It would be difficult to find a chart with a more bullish set-up than that of GDX unless it was a chart of the imminent move higher in the U.S. dollar money supply:
The Fed was unable to move the Fed funds rate within 50% of the long term average “normalized” level. It was also unable to unwind little more than 20% of the money it printed under Bernanke and Yellen, despite Bernanke’s insistence that the $4.5 trillion printed and injected into the banking system was “temporary.” Not only was the first series of QE operations not temporary, the Fed is preparing to re-start its printing press.
I believe we are very close to a major shift in investor sentiment, as investors lose faith in the Central Banks’ ability to control the markets with monetary policy. As you can see from the chart above, we experienced just a “whiff” of the type action we can expect in the precious metals sector as reality ushers in true price discovery in the markets.
I can tell the sentiment is not getting frothy in the precious metals sector when several people, subscribers and others, have expressed disappointment in the rate of return for the mining stocks. From May 30th thru the start of Labor Day weekend, gold rose 15.3% and silver climbed 32.3%. Over the same period of time, GDX rose 43.7%. Call me old fashioned, but I can remember when 43.7% over a two or three year period of time was considered a great return on stocks (this was before the tech bubble).
Where I really see disappointment expressed is with the junior exploration micro-cap stocks. Although some have been stuck in mud, many have doubled or tripled. One example is Discovery Metals (AYYBF, DSV.V), which ran from 17 cents to as high as 52 cents this summer. Based on today’s closing price, it’s more than doubled since May 30th. Many of the other stocks I feature in my Mining Stock Journal newsletter provided double-digit percentage returns this summer and some have doubled or tripled.
I believe the pullback in the sector this month is a necessary and healthy technical correction, with some help from the price management squad, that will lead to higher highs sometime between now and year-end. Certainly investor sentiment, from the metrics I see daily, are far from exuberant, which is bullish.
GDX (Vaneck) is part of the larger money-management/invesent cartel of firms like Vanguard, State Street, BlackRock, Fidelity, etc.
One goal of this cartel to reduce the numer of available shares of held assets, reduce the total number of outstanding shares (via corporate buybacks), and push for M&A’s of held assets, consolidating operations, thus eliminating jobs, so that the billionaire investors can get even richer.
Many of the firms in this cartel exist as the largest shareholders of the largest national banks, thus largely determine Federal Reserve policy, like “money printing”.
Vast central-planning of most all aspects of the economy, to drive more wealth to the .001%.
Of course, existing as the largest shareholders of the largest “competing” corps, in most every single industry, they also exist as market movers.
They know when to enter, how to create pricing bubbles, and then when to largely exit, before those bubbles pop.
Sticking everyone else with the messy losses.
This is true, vast market manipulation.
This is socialism for the ultra-rich.
Meanwhile, the larger economy continues to remain stagnant, but shrouded in manipulated EPS (via stock buybacks and other tricks).
Thus the need to create bubbles to extract as much gain as possible.
Big news from the CME. Bacon is back, a new revised Pork Belly contract.