Author Archive: Zeal Research

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Gold Production Decline Imminent

Gold Production Decline Imminent

I truly believe it will be the lack of backfill that will smack the gold-mining industry the hardest. Not only are the large producers cutting way back on their exploration spending, the junior sector has all but ceased exploring and advancing projects. I discussed the huge crisis of confidence currently strangling the junior sector in a previous essay. And it’s not hard to conclude that a lack of activity in this realm will adversely impact global mine production in the years ahead.

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GLD Exodus Is Reversing

| August 16, 2013 | Category: Investing
GLD Exodus Is Reversing

Both last Friday and this Wednesday, GLD experienced enough differential buying pressure to necessitate builds of 0.2% each day. These are modest, but they are still noteworthy. It is actually the first time in all of 2013 that GLD has enjoyed two builds in less than a single week. The GLD exodus reversal looks to be starting!

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Silver Short Squeeze

| August 10, 2013 | Category: Trading
Silver Short Squeeze

The only way for speculators to unwind futures short positions is by buying other contracts to offset their earlier sales. To go short they sell futures contracts, then to close these trades they buy them back. And this buying drives up silver’s futures price exactly like new long-side buying. So the massive shorts in silver futures guarantee proportional massive buying in the coming months to cover and close these bets.

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Gold Short Squeeze

| July 20, 2013 | Category: Trading
Gold Short Squeeze

The CFTC releases its CoT late every Friday afternoon, current to the preceding Tuesday. So the latest available data when this essay was published was Tuesday July 9th’s. And it is truly stunning. Gold-futures speculators held the short side of an astounding 178.9k contracts that day! This was at least a 12.3-year high, the most-extreme gold-futures spec short position by far in gold’s entire secular bull.

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Gold’s QE3 Anomaly

Gold’s QE3 Anomaly

I think traders, especially in the futures realm, are missing the forest for the trees. They are so worried about what Bernanke had for breakfast that they’ve totally lost sight of the big picture. It doesn’t matter one bit what the Fed says, but what the Fed does. And throughout this entire raucous 2013 “debate” about what the FOMC is planning for QE3, it has continued to aggressively monetize debt without respite.

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Are Long Rates Threatening The Price Of Gold?

| July 5, 2013 | Category: Price
Are Long Rates Threatening The Price Of Gold?

Despite the popular misconception, long rates are not always highly correlated with gold. Gold has never paid a yield, yet it has remained a popular investment for millennia. The investors buying gold are not looking for yields from that portion of their portfolio. They want proven protection from monetary inflation, financial insurance for unforeseen market events, and most of all capital gains.

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Junior Gold Cleansing

| June 29, 2013 | Category: Stocks
Junior Gold Cleansing

Any investor who has a position in juniors has no doubt felt the pain. And to show how bad it’s been, we need look no farther than the performance of the GDXJ Junior Gold Miners ETF. This ETF (managed by Van Eck Global) is the most popular and liquid of its kind, and offers a good pulse of the subsector it represents.

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Contrarian Gold Stocks

| June 14, 2013 | Category: Stocks
Contrarian Gold Stocks

The extreme contrarian appeal of gold stocks today is readily evident both technically and fundamentally. Gold stocks as a sector have only been this oversold one other time in their decade-plus secular bull, and that was during 2008’s crazy stock panic. When prices move too far too fast in either direction, sentiment gets unsustainably excessive. And then a mean reversion soon reverses the trend.

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SLV Shows A Bullish Divergence

SLV Shows A Bullish Divergence

You have to realize how crazy-anomalous 2013 has been. Melting-up stock markets breeding euphoria are very rare, only seen at the ends of major bull markets. Stock euphoria diverting capital away from all other asset classes is equally as rare. But if you’d told me how 2013 would play out in the stock markets, GLD, and gold, but said SLV would ignore the carnage, I would have thought that was utterly impossible.

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Gold-Stock Panic Levels

Gold-Stock Panic Levels

The markets are tyrannically cyclical, every sector out of favor eventually returns to favor again and vice versa. That law of sentiment is as immutable as stock prices ultimately reflecting underlying corporate earnings. Based on today’s still-battered gold prices, a 0.511x HGR would put the HUI at 731. This is 157% higher than it was in the middle of this week even after recovering 3/7ths of its gold-panic losses!

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Gold Futures Are Flashing A Bullish Contrarian Signal

Gold Futures Are Flashing A Bullish Contrarian Signal

Gold’s technical breakdown suffered in its recent capitulation selloff naturally unleashed a flood of bearish sentiment. Traders are totally convinced gold’s woes are just starting, that the worst is yet to come. This pessimistic worldview is largely universal, even among futures traders. But their collective bets are actually a strong contrarian indicator. Their bearishness peaks right before major rallies erupt.

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US Mint Bullion Coin Sales

| January 5, 2013 | Articles: General
US Mint Bullion Coin Sales

The charts in this essay superimpose these coin sales over the daily gold and silver price action over the course of their entire secular bulls. Despite the perception of 2012 being a weak year for the precious metals, new physical demand from investors for American Eagles is actually robust to strong. This is certainly a bullish omen.

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Silver’s Young Upleg

| December 14, 2012 | Articles: Insights
Silver’s Young Upleg

Although you wouldn’t know it from listening to all the bearish commentary out there, silver is actually enjoying a strong young upleg. Its technicals are very bullish, contradicting the prevailing pessimism gripping traders. This glaring disconnect between price action and sentiment won’t last forever. It has hammered silver stocks to depressed levels that offer a smorgasbord of opportunity for brave contrarians. As a hyper-volatile speculators’ playground, silver has always been exceptionally sensitive to prevailing sentiment. While all prices are affected by their traders’ collective greed and fear, silver’s emotional roller coaster has higher peaks and deeper valleys. Silver can skyrocket on greed like no other commodity, but the other end […]

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Global Silver Mine Production

Global Silver Mine Production

In order to satiate the world’s growing hunger for silver, a lot of pressure has been placed on its supply chain.  And with total annual supply recently exceeding 31k metric tons (1.0b ounces) for the first time ever, the suppliers of this white metal have so far made a valiant effort to meet demand. Silver demand is on the rise for a variety of reasons, in large part due to big increases in investment demand.  And this has naturally created a structural imbalance that has spawned a major secular bull market.  A bull in silver of course translates to higher prices.  And silver’s much higher prices have provided ample incentive […]

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