Dave Erfle – Precious Metals Outlook Moving Into Early 2022
Dave Erfle, Founder and Editor of the Junior Miner Junky, joins us to share his outlook for the precious metals and mining stocks moving into 2022. We discuss the severity of the recent tax loss selling season, and also the potential for a seasonal bounce out of the tax loss selling depths and into January of 2022. We discuss where things may head from there, and what the potential macro drivers could be for either a bullish or bearish trend from that point. Dave wraps us up with how he’s been managing his portfolio and some common sense insights for investors to consider as far as seizing opportunities while also managing risks
For those who can see a monthly chart, silver looks quite good versus copper:
https://stockcharts.com/h-sc/ui?s=%24SILVER%3A%24COPPER&p=M&yr=25&mn=0&dy=0&id=p14166764836&a=1029108470
Silver also looks good versus gold despite selling down from short term resistance today:
https://stockcharts.com/h-sc/ui?s=%24SILVER%3A%24GOLD&p=D&yr=0&mn=9&dy=22&id=p54110974610&a=1077666344
The Fed’s Doomsday Prophet Has a Dire Warning About Where We’re Headed
Thomas Hoenig knew what quantitative easing and record-low interest rates would bring.
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By Christopher Leonard – 12/28/2021
“How the Federal Reserve Broke the American Economy”
Curtain closeted oligarchs cause such things.
Systems are at their beck & call.
The Federal Reserve can’t raise rates without the threat of bringing down the stock market. As long as prices on the stock market keep rising the speculative fever will go on, but now The Fed is powerless to do anything but pour money into The Markets to keep them elevated or they will crash and the game is over. DT
SLV hit some resistance today:
https://stockcharts.com/h-sc/ui?s=SLV&p=D&yr=1&mn=11&dy=0&id=p07993059671&a=704177881
The bears repeatedly got silver to break its 600 day EMA in September and December but were still unable to smash it in any meaningful way. You can see what breaking that moving average meant in 2020:
https://stockcharts.com/h-sc/ui?s=%24SILVER&p=D&yr=1&mn=11&dy=0&id=p80188193086
Silver Price Forecast – Silver Markets Continue to Explode to the Upside
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Christopher Lewis – FX Empire – Dec 28, 2021
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“Silver markets have rallied again during the trading session on Tuesday to break well above the 50 day EMA. At this point, silver looks as if it is ready to go much higher and clearly is changing its trend.”
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https://www.fxempire.com/forecasts/article/silver-price-forecast-silver-markets-continue-to-explode-to-the-upside-851544
Silver Price Prediction – Prices Rise but Hit Resistance
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David Becker – FX Empire – Dec 28, 2021
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“Silver prices moved higher on Tuesday, rising for the 5th consecutive day. The U.S. yield curve continued to flatten, with the 2-year hitting a 21-month high while the 10-year yield eased. The U.S. yield curve (2-year versus the 10-year sovereign yield) is at the flattest level since November of 2020. The market tells investors that a slow down could be underway if the Fed moves forward with tightening.”
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https://www.fxempire.com/forecasts/article/silver-price-prediction-prices-rise-but-hit-resistance-851525
NEM: Against the Grain. What’s up?
https://saturationtiming.blogspot.com/2021/12/newmont-against-grain.html
Newmont is often a good bellwether and I suspect that it is currently foreshadowing bullish moves for the sector.
https://stockcharts.com/h-sc/ui?s=NEM&p=W&yr=3&mn=11&dy=0&id=p20322886786&a=1087443334
Yes, but there must be something company-specific for such counter action.
I don’t believe that unless you’re talking about structural, long term differences like the fact that it is the biggest and safest gold company in the world. It is up 250% vs Barrick since the sector topped in 2011 and almost as much vs the HUI index of unhedged gold miners. It’s easy to see why it has long been a bellwether since it would obviously be traded by the biggest/smartest money (which of course is better at identifying tops and bottoms ahead of the herd).
My little Impact Silver also has a long history of being a bellwether without any obvious reasons for it other than, possibly, its shareholder composition. Since it doesn’t blow money on promotion or even 43-101 compliant resource estimates, it might have significantly fewer retail/dumb money shareholders than most of its peers and that alone can account for different trading action around important turns in the trend.
What Price Signals Are Telling Us
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Lyn Alden Schwartzer – Seeking Alpha – Dec. 27, 2021
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1) “Broad money supply and price inflation are rather correlated.”
“The most precise way to phrase it is that rapid money supply growth is necessary but not sufficient to cause widespread price inflation.”
“In other words, price inflation always tends to happen when money supply grows very quickly, but a rapid growth in money supply does not always lead to substantial price inflation.”
“…we can say that broad money supply and price inflation are quite correlated when there is a period of constrained resources, and can become decoupled when resources are unusually abundant for unique circumstances involving some sort of new area of resources or labor rapidly opening up.”
“The broad money supply in the United States grew by 40% for the two years 2020 and 2021, due to large fiscal stimulus to offset pandemic lockdowns and such. Some degree of price inflation from this was almost inevitable. The questions are how much price inflation and for how long.”
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2) “Commodity cycles and price inflation are tightly correlated.”
“We would see a similar result if I put copper in place of oil there, or a broad commodity index. There were no instances of the prices of everything else going up substantially and persistently while oil and other commodities remained cheap. However, it technically is possible to have high commodity prices without it necessarily causing broad price inflation, if you have major deflationary forces elsewhere (such as the 2003-2008 period of high oil prices offset by deflationary forces of globalization, along with new ways to calculate CPI).”
“Humanity has access to a fixed amount of commodity and infrastructure resources at any given time, and replacements take money and time to develop if not well-planned for in advance. When commodities are cheap, there is little incentive to invest in bringing new resources to production. When commodities are expensive, there is tons of incentive to do so. So, commodity shortages work themselves out over time, but typically with a big lag.”
“As these two points combined show, in order to see broad and persistent price inflation in an economy, we generally need two things. The first is a persistent rise in broad money supply, and the second is a physical constraint on our ability to produce more commodities, goods, or services cheaply.”
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https://seekingalpha.com/article/4476900-what-price-signals-are-telling-us
(GSV) Gold Standard Ventures: Too Cheap To Ignore
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Dec. 27, 2021 – Taylor Dart – Seeking Alpha
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“Gold Standard Ventures is one of the worst-performing gold stocks this year, down 40% vs. a 23% decline in the Gold Juniors Index. However, this has little to do with the company fundamentals, with Gold Standard continuing to hold an enviable land position in the #1 ranked mining jurisdiction and a robust project.”
“Given the sharp decline we’ve seen in the stock, Gold Standard now trades at ~0.40x P/NAV, a dirt-cheap valuation for a company that could be a Tier-1 producer by Q2 2024. Given the very attractive valuation and the fact that the stock is becoming a takeover target at these prices, I see the stock as a Speculative Buy here at US$0.43.”
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https://seekingalpha.com/article/4476973-gold-standard-ventures-too-cheap-to-ignore
I agree that GSV is getting a bit too cheap to ignore, and just bought back into a position on 12/03 at just over $0.41, and could see it being an easy 3-5 bagger over the next 2 years as it gets closer to production in Nevada. What could truncate a move higher like that would be if GSV was taken over for a 30%-50% premium at one point, which is still a distinct possibility. I’d prefer not to see GSV get taken over yet, as my thesis to make a position trade to see the stock get re-rated higher back up more in alignment with peers. However, if Gold Standard Ventures gets nabbed by one of the big boys at any point, then so be it, and I’ll book the win. This is not investment advice, and just sharing my personal perspectives on why I’m in the trade.
Orchestrated walk down started in London to complete wipe-out of Monday’s gains.
The last blowout sale before the new year. CXB is another stock with P/B ratio less than one.
Added to MAG @ $14.52 pivot point
Took my losses in E79. Took proceeds and rolled into more shares of Volcanic than I had in E79…plus added to Santacruz, Copper Lake and Dolly Varden. I will see what that means in 31 days.
Thanks for sharing your daily trades Lakedweller2. I’ve been more reserved in trading this week, not being as active as normal, but did add a little bit to my Impact Silver, Coeur Mining, and Pure Gold positions, and added back my Granite Creek Copper and Fortuna positions today. Just a little window dressing for year-end…. looking to see if we get a rally from year-end tax loss selling into the seasonally strong January/February #Q1Run. Cheers!
Picked up some of doc Jones millennial precious metals. Liking what I’m seeing today with it. Hope he’s right about that re rating of over a buck in January. 🤞
Way to go wolf! I 👏👏👏👏👏👏you…
I’m betting on you and I hope this move is lucrative for you pal 💪
Glen
Canadian tax loss selling is over!!! Silver stocks down quite a bit today, hopefully it is the strong ownership that is involved now and F-off to the weak hands.
Only one word to say to my pal from Calgary!
Often used for years at the ker…
Ditto + 1
Thanks Glen, I thought my comment might get moderated but it is exactly the way I feel. BNN said this morning and after the close that the single biggest victim of tax loss selling this year was the silver stocks. Fortuna, Endeavor, Turquoise Hill, Pan American and New Gold were mentioned.
Great points Dan, as per usual. Yeah, the silver stocks really took a drubbing this year, but I like the set up in the silver stocks moving into mid-2022 and beyond even more than the gold stocks, but have plenty of positions in both camps of PM miners.
Topped up my SCZ today and own a bunch
of FSM LEAP calls already ITM.
That’s the spirit, Dan!
Matthew
If there ever was a time I bet Manny would love to see your charts!
Glen
GDXJ x 2 forks and a Fibonacci fan:
https://stockcharts.com/h-sc/ui?s=GDXJ&p=D&yr=1&mn=1&dy=0&id=p78123658410&a=1081065591
UUP (USD) has been weakening at resistance for the last 5+ weeks:
https://stockcharts.com/h-sc/ui?s=UUP&p=W&yr=5&mn=5&dy=0&id=p05268114179&a=1081263976
SILJ is finally filling its huge 12/16 gap vs QQQ:
https://stockcharts.com/h-sc/ui?s=SILJ%3AQQQ&p=D&yr=1&mn=3&dy=0&id=p41806308362&a=991875219
ASA is a decent proxy for the type of holding most here probably have and it finished the day at fork support but one cent below its 50 day MA. Perhaps that means it will start tomorrow with weakness but finish with strength. It wouldn’t surprise me based on other charts and indicators.
https://stockcharts.com/h-sc/ui?s=ASA&p=D&yr=1&mn=5&dy=0&id=p66569573074&a=982748961
There should be decent support about 1.6% below today’s close.
https://stockcharts.com/h-sc/ui?s=ASA&p=D&yr=1&mn=1&dy=0&id=p04701526199&a=1087960489
Thanks Matthew, your stuff and especially the fork stuff is priceless, I find myself drawing all kinds of forks on my charts now.
That’s great Dan, I’m sure your efforts will pay off!
Here’s the HUI engaging a couple of forks:
https://stockcharts.com/h-sc/ui?s=%24HUI&p=D&yr=1&mn=3&dy=0&id=p56507499488&a=982826709
Time to talk about the Eurodollar. It is part and parcel of the US Dollar being the Global Reserve Currency. Not sure if this makes things more complex or clarifies the economic mess we are in but it is part of the issue. First, we have to get past the the idea that only the Fed or US Banks control dollar creation – there are all sorts of off shore entities that are creating US dollars every day – banks in London, Paris, Munich and every where else are lending/creating US dollars daily.
For a hard and fast intro see:
https://www.youtube.com/watch?v=8GwjR7yRGGs
Agreed Mike. The only reason the US Dollar has been so strong in the face of fiscal chaos over the last year, is that Euro is so much worse and it is the heaviest weighted currency against the greenback in the US Dollar index. That “strong dollar” is a bit misleading because it’s only in relation to other crappy fiat currencies, and in reality with 6%-7% CPI inflation, US citizens are having their purchasing power eroded far faster than any move higher in the USDX may suggest. This is why prices everywhere are going through the roof, and why focusing on inflation is far more germane than how the Dollar is doing in relation to the race to the bottom in the other fiat currencies.
Ex – I must admit the whole Eurodollar issues baffles me. As I listen to non-mainstream economists I am constantly reminded that actual dollar creation occurs at the banks not the Fed. Certainly the Fed makes it possible for money creation to occur by near 0 Fed Funds rates and shipping tanker cars of liquidity to the big banks. But I’m just coming to realize that it isn’t US banks alone that can do this and we have no idea how many dollars have been created through the Eurodollar markets. By all accounts it dwarfs what happens inside the US.
The whole mess is further complicated by the decisions US banks are making. From all accounts they aren’t lending as many $’s as we think and are sitting on huge piles of cash/liquidity. It is almost like they aren’t the players in the mess we think they are – they seem to be sitting back and watching.
Grant Williams has been doing a series of podcasts called “The Endgame” where he and Bill Fleckenstein are interviewing successful investors trying to lay down where this is all headed and, as usual, they have created as many questions as answers. Over at Real Vision, when they aren’t glorifying Crypto, they are doing incredible interviews dissecting the economy and how the Fed has screwed up. One thing I have realized from both streams of information is that the Fed has maintained a track record of always doing the wrong thing at the wrong time. As more than one commenter has said – the Fed’s solutions normally do the opposite of what they want them to do.
Perhaps the Fed’s greatest mistake is the 0 rates that have caused malinvestments everywhere. The masses were already moving to algo driven passive investments which has a builtin self-reinforcing momentum play in stocks so PEs in those stocks are headed to the moon. The Fed’s interest rate policies just supercharged the whole process. When the elevator door closes and Mr Market says “going down” there will be real pain and suffering for those investors. As normal you elevate up but fall down.
From all sources the only thing I know is that this will end badly but how and what will happen next is unknowable. Since the “endgame” is out of our grasp we are left to wonder how to position ourselves for the future. I figure that is why we are all here –
Good thought and response there Mike, regarding the crazy currency crisis we are all living through. It’s definitely a mess!
GDXJ touched modified Schiff fork resistance today before turning down:
https://stockcharts.com/h-sc/ui?s=GDXJ&p=D&yr=1&mn=1&dy=0&id=p96913287644&a=1074224641