Tag Archives: GDX

Mining Stocks Are Historically Cheap

Financial Markets, Gold, Market Manipulation, Precious Metals, , ,

Early 2000 was the last time the the Amex Gold Bugs Index (HUI) / SPX ratio was as low as it is now. That bottom occurred as the tech/dot.com bubble was popping. Oh, what a coincidence.  By many indicators, the current stock market bubble will likely pop soon and it looks like the precious metals sector is on the cusp of a massive cyclical bull move.

While the micro-cap junior exploration stocks are by far the cheapest segment of the mining stock sector in terms of potential risk/reward, investor distaste and market inefficiency occasionally feeds prospecting mining stock investors an expected “golden nugget,” if you will.  Fortuna Silver is a current example. Chris Marcus invited me onto his Arcadia Economics podcast to discuss why I put a strong buy on FSM in July when the rest of the market was dumping the shares:

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I recently found another “golden nugget” large mining stock contrarian play the December 12th issue of my Mining Stock Journal. This stock should be an easy double over the next 6-12 months.  You can learn more about this mining stock newsletter here:   Mining Stock Journal information.

With More Money Printing Coming (“QE”) Gold, Silver And Miners Will Soar

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , ,

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.

 

A Quiet Bull Move In Gold, Silver And Mining Stocks

Financial Markets, Gold, Market Manipulation, Precious Metals, , , , ,

Silver is up 12.4% since November 11th, gold is up 9.3% since August 15th.  But the GDX mining stock ETF is up 21.4 % since September 11th.  GDX is actually up 71% since mid- January 2016.  By comparison, the SPX is up just 34% over the same time period (Jan 19th, 2016).

There’s a quiet bull market unfolding in the precious metals sector.  But don’t expect to hear about it on CNBC, Bloomberg TV or Fox Business – or the NY Times, Wall Street Journal and Barron’s, for that matter.

My colleague Trevor Hall interviewed precious metals analyst and newsletter purveyor,  David Erfle to get his take on what to expect in 2019 for the sector and  a couple of his favorite stocks (download this on your favorite app here: Mining Stock Daily):

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I discuss my outlook for the precious metals and mining stocks in my latest Mining Stock Journal, released to subscribers last night. I also present a list of large and mid-cap mining stocks that should outperform the market for at least a few months, including ideas for using call options. You can learn more about the Mining Stock Journal here:   Mining Stock Journal information.

The Mining Stocks Do Not Want To Go Any Lower

Financial Markets, Gold, Precious Metals, , , ,

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

Gold And Silver Are Headed For New Highs

Financial Markets, Gold, Precious Metals, , , , ,

I’ve  been pounding the table since late January that the third leg of the gold and silver bull market had started in mid-December.  It’s also been quite clear to me that the western Central Banks had lost their ability to push the price of gold/silver down.  Now the best they can hope for is to maintain a “controlled retreat” – i.e.  do what they can to limited rate at which the metals move higher.  That’s why we get these “zip line” price plunge formations followed by another “stair step” higher.

But don’t take it from me.  Andy Hecht, a famed oil trader, had this to say:

“I have been trading precious metals since 1981, and I have never seen an environment where both the technical and fundamental states of the metals have lined up as they have in 2016. I believe that we may be in the early days of a rally that will take gold, silver, platinum and palladium to new all-time highs.”

I need to point out that earlier this year Hecht was slow to accept the move being made by gold and silver and had even issued some bearish remarks at one point.  You can read his full commentary on the metals here:  Gold/Silver Are The Place To Be. (He has the same graphs I was showing 6 weeks ago).

The silver mining stock I featured in the debut issue of the Mining Stock Journal is up over 7% this morning.  It handily beat earnings.  This is the only large-cap miner I have presented.  It’s nearly doubled since early March and the Company pays a monthly dividend.  The call options I recommended are up 260%.   Another stock I recommended in mid-April popped 60% earlier this week. I’ll note that Casey Research had recently “poo-poo’d” this stock. My Mining Stock Journal focuses “off the beaten path” ideas that are higher risk/very high return juniors.   You can subscribe to the MSJ here:  Mining Stock Journal.   The subscription price includes all the back-issues (for now).

The Bulls Are Loose As The Mining Stocks Are Ripping Higher

Financial Markets, Gold, Market Manipulation, Precious Metals, , ,

To the surprise of most,  mining stocks continued their stunning upward move that began around January 20. Toward the end of last week, financial media goons, chart readers and analysts who rely on the CFTC’s Commitment of Traders report for “insight” into market direction were all calling for a sharp pullback in the precious metals sector. Most market “oracles” were calling for a sharp retreat in the price of gold below $1100 and silver below $14.

Perhaps most amusing about the plethora of “correction time” and “overbought” commentary on the metals sector is:  1)  because of the overt and continuous official intervention in the precious metals sector since 2011, it could be argued that the entire sector has been “artificially” oversold for the better part of five years;  we don’t know where the true “oversold/overbought” statistical levels should be because natural price discovery in the sector has been completely suffocated;  2)  the current stock market, adjusted for bona fide GAAP numbers, is the most overvalued in history;  the stock market, by the same intervention/manipulative forces holding down the metals, has been artificially “overbought for at least 3-4 years now;  yet, no one writes commentary on the need for a big price correction in the stock market.

Too be sure, whenever the COT report shows an extreme level in the bullion bank short position in gold and futures, offset by an extreme long position held by the hedge funds, the criminal banks implement a “COT stop-loss hedge fund long liquidation” algorithm which sets off the stop-losses set by the hedge funds and causes the now-familiar “waterfall” chart patterns that result from heavy bank manipulation of Comex trading.

So far every attempt to trigger forced liquidation of gold/silver futures has failed.  That’s not to say that it won’t happen.  But what makes this current rally even more interesting is the fact that it is occurring while the stock market continues to squeeze higher despite the continued deterioration in economic data.

Typically the precious metals sector will, in general, move inversely to the stock market. The fact that it has moved in correlation with the S&P 500 over the last three weeks suggests that either the precious metals “market” sees the recent move in the stock market as a “faux” rally or the smart money is selling stocks into this rally and moving capital into the precious metals sector, or both.

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(click on image to enlarge) The graph to the left shows the last two years of trading in GDX.  As you can see, the current move up in the mining stocks has not yet “corrected” the sell-off that occurred in early 2015.  You can see that the manipulated sell-off from Jan 2015 to July 2015 was accompanied by a steady decline in volume.   Over the next six months, the mining stocks formed what appears to be a very powerful base which was supported with heavy volume.  THAT is the unmistakable sign of smart money accumulating highly oversold and extraordinarily cheap mining shares.

I also believe that the current move up in the miners from mid-January reflects the absurd amount of short-selling and naked short-selling that has infested the mining shares since April 2011.  Naked shorting has become a big problem but we only heard about it when the S&P 500/Dow were plunging back in 2008-2009.   Once the Fed had stabilized the “problem” and began pushing stocks higher with QE, suddenly the naked-short selling was no longer an issue.  What happened to the Congressional inquiries and threats of legislative action?

While impossible to prove, it is 99.9% probable the naked short selling in the mining stock sector has been unimaginably immense – historically unprecedented.  But once the hedge funds and bullion banks are through fixing their problematic short positions in the miners, they will follow-through with enormous buying.

I am expecting a correction to begin sometime soon.  But when that correction has run its course, make sure you are ready to add or initiate positions in high quality junior mining shares, because I believe the next extended bull move in the mining shares will offer the to mining-stock-journal-bannerpotential to make a life-style changing amount of money.

I just rolled a Mining Stock Journal that will help you navigate the precious metals sector and invest in junior (and some large cap) mining stocks.  You can access the MSJ using this link:  Mining Stock Journal or by clicking on the image to the right.

This Junior Miner Was Up Over 9% Today

Gold, Precious Metals, , , , ,

It is back to break-even from when I first recommended it and has outperformed the sector by significant about (28%) – it’s also up 6.5% from when I posted the original update last week:

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I updated the report from June and explain why I think this stock is outperforming and has the potential for significant upside over the next 12 months:   Junior Miner Outperforming The Sector.
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Putting The Current Gold/Silver Market In Proper Perspective

Gold, Market Manipulation, Precious Metals, , , , , ,

Follow the money.   My friend and colleague, Nick of DenaliGuide’s Summit blog has done a short video to explain why the current trading action in gold and silver – although seems quite bearish – is really a non-event.   The goal is to help ease everyone of the oppressive negative sentiment the has engulfed the precious metals investing community.

Some Nick’s “hidden” talking points include the fact that:

1)   gold and silver bottomed in last June 2013
2)  June 1st this year:   gold is up almost 3%, silver is up just over 3%;  GDX is up almost 20%

Sure doesn’t feel like the precious metals sector has had positive returns this year, does it?

Please take 2 minutes to watch Nick’s informative video:  Market Sentiment Belies The Numbers.  (Samples of Nick’s T/A research, which I use, are linked at the top of the blog)

Perhaps what’s most interesting can be seen in this graph from Nick (click to enlarge):

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This shows the GDX index since mid-June.  As we know, gold and silver rallied along with the GDX into mid-July and have largely retraced nearly back to their June 1 starting prices. BUT, the mining stocks have been marking time in a sideways pattern.  The black line on the graph shows the amount of “stealth” accumulation that is occurring on every down-tick in the mining shares.  I have noticed this as I watch the tape every day, but this graph illustrates it.  The message:  SMART MONEY IS ACCUMULATING MINING SHARES.

I have several mining stock ideas here:   IRD Research Reports

My “Huge Upside” idea has pulled back on zero news.  I added some to the fund I manage today.  My “Short Term Trade/Long Term Investment” idea is back above my recommendation level.  I expect it to outperform going forward, assuming the precious metals sector starts trending higher.

 

Mining Stocks Are Percolating

Precious Metals, , , ,

I’ve just added Nick’s Denali Guide 3-page technical analysis to my report on Eurasian Minerals.  You see that full report using this link:   Research Reports.  I want to emphasize strongly Nick’s analysis is completely independent of my fundamental analysis.  Use Nick’s tools to guide your entry/buy/accumulate/take profits/sell trading decisions.  Use my analysis to decide the risk/return merits of any given junior mining stock.

(Click on the image to enlarge)

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