The precious metals complex had a great rebound at the end of the summer but is now in the midst of a correction. Recently we wrote that the correction was nearing an end. We believe that to be the case. A short-term bottom could occur sometime this week. However, the precious metals sector was unable to retain much of the very strong momentum it previously had. Thus, the metals and stocks will need some time to confirm support and generate positive momentum before they have a chance of breaking to new highs. That being said, we wanted to take a broader view and analyze the sector in its current context [...]
We expected a correction after the gold and silver shares ran into predictable resistance that coincided with October seasonal resistance. That was predictable. Now we are 19 days into the correction and we see some stealth signs of strength and signs of the correction nearing its end. Let’s take a quick look at GDX before we get to the analysis. There are numerous positive elements to the current technical makeup of GDX. First, is the price action. The market has very strong support at $48 to $49. It first bottomed at $50.90 and then at $50.81 on Monday. Since then, GDX pushed higher to $53. Secondly, note that the RSI [...]
The precious metals complex rebounded strongly in August and September, which is typical when the larger trend is bullish. We believe the larger trend turned bullish with the bottom in May. However, weeks ago we noted targets of $1800 for Gold and 57 for GDX as resistance points. The market has begun a corrective period which should last deep into October. Nevertheless, such a correction would provide an excellent entry point before the market makes its next move higher. Today we examine potential medium term and intermediate term targets for Gold and the gold stocks. Starting with Gold, we find it correcting and consolidating after reaching resistance at $1800, which [...]
Gold and silver stocks are not only the most volatile sector but the highest beta sector. Therefore the percentage moves can be quite exaggerated relative to the market. Currently, the shares have emerged from a W bottoming pattern. They have gained substantially (in percentage terms) in just the past month. I wanted to consult history and in particular the rebounds following the bottoms in 2000, 2005 and 2008 to get a sense of the reasonable upside potential over the coming months. Judging from history, one should not be alarmed about the recent gains because these rebounds tend to run much longer and higher. Below we chart the HUI in weekly [...]
Senior producers seeking to replenish depleted gold reserves will be looking to promising juniors to provide needed ounces, suggests Dave Goguen, director of institutional sales for PI Financial Corp. In this exclusive interview with The Gold Report, Goguen provides his views on where senior gold producers will be hunting and which companies will meet newly stringent criteria in the risk-averse but increasingly gold-hungry world marketplace of today—and tomorrow. Companies mentioned : ALMADEN MINERALS LTD. : B2GOLD CORP. : BELO SUN MINING CORP. : ESPERANZA RESOURCES CORP. : TIMMINS GOLD CORP. : TOREX GOLD RESOURCES INC. The Gold Report: Dave, tell us a little bit about PI Financial. David Goguen: PI Financial Corp. (PI) is one of Canada’s largest, independent, employee-owned full [...]
It’s amazing. Suddenly, everyone is bullish again. Two months ago you couldn’t give away mining shares or Silver. No one wanted to buy. After back to back weekly gains (for essentially the first time since January) the gold bugs are back and proud. Bullish calls are coming out of the woodwork. This is good and all but as analysts our job is to stay ahead of the market, rather than react to or follow it, as so many professionals do. That being said, today we give you a quick synopsis of where things stand and the potential risks coming into play. Below we chart Gold and Silver in weekly form. [...]
Three weeks ago we wrote that the short-term outlook in precious metals was bullish. Quoting our conclusion: “The bottom line is this sector is very close to a breakout which would likely confirm the May bottom. The price action has started to improve and the sector has not been deterred by the aforementioned bad news which, in normal conditions would have caused a selloff. In the meantime, the public has been bearish the entire year and the dumb money has started to exit the market. It is this combination of factors that lead us to a firm bullish posture over the rest of the summer.” In terms of weekly closing prices, GDX and [...]
As we alluded to last week, there is an overflowing amount of evidence that both the metals and the shares have bottomed. Price action, sentiment indicators and fundamentals more than confirm a market bottom. Does this mean the market is ready to zoom much higher? Not necessarily. The sector must contend with some overhead supply as well as repair technical damage that caused a loss of both short and long-term momentum. Once the market forms higher highs and higher lows then its momentum can start to build. Until then, investors have some time to figure out which companies could be the big winners of the next cycle.By now, speculators and investors [...]
There are two drivers of stock prices: valuation and earnings. Valuations are very much driven by investor sentiment while earnings are driven by revenue and margins. In recent months we’ve devoted some time to the three phases of a bull market. These are the stealth phase, wall of worry phase and participation or bubble phase. Earnings rise in each stage while valuations only increase in the first and last phase. The average gold producer has made no net progress in five or six years because the average valuation has declined considerably. Going forward, this means opportunity. At the end of the wall of worry phase, valuations are low and only [...]
By now, everyone has seen the chart of Homestake Mining and its bull market run from 1924 through 1935. Hence, there is no need to repost it. In this editorial, Frank Barbera shows a handful of charts of gold stocks and gold stock indices during the Depression era. US Gold producers apparently bottomed in 1929 while the Financial Times Gold Index bottomed in 1931. The time to buy the gold stocks was when deflation set in. More recently, the time to buy gold stocks and physical (Gold or Silver) has coincided with fears of deflation. Below is a chart that shows the Google search volume for “deflation.” Predictably, there is a big [...]
This weekend I had a conversation with a fund manager friend who I admire. He lives in the Asia-pac region and has tremendous knowledge of and insight into markets. I asked him what his advice would be. He told me it’s simple. My advice for the next three months is patience. My advice for the next three years is precious metals. People often feel the need to complicate things by over-trading and over-thinking the situation. In this piece, we want to keep it simple for Gold and Silver and the mining shares. The first chart is the chart we published back in May when suggesting that a major bottom could [...]
Mark Twain said that history doesn’t repeat itself but it rhymes. This is also true in the markets. No bull or bear market or particular event is ever the same. Yet, because there are similarities, the prudent analyst always studies history. When trying to foresee bottoms and tops we always compare current conditions (price action, sentiment, fundamentals) to past conditions. We continue to believe that the recent bottom in precious metals markets falls into a group of major bottoms that includes 2000-2001, 2005 and 2008. In today’s piece we examine how these markets evolve following such bottoms which hopefully can give us an idea of what to expect in the [...]
In the early days of this bull market many prominent analysts and leaders from the bullish camp noted that the juniors would be the way to best leverage the bull market. The thinking was that juniors were a call option on Gold and senior producers because of their lack of exploration in the previous decade would need to acquire the juniors to replaces reserves and grow production. From 2002 to 2007 the juniors performed quite well. Yet, five years and two cyclical bear markets later, the juniors have lost their luster while Gold has nearly tripled in the same period. In this missive we look at some charts to decipher [...]
Gold moved higher Friday as the Euro cut its losses and as sources learned that Spain will soon request assistance for its ailing banks. However, for the week Gold declined because investors currently don’t see monetary easing from the Federal Reserve or European Central Bank. This week the ECB did not cut rates nor implement any new crisis fighting measures. Furthermore, yesterday Fed Chairman Ben Bernanke said it was too soon for another round of easing. We will hear more after the Fed meeting on June 19-20. It should be noted that Gold gained along with the US Dollar. The negative correlation between the two is the weakest it has [...]
Longtime readers know that we are a huge fan of intermarket analysis which is a rather new field within technical analysis. I believe John Murphy developed this field, thanks to his book. Intermarket analysis is the analysis of the relationships between the major asset classes: stocks, bonds and commodities. Furthermore, evaluating and comparing the different sectors within those asset classes also counts as intermarket analysis. Essentially, it is comparing one market to another. Intermarket analysis is essential when analyzing the precious metals complex because it is always affected by or has some relationship to other markets. For example, strength in government bonds or strength in the US dollar is usually a [...]
Gold & Silver Price Down As Fed Could End Bond Purchases In 2014
Fair or not, like it or not, the US Fed is currently the most powerful financial organization on this planet. Today, during a press conference after a two-day meeting of the Fed (FOMC), the chairman of the Fed took almost all markets down. Precious metals, equities and bonds went sharply lower. There was something going up though: the dollar and the 10 year interest rate.
Gold And Silver – Greater Certainty Is Found In Charts
We can assert the trend is down because of lower lows and lower highs. What can be seen, at this point, is a very small range, so far, following a small range in May that closed poorly. What we know for certain is that the downtrend has not yet changed, so lower prices can be expected. We may hold an opinion that gold will ultimately be considerably higher in value, but there is no confirmation that price has begun to rally.
JPMorgan Now Long Gold. A Game Changer?
JP Morgan was able to maneuver itself to the long side of the gold market while speculators (which by nature are long during the bull market) have been pushed to the short side. Does it mean that the gold price will move up right away? No, although it could. Timing a price move is not what COT is about. But with the largest holder of gold futures contract on the long side of the market things could seem less bearish as the picture that has been painted lately.
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