Tag Archives: silver eagles

Gold, Silver, Mining Stocks Are A Coiled Spring

Currently gold and silver are behaving in a way that I have not seen since late 2008. The gold open interest on the Comex is near a record high (657,776 on July 11, 2016). The Comex banks continue pile into the short side while the hedge funds pile into the long side. However, every attempt to start a “waterfall” type sell-off is met with buying. Several attempts to take gold below $1400 this week have been thwarted. Silver all of sudden started moving higher manically. Based on the data I see daily, India and China are not participating in the buying. At least overtly. It feels like someone “big” is out “there” accumulating gold.

Phil Kennedy of Kennedy Financial put together a roundtable discussion with Bill Murphy, Dave Collum, Rob Kirby and me to discuss our thoughts on the gold market:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a miniumum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

It Looks, Sounds And Smells Like A Gold Bull Market

Gold tends to perform the best when the real rate of interest (interest rates minus the real inflation rate) is negative. For now, the Central Banks have been able to contain the movement of gold in order to prevent the price from doing what it should be doing when interest rates are negative.

With that enormous amount of negative yielding debt globally, and Treasury yields in the U.S. heading south quickly, from a fundamental standpoint there’s a high probability we have started the next big move higher in gold. Silver will eventually “catch up” and begin to outperform gold. That said, get used to a higher level of price volatility in the precious metals sector. Keep a core position but sell rallies and buy sell-offs if you want to trade the volatility. Otherwise, sit tight and be right.

The Prepared Mind invited to its podcast to discuss a wide range of issues from precious metals to geopolitical problems. Here’s Part 2 (click to view Part 1):

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a miniumum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Gold, Silver And The Mining Stocks Are Showing Signs Of Life

“Shanghai Gold will change the current gold market with its ‘consumed in the East but priced in the West’ arrangement. When China has the right to speak in the international gold market, the true price of gold will be revealed.” – Xu Luode, Chairman, Shanghai Gold Exchange, 15 May 2014

The quote above is for the benefit of anyone who refuses to acknowledge or accpet that the price of gold is manipulated by western Central Banks, led by the BIS, using the paper gold derivatives traded on the LBMA and the Comex as well as using “structured notes” in the OTC derivatives market. Those who assert that the precious metals market is not manipulated do so from a position of either complicity or ignorance.

The price of gold began spiking higher on Thursday, May 30th. Over that time period the front-month futures contract (August) has run from $1280 to $1340. I believe this is being driven primarily by the market’s perception – in response the steeply inverted Treasury and Eurodollar futures curves – that a significant problem or problems is/are occurring in the global financial system.

The idea for this chart came from a  chart I saw posted by @StockBoardAsset (he had it labeled “Gold/Silver”). The chart shows the XAU index since inception to the present on a monthly basis. I also edited the labels and added the British pound crisis label.

I like it because it shows why it’s highly probable that the precious metals and mining stocks – especially the mining stocks – are near the bottom of a long-term trading pattern that goes back 35 years. The low end happens to correlate with a period in which the stock market was at or near a top followed by a significant sell-off in stocks.

If I spent the time to create a chart showing the SPX to XAU ratio, it would look somewhat like the inverse of the chart above. I’m encouraged by the move in gold and silver over the last week. At some point there will be a pullback/ consolidation of the sharp price-rise. But if you study the chart above, it would appear that the mining stocks have the potential to make a big move in the 2nd half of 2019 and that move may be starting.

One of the “tells” which indicate the fundamental underpinnings are in place for a big move in the sector is the escalation in the frequency and intensity of price manipulation on the Comex.  The banks have been significantly enlarging their net short position in gold contracts plus the volume of PNT and EFP transactions (Privately Negotiated Trades and Exchange For Physicals) has increased substantially over the last couple of weeks. There’s a high correlation between the volume of PNT/EFP transactions and the price-capping efforts exuded by the Comex price-action.

Note: PNT/EFPs are a way for the banks to “deliver” under the terms of the Comex contract without producing and delivering an actual physical Comex bar, recording the serial number on the bar under the receiving party’s name and moving the bar into an allocated account. It’s an extension of the fractional bullion system that is used to manipulate the gold price. It allows the banks to deliver phantom gold in lieu of delivering real bars.

Massive Asset Bubbles And Cheap Gold And Silver

Notwithstanding today’s absurdly phony and propagandistic employment report, it’s becoming more apparent by the week that the Fed and the U.S. Government are once again preparing to print more money. I don’t know when the Fed will revert to more QE but I would argue that the intense effort by the banks to use the Comex as a conduit to control the price of gold is a probable signal – just like in 2008 from March to October. Several FOMC officials have already hinted at the possibility of employing “radical” policy measures to keep the system from falling apart.

Silver Liberties invited on its podcast to discuss the extreme overvaluation of financial “assets” and the extreme undervaluation of real money – gold and silver – and the related derivative of real money – mining stocks.

The Divergence Between Stocks And Reality Is Insane

“They may try to run this poor thing straight up and over a cliff. Recall the 2000 top was in March but they briefly ran it back in Sep 00. Ditto in Oct 07. When warning signs are ignored, the endings are abrupt. Maintain safety nets, but don’t assume stupidity has limits.” – John Hussman

This is the nastiest bear market rally that I have seen in my over 34 years of experience as a  financial markets professional. It would be a mistake to make the assumption that there has  not been some official intervention to help the stock market recover from the December sell-off.

Rob Kientz of goldsilverpros.com – a relatively new website that focuses on gold and silver market news and research – and I had a conversation about the extreme negative divergence between the economy and the stock market. And, of course, we discussed gold, silver and mining stocks:

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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.

Mining Stock Daily’s 2019 Outlook For Precious Metals

A quiet bull market in mining stocks is underway. The GDX ETF closed trading on New Year’s Eve up 2.37%. Through Monday, the GDX has risen 20% since hitting a 52-week low close of $17.57 on September 11, 2018. In popular parlance, GDX is now in a “bull market.”

We expect that a significant bull move will occur and a significant amount of capital will pull out of “risk assets” and move into physical gold and silver for wealth preservation/flight-to-safety.

Click on the image below to hear the short and sweet 2019 inaugural Mining Stock Daily Podcast:

Mining Stock Daily is produced by Clear Creek Digital and the Mining Stock Journal.

Treasury Debt And Gold Will Soar As The Economy Tanks

“People have to remember, mining stocks are like tech stocks where everybody and their car or Uber driver piles into them when they’re moving higher. It’s not a well-followed, well-understood sector which is what I like about it because it means there’s plenty of opportunities to make a lot money in stocks that don’t end up featured on CNBC or everybody’s favorite newsletter.”

Elijah Johnson of Silver Doctor’s (silverdoctors.com) invited me on his podcast to discuss the fast-approaching economic crisis and my outlook for the precious metals sector:

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I’ll be presenting a detailed analysis of the COT report plus a larger cap silver stock that has had the crap beat out of it but has tremendous upside potential in my next issue of the Mining Stock Journal. You can learn more about the Mining Stock Journal here:  Mining Stock Journal information

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.

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):