Category Archives: Gold

Gold Going Higher – Mining Stocks Are Historically Cheap

It’s important to keep in mind that the mining stocks have been sold to levels well-below their intrinsic value – in the case of larger-cap producing miners. Or their “optionality” value – in the case of junior mining companies with projects that have a good chance eventually of converting their deposits into mines. “Optionality” value is based on the idea that junior exploration companies with projects that have strong mineralization or a compliant resource have an implied value based on the varying degrees of probability that their projects will eventually be developed into a producing mine.

In relation to the price of gold and silver, the mining stocks generically (i.e. the various mining stock indices like the HUI or GDX) have rarely traded at cheaper levels than where they are trading now.

Bill Powers invited me on to his Mining Stock Education podcast to discuss why the price of gold and silver is going higher and why the mining stocks are historically undervalued:

In the next issue of the Mining Stock Journal, I dissect my favorite junior mining stock ideas. These are stocks that have unreasonably sold-off and have at least 10-bagger potential. You can learn more about this here:  Mining Stock Journal information.

The Tragically Flawed Fed Policies And The Eventual Reset Of The Gold Price

With gold showing good resiliency as it has tested the $1200 level successfully after enduring aggressive paper gold attacks during Comex floor trading hours, it’s only a matter of time before gold breaks out above $1220 and heads toward $1300. Gold has been under attack in the futures market this week as the world’s largest physical gold importer, China, has been closed all week for holiday observance. In addition, with financial market conditions stabilizing in India, the world second largest physical gold importer’s peak gold buying season resumed this week. When gold spikes over $1220, it will unleash an avalanche of short-covering by the hedge funds.

What will cause gold to spike up? There’s any number of potential “black swans” that could appear out of nowhere, but the at the root of it is the tragically flawed monetary policies of the Federal Reserve, along with the rest of the Central Banks globally…of course, the eastern hemisphere banks are buying gold hand-over-fist…

Chris Marcus invited me onto this StockPulse podcast to discuss the precious metals market and the factors that will trigger an eventual price-reset:

The Fed: Lies, Propaganda And Motive

The agenda of the Fed is to hold up the system for as long as possible. The biggest stock bubble in U.S. history has been fueled by 10 years of negative real interest rates. The only way to justify that policy is to create phony inflation statistics. Based on historical interest rates and based on the alleged unemployment rate, a “normalized” Fed funds rate should be set at 9%, which reflects a more accurate inflation rate plus a 3% premium. The last time the unemployment rate was measured at 3.7% was October 1969. Guess what? The Fed funds rate was 9%. I guess if you live an a cave and only buy TV’s and laptops, then the inflation rate is probably 2%…

Silver Doctor’s Elijah Johnson invited me to discuss the FOMC policy decision released on Wednesday afternoon:

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If you are interested in ideas for taking advantage of the inevitable systemic reset that  will hit the U.S. financial and economic system, check out either of these newsletters:  Short Seller’s Journal information and more about the Mining Stock Journal here:  Mining Stock Journal information.

Silver, Trump’s Trade War, Mining Stocks And The Fed’s Gold

If you have gold, you have money – If you don’t have gold, you have a problem – Alisdair Macleod

With the massive net short position in both gold and silver Comex paper precious metals, offset by the historic net long position of the “commercials” (banks, mining companies, users, hedgers), numerous rumors are swirling around the precious metals market. For certain, the availability of physical gold bars in London that can be delivered to the large eastern hemisphere buyers who demand delivery is growing tight.  Apparently the retail silver coin/bar market is starting to feel supply strains.

Miles Franklin’s Chris Marcus invited me onto this podcast to discuss the precious metals markets, mining stocks, Trump’s Trade War and the status of the gold held in custody by the Fed on behalf of the American public:

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If you are interested in ideas for taking advantage of the inevitable systemic reset that  will hit the U.S. financial and economic system, check out either of these newsletters:  Short Seller’s Journal information and more about the Mining Stock Journal here:  Mining Stock Journal information.

Reasons To Optimistic About The Precious Metals Sector

The September 7th COT report is probably the most bullish I’ve seen since the beginning of my involvement in the precious metals sector in 2001. As most of you probably know by now, the “commercial” trader category is now net long both gold and silver for the first time going back to at least 1994. The banks (“swap dealers”) net long position in both paper metals increased. Conversely the hedge fund net short increased in both.

It may take a few weeks for gold to push through $1215-1220, as the hedge fund algos will be looking to attack the price until they have covered their enormous net short position. That said, it will take only one particularly surprisingly bad economic report or unexpected geopolitical event (Syria, trade war, domestic political surprise, reckless Trump tweet, etc) to trigger a spike-up in the price of gold. Once this occurs, the hedge fund computers will race to cover their shorts, which will drive the price higher very quickly.

Trevor Hall and I co-produce the Mining Stock Daily, a brief, daily overview of news and events connected to the precious metals and mining stock market. We focus on junior mining stocks. We are looking to exploit audio information distribution on 10 different digital platforms including Anchor, Alexa, Apple Podcasts, etc. Trevor and I discussed why there is cause for optimism in the precious metals sector for MSD’s Friday feature interview segment (click on graphic to listen):

Precious Metals, Mining Stocks, Housing Market – What’s Next?

“The housing market is 100% a function of the Fed’s money printing.  Half the money the Fed printed, $2.2 trillion, went directly into the housing market.”

Analysts and financial media meatheads look at the $4.5 trillion created by the Fed and truly believe that it wasn’t money printing because it’s “backed” by Treasury bonds and mortgages.  But this is pure ignorance.  Not taken into consideration is the amount of credit and debt issuance enabled by using the $4.5 trillion as the “reserve capital.”  It’s fractional banking on steroids.

As the U.S. financial system reaches its limit on the amount of debt that can be serviced from the current level of wealth output, what happens next?  We’re already seeing what happens in the housing market per the fact that the homebuilder  stocks are in an “official” bear market, with some of them down over 30% since late January.

Then what?  The Fed will have to print multiples of the original amount it printed or face systemic collapse. At that point the precious metals sector will soar beyond anyone’s imagination at this point in time.

Phil Kennedy (Kennedy Financial) invited me to discuss these issues on his podcast.  Phil’s podcasts blend truthseeking, facts, humor, humility and sarcasm.  It’s  well-worth the time spent to listen:

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If you are interested in ideas for taking advantage of the inevitable systemic reset that  will hit the U.S. financial and economic system, check out either of these newsletters:  Short Seller’s Journal information and more about the Mining Stock Journal here:  Mining Stock Journal information.

The Employment Report Has Become Orwellian In The Extreme

“Today’s job numbers might be the biggest disaster I’ve ever seen reported. This Fall could get real ugly real fast. The deterioration of the participation rate is so big it makes me suspicious of earlier numbers.” – John Titus, producer of Best Evidence videos.

Titus goes on to say, “”The Household Survey” is showing a net loss of 1.47 million jobs year-over-year and a Labor Force reduction north of 2 million [YoY]. CNBC headline: ‘Economy adds more jobs than expected.'”

The employment report is unquestionably the most manipulated economic report issued by the Government. The content of the the headline on which the mainstream media bases its  broadcast and analysis of the report is entirely disconnected from the actual data contained in the report. The damning data that no one in the financial media or Wall Street seems to be able to find is at the top of the BLS’ report:

As you can see, the “civilian labor force”declined by 469,000 people in August from July. The number of “employed” dropped 423,000. The “not in labor force” increased by nearly 700,000. With these facts in mind (“facts” at least as far as the BLS numbers contain any shards of credibility),  how can the Government claim that 201,000 “jobs were created” in August? How can CNBC say the “economy created more jobs than expected?”  Based on the numbers in the details of the BLS report, it looks like, between the decline in the number of people employed and the decline in those not counted as part of the labor force, the economy shed over 1 million jobs.

Titus remarked to me that, in terms of manipulating the data to make the headline report look positive, this is the worst report he’s ever scrutinized: “In terms of people leaving the labor force, it sure looks like earlier data was was manipulated to hell and back and the BLS just couldn’t hide it any longer. The deltas are f—ing crazy.”

By the way, has anyone besides me noticed that the BLS calls this report the, “Employment Situation Report?”  What does that even mean?

On another note, my colleague and Mining Stock Daily collaborator, Trevor Hall, posted a fascinating interview with Scott Close and Dr. Eric Jensen of EMX Royalties.  EMX employs a project generator royalty  model and has 92 assets, three of which are current-pay royalty assets. One topic covered is what EMX will do with the cash proceeds from the sale of its giant Malmyzh copper-gold project in eastern Russia. EMX will receive a cash payment ($68 million) that is approximately two-thirds of EMX’s current market cap ($98 million).  You can listen this interview by clicking on the image below (or this link: MSD / EMX Royalty):

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The Mining Stock Journal has featured EMX Royalties as strong as recently as early May, when EMX was trading at 80 cents. You can learn more about this newsletter service here: Mining Stock Journal subscription information.

Why Are The Banks Long Gold And Silver Futures?

“The banks are very net long gold and silver futures. To the extent that banks can peer at what’s going on behind the proverbial ‘curtain,’ they must see something that has inspired them to take long position in the precious metals.”

Gold is behaving the same way it was behaving in the months leading up to the 2008 financial crisis.  Emerging markets are melting down and transmitting a financial and economic virus that infect the entire world.  The coming financial collapse will be magnified by the enormous amount of visible and hidden debt, the worst perpetrator of which is the United States.

Elijah Johnson invited me onto his Silver Doctors podcast to discuss the bullish set-up for gold and silver, along with the underlying factors that will lead to problems which have motivated the banks to go long gold and silver:

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You can learn more about this newsletter here:  Short Seller’s Journal information and more about the Mining Stock Journal here: Mining Stock Journal information.

Gold And Silver Are Set-Up To Soar

Per the latest COT report (note: this references the August 21st COT Report), the hedge fund (Managed Money) net short position in Comex paper gold was 90,000 contracts – by far a record short position for the hedge fund trader category. Conversely, the bank net long position (Swap Dealers) in Comex paper gold was close to an all-time high. It’s not quite as high it was in December 2015.

The hedge fund long position in US dollar futures is also at an extreme right now, with the banks taking the other side. Unless there’s something devious going on behind the scenes in the reporting of this data (possible but not probable), the banks are positioned for a huge move higher in gold and a sell-off in the dollar. The only question is timing. The commercial category of the COT Report (banks + producers/merchants/processors/users) is net long silver futures for the first time in at least 25 years. In combination with the gold COT Report structure, this is the most bullish set-up for the precious metals in history.

Note: Per the latest COT Report, positions as of August 28th, the hedge funds reduced their net short by 16,000 contracts and the banks reduced their net long by 2,700 contracts. The hedge fund covering explains why the price of gold rose roughly $20 between August 21st and August 28th.

The chart below illustrates the extreme positioning by speculators in gold, interest rates and the stock market:

The graphic shows the net short position of non-commercials (managed money, other institutional pools of investment money and retail traders) in gold futures, 10yr Treasury futures and VIX futures. It’s the largest bet in history by speculators that gold and 10yr Treasury bonds will go a lot lower and the stock market will go a lot higher (volatility declines as stocks rise so a short-VIX bet is a bet stocks go higher).

When positioned at an extreme like this, speculators are always wrong.  It may not seem like it right now, but I would also suggest some type of development is percolating that will trigger an unexpected and substantial sell-off in the dollar.

Based on looking at the increase in the hedge fund net short position in the gold futures COT report between the end of June and the latest report as of August 21st, it would appear as if most hedge fund short-interest contracts were sold short between July 31st and August 21st. During that stretch, the price of gold dropped from $1224 to $1170. I’m guesstimating that the average price on the hedge fund net short position is between $1215-$1220. The is a rough estimate but I would bet it’s pretty close.

This is important because it tells us the price-level at which we might see a big short-cover move higher begin. Last Friday gold shot up from $1194 to $1212. From this past Monday (August 27th) through Tuesday just before the Comex floor opened, gold ran up close to $1221. About an hour into the Comex floor hours, gold fell off a cliff quickly down to $1207. This price-hit occurred in the absence of any news or events that would have triggered a selloff. In fact, the yuan rose sharply vs the dollar on Tuesday, which throws cold water on the theory that the Chinese have pinned gold to the yuan.

The point here is that the hedge funds will be motivated to defend the $1220 price level. Above that price the hedge funds will start to lose a lot of money on their net short position. This is the only way I can explain the waterfall hit on the price of gold on Tuesday. If the price of gold can climb over $1220 toward $1230, it will likely trigger a short-cover move. But keep in mind that, as the price momentum heads higher, the hedge fund position will swing from net short to net long.

This is likely what will the drive start of the next move higher in gold. A move that will be reinforced by the start of the big seasonal buying season in India and China. Based on the numbers I see on a daily basis, the Indians and the Chinese are taking advantage of the lower price of gold and have already ramped-up their gold buying. When the Fed is forced by the economy to fold on rate hikes, gold will really begin move.

The junior mining stocks are trading at one the lowest valuation levels over the last 18 years in relation to the price of gold. US Gold Corp (USAU) traded briefly below $1 last week in the absence of any news or events that might have affected the stock price. The market cap is close to 50% below the intrinsic value of its Copper King Project. The stock jumped 14% on Friday and Mining Stock Journal subscribers had an opportunity to buy shares ahead of this move. You can learn more about this newsletter and why USAU is absurdly undervalued here: Mining Stock Journal information.

A Coming Flood Of Treasuries And An Epic Gold Rally?

“When it starts to happen, I think it could happen a lot more quickly than people realize.” The rest of the world is methodically “weaning” itself off its dependence on the U.S. dollar. Perhaps the latest EM collapse will accelerate this reset. At the same time, the U.S. Government is on track to issue a record amount of Treasury bonds to fund its rapidly expanding spending deficit. Who is going to buy these Treasuries? When the bid for Treasuries disappears, the dollar will begin to collapse, gold will soar. Demand will far exceed supply as the price rises and the paper gold shorts will be slaughtered.

My colleague Chris Marcus invited me on to his Miles Franklin podcast to discuss what appears to be an extreme version of the 2008 de facto financial system collapse and a likely “reset” of the global monetary system:

In the next issue of the Mining Stock Journal, I analyze the latest COT report and present the price-point at which hedge funds will start to cover their large short position.  I also update my favorite junior mining stock ideas and present my favorite shorter term trading plays. You can learn more about this here:   Mining Stock Journal information.