Gold Stocks’ Winter Rally 2

The gold miners’ stocks have largely ground sideways this year, consolidating their massive 2016 gains. That lackluster trading action, along with vexing underperformance relative to gold, has left gold stocks deeply out of favor. But these uninspiring technicals and resulting bearish sentiment should soon shift. The gold stocks are just now entering their strongest seasonal rally of the year, the super-bullish winter rally.
Gold-stock performance is highly seasonal, which certainly sounds odd. The gold miners produce and sell their metal at relatively-constant rates year-round, so the temporal journey through calendar months should be irrelevant. Based on these miners’ revenues, there’s little reason investors should favor them more at certain times of the year than others. Yet history proves that’s exactly what happens in this sector.
Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.
Gold stocks exhibit strong seasonality because their price action mirrors that of their dominant primary driver, gold. Gold’s seasonality generally isn’t driven by supply fluctuations like grown commodities experience, as its mined supply remains fairly steady all year long. Instead gold’s major seasonality is demand-driven, with global investment demand varying dramatically depending on the time within the calendar year.

This post was published at ZEAL LLC on November 3, 2017.

Doubling Down on Deflationary Forces

Almost all other forecasters have been looking for a revival of inflation for years. And they still are.
Zeal for Gold
After the Fed bailed Wall Street out of the 2008 financial crisis, and exploded its balance sheet through quantitative ease, many investors, including astute hedge fund managers, foresaw hyper-inflation and charged into gold as the most likely beneficiary. They solemnly quoted Milton Friedman, who said that inflation is driven by central bank-created money, and leaping Fed assets foretold lots more of it. But inflation didn’t gallop, but receded – and with it, gold prices.
But that hasn’t dissuaded the inflation bulls. Wall Street Journal columnist James Mackintosh wrote in the recent September 8 edition: ‘The danger is that the low inflation consensus has grown far too strong, on too little evidence.’ A September 1 Journal headline sums up those folks’ problem: ‘Inflation Still Subdued, Posing a Conundrum.’ They point to the low U. S. unemployment rate, the weak dollar, and stronger growth worldwide, which, they maintain, should intensify demand for commodities and push their prices up. Yet the personal consumption deflator, the Fed’s favorite inflation measure, ex food and energy has been slowing since late last year.

This post was published at FinancialSense on 10/31/2017.

The Big Macro Play Ahead

At NFTRH, we are about major macro turning points above all else. Of course, it is often years between these turning points or points of significant change so we are also about the here and now, and managing the trends, Old Turkey style.*
Since we are all learning all the time, I have no problem admitting to you that while right and bullish on commodities and stocks in 2009, after becoming bullish on the precious metals in Q4 2008, I completely ignored Old Turkey due to my inner biases. The result has been that after taking excellent profits from the precious metals bull, personally, I have greatly under performed the stock market bull despite holding a bullish analytical view for the majority of the post-2012 period.
Undeterred and ever plucky, we move forward. Currently, I play the bullish stock market like millions of other casino patrons, but this is as a trader and portfolio balancer, with the goal always to be in line with the macro backdrop of currency moves (I’ve been very long the US dollar for a few months now) and Treasury/Government bond yields and yield relationships.
This week something happened that has gotten me geeked out like at no other time since Q4 2008, when it was time to put the real precious metals fundamental view (as opposed to commonly accepted gold bug versions) to the test and go all-in. This week, assuming it is confirmed by remaining active through the FOMC next week, we got a short-term signal in Treasury bond yields that starts the clock ticking on a big macro decision point, which may include an end to the stock mania and the beginning of a sustained bull phase in the gold sector, among other things.
But first, we need to understand that the macro moves at an incredibly slow pace and one challenge I have had is to manage what I see clearly out ahead with the extended periods of intact current trend that seem to take forever to change. We as humans (and quants, algos, black boxes, casino patrons and mom & pop) are increasingly encouraged to try to compute massive amounts of information in real time and distill a market view from that at any given time, all at the behest of an overly aggressive financial media that wants to harvest your over exposed, bloodshot eyeballs on a daily, no hourly basis.

This post was published at GoldSeek on 27 October 2017.

Gold Price Rallies as China Fears ‘Minsky Moment’

Gold price losses of 2.0% for the week so far were cut to 1.2% lunchtime Thursday in London, as world equities fell from new record highs and government bond yields rose against a backdrop of fresh geopolitical tensions from Spain to India and China.
After Wall Street set new all-time highs last night, gold priced against the rising US Dollar touched $1288 per ounce as Western stock markets marked the 30th anniversary of October 1987’s Black Monday – the sharpest ever 1-day fall in equities – by falling some 0.7% on average.
Commodities slipped and major government bond prices rose, nudging longer-term interest rates lower.
The weakest UK retail sales data in 4 years meantime saw the Pound retreat to a 1-week low on the foreign exchange market, helping the UK gold price in Pounds per ounce to halve this week’s earlier 1.5% loss to trade at 976.
“From being the most hated developed market currency earlier this year,” says a Hedge Fund Watch from French investment bank Societe Generale, “Sterling is now back in favour” with speculators.

This post was published at FinancialSense on 10/19/2017.

What a Gold-Backed Yuan and Cryptocurrencies May Mean for the Dollar

Amoungst all the crypto news this, and crypto news that, was a tiny item appearing in the Nikkei Asian Review on September 1st. Reporting from Denpasar, Indonesia, Damon Evans wrote, ‘China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry.’
Not bitcoin backed, not ethereum backed, g-o-l-d backed. How low tech of the Chinese. For the moment, oil is priced in dollars, whether it’s Brent or West Texas Intermediate.
Evans explained,
China’s move will allow exporters such as Russia and Iran to circumvent U. S. sanctions by trading in yuan. To further entice trade, China (the world’s largest oil importer) says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong.
This will be China’s first commodities futures contract open to foreign companies such as investment funds, trading houses and petroleum companies.

This post was published at Ludwig von Mises Institute on October 20, 2017.

Europe’s Weight In Gold and Silver

Gold, and silver, have always been valuable. Through upturns in fiat currency, downturns in commodities, and everything in between, the precious metals have always been a useful indicator and base level for the worth of things internationally.
Learn How to Exploit the Gold Frenzy! Far from being the hallmark of huge institutions, like the Federal Reserve, you can take advantage of the evergreen currency to secure your own ‘reserve’.
Why Use Gold?
There have been few occasions where government has been criticized for keeping hold of gold reserves. Quite apart from it, in fact, with the British government panned for selling back in 2002.
Buy Silver Quarters – In Stock, Ships Fast! There has never been a better time in fact, with measures over the world being taken up that can threaten your ‘liquid’ cash flow. Over in Europe, there has been legislation introduced as the EU attempt to prevent bank runs that threatens your ability to withdraw your own cash in the event of adverse economic conditions.

This post was published at GoldSilverWorlds on October 12, 2017.

Germans Have Quietly Become the World’s Biggest Buyers of Gold

When I talk about Indians’ well-known affinity for gold, I tend to focus on Diwali and the wedding season late in the year. Giving gifts of beautiful gold jewelry during these festivals is considered auspicious in India, and historically we’ve been able to count on prices being supported by increased demand.
Another holiday that triggers gold’s Love Trade is Dussehra, which fell on September 30 this year. Thanks to Dussehra, India’s gold imports rose an incredible 31 percent in September compared to the same month last year, according to GFMS data. The country brought in 48 metric tons, equivalent to $2 billion at today’s prices.
As I’ve shared with you many times before, Indians have long valued gold not only for its beauty and durability but also as financial security. Indian households have the largest private gold holdings in the world, standing at an estimated 24,000 metric tons. That figure surpasses the combined official gold reserves of the United States, Germany, Italy, France, China and Russia.
A New Global Leader in Gold Investing?
But as attracted to gold as Indians are, they weren’t the world’s biggest investors in the yellow metal last year, and neither were the Chinese. According to a new report from theWorld Gold Council (WGC), that title shifted hands to Germany in 2016, with investors there ploughing as much as $8 billion into gold coins, bars and exchange-traded commodities (ETCs). This set a new annual record for the European country.

This post was published at GoldSeek on Thursday, 12 October 2017.

What Few Expect: Inflation Will Surge, Destabilizing the Status Quo

Few seem to ponder what global shortages in key commodities might do to prices.
If there is any economic truism that is accepted by virtually everyone, it’s that inflation is low and will stay low into the foreseeable future. The reasons are numerous: technology is deflationary, globalization is deflationary, central banks will keep interest rates near-zero essentially forever, and so on.
Just for laughs, let’s look at healthcare, almost 20% of America’s entire economy, as an example of low inflation forever. If being up over 200% in the 21st century is low inflation, I’d hate to see high inflation.

This post was published at Charles Hugh Smith on TUESDAY, OCTOBER 03, 2017.

What Few Expect: Inflation Will Surge, Destablizing the Status Quo

Few seem to ponder what global shortages in key commodities might do to prices.
If there is any economic truism that is accepted by virtually everyone, it’s that inflation is low and will stay low into the foreseeable future. The reasons are numerous: technology is deflationary, globalization is deflationary, central banks will keep interest rates near-zero essentially forever, and so on.
Just for laughs, let’s look at healthcare, almost 20% of America’s entire economy, as an example of low inflation forever. If being up over 200% in the 21st century is low inflation, I’d hate to see high inflation.
Here’s the official Consumer Price Index (CPI), which as many have noted, severely distorts real-world inflation by claiming big-ticket items such as college tuition and healthcare are mere slivers in household budgets.
Note the remarkably stable trend line in CPI over the past 40 years. This certainly doesn’t shout “inflation is near-zero and will stay low indefinitely.”
Here’s the PCE, Personal Consumption Expenditures, the Federal Reserve’s favored measure of core inflation. Let’s put it this way: either the PCE is real and the CPI is false, or vice versa; they can’t both be accurate measures of real-world inflation.

This post was published at Charles Hugh Smith on OCT 3, 2017.

Sustainability Or Growth? E&Ps Face A Difficult Decision

Only 16 E&Ps are expected to grow production and keep spending within cash flow
U. S. unconventional E&Ps often find themselves in a difficult position in the current environment. The environment has long been ‘grow or die,’ with high emphasis placed on companies growing production. Firms that have little growth prospects generally trade at significantly lower multiples.
On the other hand, a different group of investors have much different priorities.
Many investors have begun to place a premium on operational sustainability instead of growth. These investors prefer that companies are able to sustain operations and generate free cash flow, rather than spend beyond their means to keep growing.
Companies, then, are often forced to decide. Is it worthwhile to spend beyond cash flow to grow? The ideal company is able to do both, but most must choose one or the other. A tough downturn and volatile commodities prices have made E&Ps and investors cautious.
Out of 119 E&P companies, 72 are predicted to have average 2017 production exceed Q4 2016 production. Significantly fewer, only 27, are expected to have positive free cash flow in 2017. These two are not mutually exclusive, as a total of 16 companies have both positive free cash flow and production growth.
These 119 companies are plotted below.

This post was published at Zero Hedge on Oct 3, 2017.

Gold Sales at Australia’s Perth Mint Doubled Last Month

Gold sales at Australia’s Perth Mint doubled in September. Meanwhile, sales of silversurged 78%.
Sales of gold coins and minted bars jumped to 46,415 ounces in September, up from 23,130 ounces a month ago. Silver sales during the month came in at 697,849 ounces, compared with 392,091 ounces in August.
Australia ranks as the second largest gold producer in the world behind China. The Perth Mint refines more than 90% of the country’s gold.
Officials at the mint said investors seized upon the opportunity offered by the drop in the price of gold in late September to buy. The price fell after a hawkish Federal Reserve meeting and hints that the US central bank would raise interest rates again in December. The unveiling of the Trump tax plan also seemed to strengthen the dollar, placing price pressure on gold and silver.
Late last month, ‘commodities king’ Dennis Gartman said investors should take this opportunity to buy gold, predicting the bull run is not over.

This post was published at Schiffgold on OCTOBER 3, 2017.

The Best And Worst Performing Assets In September, Q3 And 2017 YTD

While September and Q3 were the latest solid month for US risk assets, which ended the month and quarter at all time highs, across the globe returns were relatively more mixed for the sample of assets tracked by Deutsche Bank. That said, a large number of assets (21 of 39 in local currency terms) finished with a total return between -1% and +1% which in part reflects another month of incredibly low volatility with the VIX in particular spending much of it trading between 9.5 and 11.0. In the end, excluding currencies 19 out of 39 assets finished the month with a positive total return in local currency and USD hedged terms.
As Deutsche Bank’s Jim Reid reports this morning, in terms of the movers and shakers, commodities dominated the top of the German bank’s leaderboard with Wheat (+9%), WTI (+9%) and Brent (+8%) all finishing with a high single digit return. It’s worth noting however that this does follow heavy falls for the price of Wheat and WTI in August. Equities generally had a strong month, particularly in Europe where a slightly weaker euro (-1%) aided local currency returns. The DAX (+6%), FTSE MIB (+5%), Stoxx 600 (+4%), Portugal General (+4%) and IBEX (+1%) all finished firmer – the latter underperforming however reflecting elevated tension around the Catalan referendum. Returns in USD terms were 0% to +6%. It’s worth also noting the return for European Banks (+5% local, +4% USD) which got a boost from the slightly higher rate environment. There were two standout underperformers in equity markets however. The first was the Greek Athex which tumbled -8% in local terms although still remains up an impressive +19% YTD. The other was the FTSE 100 which fell -1% under the weight of a strong month for Sterling (+4%) following the BoE signalling an imminent rate hike as well as some progress around Brexit talks. Indeed in USD terms the FTSE 100 was up +3%.

This post was published at Zero Hedge on Oct 2, 2017.

Russia Gold Rush Sees Record Reserves For Putin Era

Russia Gold Rush Sees Record Reserves For Putin Era
by Yuliya Fedorinova of Bloomberg via Irish Indepedent
Vladimir Putin is doing his part to keep the upswing in gold alive.
Since the Russian president went on a geopolitical offensive in Ukraine in 2014, the haven asset had its first annual gain in four years in 2016 and is on track for another in 2017.
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A beneficiary of economic and political perils from North Korea to Brexit, it’s among the top-performing commodities this year.
Meanwhile, the Bank of Russia has more than doubled the pace of gold purchases, bringing the share of bullion in its international reserves to the highest of Mr Putin’s 17 years in power, according to World Gold Council data.
In the second quarter alone, it accounted for 38pc of all gold purchased by central banks.

This post was published at Gold Core on October 2, 2017.

How to Get Started Buying Gold and Silver Today

For thousands of years, gold and precious metals have been used as money. Gold’s scarcity and finite quantity make it a stable and predictable way to preserve wealth. Even in today’s financially uncertain world, gold and silver are still among the most stable commodities to buy. While central banks manipulate interest rates, print more money, and help drive inflation, the value of gold continues to remain steady decade after decade.
Today, it’s easier than ever to make gold and silver part of your portfolio. SchiffGold’s precious metals experts will walk you through where and how to buy gold and where to buy silver. Whether you’re considering home storage or converting your IRA into precious metals, Peter Schiff and his team will take the time to understand your individual needs and goals in order to provide sound guidance on buying gold and silver.

This post was published at Schiffgold on September 28, 2017.

Stocks Up, Bonds Up, Gold Up, & Dollar Down But ‘Middle-Class-Miracle’ Fades

Odd day. Low volume, small range in stocks. Good macro. Some questions over just how ‘miraculous’ Trump’s tax plan will be for the middle-class… but the day’s trend across FX, bond, and commodities was set early on when Asia closed and dollar-sellers, bond-buyers, and precious-metal-purchasers came back to play…

This post was published at Zero Hedge on Sep 28, 2017.

A New Challenge to the Dollar

In a move that was little noticed outside of the financial world, China announced the creation of an oil futures contract (open to international traders) that will be denominated in Yuan and convertible into gold. This move provides the first official linkage of oil to gold, and more importantly a linkage between the Chinese currency and gold. While the contract volumes that will be traded on this new platform will certainly be minuscule in comparison to those in the dominant markets of New York and London (at least initially), I believe the move is the latest, and perhaps most significant, step that China has taken down the path that could lead to a global economic system that is not fully dependent on the U. S. dollar. The move amounts to a direct challenge to the dollar’s privileged reserve status and could threaten U. S. dollar price erosion.
The move comes at a time when the U. S is particularly vulnerable to an economic challenge. Given the bold, but not particularly diplomatic, efforts of the Trump Administration to push an America First agenda, the U. S. finds herself somewhat isolated. Add to this the widening political polarity in the U. S., which will make it that much less likely that Washington can take needed action in passing economic reforms to prevent a looming debt crisis. The dollar has been neglected far too long, and its strength may be far more tenuous than many imagine.
By way of background, the United States emerged from World War II as the world’s undisputed economic, financial and military leader. In 1944, at Bretton Woods, the U. S. dollar, convertible into gold exclusively by central banks, was adopted as the world’s main reserve currency. This status meant that the dollar was used to price most commodities, used to transact nearly all international trade. This status further strengthened the dollar and helped make Americans the richest people in the world.

This post was published at Euro Pac on September 28, 2017.

Gold Price Down Again Amid US Rate-Rise Bets, Strong China Trading, Pall-Plat Parity

Gold prices fell beneath yesterday’s 1-month lows in London trade Thursday, dipping to $1278 per ounce as most commodities edged higher with world stock markets.
With gold prices now falling almost 6% from early September’s 12-month Dollar high, silver today fell to $16.70 per ounce – down more than 8% from 3 weeks ago.
Platinum meantime dropped to 9-week lows beneath $920, trading below sister-metal palladium for the first time in 16 years.
Following Janet Yellen’s comments from Tuesday on needing to tighten US policy sooner than expected, US Treasury bond prices also fell again, driving the interest rate offered to investors by 10-year notes up to 2.34%, the most since 11 July.
Gold was then trading at $1211 per ounce.
Betting on US interest rates now see a 76% chance of the Fed raising at its December meeting, up from just 33% one month ago.
EAD MORE

This post was published at FinancialSense on 09/28/2017.

Commodities Bottom as Emerging Markets Breakout

Tonight I would like to update some of the different commodities and emerging markets we took some positions in back in late July of this year. First, let me say that as investors we like everything to line up in perfect harmony so we can make some sense out of what is actually happening in the markets. It’s just human nature. For example, if the US dollar is doing this then the PM complex or the commodities should be doing that. There is a general rule that there is an inverse correlation between the US dollar and the PM complex or commodities, but it’s not always accurate.
Many times we can get bogged down trying to make everything fit perfectly before we make a trade. This can sometimes lead to missed opportunities as what we were expecting didn’t take place. For the most part this is one of the reasons why I prefer Chartology. When a pattern is building out the bears and bulls are making their side known by the battle they’re having with each other, which eventually creates a consolidation or reversal pattern. All the fundamentals that a stock has is also priced into the chart pattern.
Many times as investors we have to know why a stock is doing what it’s doing, from a fundamental point of view, which can begin to complicate things to the point where we become more confused than ever and can’t see the forest for the trees anymore. For me personally I try to keep it fairly simple by looking at what chart pattern is building out and base my buy or sell points by what the chart is suggesting. Nothing is perfect when it comes to trading the markets, but sometimes less is more.
I know right now many investors are seeing a stronger dollar and expect that commodities will head much lower based on the inverse correlation these two generally have which may in fact turn out that way. From a Chartology perspective many of the different commodities built out very large reversal patterns, which is going to be very hard to reverse those patterns. So regardless of what the US dollar is doing I have to go with what the chart patterns are suggesting.
Lets start by looking at a weekly chart for Copper which built out a very large 3 year inverse H&S bottom. About 3 months ago we got the breakout above its neckline telling us the bottoming process was complete. After a strong breakout move Copper is now pulling back to the breakout point forming a backtest to the neckline which will come in around the 2.75 area along with the 30 week ema. Until something changes this bullish setup I have to respect what the chart is saying regardless of what the US dollar is doing presently.

This post was published at GoldSeek on Thursday, 28 September 2017.

Asian Metals Market Update: September-27-2017

Mutual funds will be allowed to trade in the Indian commodity markets in the next six months. This is a sign of the maturity of Indian commodity markets. Indian commodity markets started in 2003 and has overcome a number of hurdles to get at par with developed nations. Options are being gradually started in metals and will slowly move onto to other commodities. Fading trading volumes due to demonetization and bucketing are a thing of the past now. Volumes will now zoom in all commodities trading in India. Indian’s who mostly have a preference to stocks should now look at commodities to invest. Starting with five percent of your portfolio and gradually increasing to fifteen percent over the next year. Silver is the least risky bet in the metals sector. One can start investing in silver at current prices in small amounts and increase investment in silver on any ten percent fall (if any). Gold is always evergreen.
Ups and downs in North Korean risk will dictate gold and silver.

This post was published at GoldSeek on 27 September 2017.

Africa’s Richest Man: Oil Is Not The Way Forward

The richest man in Africa says crude oil prices would do Nigeria a favor if they stay lower for longer.
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Last week at the UN General Assembly, Nigerian billionaire Aliko Dangote, whose main business is in cement but also holds interests in agricultural commodities and petrochemicals, said that agriculture – not crude oil – is the way forward for Nigeria, and that Africa ‘will become the food basket of the world.’
The latest economic data from Dangote’s home country tend to support his view. GDP grew by 0.55 percent in the second quarter of the year, which, although a meager growth rate, was welcomed because it signaled Nigeria’s exit from the recession that it plunged into due to the oil price crash.

This post was published at Zero Hedge on Sep 26, 2017.