Who wins in the next leg down....or hyper up?

The market has been on a tear, providing you only look at top 30 companies and ignore the rest.  The part is going strong until the music stops.  The FED hasn't indicated any willingness to stop creating free money, and has even go so far as to change the definition of Inflation.

I can't say of the market will decline 25-50% from here, if the FED wasn't printing unlimited new free money to be used through a shell company to circumvent law, pretty sure it would .  And my guess is so does the FED, hence their unusual (legal?) activities to 'save' the economy.

What I do know, with equal conviction I had in January about the impending market decline, is that there will be consequences.    The FED doesn't give money directly to individuals so they can climb out of debt or pay bills.  If they did then the economy would have much less distortions.

Instead its through the financial companies, and they can't micro-manage how the money moves through the economy.  Therefore the free money will find places to go.   I still think Gold, Silver and mining companies will continue to benefit.  GDX moved from 16 dollars to 45.78.   I expect GDX to hit 100 if not higher, I would get nervous once GDX hits 160-200 as a potential all time top.

The problem with Gold is of course, that its physical and subject to countries import/export taxes or restrictions, as well as governments putting restrictions on it.

We have seen that Crypto has faces similar issues as governments tax or block the use of it.  However, being virtual if you can connect to the 'blockchain', you can move your resources in spite of government restrictions.

I believe that if the market falls, everything will go down, just some things not as far as others.  In 2009, GDX did not fall nearly as much as the market, and I expect the same thing as 'smart money' continues to move into the sector. 

I think the same for Crypto currencies and to a lesser degree cyrpto miners miners.  I am in substantially into these Cryptos:

Bitcoin ($11.5K) - It is the premium crypto, that is the main reason.

Ether ($400) and XRP ($0.275) are two crypto’s entering into mainstream currency trading in Japan on 8/31/20. ( click to read )

Bitcoin Cash ($270)  and Lite coin Trust  ($58)  to be listed as a trade able stock ticker (BCHG & LTCN) , and it has passed its first hurdle. (click to read)  

The reason I chose these Crypto's is they are set to be pioneering into trading on currency exchanges or as a stock ticker.  This is a game changer, as you can move into Cryptos in a manner that many more people are already familiar with.

I am hoping for 2x-10x resturns on BCHG, LTCN, Ether and XRP.  Bitcoin I think is an easy 3x before this is over.  Its possible for 10x, but 'easy money' may go to other faster moving Cryptos.

Bitcoin miners I like are GBTC, RIOT,  HUTMF, and HVBTF. (in that order)

I highly recommend Coinbase for your consideration into cryptos.

For Gold miners, GDX, GDXJ aer still best bets.

For miners, GOLD (miner stock symbol) is now being purchased by Warren Buffet.  Mr. Buffet has historically said investing in Gold or miners is 'stupid'.  Apparently things have changed. 

For other miner picks, see the list I created in May.  Everything exploded and did very well since then.

I can't say if the market will fall simply due to FED interference.  I  believe that something will shift with 14 million continuing to be out of work, massive layoffs ahead , IRS projecting a decade to return to pre-COVID employment levels, the USD plummeting almost 10% in about 6 months, Gold skyrocketing 37% since March to all time highs, a highly charged election in USA with potential a sitting president refuses to step down, COVID quite likely to surge into flu season, and various global tensions continuing to rise quickly.

Good Luck!

Natural Resources and Beyond

Every news source I hear tells me that oil and natural resources are going to be depressed for years to come.  While I can't say what will happen, when I hear such a chorus telling me all the same thing about the future it does raise questions.

Looking at the charts, lets see what we can gleem as likely next few years.

First, lets talk about the US Dollar.  Even mainstream news tells us how much the US Dollar has been gaining value compared to the world.  It is quite possible USD will go 50% higher from here.  But lets take a look at the last year.

Since about August of 2014, the USD has been on a tear!  If you follow currencies, this change is very dramatic, but not unprecedented.
Recently the USD has been pulling back, but I dont expect a straight down line, this may take 3 months to a year to return to 80 range.

So what did the overall US stock market perform during the same period?

\

The overall market went from about 1860 to 2115, about 13% rise.  During same period USD went from 80 to recent high of 100. about 25%.  This alone does not tell us much, except as the world entered a recession, the US attracked investors as haven of stability driving currency and stock up higher.

How did natural resources do?

The world entered a recession, and China is a HUGE driver of natural resources.  Overall natural resources collapesed, from about 310 down to about 210.  Pretty huge drop.  To give context, here is CRB over last ~8 years.

We are at a near 8 year low, comparable to the 2008 crash.  

Gold is a subset of this, how did that do?

Considering how STRONG the USD was, and commoditied TANKED in the last year, gold has been relatively flat. 1300 down to 1200 range.

How has Gold miners fared?

Gold miners are also at near lows, not seen since 2008 crash.

So what can we say absolutely about all this data?

RELATIVE to last 8 years, natural resources are near a LOW, as also GOLD MINERS (GDX).

That during the last year as USD rocketed, gold valuation kept about parity value.

USD, if going to return closer to valuations a year ago, indicate Gold will appreciate. (as gold is priced internationally like all resources independant of USD valuation).

If buy low, sell high is a strategy, all things point that Gold Miners are near decade lows.  Doesn't mean that miners will head higher, could stay here for 20 years.   But risk of devaluation from here is much smaller than most of the last decade.

The Federal Reserve Bank was dovish, basically indicating interest rates won't rise until winter at earliest.  We are witnessing a huge game of chicken across all countries.  Good luck!

What other games are there in town?

I am starting to pull away from Gold Miners, yea, if your reading this, it's long overdue.
I went into Oil companies big couple weeks ago, its nice to see green on the screen.
Right now I am looking at Natural Gas, 3x ETF GASL if 4 bucks, and 1X ETF UNG is 13.  I may not get any as Natural Gas has not been good to me in the past.

then there is tech, many stocks have been taking a hit, but rebounding in last couple of weeks, like Amazon or Microsoft.   I can't see buying Microsoft at this time, but most top line tech is always good.

Looking back, simply buy the obvious is best, anything else is an outsiders bet.
I am still in gold miners, but not looking (ever?) to add, good luck!

May the Games begin! Who will be the Gold Metal winner?

On Friday close, Jan 16th, 2015, Friday,  Long dated options for GDX and GDXJ, and many other stocks will expire.
I expect this week to be the week of games, as large bets over years come due this Friday.

Miners could do anything.  If they explode higher, I'd be tempted to dump some positions on Friday.
Gold has been holding its own for months, and miners are above their low.  GDX was down to 17 now trading around 20.

So the week ahead will be interesting across the market.

Will there be a Gold Metal winner?  I am hoping so!  good luck!

Gold Miners - Missing the boat?

Yesterday I posted "Gold Miners, Break Out?" indicating we may be on the verge of a break out.  Today there was a nice follow through.  GDX could turn back down lower, but with this channel break I think it is safe to put stops now in at 18.

GDX has been on such a slide for years, this maybe on the beginning on a multi-year run.
We haven't had a weekly moving average cross yet to confirm a multi-year run, but in the short term a nice trend change.  (see this post for long term indicator)

I also wouldn't be surprised in a whip-saw action into the yearly options expiration in mid-January, it simply becomes where the big money wants it to go.

To the chart!

Also Oil has taken a huge hit, which will help gold miners profits.  Whenever Oil bottoms, huge buying opportunity, anyones guess how low it will go.  There is severe international games going on with Oil, and Russia is taking the worst hit!

Russia 2 year federal bond is paying about 16%!!!! compare that to USA 2 year bond at 0.66%!!!
Oil price collapsed with Ruble devalued and Russia rates soaring is not a good time for Russia.

Gold Miners, Break out?

Gold Miners have had a nice run the last couple of weeks.
Of course, I am happy to see finally some gains, however I want to temper this optimism with a larger context.

I do believe gold miners can do well WITHOUT gold appreciating, simply due to cheaper energy.  A flat gold price with cheaper costs will improve stock price.

However, after watching gold miner beat down for last few years, best to wait for indicator of a trend change.

Taking a step back, Gold Miners (GDX) is on the cusp of breaking out of a range.  If it does, it maybe an explosive move.   Buying here at 19.44 you can use as a stop out price of 17.44, risking about 10% for upside gains of potentially much more.  I rise back to price of  $60 3 years ago would be 200% gains.
It is also important to know that USD has risen insanely rapidly since October, and Gold has held its price.  If USD reverses will be interesting to see if Gold rises.

To the charts! Use your own judgement.

GDX hits through 17.34

Just this past Thursday I said GDX should go lower around 17.75, well, we sliced right through to 17.34.  I still hold true that buy now, stop out 10% lower, now at $15.60, a low for 2008 is a relatively low risk play.  10% loss for possibly buy low deal.

Good luck!

Last Entry point for GDX?

If you want to get back in, consider putting various buy points at 18 through 16.25, with a stop at 16.
This will provide a 5-10% risk entry depending on your cost averaging.
Miners hit 60 bucks only couple of years ago, as the saying buy low sell high, unless of course buying low turns out to not be low enough :)

Considering 2008 crash brought GDX down to 16, its pretty low now.
To the chart!

Possible turning point

Turning points are impossible to spot.  Since 2008 my greatest fear is US over-reaction to financial crisis will spur an even bigger crisis.  Since then some of my worst fears have come to pass including lack of law enforcement, fantasy accounting, and worst of all appeasement.

Some rule breaking in the depths of 2008-2009 was needed, best not to take all the medicine at once.  But there has not yet been a time to knuckle down and return to normal law.

Today, the Federal Reserve bank released it's minutes and the International Monetary Fund warned the FED of possible trillion dollar losses.

Instantly, gold miners EXPLODED higher, as well as gold, and the overall market.
The 3x Junior miner ETF rose 43% in about 2 hours, quite insane.

Unfortunately, what this looks like combined with my other posts is a shift internationally.

First the FED basically announced more of the same, appeasement since 2008, easy money equals all is lookin great!  I fear that once this buzz wears off we may see reality finally sink in that more of the same fixes nothing, combined with the world critiquing the Fed.

This fear may be unrealistic so we'll probably get our answer by February, if not earlier how this 'free money' announcement plays out.

Its hard to say if my post 'full route in gold before the going gets good' is now behind us.  Every fiber of me says we saw the bottom and say its all good to buy GDX between 20 and 22 (probably will pull back from high today).
The post I did Sunday details how insanely low GDX is, how HEAVY buying was this past Friday, so buying at 'bottom 10% range' is all good.

Good luck out there, if what I think happens unfolds, gold and gold miners will have a VERY rough ride climbing the wall of worry from here to 5x higher. Once GDX hits 100 bucks a share we may start to see political bs appearing. This will not be easy money and will take until 2017 to reach a peak.

And of course, the USD has taken a hit.

Good luck out there, some charts!

USD

Gold Miners IMPLOSION, whats up with that?

If you have anything in Gold Miners, it has really been destroyed last few months just as the market exploded higher.
The beating of gold miners is so severe, I feel like a truck ran over me.
The question is, what the heck is going on?
Gold miners profits are a combination of price of gold, production quantities, costs, perception, and politics.

I say politics because for better or worse Gold has an element of Politics in the mix.
First lets take a look at the price of gold, in the last 3 months, it has dropped about 7%

During the same period USD has EXPLODED higher by over 8%

The correlation of price of gold to USD valuation seems correlated.  Thats because Gold like all commodities are priced vs demand, but the 'localized' cost is a reflection of each countries currency valuation.  If Gold demand collapsed, I would expected much more collapse in price.  Basically gold price is trading in a tight range for the same period.

Now lets take a look at USD over the longer haul, is 86 really out of line?

Still within reason, but it is amazing the market is at near highs and USD is also on a rocket ride up.  We are fast approaching the panic levels seen in 2009, and levels not seen regularly since pre 2005.  So from a near historical perspective, it is appears out of character.

OK, lets see what happend to Gold Miners (Brace yourself).

Holly hell, that can only be called an all out destruction of Gold Miners during the same period.

It can be partially explained that the change of Gold price down to US valuation combined with overall market strength and overall perception of low near term demand due to market stability.  Throw on there any political games and its a recipe for destruction.

The question is, are we near a bottom?

Lets take a look at GDX over the long Haul.

From a HISTORICAL perspective Gold miners is near its all time low from the 2008 collapse.  That is outright amazing! the worst collapse in modern history and GDX hit 16 bucks a share, and now we are at 20.6, amazing!  The panic selling began in earnest when the trend line broke down Friday.  This could be beginning of a freefall of GDX down to 16, or a final panic sell for a reversal.  There is NO NEED to jump infront of this train by adding more that what you may already have, wait and see.

NOTICE that the trend lines still show GDX is on a BULL trend up, not down, read and watch the video for the longer term trend indicator described on When to buy and get out of the stock market.

But I can say, from a historical perspective, Gold miners are DIRT cheap. Gold was at 700 oz at the depths of 2008 collapse and GDX at 16, while now Gold is at 1150 with GDX at 20.6.

PLACE all of this into context with my post Market Dislocation to help gain perspective. (click to read)

So in the end, whats the deal?  Frankly I am shocked at the beatdown Gold Miners has taken.  I knew this would be the hardest trade of my life, but still nothing prepared me to see GDX at these levels.

The facts remain, GDX is near all time lows, and it is possible it breaks those lows.  But as a logical guy, playing the odds, the odds in history say GDX will go higher than it is today.  I really doubt gold miners en-mass go bankrupt or the Asian demand for gold evaporates.  China loves gold, the greatest threat to gold is if China adopts Crypto-Currencies and runs from gold, a distinct possibility.  They could announce their own Bitcoin as the new standard for China.

If so the I would expect gold to go lower than 700 an ounce quite quickly.  Outside of such an event, Gold Miners are experiencing a panic sell off.  Once all those who will sell, sell, the bottom will be in, its anyone's guess when that will be.

At this point I am watching like a deer in headlights.  Once Call Options for 2017 for GDX are publicly tradeable, I may buy some at these depressed lows for the long haul.

I'll post when I do, for now its a watch and see.

I would expect if USD doesn't continue on a vertical line straight up, Gold price will stabalize.

I recommend checking out this blog for more frequent commentaries, Alex talks of any trading opportunities:

http://www.chartfreak.com/

Gold Blood

There is no denying it, gold in on an epic crash right now.
Frankly, I have no idea where this goes, and its likely to get worse.

The hope, thought is, when this is done, there are no more sellers, and the bottom will be in.
Is that 10% or 30% lower to find that bottom, who knows.
I wouldn't be surprised if gold hits 990 an ounce, enough to get full capitulation.

Starting Sept 26th-ish, China will open it's gold exchange in an attempt to take leadership in gold pricing.
Perhaps thats when the bottom hits, or not.....

I took an edge off Friday, I may dump more monday, each buck is a bigger % loss now, I simply can't take it.
good luck.

The Golden Bull

Wow, Gold is really picking up the pace, take a look at the first chart and after years of downside it is exploding up.  If you think you missed the entry, keep in mind its a long way to gold over 1900 an ounce as second chart shows.  The advancement in GDX, GDXJ, and GLDX has been nothing short of stellar.
On Sunday night I revised my New Reader entry to highlight my concerns and positioning on gold.
Wednesday of last week my post Gold miners, Stock Market what next? all of the stocks below where even lower than Tuesday AM, so gains are even greater in 7 days.

Assuming GDX breaks above 27, the long term stock indicator will indicate a probable multi-month rally.  since gold has been very suppressed for so long, I suspect the pent up demand and heavy short covering will make this scream higher.
                   
                    Tuesday AM             EOD Thursday         Percent gain
GLD            122                             127                            4.1%
GDX            23.75                          26                              9.5%
GDXJ           38                               43.07                         13.3%
GLDX          14.25                           15.90                        11.5%
  

Gold, 10 year view

Gold miners indicating multi-month rally

The etf GDX, gold miners, has crossed on 20-50 weekly SMA, indicating a potential multi-month trend change.  GDXJ, junior gold miner ETF may have better return on investment, as well as the etf GLDX, gold miner explorers.

Since the 20-50 weekly SMA just crossed today, it is not yet a convincing indicator.  GDX hitting above 27 I believe will be a clear indicator of trend change.  However, the miners have been depressed for so long, there is a good chance this is the beginning of the final, multi year rally I have been waiting for since April 2011, in post Precious Metals into 2015-2017.

In that post, I violated my own advice with this statement:
I am sitting more on the sidelines as per his paid service recommendations. I am keeping core positions, as I will until this run ends, sometime after 2013.
I grew impatient and started re-entering gold miners earlier, to my detriment.  It is 2014, and I think the down trend may have finally run its course.


Throw into the mix of Iraq falling apart, Russia acting very aggressive, and China always looking for ways to advance itself as the next world super power, any instability should send gold shooting insanely higher.

My original thesis for liking gold is still in tact, that India and China as they grow richer will buy more gold as part of their culture.  See blog post why I like natural resources better than bonds.

Below is GDX 20-50 weekly SMA long term investing indicator, as explained in post when to buy stocks or get out of the stock market.

Gold may take it on the chin, hardcore

I am looking at the gold futures, and I am seeing that gold price is violating the trend line up, as I posted Friday as a possibility in post "Gold, are we in for another leg down"  If Gold ends below 1280 Monday into Tuesday, I fear gold is going to new recent lows, down to 1180, and could even make a run for the psychological line of 1000 an ounce.

I hit out of most GDX and GDXJ, I may hit out of the rest, and simply watch.  GDX could easily go down 20% from here, down to 19.  It seems quite insane, but I think there are some major strains on entire financial system that is hitting the gold market hard with political meddling.
Doesn't matter really as to if there is any meddling, all that matters is being on right side of a trade.

Good luck out there, I still like long term better than ever.  As an example of the gold tension, an Indian man was cut open by doctors to confiscate smuggled gold bars in his stomach.  My original premise has come true, China and India gold buying is reaching fevered pitch, but there is market suppression that is also happening.  Only time will tell of the market will break free and start rallying.

Gold, are we in for another leg down?

I already posted I lightened up heavily on gold miners, but I am still in for long haul.
However, I have to point out that gold maybe in for another leg down.
The gold trend line from it's low is in danger of being violated.
Once violated people who watch trend lines will likely pile on to short gold, and push it down.
The next line will be to violate it's recent low.  If that is violated, gold could tumble a bit more.

See the chart, do what you must to take risk off the table.

Whats up with Gold and Miners?

As readers know, I have been bullish on gold miners since GDX hit 27 on the way down to 21, and around 21-22, I loaded up on gold miners.

Recently when GDX hit 28 going back up, it topped and toppled quite hard down into this past Friday.

Gary of the Smart Money Tracker is pretty bearish, on the gold mining sector.
To Gary's credit, he keeps nimble and will change in an instant once there is momentum to the contrary to prove his view wrong.  Until proven wrong, Gary is bearish.  Gary has been more right than wrong the last few months, so I do give his opinion weight.

Tim Knight of the Slope of Hope is actually turning bullish.  Tim bought GDX with  a stop of $22.70.  Meaning if GDX violates that level down he will exit his position.   I put a video below to see his opinion on recent miner analysis below.

Also my friend and life-long day-trader Happy John is hanging in there, sticking to miners.

Me? I am concerned, not just because Gary says so, but yes Gary's weight does influence me.  I am concerned because out of a bottom I would have expected miners to be stronger.  The fact they haven't held up with gains is a concern.  However, if oil price drops miners should shoot up like a rocket.  After all miners biggest expense is energy.

The readers out there need to hedge bets, lighten up if GDX pops up to be prepared if GDX is beaten down below 21 ahead of the beat down, to be ready for the final bottom.

Getting Bearish on Gold

Hopefully gold will rebound after the beatdown that has happened since the 14th.
I am really starting to get concerned that there will be a lasting rally out of this latest decline.

My intention is to LIGHTEN my miner positions, if GDX can make its way back to 26 range.
Of course, this is likely a read that we are finally going to rally to 30+, now that I am considering lightening my position.

But if we do have a deflationary collapse in the months ahead, or at best a negative market outlook, I can't see gold miners rallying to new highs.
Thats not to say I will go completely flat, I couldn't stand it if I am wrong.

I encourage subscribing to Gary of Smart Money tracker, his subscriber blog is calling for GDX hitting 22 and below.

Technical Charting good for gold, good for miners, bad for bonds, bad for stocks

Ran across this video, does a decent job of showing chart technical's on gold, gold miners, bonds,  real estate.

The basic gist is once bonds start having interest rates rise for US bonds, stock market should get hurt and areas considered safe havens should rally.  Of course, we will all have to wait and see how this unfolds.
Below is a quick update of the 40 year trend for US 30 year bond debt.

Gold, whats not to love?

A good couple of days for gold miners

Thanks to Eric for the link

Gold, Bitcoin, US Dollar, and the Ruble

Below is a summary of stores of value that is in the news, gold, Bitcoin, USD, and Russia's ruble.
The moral of this story is all storage of wealth is relative.
To the charts!

Gold Miners

Back on January 26th I posted Gold at a Crossroad. As readers know, I don't buy gold or gold paper, but gold miner stock. Since that date, GDX has risen from about 23 to 26, a little over 10%, at best 15% from low to high in that period. So while 10% is not that big in the scheme of life, its pretty big for a sector beaten to a pulp since 2011. Of course, the magic question is, will it continue.

Bitcoin

Bitcoin ran into major issues when gtmox started to fail a couple of weeks back, with bitcoin spiraling from 820 to about 540 a coin.  Bitcoin shaken to the core has held up pretty well, considering it is not even a currency!

I should have my first bitcoin tomorrow, already up 20% in a few days.  Reports of bitcoins death is insane, its here to stay.  Overstock predicts before years end, $20M in sales through bitcoin.

US Dollar

The US dollar is under constant attack from arm-chair economists, I see nothing of concern according to the charts.

Ruble

Well, the Ruble is not having a fun time, there is active intervention just publicly announced to stop (yea, right)  to hold the ruble's value.

Who could have seen there may be issues?  Well lets look back to my post Global Currencies Showing Strain.  Granted, the Ukraine issues have accelerated Ruble problems, but its no shock to me there is an issue here.  Lets look at the Ruble value over last 10 years, there is no question the Ruble is under strain vs USD, hitting lows not seen 2008 crisis.