Friday, November 28, 2014
Since there is a gap in the US junior miner index charts cos of Thursday, here's a chart of the TSX's ZJG ETF instead, which is about as GDXJ as you can get:
And now you see how damn good it was for me to sell all my juniors on the suspected violation of the EMA(10) on Thursday, light volume be damned. Selling on the violation turns out to have locked in my gains for me.
However, I note a few problems with this:
1. How bullshit is it for the miners to turn around right at the SMA(50)?
2. That's an awful big volume candle for Friday.
3. Why the heck were people selling PMs and miners? Because oil dropped? Really? That's a reason now?
Anyway, USD threatened to break upwards today, but really hasn't yet. If USD does break upwards, there'll maybe be more pain as people short the hell out of PMs and miners for no reason.
So you goldbugs need to keep watching the US dollar if you want early warning of when to get back into PMs.
Um... oh, unless, of course, the PM drop is really driven by a worry about collapse in gold and silver demand because it's the oil barons who buy all the world's gold production. (Looks it up) Um. No, forget that, they don't.
In fact, I'm going to have to start following the India news again to see what the oil price collapse does to India's current account: their trade deficit was what brought down the heavy-handed gold duties, and oil is the other huge contributor to their deficit. So on a collapse in oil prices, maybe India doesn't need to muscle gold anymore?
How far can oil collapse, by the way?
That Friday candle, frankly, is fucking childish. 10% in one day? That's fucking childish.
It's so childish that you know it's being driven by hedge fund clowns puking their long positions and going short, and not by any real demand shock or supply glut.
Even if oil is going down, even if it's going down to $20, it's not going to do so in a week.
Personally, I think an oil move like Friday's needs to see a similar upmove in the USD to be believed. Is USD ahead of oil? Does it go up no more? We'll just have to wait and see!
Meanwhile, the real barometer of the US economy is doing this:
It was breaking out, but then the oil silliness at lunchtime made it turn back down. Now all the amateur hedge fund TAs are going to be crowing all weekend about a Friday gravestone doji and OMG that might just mean sell sell sell.
Personally I'm weirded out by the dive in IWM while QQQ did very little.
But yet the US economy is growing, debt is cheap, and the US consumer is about to get a shock the next time he fills up the tank and isn't asked for a sack of $100 bills.
It's amazing how much the stress has just melted away, now that I'm an unemployed bum. Engineering is rather stressful, if you let it be, which I did.
Anyway, I'm not making any decisions what to do next right away because I still have a 5-figure severance coming my way.
But I was thinking about going to university and getting a second degree, in economics. I'd probably be interested, if such classes even exist, of studying commodities - especially that wacky Libertarian shiny one that you and I love so well.
1. Canada is the world's miner and the world's exploration capital market (suck on that, Australia!), so I already live in the perfect country for a degree focusing on metals economics. Hey, at worst I could still go work for some dump like Dundee. Though I look like crap in a suit.
2. Even Ben Bernanke himself recently said that nobody has a clue what really makes the gold price do what it does. If you've been reading along these past few years, you know I have opinions on the topic, and I'd love nothing more than to study metals pricing at university to get a better understanding. And if nobody else is working in the field, bam! I gots me instant territory.
3. I could write a book, as an economist, on precious metals. You know I can write, and write well. And maybe by then the gold bull market will be back on, in which case I'll be able to sell lots of that book.
4. I've spent years mocking newsletter writers for having utterly no understanding of economics, right? Well, maybe if worst comes to worst I can write a stupid paid newsletter as an economist. A sane one. Well, okay, a vaguely sane one.
5. I'm an information sponge, a lifelong learner, and a compulsive arguer. That alone could carry me through to a Ph.D.
1. Economics isn't a science, it's politics masquerading as science.
2. The whole economics world is still ruled by the Chicago School and the Austrians - sensible Keynesians like Krugman are still thought of as loonies braying in the wilderness.
3. It'll take 2 years of my life to get a second BA.
Cons 1 and 2 are bearable, I think. Meanwhile pros 1, 3, 4 and 5 leverage my personal situation and my personal strengths. I think it's a good plan on balance.
I'm not making any decisions just yet, but this is an option that came to me right away.
The sensible mainstream alternative open to me right now is moving to some dump like Markham and getting another engineering job, and many of those companies are meat grinders.
We'll see what I choose.
In the meantime, I feel very good about having dumped all my junior miners yesterday. Discipline with the EMA and ability to jettison a narrative in the face of conflicting evidence means I made enough money on this advance.
I have 40% cash right now, but might wait for a couple down days on the US market before I deploy. $VIX was a bit low yesterday and has come back up now.
Here's Zedd & Foxes, with a tragic love song for junior gold mining stocks:
By the way, if you don't like autotune, guess who you can blame?
Yes. A geologist. A geologist invented autotune. You can blame geologists for autotune.
Thursday, November 27, 2014
So, I just got laid off from work this afternoon.
No big deal: I've got a severance cheque coming, I have quite a bit of savings, and in fact there might be an even larger chunk of money on the horizon.
And I already know a bunch of places where I can go to look for another job tomorrow, doing the exact same thing: there are only maybe 20-40 people with my skills in Ontario, and (it being engineering) the number dwindles by the day because of the present demographic-driven wave of retirements in my field. In fact, my old engineer already offered to get me a job at his company.
Then again, I have more than enough money to go back to university, and was once interested in doing a Ph.D. in sociology.
Then again then again, there was once this loony, years ago, who suggested that I start my own paid investment newsletter. That'd be good for a lark, wouldn't it? After all, I can blather on at length about charts, I have opinions on markets and gold, I know big words, I type at 60wpm, I find it easy to ignore my own incompetence, and I know where to download a PDF file creator program: what the hell else do you need?
But for the time being, I'm happy that I dumped my junior miners on seeing the roll-over (and before being told I was laid off) today. Being unemployed means shifting to a more conservative asset mix - in particular, one that doesn't drop 50% on a whim.
More importantly, I want to notify y'all that posting may be light for perhaps the rest of this week, or perhaps next week too: there's a large collection of newly-purchased liquor and a Buffy The Vampire Slayer box set that I feel a desperate need to become acquainted with.
With the caveat that the US is closed today so all we have left to go on is an illiquid Canadian market, the junior gold miners are rolling over:
So I guess at the very least we'll probably see a MACD rollover and a retest of the Bollinger mean.
So, oh well. It was fun while it lasted, but I use extreme discipline playing bear rallies, so I dumped most of my miners.
Too bad, maybe I'll put my money in Europe for the rest of the year?
Anyway, the market will be boring for the rest of the day for me, so maybe I'll just spend the rest of my time today sending "To collider!" and "Me told you so!" emails back and forth with Otto like has been going on all day.
There's a music video coming up tomorrow morning about junior miners, btw.
Wednesday, November 26, 2014
Poked around in some other blog rolls and found these:
Bespoke - jobless claims "surge". Except they normally go up this time of year. Yawn.
FT Alphaville - the US government has finally stopped holding back the recovery. Actually, either Bonddad or Bill McBride have already been talking about this for months, buddy. It's not news. It was news in late 2013.
Gavyn Davies - fault lines within the ECB. And it all boils down to party lines: Draghi is a Keynesian, while Weidmann is a sadomonetarist from the Austrian school. Ultimately, we can hope that Weidmann gets proven wrong, and decades from now his grave becomes a popular defecation place. A hilarious jab in the comments section: "These guys are from the Austrian school? Do they ride to the ECB meetings in a carriage?"
JC Parets - hey, look at Europe! Yeah, upon reading this article, I'm suddenly overcome with doubt as to whether it was a good idea to buy a Europe ETF. I generally don't believe one single sentence this guy writes, and basing everything on a long-term ratio chart is specious.
Short Side of Long - China to play catch-up? Hey Tiho, did you know that the FXI is only the "China 25"? Maybe the chart sucks because that ETF is a bunch of fat SOEs, and it's only bought by hedge fund morons who have no clue about the China economy? Maybe instead you should look into China tech ETFs instead, which are up quite nicely over the past year, especially considering that Jim O'Neill (the guy who invented "BRIC") has called China tech the new play?
But no, so you're going to buy the FXI because it's not done anything in over 5 years? That's an investment strategy? I have a rock that hasn't done anything in 5 years - wanna buy that too?
Argonaut has already rolled over and resumed its descent. It's below its EMA and below the Bollinger mean, and worth less today than it was yesterday - how clearer a signal than that do you need?
Endeavour isn't as clear, but it is already failing its EMA.
McEwen has also failed its EMA and is trending back down.
Sandstorm is also failing its EMA, though that's also not as clear.
So are the junior miners in the process of rolling over, and quality is going to drop last?
Or is the market just reacting to last week's sector-wide pop, and only now starting to sort the wheat from the chaff?
I guess we'll know in a couple days max.
GDX seems not to want to cross its SMA(50). As if it matters or something.
GDXJ seems not to want to cross $30.
GLD is also squashed below its SMA(50).
And SLV shies away from its SMA(50) too.
The SMA(50) only matters because people sometimes trick themselves into thinking that it's important. Kinda like religion.
But religion still makes real people do dumb things in real life even though it's all stone-age mud-hut hokum, so the SMA(50) might make people want to dump miners because ooga-booga. That's TA for you.
AKG, RIOM and (ha!) KGC have all already popped above their SMA(50)s, though, so the question is whether the rest of the complex can follow suit.
And how meaningless would that SMA(50) get if the US dollar index decides to turn south?
Who knows. It seems important for now, but frankly I'm getting a bit fed up here and am about to write this little junior miners pop as a roll-over in progress.
I had more news links for you, but then I figured they were mostly trivial bullshit. We're on set-and-forget until things change, then we'll start reading the news again.
So here's what I do have:
FT Alphaville - commodity decline: definancialization? Is there really so much of a speculative premium on commodities?
The Krugginator - Keynes is slowly winning. Now even the OECD has turned their backs on sadomonetarism.
Mineweb - iron ore drops below $70. And Rio, BHP and Vale just don't care.
Mineweb - Marine Le Pen calls for audit of French gold reserves. This is your ally, goldbugs - a neo-Nazi. Just wanted to point that out, for those of you who've never heard of the Le Pen name.
Previously, on Buffy the Vampire Slayer!:
Does it continue drawing a shallow upward channel? Or does it break down here?
What do you think happens to PMs if it breaks down?
It's the thing to watch! Too bad we might have to wait til next week!
Tuesday, November 25, 2014
Here's some more charts, by the way.
It's still above its EMA(7), so by definition gold is in an uptrend.
It's still above its EMA, so again, uptrend. Note that I do personally believe the fundamentals for silver suck balls; however, the entire market's known this for a while, I bet it was already baked into the price. Maybe too baked.
And here, again, is the key:
If UUP breaks down from this horizontal consolidation, I'm hoping I see some fun to finish the year as long-short PM pairs get unwound. Maybe it won't happen, but it's my bet anyway.