Tag Archives: junior mining stock research

2018 Should Be Bullish For The Precious Metals Sector

Usually I’m loathe to stick out price targets on the markets, especially gold and silver, because of the undeniable market intervention of the Central Banks – market manipulation which is blatant to the point at which it is now denied only by card-carrying idiots.

Gold and silver had a sharp run-up in the last two weeks of 2017. However, the abrupt move in gold was accompanied by a rapid rise in the gold futures open interest on the Comex. The “commercial” – aka “the banks” – net short position in Comex gold futures has increased by 100,000 contracts (from 120 net short to 220k net short) in just four weeks through the most recent COT report. That’s a net paper gold short of 22 million ozs, or 623 tonnes of paper sold short. As of yesterday (Tues, Jan 16), the open interest in gold futures increased another 27,000 contracts, most of which, based on the trend in the COT positions,  can be attributed to a continued increase in bank short interest.

To put this paper gold short position in perspective, the Comex reports that its warehouses “safekeep” 9.2 million ounces of gold (this number is unaudited). That’s 11 million ounces less than the bank net short position. However, only 586k ozs of gold are reported to be “registered,” or available for delivery. The ratio of the paper gold short to deliverable gold is 37:1. In other words, each ounce of deliverable gold has been “hypothecated” and re-sold 37 times.

I guess if you are a card-carrying idiot, you have every right to deny that these numbers reflect the flagrant disregard of securities laws by the banks. But of course, the very people appointed to enforce these laws are from law firms that make millions defending the banks’ legal rights to ignore Rule of Law.

On the other hand,  offsetting the attempted control of the price of gold using derivatives, the eastern hemisphere demand for physical gold continues to be immense. It looks like, based on SGE gold withdrawals, China as a whole “consumed” over 2,000 tonnes of gold in 2017. India likely imported and smuggled into the country close to or more than 1,000 tonnes. Turkey imported 370 tonnes of gold in 2017. This exceeded the previous record in 2013 by over 22%. I would note that the size of Turkey’s demand was not expected. I don’t have Russia’s import numbers off the top of my head but Russia imported more in 2017 than has been typical.

The point here is that the eastern hemisphere’s demand for gold on an annualized basis is increasing as the price of gold increases. It’s important to know that, on a seasonal basis, imports into China and India tend to slow down in late January through February before picking up again. My hunch is that the paper gold manipulators are looking to hold down the price of gold as much as possible and wait for eastern demand to subside before attacking the price. 

This will serve as a catalyst to launch another surge higher in the price of gold driven by physical demand.  Demand which might get a boost from the ongoing crash of the cyptocurrencies.

Having said all of that, I believe there’s a good chance that gold will move toward and possibly over $1400 during 2018. This Trump tax cut will negatively impact the Government’s spending deficit by a meaningful amount and the U.S. will be forced to issue well over $1 trillion in Treasury debt this year. Moody’s placed the U.S. Government’s rating on watch for a possible downgrade. During the course of the year I expect to see the dollar index drop below 90, which is a key technical support level. If this occurs, gold will quickly move over $1400.

A portion of the commentary above is an excerpt from the latest  Mining Stock Journal.

The Precious Metals Train Is Leaving The Station – Especially Silver

The Nikkei is down 3.7% right now, the dollar index is below 93 and the U.S. seems bound and determined to start World War Three.  The U.S. is collapsing and everyone in the world knows it but the majority of the U.S. population.   Hubris rules the day in the Democratic Party as Obama is going on a farewell tour around globe to tell everyone he saved the world and Hillary Clinton feels confident enough to commit any kind of crime under the sun and get away with it.

Doc and Eric Dubin – The News Doctors – invited my onto Silver Doctor’s Weekly Metals & Markets show sponsored by SD Bullion.

“This Thing [the Comex paper short interest] Could Get OUT OF CONTROL to the  Upside Quickly!” – Dave Kranzler, Investment Research Dynamics

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Is The Pullback In Gold Over, Part 2

The bullion banks/Central Banks seem to be having a problem pushing gold lower here. Nearly every evening (U.S. time zone) they take a sledge hammer to the price by dumping payloads of paper gold electronic contracts in the Globex trading system.  But gold snaps-back typically after the London a.m. fix.  They also try to hammer it about 25 minutes before the Comex floor trading opens, to no avail:

Untitled3This graph on the left shows the spike up in gold that occurred at 9:05 EST today (the x-axis is MST).  The banks tried to hit gold about 15 mins after the stock market open but failed.

The next graph shows the daily gold price since September 29, 2015.   As you can see, gold appears to be consolidating Untitled1after a pullback from the 20% move that occurred from early January to early March.

I find it amusing when the gold investment community starts whining about a price pullback after a big move in a short period of time.  When is the last time the S&P 500 moved up 20% in 2 months?   It looks like the momentum indicators are curling back up as well.  The action in the HUI and the metals reminds of late 2005 and late early November 2008.   I leave it to the reader to review that particular history to see if they draw a similar conclusion.

Note:  I just got off the phone with the CEO of a junior gold mining company that is one of the best ideas from a risk/return standpoint that I’ve seen in 15 years of researching, investing in and trading this sector.  There’s been a handful of time when I’ve smelled “grand slam” ideas – Aquiline Resources, Silvercrest Mines, Wheaton Minerals (which became SLW and Gold Wheaton), Osisko, to name some of the most memorable.  I smell a grand slam in the making with this company.  I’ll be featuring it this week in the latest issue of the Mining Stock Journal.