Tag Archives: silver

Economic, Financial And Political Fundamentals Continue To Deteriorate

I’ve been writing about the rising consumer debt delinquency and default rates for a few months.  The “officially tabulated” mainstream b.s. reports are not picking up the numbers, but the large credit card issuers (like Capital One) and auto debt issuers (like Santander Consumer USA) have been showing a dramatic rise in troubled credit card and auto debt loans for several quarters, especially in the sub-prime segment which is now, arguably the majority of consumer debt issuance at the margin.  The rate of mortgage payment delinquencies is also beginning to tick up.

Silver Doctor’s Elijah Johnson invited me onto his podcast show to discuss the factors that are contributing to the deteriorating fundamentals in the economy and financial system, which is translating into rising instability in the stock market:

If you are interested in learning more about my subscription services, please follow these link: Mining Stock Journal / Short Seller’s Journal. The next Mining Stock Journal will be released tomorrow evening and I’ll be presenting a junior mining stock that has taken down over 57% since late January and why I believe, after chatting with the CEO, this stock could easily triple before the end of the year.

“Thanks so much. It was a pleasure dealing with you. Service is excellent” – recent subscriber feedback.

The Mining Stocks Do Not Want To Go Any Lower

It feels like were at the point in the “correction” cycle in which the mining stocks are reluctantly going lower. I also believe that aggressive hedge funds looking to buy at this level are trying to push the stocks down in early trading in order to induce remaining weak hands to sell in their bids. Tuesday (March 20th) is a perfect example. Several of the stocks I own were hammered early and then snapped-back during the course of the day. As an example, USAU opened at US$1.84 but was slammed down to $1.75. It rebounded to close down only 2 cents at $1.80. This was despite sideways movement in gold after gold was hit in early morning trading.

The graph above is a 1-yr daily of the GDX. You can see that it’s been trending sideways since early February this year. You can see also that it’s managed to hold the 52-week lows on several occasions. It just “feels” like the miners do not want to get lower. Similarly, the sentiment regarding, and interest in, the mining stocks is at a low level seen at cyclical bottoms in the precious metals sector (Oct 2008, Dec 2015):

I sourced the chart at the bottom of the previous page from Turd Ferguson (TF Metals Report). It shows a timeline of Google searches on “gold mining stocks” over time.

The trading patterns and sentiment indicators are thus at levels that is typically associated with market bottoms. The best time to buy into a stock sector is when it’s at its most unloved. I would argue that were are at that point right now.

As far as the timing on when the sector will begin to take-off again, I’m loathe to assign a time-frame other than that I expect a big move to begin before the end of the summer. A subscriber emailed me to discuss the sector and expressed frustration over the fact that the enormous physical off-take in the eastern hemisphere has not stimulated a big move in gold. I responded by explaining that I’m not relying on the Chinese to squeeze the market.

I think the market will move higher on its own accord. As things fall apart more quickly in the west, gold will soar. Look at Wednesday’s FOMC rate hike event. Gold’s response to the Fed’s rate hike completely surprised me. We put on a trading hedge this morning thinking that gold would get hammered when the rate hike news hit the tape. Gold did just the opposite. This is bullish.

The commentary above is from the latest issue of the Mining Stock Journal. My goal is to find junior mining stocks with huge upside potential before the get discovered by the “heard.” You can learn more about the MSJ using this link:   Mining Stock Journal.

MSJ to the rescue! (of my mining stock portfolio). I’m up 198% currently on a significant stake @ .18 cents.
Thank you for all you do!
– Subscriber “Phil,” in reference to Mineral Mountain Resources, which I presented July 7, 2016

The Stock Market – Dow And SPX – Could Easily Drop 50%

Jim Rogers stated in an interview with Bloomberg that “the next bear market will be worst in my lifetime,” adding that he didn’t know when that bear market would occur. The stock market has become insanely overvalued. Before last week, several market-top “bells” were ringing loudly. The stock market could easily drop 50% and, by historical metrics, still be overvalued.

Gold, silver and the mining stocks have been pulling back since late January. In fact, I warned my Mining Stock Journal subscribers in the January 25th issue that the sector was getting ready for bank-manipulated take-down. In the latest issue I offered a view on when the next move higher could begin. Mining stocks in relation to the price of gold and silver have become almost as undervalued as they were in December 2015, when the sector bottomed from the 4 1/2-year cyclical correction. In a recent issue I listed my five favorite junior mining stocks.

I was invited to join Elijah Johnson and Eric Dubin on Silver Doctors’ weekly Metals & Markets podcast. We discussed the stock market, precious metals and the Fed’s next policy direction:

I also publish the Short Seller’s Journal, which is a weekly newsletter that provides insight on the latest economic data and provides short-sell ideas, including strategies for using options. You can learn more about this newsletter here:   Short Seller’s Journal information.

The Stock Market Is Setting Up For A Historic Collapse

There is no history to suggest this is sustainable. This price move remains the most extreme technical disconnect in the $DJIA ever.   – Northman Trader

The U.S. dollar has had the worst January since 1987.  There’s a lot of reasons why the stock market crashed in October 1987, but the declining dollar was one of the primary catalysts.  The rest of the world, led by China, is methodically and patiently removing the dollar as the world’s reserve currency.  The cost for the U.S. Government to fund its rapidly expanding spending deficit is going to soar. Absent the ability to print unlimited quantities of electronic dollars, the U.S. Government’s credit quality is equivalent to that of a Third World country.

Silver Doctor’s invited me to join Elijah and Eric Dubin for their weekly Metals and Markets podcast.  We discuss the issues above plus have a little bit of fun:

The cost to buy down-side protection has never been cheaper.  No one, I mean no one is short or hedged this market.  When slide starts, it will quickly turn into a massive avalanche.  You will have to be set up with hedges and short positions or you will miss the money that will be made from taking a lonely contrarian view of the market.

My subscribers who shorted my homebuilder stock idea two weeks ago are now up 17.7%. That’s if they shorted the shares. They are up even more if they used puts. If you are interested in learning how to take advantage of the coming stock market crash, you learn more about the Short Seller’s Journal here:   Short Seller’s Journal information.

Raymond James Recommends Gold?

From King World News on October 12th:

With very little in the U.S. stock market looking like a low-risk entry, consider gold as an alternative option. Recall, the metal broke the downtrend that had been in place since 2011 back a couple of months ago, and has now pulled back to that former resistance line. It should now offer some support, and the 40-week moving average also sits around there, further adding to the importance of the zone (see bullish breakout and test of support below). (click to enlarge):

This graphic above from the KWN report is based on chart-reading analysis. I’m not a big “chartist” or “technicals” advocate, but hedge fund algos and day-traders love to chase “technicals” and price velocity – in either direction. To that extent, the completion of chart “formations” can become a self-fulling prophecy.

Having said that, the fundamental support for substantial upside adjustment to the price of gold becomes more compelling the day, not the least of which is an acceleration in the accumulation of physically delivered gold bullion by several eastern hemisphere countries.

I wanted to highlight the call by Raymond James because, interestingly, a couple different advisors from Raymond James subscribed to the Mining Stock Journal yesterday. I was wondering why until I saw the report posted on King World News. If just a small percentage of retail/high net worth investment advisors begin to allocate capitol to the mining stocks, it will trigger a massive move higher in mining stock prices. Currently, relative to the price of gold, the only time in the last 20 years that mining stocks have been more undervalued was in December 2015.

Sprott (the firm) is currently recommending that its clients invest in an emerging junior exploration gold mining company.  I recommended this particular stock to Mining Stock Journal subscribers in April about 25% below its current price.  I’m chatting with the CEO today and will be updating my outlook for this stock in next Thursday’s issue.  I will also be featuring the stock of a mid-cap mining stock that I think has 30-50% upside by the end of the year if the price of gold continues to move higher as I believe it will.

On average and in general,  since the inception of MSJ, I have been able to dig up junior mining stock investment ideas before the big firms discover, promote and channel client money into them.  I am starting to feature mid-cap miners with stocks that have been unreasonably beaten down in price this year because those are “low hanging fruit” risk/return plays in which 25-50% can be made in a short period of time.  I recommended call options on SA (Seabridge Gold) in the 9/21/17 issue that are up 300% since then.

You can find out more information by clicking on here:  Mining Stock Journal information.

Can The Fed “Normalize” Without Collapsing The System?

The official lies about the economy keep mounting.  The Dallas Fed reports that its regional economic activity metric surged in early September, despite the complete shut-down of Houston for a few days during the “measurement” period.  The “general activity” index spiked up to a 7-month high. Clearly the quality of this report is suspect, to say the least.

Contrary to this report, the Chicago Fed’s National Activity Index plunged to -0.31.  It was the weakest reading since last August and a huge plunged from the July reading of 0.03. The Street was expecting 0.11.  Because of the nature of this index (85 sub-components measured at the national level) it takes a lot to “move the needle” for this metric.  A negative point-three-one reading implies that the national economy broadly contracted during August.

Clearly the Dallas Fed propaganda was intended to reinforce the Fed’s empty threat to raise interest rates and “normalize” its balance sheet .  Silver Doctors invited me onto their Friday weekly market podcast to discuss the latest propaganda that spewed forth from the Fed’s FOMC meeting earlier in the week, the western Central Banks’ losing battle to push the price of gold lower and the continuing deterioration in the U.S. political and economic system:

The precious metals is in the early stages of another bull market run, like the one that occurred from 2001-2011. This one is being driven by the China-led movement to remove the dollar as the world’s reserve currency and replace with a currency that will incorporate incorporating gold back into the monetary system. The Mining Stock Journal is a bi-weekly newsletter that will help you get invested ahead of the next huge capital flow into the precious metals sector. To find more, click here:  Mining Stock Journal

“Best 20 quid a month I’ve ever spent.” – subscriber from the UK

The United States Of Hubris

The U.S. Government is following the propaganda formula used by Joseph Goebbels that was devised by Sigmund Freud’s nephew, Edward Bernays. The basic idea is to keep repeating a lie enough times so that eventually the masses believe it. The “Russia hacked the election” propaganda is the perfect example. Hillary Clinton first mentioned it in reference to “Russia hacked the DNC emails” during one of the debates. That lie transformed into the “Russia hacked the election” false-narrative repeated every 30 seconds on Fox News, CNN and the greater mainstream media. In truth, to this day not one single shred of evidence has been produced to support the claim. And yet, the lie perpertuates and the public fears Russia. Charles Dickens could not have scripted a better socio-political parody.

This guest post is from “Antonius Aquinas:”

This year, as of yet, North Korea has not been responsible for a single death of a foreign national. Nor has the tiny communist state ever used a nuclear weapon against an enemy like the US did with its immoral and hellish destruction of two Japanese cities, Hiroshima and Nagasaki at the conclusion of WWII.

On the other hand, since the start of the Trump Presidency, US-backed forces have been responsible for the deaths of some 3700 civilians in Mosul, Iraq.** This is not to mention its murderous armed strikes in Yemen and Afghanistan. Nor is American aggression limited to direct military action, but its arms supply sales to despots and its puppets has escalated tensions and makes conflicts that do break out much more brutal.

Fortunately, for the future of global peace, US hegemony is coming to an end. The nation is hopelessly broke while its welfare/warfare economy is beyond reform and faltering badly which means that when the inevitable collapse does happen, it will mean the end or a serious pull back of the Empire. A similar situation took place in Great Britain in 1945 after it took part in another senseless global conflict which liquidated the British Empire once and for all.

Click here to read the rest: The United States of Hubris

Gold Breakout Signals A Financial Hurricane Coming Onshore

I found it amusing that Mohamed El-Erian wrote an opinion piece for Bloomberg which asserted that gold is not much of a “safe haven these days.”  His thesis was entirely devoid of material facts.  His underlying rationale was that safe haven capital was flowing into cryptocurrencies rather than gold.  I guess if one has a western-centric view of the markets, that argument is a modicum of validity.  However the scope of the analysis omits that fact that the entire eastern hemisphere is converting fiat currency at a record pace into physical gold that requires bona fide delivery outside of western custodial roach motels.

Elijah Johnson invited me onto his podcast sponsored by Silver Doctors to discuss why the financial upheaval beginning to engulf the United States will be much worse than the 2008 “Big Short” crisis.  We also discussed by the precious market has always been and will continue be the best place to seek shelter from coming financial hurricane:

If you are looking for ways to take advantage of the next move higher in the precious metals bull market, you can find out more information about the Mining Stock Journal using this link:  Mining Stock Journal subscription information.

“Stock Market?” What Stock “Market?”

“There are no markets, only interventions” – Chris Powell, Treasurer and Director of GATA

To refer to the trading of stocks as a “market” is not only an insult to any dictionary in the world that carries the definition of “market,” but it’s an insult the to intelligence of anyone who understands what a market is and the role that a market plays in a free economic system.  By the way, without free markets you can’t have a free democratic political system.

The U.S. stock is rigged beyond definition. By this I mean that interference with the stock market by the Federal Reserve in conjunction with the U.S. Government via the Treasury’s Working Group on Financial Markets – collectively, the “Plunge Protection Team” – via “quantitative easing” and the Exchange Stabilization Fund has destroyed the natural price discovery mechanism that is the hallmark of a free market.  Capitalism does not work without free markets.

Currently a geopolitically belligerent country is launching ICBM missiles over a G-7 country (Japan).   In response to this belligerence, the even more geopolitically belligerent U.S. is testing nuclear bombs in Nevada.  The world has not been closer to the use of nuclear weapons since Truman used them on Japan.  The stock markets globally should be in free-fall if the price discovery mechanism was functioning properly.

To compound the problem domestically in the U.S., the financial system is now staring down a potential financial catastrophe that no one is discussing.  The financial exposure to the tragedy in Houston is conservatively estimated at several hundred billion.  Insurance companies off-load a lot of risk exposure using derivatives.  The potential counter-party default risk connected to this could dwarf the defaults that triggered the AIG and Goldman Sachs de facto collapse in 2008.   The stock “market” should be down at least 20% just from the probability of this occurrence.  Forget the hurricane issue, Blackrock estimates that insurance investment portfolios could lose half a trillion in value in the next big market sell-off.  Toxicity + toxicity does not equal purification.  The two problems combined are the equivalent of financial nuclear melt-down.

Last night after the news had circulated of the missile fired by North Korea, the S&P futures dropped over 20 points and gold shot up $15.  As I write this, the Dow is up 50 points, the SPX is up over 3 points and gold has been taken down $20 from its overnight highs.  Yet the two catastrophic risks above have not changed in potential severity.   Pushing around the markets is another propaganda tool used by the Government in an attempt to control the public’s perception.  In the words of the great Jim Sinclair, “management of perception economics,” or “MOPE.”

The good news is that, while the systemic puppeteers can control the markets in general, they can’t control the individual parts.  There has been a small fortune to be made shorting individual stocks.  Today, for instance, Best Buy reported earnings that predictably “beat” the Street estimates but it warned about future sales and earnings.  The stock has plunged 11% from yesterday’s close.  The Short Seller’s Journal featured Best Buy as a short in the May 28th issue at $59.  The target for this stock is $12.50, where it was in 2013.  I recommended some January 2019 puts as high probability trade to hit a home run on this idea.

Other recent winners include Chipotle, General Electric, Tesla (short at $380), Bed Bath Beyond in December at $47 and may others.  The more the PPT interferes in the markets to keep the major indices propped up, the more we can make from shorting horrendously overvalued stocks that can’t hide from reality. There’s very few investors and traders shorting the market, mostly out of fear and the inability to do fundamental research.  The Short Seller’s Journal focuses on the areas of the stock market that are no-brainer shorts right now.  You learn more about this product here:  Subscription information.

I really truly look forward to every Monday morning when I get to read through your SSJ. Again, last nights one was great. I have added to the BZH short position and I have had a lot of success adding to CCA each time it has tagged its 200 dma from below. I have done it four times now and each time it has sold off hard within the next several days. I plan to do the same again if it tags it again this time as it has bounced again.  – subscriber feedback received earlier this week (James from England)

 

Is The Precious Metals Sector Set-Up For A Big Run?

I had not noticed until I looked mid-day today (Thursday, Aug 24th) and saw that the HUI index was above 200. It ended up closing just above 200. I want to see it hold above 200 dma and move higher from there before I get excited.  But the chart has become mildly bullish.  GDX, which is a larger representation of the large-cap mining stocks, looks even more bullish that the HUI:

I’m not big advocate of using chart “technicals” to forecast the next move in any market, but many traders, hedge funds and investors use them and they can become “self-fulfilling prophecies.” You can see that GDX (same with HUI and GDXJ) has been trending sideways since early February in a pattern of rrowing volatility. Chartists look at this as a pattern that predicts a big move in either direction. I’ve drawn in a white downtrend line through which the GDX appears to have climbed over. It’s also now above its 50/200 dma’s (yellow and red lines, respectively). I’m not ready to declare a “break-out” yet, but I’m feeling optimistic going into the eastern hemisphere’s biggest seasonal period for accumulating physical gold:

The gold chart above is a 2-yr daily for the price of gold as represented by the Comex continuous gold futures contract. Since April the price has been hitting its head on $1300. I remember when gold attempted to break above $400 in late 2003/early 2004. It took several attempts to get up and over $400. Around that time Robert Prechter had predicted that gold would drop to $50. How well did Prechter’s charts work then?

There’s one of many catalysts away from sheer eastern physical demand or an errant tweet
from Trump that can push gold a lot higher in conjunction with the U.S. dollar index quickly falling a lot lower. The most pressing issues currently are the rising geopolitical tensions between Russia/China and the U.S., the upcoming Treasury debt-ceiling battle and, what is becoming more apparent by the day, a deteriorating U.S. economic and financial system.

Speaking of physical demand, extremely negative ex-duty import premiums have been
observed in India. Many of you may have read standard gold-bashing propaganda pointing to that as evidence that India’s new sales tax is affecting gold demand. But quite the contrary is true. As it turns out, there was a loop-hole in the Goods and Services Tax legislation that scrapped a 10% excise duty on imports from countries with which India had signed a Free Trade Agreement. Currently Indian gold importers appear to be sourcing gold from South Korea, which enables buyers to avoid the 10% import duty entirely. Until the Indian authorities move to close this loophole, we won’t have good feel for how much gold is flowing into India until the official monthly statistics are released. Based on the import trend in June and July, there continues to be an usually large amount of gold imported into India this summer. It will likely pick up even more as we head into the India festival season this fall.

The above commentary is from the latest issue of the Mining Stock Journal.  For those of you with huge profit in Novo Resources, I provide some information about Novo that is not in the analyst reports.  It includes some technical information about the nature of the assay results produced up to this point.  The issue contains analysis in support of buying two primary silver producers whose stocks have been sold off well below their intrinsic values.   New subscribers get all of the back-issues.  You can find out more about the MSJ here:   Mining Stock Journal information.