Gold and Commodities Pullback From US and International Drivers
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This week we started to see a turn around in the precious metals and commodities in general. On this week’s show we take a close look at why this pullback in commodities happened from both a domestic and international perspective.
Over the past month money has been flowing out of US equity ETFs and into EU and EM funds. This has not had a big impact on the US equity markets but by the end of the week we started to see a slow rollover. This helped provide a small pop for the metals from an oversold territory and looks to continue. The question is, how long and how high?
I hope everyone has a great weekend. Please email me directly with any companies that you would like to see on the show or would like our thoughts on. Fleck[at]kereport.com
- Segment 1 & 2: In the first two segments I am joined by Dan Oliver, Founder of Myrmikan Capital. Dan is a great at recapping markets moves dating back hundreds of years for metals and commodities. In the first segment we discuss the current commodities pullback and compare the situation back in the late 1920s. In the second segment we look at the relationship between inflation and monetary debasement.
- Segment 3: Chris Martenson joins me to dive into China and discuss the deleveraging that is underway and the markets and economies that could be impacted by a China pullback.
- Segment 4: Fund Manager Dana Lyons take a look at international markets where we have seen large flows of money into ETFs over the past month.
- Segment 5 & 6: Jeff Christian, Managing Partner at CPM Group, joins me for the first two segments of the second hour. Both segments focus on gold and commodities but in the first segment we look at the factors in the US driving commodities. In the second segment we look again at China and India in terms of gold demand.
- Segment 7: Brent Cook, Founder of Exploration Insights, shares his outlook on the GDXJ rebalancing as well as a few zinc companies they are following in his newsletter.
- Segment 8: A recap of the week in US equities and the metals. We are seeing turn and bounce from oversold territory.
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Happy weekend to all.
Thanks Cory & gang for all the hard work.
Thanks for the show as always fella’s
Appreciate your efforts.
Cheers.
Agreed. Thanks to Cory, Big Al, and all the contributors to the weekend show for all their work bringing us Info-tainment.
Ditto, but of course!
Re. Segment 1: I do not consider gold to be a commodity. It is only 10-15% a commodity. It is mostly money. However, neither do I consider its price to be determined in the short term by an open market.
I notice the tremendous increase in the value of crypto-currencies and wonder how much that is siphoning off from any potential rise in gold.
If precious metals are manipulated lower than normal, but cryptocurrencies are not, then Bitcoin may offer a respite from government manipulation. If this is true, expect swift condemnation of cryptocurrencies, as well as governmental power brought against it from multiple sources. It all depends on how much currency is at stake.
That being said, remember how they turned off the Internet in Egypt and Turkey in the past few years? Is Bitcoin vulnerable to such tactics? What about the Great Chinese Firewall?
I don’t know how opposed “governmental” powers will be. I expect modifications, but not destruction of cryptocurrencies.
Obviously the block-chain technology is powerful and useful.
Many companies are jumping on the band-wagon.
Some individual banks (e.g. Banco Santander) are already working with it. (Mostly Ethereum)
I understand some central banks are looking at bitcoin technology, although, despite its first-mover advantage, has a problem in its technology.
Dave of X-22 has an interesting theory around 19 minutes in, namely that the scoundrels behind Ransomware work for the deep state and that by wanting payment in bitcoin are seeking to deter people from cryptos on the basis that it is the hide-out from where fraudsters operate.
AA:
Interesting observation.
If the attacks increase, it’s good old private enterprise. If the attacks go away, it’s the deep state sending a warning.
While you’re there Robert, what’s your take on bitcoin? I know that you and I share a similar enthusiasm for Gold-Money which as you said before is NOT crypto-currency. Marin Katusa, Peter Schiff and others see cryptos as a scam.
Thanks, A
Cryptos are a scam.
Gold Money/Bit Gold gives a person the ability to go onto their own gold standard. It’s as real as real can be.
Thanks. It’s funny though when tulip mania is in full swing one can see how anyone can get caught up.
I’m not buying any bitcoins till Doc, Matthew, Excelsior, and Moriarity buy first.
BB:
Don’t hold your breath, you will turn purple and then die.
I don’t do anything the crowd does, I’d be trading Krugerrands for tulips first.
JHpace1:
Was gold manipulated lower from $252 in August of 1999 until hitting $1923 in September of 2011?
If you think it was, wasn’t it a pretty meaningless manipulation?
Manipulation is just another word for “I make stupid investment decisions all the time, buying at tops and selling at bottoms but I can always blame it on manipulation.”
I believe all markets are manipulated in BOTH directions.
I make informed investment decisions which sometimes lose money, but to blame such on manipulation serves no purpose.
I try not to stand in front of a steamroller, nor behind one when its backing up.
There is wisdom, however, in observing in which direction the steamroller is travelling and trying to ascertain when it is going to change directions.
Ya cant buy a cup of coffee with gold in N.A.
Cryptos are going thru the roof with more and more people and institutions interested in the technology….thats gotta tell ya sometin.
Take India for example, will they be going crypto or back to gold?
Maybe the most important thing, is what do the Zionists want?
How many Indians still do not have smart phones?
Invest in smart phones, sales are going to go thru the roof.
My thoughts exactly CFS. Crypto currencies and specifically bitcoin, are an alternative that is perhaps taking potential money inflows away from PMs. I have mentioned more than once in the past of the inverse relationship that has developed between gold and bitcoin in the last few months to a year.
I see gold as having more substance than bitcoin in the long term. The latter is possibly being caught up in abit of a mania type fad at the moment. We shall see.
Global cyber attack across 100 countries. Many hospitals in chaos as their IT systems shut down in the UK. Apparently 12,000 ransom payments have been made from the UK to these hackers’ various BITCOIN accounts. Untraceable they say.
These crypto currencies will definitely be getting more governmental scrutiny in my view.
I certainly wouldn’t expect gains in the price of a bitcoin to be relied upon.
It’s not tangible like gold so it could conceivably go to zero…… It could be taxed at unrealisticaly high levels, removing its attraction OR, holding a crypto account could become a criminal offence; holding foreign/offshore accounts in some countries is a criminal offence punishable with jail time right now I believe.
Taxing crypto is impeded by its anonimity.
It is the anonymity that is potentially ‘illegal’ though…. Not declaring the account is tax evasion. Declaring it could attract a ‘capital gains tax’ on your annual tax form; perhaps a very high one specifically for cryptos, based on the value of assets held (not profits realised) like a French annual property tax.
They could introduce a flat rate ‘annual government accredited participation/subscription fee’. They could make the annual subscription fee so high to make cryptos only available to institutions.
They COULD do anything. I’m sure they’ll definitely will do something….
Undoubtedly a G20 quango working on it somewhere.
If people are making money on it and it aids illegal activity I think it will get its wings clipped.
Metals Investor Forum May 2017: Mineral Mountain Resources Ltd.
Published on May 12, 2017
Brad Baker, VP Corporate Development of Mineral Mountain Resources Ltd., delivers a presentation at the May 5-6 2017 Metals Investor Forum
John Kaiser bottom-fish recommendation. A possible Father or Son of Homestake Gold Mine South Dakota. Ticker symbol MMV.V and MNRLF
Bottom-Fish Comment – March 22, 2017: Recommendation Strategy for Mineral Mountain Resources Ltd
Mineral Mountain Resources Ltd is a new bottom-fish accumulation target between $0.20-$0.29 based on its potential to discover a smaller version of the Homestake gold deposit in the Rochford district of South Dakota. The Homestake gold deposit was discovered in 1874 and produced over 40 million ounces from 152 million tonnes at an average grade of 8.4 g/t from 1876 until 2001 when mining stopped due to a low gold price and the high operating cost of this underground mine which had chased ore to a depth of 2,400 m. Homestake apparently spent $70 million on exploration within the 70 km by 10 km “Homestake Trend” from 1980 onwards in an attempt to find additional banded iron formation hosted high grade ore closer to surface.
https://secure.kaiserresearch.com/s3/Excerpt.asp?ReportID=783620
It’s a good sign that the weekend politics show has 2.5 times as many comments as the investing focused show. The coming week is going to be a good one for the miners.
Keep up the great work Matthew.
Best, A
I agree Mathew about the outlook. The obvious candidates are the Silver Producers soon to be followed by the explorers.
After running scans I noticed “hidden ” strength in the Uranium sector. The Uranium stocks are 15 of the 383 stocks that I follow from a variety of sectors.Producers,explorers,etc etc. For the previous 6 weeks none of the Uranium stocks put in a new six week low.It looks like the weak hands have moved on.
Rick Rule interview on bnn
http://www.bnn.ca/market-call-tonight/market-call-tonight-for-friday-may-12-2017~1115247
This GDXJ debacle is confusing to say the least. So much money is pouring into junior mining shares that the fund can’t invest it efficiently. One would think this is the most bullish news possible for the sector. And yet this rebalancing means the fund has to sell shares? Something stinks to high Heaven here. When there is too much money flooding into the sector for one fund, shouldn’t other funds start up to take advantage of this? If we didn’t have bad luck we wouldn’t have any luck at all.
Victor, the implications are net (very) bullish for the sector longer term. Sprott’s competing ETF (SGDJ) has been a beneficiary of GDXJ’s issues. Look at the recent surge in volume:
http://stockcharts.com/h-sc/ui?s=SGDJ&p=D&yr=1&mn=1&dy=13&id=p33707836788&a=523456729
SGDJ is up more than 10% versus GDXJ since early March and I expect that outperformance to continue now that GDXJ will hold much larger companies.
SGDJ:GDXJ daily:
http://stockcharts.com/h-sc/ui?s=SGDJ%3AGDXJ&p=D&yr=0&mn=11&dy=11&id=p49540274295
Agreed Matthew. SGDJ is the superior ETF over GDXJ for participating in the upside the Junior Miners. Also GOEX is a good Jr miners vehicle. I don’t hold either, but neither of them has GDX as one of their big positions 🙂
Thanks for the explanation, I hope you’re right.
I have no position, long or short, in either fund, btw.
Not sure if you saw this Excelsior.Its the most recent letter to the shareholders for abitibi royalties
http://abitibiroyalties.com/investors/letter-to-shareholders/may92017/
Hi Wolfster. No I had not seen that yet, but it was in my email inbox. Just now catching up on some news market chatter.
It is nice to see RZZ Abitibi Royalties starting to get the recognition they deserve, and also a silent promotion for GZZ Golden Valley who owns 49% of their assets (and then all their other assets). I’m still watching to see GZZ get properly valued in relation to RZZ as Golden Valley has so much more upside. Did you see the Siros drilling earlier this week? They just did the deal with 61 properties over to KZZ, and nobody even noticed, and same thing with their new JV with Alexandria Minerals:
_____________________________________________________________________________
$GZZ GOLDEN VALLEY MINES OPTIONS CENTREMAQUE PROPERTY TO $AZX ALEXANDRIA MINERALS
April 25, 2017
GZZ really needs to update their presentation, as this one form January doesn’t take into account all the recent news and JVs.
http://www.goldenvalleymines.com/investors/presentations/GZZ-January2017_v1_EN.PDF
*As of this presentation from January 2017:
$GZZ owns ~49% of Abitibi Royalties (TSXV:RZZ)
– $RZZ owns royalties on parts of the Canadian #Malartic Mine, including a 3% #NSR on Odyssey North
– $AEM and $YRI had an exploration budget of C$13.5 million for 2016
-Resource on Odyssey expected by early 2017
– $GZZ owns 4,148,374 shares of $SOI Sirios Resources Inc.
w/ a 2.5–4% #NSR on the Cheechoo Prospect
*Active Joint Ventures
-Lac Barry with $BTR BonTerra
(now they’ll need to add the $AZX and $KZZ JVs as well)
*Share ownerships
-49.4% of $RZZ (5,605,246 shares)
-60% of $KZZ (7,763,634 shares)
-4% of $SOI (4,148,374 shares
-22.4% of $VZZ (4,170,910 shares) $VZZ was also owned 21% by $LEX, so this 21% stake likely transfered over to $MUX now that Rob is taking over $LEX. It’s all so entangled and hard to keep up with.
** I still believe $OR may use $GZZ as a back door into getting at that 3% #NSR on Odyssey, and there is little $RZZ could do about it.
** As an updated, $GZZ likely has 3.45% of $SOI now. This is 4,148,374 out of 120,131,793 outstanding shares, as another contributor over at ceo pointed out.
That presentation above is from January 2017 ( and there isn’t a presentation on their site at present as a new one is under construction), so things have likely changed as $SOI issued more shares apparently. I’m not sure if $GZZ changed their share count in concert with that, or if they still have the same number of shares. It will be interesting to see the updates in the new presentation regarding how things have now developed with $AZX and $KZZ.
* As a side note, Rob McEwen is a genius. As of that January presentation, he owns 3.3% of $GZZ, 12.3% $RZZ, and through his $LEX and now $MUX controls 21.4% of $VZZ. $GZZ owns 22.4% of $VZZ and 49% of $RZZ (increasing his stake in both through Golden Valley). Makes sense.
Golden Valley has been a profitable #ProspectGenerator / #royalty company to invest in… but still, the fact the $RZZ trades at premium to the mother ship is a bit of a mystery (since $GZZ essentially owns half, but has all the other upside with $SOI $BTR $AZX $VZZ and $KZZ).
________________________________________
Here is a #Chart of some of the P.G.’s and Royalty cos, and you’ll see it has done very well…… but the arbitrage with Abitibi is very intriguing at these levels.
$MRZ $RZZ $GZZ $ALS $EMX $AMI $SMD $GMX $MRO $MD
Yes it’s very interesting.Mcewen is the one who voted against vzz getting the properties that kzz ended up with.What I find interesting is the other properties rzz has that have been given no value really like the Norrie…as mentioned AEM has learned at its Goldex mine how to extract gold from these kind of properties which are also similar to Integras and Alexandrias which in turn are similar I believe to the one gzz has just joint ventured with Alexandria..this area play is just growing in leaps and bounds…I’m considering getting some more gzz just because it is so discounted and rzz is looking like it’s going higher….10M shares outstanding is the goal in the near future for rzz…after reading the letter to shareholders I got extremely exited again about the whole gzz/rzz play
Yee-up Bitcoin has to be a scam.
Every time I hit CTRL-R my balance gets bigger.
Yee-up The fraudsters at the Comex are rigging the price of precious metals.
What next?
Aluminum price rising due to John K’s new line of designer hats?
Also I still have my order in with Mr. T for the designer wheelbarrow to match the tin foil hats to haul away the funny munny.
Notwithstanding all the comments above about crypto-currencies, I believe the block-chain technology is most powerful and useful.
It would not surprise me to see its use spread to internal company “internets”, and to a major use in contracts and banking; basically wherever high security is necessary.
Block-Chain is brilliant and as you point out with great accuracy, is independent of crypto-fraud.
You make a good point Mr. Moriarty.
Let me ask you where was the blockchain before Bitcoin?
The “scam” as you say brought forth the technology we all know as the blockchain.
Everything with the blockchain since the inception of Bitcoin with the cryptos are merely people replicating the technology that Bitcoin showed the world.
The irony of the latest hack is that the hackers want ransom payment in Bitcoin, where as if the parties that were hacked had put their information on the blockchain via Bitcoin, this wouldn’t have happened.
As with everything else, the early investors will benefit financially the most. Thats’ just a fact of life.
You know I have the utmost respect for you Mr. Moriarty,but on this one I think your wrong. Bitcoin has stood the test of time.If there was nothing here it would have already been gone.
Before you skydive you have to jump out of the plane.I’m not hoping the parachute opens.
JK:
Bitcoin has been up and down like a bride’s nightly. Far worse than gold and silver. For any investment to have true value, there has to be something there. Bitcoin is a pseudo currency with no real value. The fact that lots of people think it’s a great idea doesn’t speak well, lots of people fall for every scam.
Mr Moriarty:
That all sounded pretty good but my question back to you why then is Visa trading at $92.73 a share? The value of Bitcoin lies in its ability to facilitate financial transactions at a fraction of the cost that a credit card does.
Most people miss this point.
Really liked Dan Oliver’s history lesson.
The only part I didn’t get was in the 1st seg at 8:20 min or so, he said that the gold:commodity ratio was rising, a sign of gold going up.
But when I pull up a GLD:DBC chart, it looks like it’s topping, because of the neg divergence on the RSI(14). It’s only a chart, and it doesn’t predict the future, but it does mean that momentum is slowing, and is peaking. Looking ahead, odds are that DBC will go up relative to GLD, looks like to me.
The weekly GLD:DBC recently (Dec) made a lower low, and is now looking like it’s making a lower high —> thus, if the weekly MACD crosses down, it’d be a confirmation of a downtrend. Not sure if I heard Dan correctly.
The CRB is rising versus gold and that is good for the nominal price (or dollar “value”) of gold. It might seem backwards at first, but during the best bull markets in the gold/commodities space, gold is one of the worst performers. This makes sense because we all want to leverage a “sure thing” and the way to do that is to invest in related items with similar price drivers that are less of a sure thing.
On the following weekly chart of commodities priced in gold, you can see that both bottomed early last year but commodities have outperformed.
I’m glad you brought this up because I really like what I see on that chart and hadn’t been paying attention to it.
http://stockcharts.com/h-sc/ui?s=%24CRB%3A%24GOLD&p=D&yr=1&mn=5&dy=22&id=p45068160851&a=523710623
BIT:
Compared to commodities, silver, platinum, oil, ng and a lot of other things, gold is expensive.
BitCoin & Alternative Currencies – Armstrong
QUESTION: I very much look forward to reading your blog every day and feel that I am learning much. I don’t know much about BitCoin but I note that it has almost doubled since the beginning of the year. Does your model have any insight into the future of cryptocurrencies like BitCoin. MR
Pento on USAWatchdog
Jim Willie on Silver:
uranium
“This Is Going To Be WILD! – China Is Attacking COMEX Silver!” – Harvey Organ
Stateside Report Podcast – May 14, 2017
In this episode of the Stateside Report Podcast we talk about the week in gold, silver, base metals and the stocks and then we wrap up with news of the week from the Canadian junior exploration sector including: Galway Metals $GWM, Cartier Resources $ECR, Kootenay Zinc $ZNK, Arizona Silver Exploration $AZS, Mariana Resources $MARL, Thor Exploration $THX, Lion One Metals $LIO, Inventus Mining $IVS, Alexandria Minerals $AZX, Antler Gold $ANTL, Vanstar Mining $VSR, Tomagold $LOT, Alto Ventures $ATV, Northern Dynasty Minerals $NDM. We talk gold, silver, lead, zinc, nickel, copper, oil, gas and uranium.
Deep Survival: Lessons for investing and trading in the metals
Should ignorance override knowledge?
great listen to……
Another gold jr explorer acquired ..Integra taken out by eldorado
http://www.marketwired.com/press-release/-2216186.htm
Yes, that’s another key takeover in the works. It’s starting to get interesting again in the M&A space. Cheers!
This relief rally in the metals and commodities is fine and dandy, but I won’t really feel better about it until gold closes solidly over the 200 dma again. Call me too bearish, but I still feel like we are just in the process of building out a right shoulder of a head and shoulders pattern. We need to take out the April high for the formation to be put to bed.
GCC spiked back over $19 today. That is constructive for sure, but if needs to stay above $19 by the close of the month, that will be the key. A heck of a lot can happen in the next couple of weeks. Also, the stochastics on the monthly chart are still pointed down and are under 50. It is going to take a decent sized rally over the next couple of months to turn them back up. The path of least resistance on the monthly chart is still down still.
Spanky, look at the monthly MACD and your daily and weekly charts. GCC looks fine.
http://stockcharts.com/h-sc/ui?s=GCC&p=W&yr=4&mn=2&dy=0&id=p21582127681
Gold is a clear SELL relative to silver. Shorting gold would be a good way to hedge long silver and pm miner positions.
GLD:SLV
http://stockcharts.com/h-sc/ui?s=GLD%3ASLV&p=D&yr=1&mn=1&dy=13&id=p58584716518&a=521820217
So much for the trend line break head fake:
http://stockcharts.com/h-sc/ui?s=SLV&p=W&yr=4&mn=2&dy=0&id=p18655049865&a=521684160
It’s got to hold though. I appreciate your conviction though.
Yes, it’s got to hold but it’s no small feat that the bulls were able to rip the advantage from the bears paws after they got the upper paw!
The trend line break should have should have strengthened the bears resolve considerably as well as turn many bulls into bears – yet it still failed.
The weekly SIL chart is shaping-up nicely:
http://stockcharts.com/h-sc/ui?s=SIL&p=W&yr=5&mn=10&dy=0&id=p72072380758&a=491088089
An interesting move from Rye Patch – they sold their CDE royalty to raise capital instead of doing a more traditional capital raise. I like it because it didn’t really dilute current shareholders, and traded future income from the NSR for immediate value in the now to progress forward Florida Canyon and Lincoln Hill.
____________________________________________________________________
Rye Patch Gold sells Rochester Royalty
May 15, 2017 /CNW/ – (RPM) (RPMGF)
http://www.newswire.ca/news-releases/rye-patch-gold-sells-rochester-royalty-622291173.html
SGDJ has come within 4 cents of filling today’s gap while GDXJ has only managed to come within 24 cents. The discrepancy is probably due to short covering in GDXJ.
SGDJ weekly looks good:
http://stockcharts.com/h-sc/ui?s=SGDJ&p=W&yr=2&mn=7&dy=0&id=p44549264831&a=523957415
GOOG and AMZN headed to 1000+. Get on board before they head to 2000+. It’s a no lose investment (5% will be the biggest loss you will ever see on paper). They are backstopped by the Fed and US govt. They now have a critical mass of resources (money and talent) to take over the world.
Typical ugly gap and crap in GCC, gold, silver. It think it is going to be hard to overcome.
Thanks guys for the show.