Tag Archives: asset bubble

Gold, Silver, Mining Stocks: Quo Vadimus? (Where Are We Going?)

The chart above was sourced from spiralcalendar.com with a couple edits of mine. It shows the S&P 500/gold ratio going back to 1980, when the 1970’s gold bull market culminated. I believe before the a complete financial “reset” is imposed on the global financial system, we could see the SPX/gold ratio fall to the level it hit in 1980.

A subscriber asked me if I thought that the fact that stocks like AG, EXK and HL, among many others, are only 50% as high in price as they were when silver hit $20 in the summer of 2016 is a red flag.

I said that I do not see it as red flag for the sector. Rather, I see it as just one measure by which mining shares are extremely undervalued relative to gold and silver and to the rest of the stock market. I always thought that the mining shares ran up in price too quickly during the 2016 rally. The GDXJ rose 300% in six months and investor sentiment had become far too frothy.

In my observation of the moves in the sector from 2001 to mid-2006 and from November 2008 to mid/late 2011, gold and silver lead the sector at first, followed by the large cap producers, with the juniors lagging and then outperforming gold/silver/large caps. That seems to be the progression unfolding now.

If I’m right, and if the metals continue moving a lot higher, we should start to see stocks like AG move well above their 2016 highs. Eventually many of the juniors will be 3-5x higher than their current level. We got a taste of the type of moves juniors will start to make this week.

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The Mining Stock Journal  covers several mining stocks that I believe are extraordinarily undervalued relative to their upside potential. I also present opportunistic recommendations on select mid-tier and large-cap miners that should outperform their peers.  You can learn more about this newsletter here:   Mining Stock Journal information.

“Thanks for today’s latest issue. It’s value to me is increasing with time.” – From “Greg”

Gold Set Up For Big Move This Year – What About Cryptos?

Gold and silver had a sharp run-up in the last two weeks of 2017. However, the abrupt move in gold has been accompanied by a rapid rise in the gold futures open interest on the Comex. Furthermore, based on the last COT report the banks have dramatically increased their net short position and the hedge funds have gotten, once again, extremely net long. I don’t like the looks of the COT report right now plus I anticipate a possible brief “relief” rally in the dollar index.

But what about cryptocurrencies? Over the past few weeks the largest and most actively traded cryptocurrencies have been massacred in price. This follows on the heels of the news that the founders of Bitcoin and Litecoin sold 100% of their holdings. Nothing like insider selling as a signal about the value of what was sold… You may not know everything surrounding this industry and that’s fine. As long as you know that you can visit sites such as cryptoexchangespy.com to keep up to date with everything relating to cryptocurrency, it’s better than not knowing anything about it at all.

Phil Kennedy invited me on to his podcast to discuss precious metals, cryptocurrencies and the U.S. dollar. We engage in a friendly (I want to emphasize “friendly”) debate on the merits of cryptocurrencies:

The bottom line for me is that gold has been declared a Tier 1 bank asset by the Bank of International Settlements. This means that gold is considered the highest form of bank asset. I believe there’s a good chance gold will move toward and over $1400 this year. As for a price prediction for the cryptos – it depends on the degree to which the fear of losing money overwhelms the fear of missing out on gains for the momentum-chasing speculators – most of whom are Asian-based. We may be approaching that point of no return: