Jordan Roy-Byrne – How Precious Metals Will React To The Rate Of Inflation, Real Interest Rates, Stagflation, And Fed Monetary Policy
Jordan Roy-Byrne, Founder and Editor of The Daily Gold, joins us to discuss how the rate of inflation, real interest rates, looking forward at stagflation, and the expectations around the Fed tightening cycle are affecting the gold and gold stocks. We have Jordan provide some technical outlook on the precious metals sector, as well as run through a few likely scenarios as to how things will develop in the short-term and medium-term, before we see the larger bullish pattern unfold.
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Stagflation Rules with John Rubino
April 19, 2022 – Financial Survivor Network
“John Rubino is back… Interest rates keep rising, 10-year Treasury nearing 3% Housing bubble is bursting. Mortgages above 5% and some sellers are cutting their prices. Massive drag on the overall economy. Stagflation is here. Ukraine war looking like a quagmire, with an outside chance of stupid mistakes causing Russian and NATO forces to start killing each other. Idiots in the US corporate media seem to think the above is okay.”
https://www.financialsurvivalnetwork.com/2022/04/stagflation-rules-with-john-rubino/
Gold $1835: It’s Where The Miners Come Alive
Stewart Thomson – April 26, 2022
“For a look at the current market and some “buy zones of champions”… The $1835 support zone is of particular interest.”
http://www.321gold.com/editorials/thomson_s/thomson_s_042622.html
Gold Price Slumps To Two-month Low As US dollar Rallies
Mining.com – April 27, 2022
“Gold prices continued to slump on Wednesday as the dollar rallied on expectations of an aggressive monetary policy tightening by the US Federal Reserve, steering investors away from the precious metal.”
https://www.mining.com/gold-price-slumps-to-two-month-low-as-us-dollar-rallies/
This is really continuing to not be a good look for mining in Peru:
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Peru gov’t declares state of emergency near MMG’s Las Bambas mine as stand-off continues
Reuters | April 27, 2022
“The Peruvian government on Wednesday declared a state of emergency near MMG’s Las Bambas copper mine, where production has been halted for a week due to indigenous communities camped inside.”
“A state of emergency suspends civil liberties such as the right to assembly and protest. Reuters reported on Tuesday that Las Bambas was weighing attempting to evict protesters on Wednesday.”
This isn’t a great look for Mexico either, as it relates to Lithium:
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Business Group Blasts Mexico’s New Lithium Law As Violating Trade Deal
Reuters | April 27, 2022
“A Mexican law that nationalizes its future lithium industry violates its trade obligations and could prove costly to the government if mining companies seek to recoup losses, the local branch of the International Chamber of Commerce said on Wednesday.”
“Mexico’s Congress last week approved a bill championed by President Andres Manuel Lopez Obrador to nationalize lithium. He has also vowed to review all active contracts to exploit the coveted battery metal.”
“The proposal was passed by a large majority of lawmakers in both chambers who argued that Mexico’s untapped lithium deposits should only be developed by a government-run company, not foreign or private miners.”
https://www.mining.com/web/business-group-blasts-mexicos-new-lithium-law-as-violating-trade-deal/
I was watching Jordan’s YouTube channel pretty closely, and unfortunately he completely missed the highs in gold and was actually bullish on gold with high dxy, hawkish interest rates increases and an impending equities downturn.
I’m so glad I sold all my PM related stocks when gold hit 2070 and all the commentators were bullish instead on discussing tops and good profit taking opportunities (typical)
Anyhow, I used that cash to buy long term Treasury etfs at 52week lows and will buy back into explores after they drop another 30-40% from here….
I still can’t believe you guys are intervieing people who actually got caught off side and just talking their book to keep buying this sector.
I guess it’s just like mnsbc, always buy and never sell.. Lol
“I still can’t believe you guys are intervieing people who actually got caught off side and just talking their book to keep buying this sector.”
You clearly have not been listening to Jordan’s interviews or following his channel closely if that was your takeaway of his comments from the last 2 years. Jordan has been more bearish on gold and PM stocks for the last 2 years than most of the guests we’ve brought on, and rightly so, and was definitely not recommending people just keep buying this sector. In fact many of the interviews week after week and month after month, Jordan mentioned it would take more time for corrective move to play through, and he mentioned seeing more downside, while still remaining a bullish outlook for the long-term and he mentioned it wouldn’t be until 2022 into 2023 that gold would break out to new highs, from back in 2020 and 2021.
He’s gotten some calls wrong on short-term fluctuations like all market participants do, but overall has been more accurate than many, and never claimed to be perfect. However to suggest he is just talking his book and saying to always buy is wrongo in the congo, and clearly is not the message Jordan has been sharing the last 2 years.
As for whether the explorers will drop another 30%-40% from here…. we’ll see, but at this point most of the damage has already been inflicted. I could see another 10-20% downside in some stocks, but many are already in bottoming patterns.
Well said.
It is laughable to call these interest rate hikes hawkish. The masses are in for a rude awakening in the years ahead but isn’t that always the case? It takes all kinds…
TBH, I am getting fairly concerned that a stock market crash will spill over into the miners, just like in 2008. The hammering that the small cap silver miners have taken is particularly ominous. After all, if you thought there was going to be a liquidity event, the silver miners would be the weakest, and they in fact have been the weakest in the PM complex for the last couple of years. Look at SIL:SLV for example. I am not sure there is any other explanation for their extreme underperformance while the rest of the commodity complex has made a moonshot over the last 2 years.
Right now the futures for gold and silver are down yet again. Will AXU close red 10 days in a row?
Just wait for the Fed to give the all clear. Or is this time different than 2008, 2018 and 2020? At this point I don’t see anything other than Fed capitulation halting the slide in metals and especially miners, which could and likely will go down with the rest of the market.
The equities market is not tanking yet mark my words. Eventually it will! Your scenario of 2008 drop won’t happen now but much further ahead you have it right somewhat just to early to the party. And if and when that happens the miners will correct from a much higher valuation.
Glen
I agree with you Glen that equity markets will not tank soon. At least not until the war in Ukraine is over and russians are defeated. And that will take some time.
There’s nowhere else to go, granted that dollar collapse hasn’t happened yet…
HL is down over 25% versus KTN since I nailed the top for the HL:KTN ratio and sold some of the former to buy the latter. SILJ:KTN is down over 20% since I caught its high.
https://stockcharts.com/h-sc/ui?s=HL%3AKTN.V&p=D&yr=1&mn=1&dy=0&id=p55409350673&a=1130587745
I remember that post of yours trading some of your Hecla for Kootenay and that was a good call Matthew.
Glenfidish
Apr 18, 2022 18:59 AM
This is not investment advice so do what you will with it. Large cap producers and royalty companies imo have topped here. This does not mean they won’t fair well going forward, it means mid cap, developers and explorers are about to embark on a ride which is going to rapidly take them much higher and in short session.
Of course this all comes in line with my before the year end statement that the bull would not dip or crash but contrary to that it would be a heck of a year with a “ mini” pause possibly mid year but continued upward motion into November. I have slightly moved forward that outline. Meaning a larger correction would come in between November-January things can change down there road. For now enjoy what’s coming and thank Matthew for kindly and graciously giving you a cycle trend from 2015 if anyone was listening out there.
Lastly to some of us Scorpio gold holders, I can’t say this month with 100% but within the 1-3 month period we are going to have what I expect one of the largest volume candles in recent history with Scorpio. It’s painted in the charts and it’s coming soon.
Good luck to all!
The timing call is one for the books Imo hopefully was helpful to some. Matthew looks like he took some off the books with his ratio call not sure on which day that was I must have missed it. Would be nice to pull that chart back up because it might coincide with what else im going to say.
In regards to my statement that small cap, developers and explorers would be next that has not changed I remain a bull.
Here’s another well timed post which I hope some of the readers could appreciate with the technical targets more importantly the monthly target and the pattern that is being shared! Nothing has changed we are extremely close to a turn and moving forward I expect the explorers, developers and small cap to explode higher while the big boys underperform with lower to sideways choppiness for extended period.
For example Newmont is targeting 64 and overtime will go even lower that’s not to say it won’t range bound for a long period. That’s what I see more off.
Glenfidish
Apr 25, 2022 25:26 AM
I was expecting a pull back here believe it or not but the overall picture has not changed. I remain more bullish then ever before.
For quick reference to what I’m seeing in my charts regarding gold specifically I believe today or possibly tomorrow has a great chance of completing a monthly low which would put the monthly prices on the miners at a floor. This is not investment advice but what Glen is seeing through his lenses.
The monthly candle in all probability will paint red for the following hui, xau, gdx, gdxj
The key reversal in gold “ could” come around 1877-1885 if it goes lower from here. I’m looking for a monthly bottom at the 10 day moving average across the board give or take with the above mentioned.
We are extremely close which leads me to believe may and going forward will and should be very prosperous and a breakout hard to believe of gold should happen imo before summer or during summer..
Best of luck to all the long time investors and pain always comes with reward in the end!
The parabolic dollar hasn’t been so overbought since early 2015 and is now at important resistance (since it is higher this evening than shown on the chart below).
https://stockcharts.com/h-sc/ui?s=%24USD&p=W&yr=7&mn=0&dy=0&id=t8715800092c&a=932696065&r=1651124291563&cmd=print
It’s easy to see why gold could go much lower but there are also a few supports at the current level. It came $2.10 short of touching its November high today but did so this evening and now sits at its 50% retracement of the whole move off of last year’s low.
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=5&mn=0&dy=0&id=p23165239080&a=1152846199
SILJ to 11.85 tomorrow?
https://stockcharts.com/h-sc/ui?s=SILJ&p=D&yr=1&mn=1&dy=18&id=p39064466083&a=1151687641
After thinking this through, I think the February low will hold, but as I have been saying for the last few months, the silver miners and likely the gold miners (but less so) are going to be rangebound this year. For example, I don’t see a stock like AG breaking above $14 this year. I am expecting it to hit its 2021 high in late 2023 or early 2024
I also suggested last month that GDX was going to build out a right shoulder of an inverse H&S, and it appears that is a strong possibility with the hard correction the last few weeks. I think it’s possible that it will test its 2020 high later this year. I would obviously like the Sept. ’21 low to hold keep the inverse H&S scenario alive.
IPT just might have found a low versus SILJ.
https://stockcharts.com/h-sc/ui?s=IPT.V%3ASILJ&p=D&yr=1&mn=7&dy=0&id=p86835904345&a=1152905320
The US dollar has been so talked up lately including Martin Armstrong that it is long overdue in a ultra bullish sentiment breakdown! Dollar is very close to reversing and cad will rise with commodities once this blood bath phase is done which I believe most carnage has ended yesterday/by Friday.
This is nothing more imo then a half cycle low noted by Gary savage. I hope he doesn’t doubt his one views as he is correct in this in regards to gold. And once we turn we will make new highs in due time and these thinly traded stocks as noted by Matthew will rise just as quick as they came down.
Some of us or others did speak about the extreme volatility you will be getting in the miners more specifically during this super cycle 2022-2025.. if you can’t stomach it, then join Jerry 😃and buy bullion silver or gold.
I believe in his latest video that he is suggesting gold is actually now making an ICL (“4-6 week correction” that began last month).
Dollar rocketing (103.89) approaches next Fibo level (chart later).
https://saturationtiming.blogspot.com/2022/04/dollar-index-april.html
as posting /GC just did a one minute chart spike from 1882 to 1894…too bad not monthly bars yet….get ready set to go…
https://tos.mx/wl8w4dI
The CB weasels are trying to using FX and coordinated monetary policy to keep a lid on commodities just like they did from 2012 to 2020 (the BoJ bent over for the Fed then too).
While the commodity complex has so far not only resisted yen weakness but actually risen, if they hammer the yen hard enough, it’s quite possible the CBs will get their intended effect. Not only that, but the yen carry trade will likely support US stocks and bonds as banks and investors borrow in yen and then buy anything not nailed down.
the inverse H&S for USDJPY has a measured move to 175.
There could obviously be pullbacks along the way, but if 2011-2015 is any roadmap, you can go ahead and throw momentum indicators and most other technical indicators right out of the window. This could literally be a straight line up.
Despite the cremation of yen today, GCC is still higher so far.
If GCC fails to meaningfully correct in the face of this onslaught, the Japanese citizens are going to need to start building guillotines and making rope.
I have been using Emo profits to add some other miners. They have crushed the Emo price to the point I took what little profits I had from others (Petrus, Summa, Osisko) and moved back to Emo. Left overs went to add to Colibri.
Good Timing: I was surfing “movies” to watch last night and came across Margin Call. Probably dated around 2010…didn’t look. Made my point about Wall Street willing to “take down” everything and everyone rather than admit being “over leveraged”. Really sick…
same old scenario, gold holding on to a higher consolidation, silver underperforming and mere buck above repeated annual lows, major producers underperforming, the dregs continue to be dregs. at multi year lows.
All in the context of the most favourable fundamentals available of inflation, war, political domestic chaos blah blah. Bewildered vast majority bulls have been left to strategies of pair trading one loser for another in the same losing sector to limit losses rather than make money as a success.
Will see but yesterday’s third commitment, will be sold as with past pop ups where any potential rally has the same character.
I concur with your characterization. However, I truly believe the next major pivot low, which could be imminent, will mark the beginning of an enormous move, especially in the silver miners. However, I am not expecting any sort of breakout above the 2016 highs in the silver miners until 2023. I think we will still get significant backing and filling to that point. Maybe that’s pie in the sky delusion, but I am sticking with that timecourse.
What would definitely put a damper on things for me would be if GDX breaks below its 2021 low.
Fair enough Green. The potential enormous rally your refer to, will principally be for the recent buyers or those having lots of cash. Paricularly those here buying the dregs. The near or fully invested crowd will remain in recovery mode. Tough to recover 40 to 50% loss without a nirvanna moment rally
Peraps Powell or Putin will provide such in May. Hopefully not Putin,
No, the rally I speak of will be for anyone who bought anywhere between now and 2016, as I expect all of the miners to be multiples higher than their 2016 peaks by the time this next rally–which I should characterize more as a real bull run–is over. I am talking about a 2-3 year move from the next major pivot low in the complex.
I am hoping yesterday’s inverted hammers across the sector mark a historical and important pivot low in the miners. We need positive closes today to confirm.
On the same page as you as to yesterday.
But with a more limited expectation. More Doc’s view of a laboured rise in the immediate term. Hopefully otherwise but who knows except the kitco pundits and promoters who are right once every couple of decades. LOL
flipped out ot yesterday’s vzla at 2.41 for amx 2.85 as a better bet me thinks
There’s no guarantee that the Federal Reserve will reverse course and start cutting interest rates again. JRB and many other gold pundits are confident that they will, but I would not bet on that. If the economy gets into trouble, they might pause and shift to a neutral policy, but it would take a huge crisis to start cutting again.
Stephanie Pomboy was sure they wouldn’t raise rates once which says a lot about her lack of understanding of the situation. She’s not much of an expert in my book.
Check out this very embarrassing tweet of hers:
https://twitter.com/spomboy/status/1496140354155950093?lang=en
https://seekingalpha.com/article/4503868-fortuna-silver-mines-stock-q1-production-decent-start-fy2022
Taylor Dart makes some good points on mining costs in general.