don’t expect the 2020 highs to be matched until mid to late 2023. it is quite possible that the small cap silver miners like AXU put in their absolute low for the next few years anytime between now and July. That being said I am not expecting a V shaped rocket ride to new highs like in 2016. I think it will be a choppy mess back to the 2020 highs over the next 1.5 years.
Finally, I expect that the bull run will be over, for the most part, within a year or two of silver miners breaching their 2020 highs. In other words, the vast majority of the gains will be compressed into a very short period of time after having built out a gigantic 6-7 year base since 2016. This bull run will be absolutely nothing like the one from 2000-2012, which saw fairly steady gains over that entire period.
It has always been my cynical take that the CBs have coordinated their monetary policy to keep the USD strong, while at the same time flooding the world with liquidity. In this way, they could have their cake (printing trillions of USD, yen, euros etc to support financial assets) and eat it too (creating disinflation or outright deflation in commodities via a rising USD).
That playbook has worked incredibly well since 2012. However, there comes a time when the production of commodities becomes unviable, which in the long run results in shortages.
Well I believe they pulled the rubberband so far to the downside (the CRB hit the same absolute level as it was in the early 1970s(!!!) in 2020), that no amount of FX manipulation via coordinated monetary policy is going to stop the monster they have been feeding since 2012. Exhibit A is the moonshot that the USD has made since 2020, yet the CRB and unweighted commodity indexes have risen simultaneously with USD and even now, with the yen (arguably the most important currency for commodity prices) falling out of bed and looking like it has even further to fall, have barely corrected over the last 2 months.
That’s not to say that if the Fed creates a liquidity crisis that commodities won’t take a hit in nominal terms. But relatively speaking, they will outperform equities and bonds.
AXU’s 5 day RSI has basically matched the level it hit in November 2015, exactly 2 months prior to a secular bear market low, and the level it hit at the 2018 low.
I don’t think I am going out on a limb to suggest AXU’s absolute low for the next few years will be getting hit between now and July. Of course, you if you bought today, you might have to endure a drawdown, but I think it would be fairly quickly be recovered.
Greenspanconscience – good thoughts on Alexco. If there is that further move down in AXU, over the next few months, then I’ll likely add 1-2 more tranches in it, as fundamentally, I like it a great deal for playing the next move higher in the PMs for later 2022 into 2023.
First time into Colibri. It looks interesting with its multifaceted potential resource.
Back into Fosterville South. Price way down and recent drill results look good.
We’ll be having Colibri on the show later this week to discuss those drill results… stay tuned…
Gold Up, Rallies as Dollar Weakens, Treasury Yields Fall
Investing.com – Apr 26, 2022
“Some tentative support has appeared in Asia as China eased foreign currency reserves for local banks and set a neutral USD/CNY fix to support the yuan,” OANDA senior analyst Jeffrey Halley told Reuters, adding gold’s stabilization looked very fragile.
https://www.investing.com/news/commodities-news/gold-up-rallies-as-dollar-weakens-treasury-yields-fall-2810302