Tag Archives: gold stocks

Tuesday Morning Massacre In The Large Cap Miners

Something very ominous is brewing behind the scenes.  It is systemic and related to a ongoing credit collapse behind “the curtain.”  The indicators are right in front of our eyes, regarded with indifference by a zombified, propaganda-infused public injected with the “hope heroin” greedily pedaled by Wall Street, the Fed and the Government.

The credit markets are in a slow state of collapse led by high yield bonds and leveraged loans, which have been declining for the better part of a year.  Recently that decline has turned into a tail-spin in the more toxic classifications of “high yield.”

It was revealed by Zerohedge LINK, in a display of adept journalism, that the Dallas Fed has quietly told its regional member banks to refrain from marking to market their distressed energy loans and to defer an initiative to foreclose on defaulting loans to technically bankrupt energy companies drowning in debt.

Of course the head of the Dallas Fed, a former high-ranking Goldman Sachs executive, has issued a polished denial.  We need to two more denials before the intel is confirmed to be true.  But I know from a source that it is indeed true.  A couple months ago a little birdie passed on the remarks made to his client from the President of a big regional bank in Texas:  the economic hurricane brewing from the collapse in energy prices is about to hit Texas hard and it will hit every sector of the Texas economy.

Back to the Dallas Fed issue, does this sound familiar?  Anyone happen to learn anything from “The Big Short” about the fraudulent behavior of the big banks when their fraudulent business activity hits the wall?   One well-read analyst dismissed this latest round of fraud by attributing it to the change in mark to market accounting rules passed in 2009.  But these rules were meant to enable the big banks to avoid reporting asset mark-downs for GAAP purposes, enabling them to mark-up bad assets.  This further enabled these banks to misrepresent their earnings per share in quarterly earning reports.  But that analyst is whistling past the graveyard on this issue.   This is much more insidious and fraudulent than changing the GAAP accounting rules.  This is about telling banks to let bankrupt companies pretend to be solvent, just like we saw in The Big Short with CDO’s and CLO’s.

This latest move by the Fed is an attempt to play Atlas and hold up the world of banking on its shoulders.  It’s about enabling these banks to avoid taking big hits to their reserve capital.  This lets the banks carry on as if nothing is wrong when they should be selling assets hand over fist and raising even more capital to use as reserves against collapsing energy assets.   The canary has died and the Dallas Fed is going to try and carry the canary out of the mine before anyone sees the corpse.

Now does it sound familiar?  This is exactly what happened in 2008 in the mortgage market. Only this time around it will be worse because this dynamic will encompass most of the biggest lending sectors of the financial system:   energy, auto loans and student loans.  Don’t worry, mortgages won’t be left out.  The pool of homebuyers sitting on 0-3% down payment mortgages has bubbled up.  I predict that within the next twelve months a large portion of the subprime mortgages disguised as FNM/FRE/FHA conventional loans will be come quite problematic for the banks.

How does this relate to the Tuesday morning massacre in the large cap miners?  Whenever something really bad is about to hit the system, one of the first places it manifests is with an unexplainable raid on the mining stocks.  I thumbed through the news announcements of every single component of the HUI index and could not find any news reports that would have triggered a 6% hit on the HUI.   Some of the biggest stocks, like BVN, Kinross and Newmont are down 7-10%.   Unexplainably down.

This could lead to a big attack on gold/silver, so brace yourself.   It won’t last and anyone who sells into it out of fear will regret doing so in 3-6 months.

The global financial system is collapsing.  It was reported yesterday that Italy’s big banks are melting down.   This will trigger a big daisy-chain explosion credit default swaps.  I expected to see the S&P futures down 2% on this report.  They were up 1.5% overnight. I guess a melt-down starting in the European financial system is a good reason to pile into U.S. stocks…But on the contrary, I knew I would wake up to find the SPX futures up big and that’s what confirmed for me that the system is collapsing.   The Tuesday morning slaughter in the large-cap miners is Fed’s attempt to get that canary past the last group of people entering the mine and it further confirms that the global economic system is failing.

UBS/Edel Tully’s Gold Market Research Is Completely Useless

Die Wahrheit über alles (The Truth over all)

As we used to say when I traded on Wall Street in the 1990’s:  “there’s no BS like UBS.”

UBS put out a research report claiming the U.S. dollar has renewed “predictive” economic powers. Nothing could be more misleading.

The U.S. dollar vs what? The dollar index is measured strictly against the euro/yen/pound/Canadian$/Swissy/krona.

The dollar is down vs. yuan since May:

I read Edel Tully’s report every day and she is about as rhetorically biased against gold as Wall St. can get.  She’s been writing about waning demand in India and China all year. Nothing could be further from the truth.

In June, the latest month for which we have final numbers, India imported the highest amount of gold in the last 12 months. That does not include smuggling or Indian gold purchased through Dubai. We can’t track China’s numbers anymore because China specifically opened up Beijing for gold imports to hide its true import volume.

I have emailed Edel – TWICE – in the last 6 weeks to ask her if she can tell me how much gold is flowing into China through Beijing because I pointed out that you can’t quantify China’s import demand unless you know that number.  In other words, it is humanly impossible to quantify and make statements about China’s true import numbers.   Any entity that puts out statements and conclusions about the quantity of China’s demand is a fraud.

So far she has failed to respond. Therefore, she has NO credibility as a gold analyst.

If you read this news report about Beijing, you’ll see that China opened up Beijing SPECIFICALLY to hide its true import demand: http://www.scmp.com/business/commodities/article/1493507/china-opens-beijing-gold-imports-cutting-hong-kongs-transit

UBS research is a waste of time.

Gartman Finally Acknowledges The June 2013 Bottom In Gold

We will look back at the late June 2013 bottom in gold and realize that it would have been a unique opportunity in the market – both physical gold/silver and mining stocks – to bet the ranch and experience lifestyle-changing wealth gains. – Investment Research Dynamics

Gartman:  “This chart of gold in weekly terms tells an important story of gold having made its low more than a year ago, with the low tested three times… and now with the down trend line drawn here broken through rather decisively”…

“War is in the air and when war is in the air gold goes bid. What else can gold do? Capital is fleeing to the safe corners of the world, and when that happens it flees to gold. …this shall be an important day for gold and for gold’s future, for whoever or whatever has been the seller of gold on Friday’s in recent days, weeks and months cannot allow gold to trade upward through $1325 and certainly it cannot allow gold to trade upward through $1350 through all other markets in all other places. Hence…and let’s call this group “The Force”… the “Force” will have to work very hard today to defend its authority. The question shall be, “Will it?”

The “Force” has already lost one very important battle: it has lost the battle at €975/oz., with gold trading presently at or near €982 and with the truly psychologically and technically important €1000/oz. level only just a bit ahead.”

Your’s truly here made that call in late January this year:   Gold Has Found Its Bottom

Of course, my $2000 call is looking terrible, but I underestimated the extreme degree of Fed/Big Bank/Bank of England intervention we would get in the gold market.  $1500 is looking reasonable, however.

If we get $1500, the mining stocks will have made a big move.  My “Trade Idea” call from last Friday is still valid.  The stock has bounced 5.6% since then but it still has an easy $3-$5 in it, assuming the sector at least moves sideways.  You can access the report here: Research Reports.   Included is a free technical analysis assessment from Nick of Denaliguide.


Incredible Trade Opportunity In A High Quality Mining Stock

I want to preface this by saying that I try to focus exclusively on opportunities in the junior mining sector. For instance, tomorrow I will be having a discussion with CEO of a junior miner that I think could have the potential to go from 18 cents to $8 eventually.

However, I focus on the mining stocks because this is one of the few sectors of the market that has embedded information and trading inefficiencies. This is the case because of the relatively few “eyeballs” that watch or follow this sector and many of those eyeballs – especially the Bay Street (Toronto) and Wall Street analysts are either incompetent or so afraid of their own shadows that they can’t bring themselves to take any risk, even when they understand the fundamentals.

I believe this stock has an easy 10% outright, unannualized return based on today’s close, assuming the entire stock market doesn’t sell off hard or assuming the precious metals sectors minimally moves sideways over the next 5-10 trading days.

My report outlines why the opportunity was created, why Wall Street and Bay Street are clueless with their analysis of this sector and why this particular has the potential for a quick short term gain.   It’s also been set up for anyone who prefers large cap stocks to buy in now and outperform all large cap mining stocks going forward.

In addition to my analysis, Nick of Denaliguide (link at the top) was kind enough to put together his high quality, unique technical perspective and allowing me to include it in my report.  He thinks this stock has great short term trading/investing technicals.

You can access this report here:   Incredible Short Or Long Term Trade Idea


Disclosure:  I put this stock into the fund I manage this afternoon just below $37 and just before the close today.   Whether I keep it for a quick bounce or longer term will depend on several factors.