Friday, June 27, 2014
Red volume has been larger than black volume for the past week, which kept me from staying in the juniors. I dunped most stuff in the past 2 days, just have warrants left.
Now it turns out we're printing another red outside candle today. And it's breaking through the EMA(8), which was support throughout this rally. It better not keep going down.
The Bollinger mean is at $38 right now, which coinkydinkilly is where the weekly SMA(50) is. So a break of $40 might just mean a pullback to $38.
That is, as long as silver doesn't decide to pull back too:
GDXJ only looked good because silver wasn't breaking down. What happens if silver breaks down? Ouch. GDXJ will look significantly less good.
"Hyuk hyuk", says mister silverbug, "silver's not going to break down!" Really? Do you honestly think this chart can maintain a RSI of 80 forever? Volume is dwindling, and the price is really overextended because of a single piece of bullshit on June 19th that we already knew about.
Here's some stuff to read, or else:
Ritholtz - single variable market analysis is for fucktards. You can not look at one single number and say "aha! therefore doom!". Why not? Because economies and markets have hundreds of different inputs, all fighting against each other. It's about as stupid as saying "if you eat a carrot, you'll live to 100". Anyone who simplifies everything down to one figure is a moron and you should block their website.
Data Dive - here's why it's so hard to land a job. The thesis at the end about social networks is demonstrably bullshit (ask a sociologist - the whole "atomization of society" wank died in the 90s with Douglas Coupland's career). But they do make one important observation: difficulty in finding a job has nothing whatsoever to do with a "skills mismatch", which really is just a Republican bugaboo intended to blame the poor for being poor. Why are we sure there's no "skills mismatch"? Because if there was one, the people with the skills would see their pay skyrocketing.
Bloomberg - EM ETFs show biggest premium since 2012. I dunno... if you're paying a 0.2% premium to buy something grossly liquid like EEM, I'd have to wonder if you're buying at the wrong time.
FT beyond brics - Modi's biggest challenge. Again, Jim O'Neill says it's easy for India to improve its growth - just quit doing stupid things. Too bad, then, that they have to try to quit doing stupid things with the secular credit cycle against them. As well as this:
Reuters - monsoon revival seen in early July. Rainfall has been about 40% below average so far this season, which spells doom if it carries on through the summer. Thing could improve in July, of course. But if the Indian Ocean dipole sets up the way the Japanese have recently predicted, that could cause even more trouble.
And by the way - the last time the summer seasonality for gold didn't show up was during the last Indian drought. But of course Indian farmers have nothing to do with the gold price, right?
Mining.com - mining costs in Chile versus a decade ago. I guess the secular commodity cycle has this going for it - where in the world is it getting cheaper to mine anything?
Reuters - US brokerage must pay athletes $13.7M for Ponzi fraud. Hey, shitty gold explorecos could easily raise a heck of a lot of capital in private placements. Just find a few thousand rich people who suffer from poor judgment and impulsivity due to post-concussion syndrome.
Chronicles of Brodrick - Ermagerd gold is doomed!
He fires withering sarcasm at the idea that the China debt collateral problem is bad for gold. Look, for example, at this chart of sarcasm!:
Bah god King! He chokeslammed the gold apocalypse idea straight to hell! The gold apocalypse idea is broken in half!
Of course, the mere discovery of a $15B hole in China's $42B gold collateral shouldn't tank the price overnight because physical flows haven't changed on the news. Especially when Wall Street Whitey still thinks gold has nothing to do with China and India, but everything to do with Treasurys and the US dollar.
Gold flows might, however, change in the near future when all the banks decide to call in all the gold-backed loans, causing a wave of gold to be sold back into the market which no longer sees strong demand from China, and which is weakened by an Indian monsoon failure. Like, sometime over the next month or two.
Here's some more snark from Brodrick:
Surely, the professional hand-wringers said, this is the rough hour of gold's doom come round at last!Whew! I had thought earlier that he was mocking me. But I'm not a professional, so he must be mocking someone else.
Then Brodrick decides to have an idea.
Here's an idea: if $15 billion worth of Chinese loans are based on gold that doesn't exist, maybe gold that does exist has more value?Or maybe when the Western banks that extended these loans see how suspect the collateral is, there's a rush to call all the loans in? After all, the last bank to call in their loans will find there is no collateral backing left. And what happens when the loans are called in? The physical goes back into the market, except this time there's no Chinese gold-backed collateral loans mopping up hundreds of tons of physical demand.
A news item shouldn't cause a one-day hammerblow in the price. That is not a rational market. In a rational gold market, the price moves based on physical demand, and this will take a while to play out.
But wait! Then he has another idea.
Here's another idea: If Germany asks for its gold back from US vaults over a multi-year period -- and then basically just gives up trying to get it back -- maybe there's another problem.Yeah well good luck with that. Whitey's been happy with the possible nonexistence of Federal Reserve vaulted gold for decades now - they only care about paper. Who cares if the paper is stored in Germany or New York?
And then Brodrick does the unthinkable:
To quote Sprott on the German situationGod no, Sean! Don't go there!
-- and yeah, I'm goin' there,Aw fuck you're goin' there.
because he has at least as much if not MORE credibility on gold today as Wall Street's paper pushers of record:Ah ha ha ha ha ha!!! Yes Sean, Eric Sprott has credibility. That's why Sprottcorp doesn't let him touch their money anymore, right? Ah ha ha ha ha ha!!!
I'm not saying gold is doomed. I'm saying that my feel of the fundamental situation has changed, and now I see fewer positive drivers for the gold price, and more negative drivers. At least til we get further into Indian monsoon season.
Or at least til we're through fund rebalancing this weekend. Because maybe these past few days of weakness have just been because of a few funds taking profits on their junior positions.
Thursday, June 26, 2014
Two afternoon reads:
Calculated Risk - the future's still bright. McBride drills down into US demographics to show how important it is for the next few years.
Mining.com - China finds massive $80B hole in gold financing. Geez Frik, do you live on the west coast or something? You should wake up earlier, then you could break these stories before me.
Here are some morning links:
BI - China finds $15 billion tied to fake gold deals. As predicted here, long before the WGC, a big chunk of China's gold imports were not due to physical demand, but was actually destined for financing collateral, and it's all coming apart. Quote:
Spot checks on 25 companies that process bullion, such as jewellers, showed they made a combined profit of more than 900 million yuan by using the bank loans to take advantage of the difference between onshore and offshore interest rates, as well the appreciation of the Chinese currency, according to a report published this week on the National Audit Office's website.The trick is to now figure out what that does for future gold demand, especially given a possible poor monsoon in India.
Chinese firms could have locked up as much as 1,000 tonnes of gold in financing deals by the end of 2013, the World Gold Council said in April, indicating a big slice of imports has been used to raise funds due to tight credit conditions, rather than to meet consumer demand.
At current prices, that would be worth about $42 billion.
Oh, and by the way: this story hasn't yet been posted on Zerohedge. Why not? Hm? Any idea?
FT Alphaville - when commodity collateral shenanigans go wrong. Izzy Kamizzy jumps on the China gold collateral story. She thinks it'll have more of an impact on dollar liquidity in China.
FT Beyond Brics - speculating on Modi's budget. Well, he seems to want to talk directly with foreign companies to address their problems with locating in India, and that's good.
Gold Report - Lawrence Roulston interview. If you're interested.
Wednesday, June 25, 2014
Sorry, wasn't much into posting today, so I'll make it up to you with some Fry and Laurie sketches:
(more after the break)
I forgot to say earlier that I was watching SLV for a break above yesterday's high of $20.22.
Because the last candle on this chart:
is not what you would expect to see when a junior gold rally dies.
The peak in silver was at noon today, so maybe it was just Englishmen fiddling around. We'll have to see.
Chronicles of Brodrick - short-term gold and silver outlook. Presented for what it's worth.
Speaking of which, this isn't an inverted H&S pattern in the miners. The neckline is skewed and we're not seeing the strong volume on the right shoulder.
But it doesn't matter, because an inverted H&S is really nothing more than a transition from a lower-lows-lower-highs trend to a higher-lows-higher-highs trend. That is really all it is. I don't know why people want to see a fucking H&S everywhere; is it because they'd rather not think for themselves? Go buy a fucking tarot deck if that's what you want from life.
Oh, and by the way, check out this chart:
You'll see that here I use the EMA(10). That's because the EMA(10) governed the entire June uptrend.
A break below the EMA(10), as far as I'm concerned, means (truistically) that the lower bound governing the June uptrend has been broken. At that point you could drop to the Bollinger(20) mean, or further. But if it doesn't break, then the uptrend from June is still intact.
Looking right now at this chart, by the way, I could see the latter happening: yesterday just filled the GDXJ gap from last week. That is good, chart-watchers will take heart from that.
Though then again, a breakaway gap that sees a quick reversal is bearish.
Then again then again, the reversal might just be due to fear of another opex smackdown.
We'll see. I have a criterion for selling, that's a good thing.
Here's just some ideas running through my head:
1. If the gold miners' rally is dead, why is silver still in its uptrend, as if nothing happened? Silver is supposed to be a PM like gold, and silver correlates with junior miners. So either silver has to crash in the next couple days, or the miners have to pop back.
2. Why did GDXJ drop $1.50 in the last half hour of yesterday? Was that just ETF longs puking back into the market? I guess GDXJ was overextended (and some of the juniors certainly were), but that's a lot of damage to fix before the chart looks good again.
3. Does anyone else know opex is happening? Do they expect a smackdown this week? Cos it might not happen. I have seen the gold-negative headlines crop up again, though.
I dropped a bit of a couple things that looked bad, but thankfully my RIO position is still in the green (and will be til the Lizard People drop it below $1.90) and my other small positions aren't that bad either. I'm on the cusp of selling, but want to see what happens with silver and with GDXJ and with opex.
Tuesday, June 24, 2014
Monday, June 23, 2014
Korelin - Brent Cook interview (mp3). I'm linking to the mp3 and not the show webpage, because I care too much about your braincells to expose them to the idiotic blather in the comments section.
Cookie was surprised by the pop in the juniors, which I guess means yet another person who doesn't know about the June-September seasonality in the gold stocks.
It's starting to get hilarious - everyone is attributing the pop to some magical thing or other, when really it happens every year and it happens because it's the time of year when gold gets bought by India.
I'd be happy if the miners kept going up after September.Til I see that happen, though, I'm taking this as a summer play and that's all.
Dammit, I haven't been following him for years, and I should, just for the entertainment value.
Stock Gumshoe - exploring Frank Curzio's "once in a lifetime" meeting about a $1 Brazilian gold stock. It's got ambassadors, senators, Rick Rule and Doug Casey... fun read. I won't spoil the read by telling you which company it is.
at 11:47 AM
Reformed Borker (Bork Bork Bork!) - what if wages rise? Of course, that means the masses will be better off, and the stock market will throw a snit.
FT beyond brics - emerging Asia to drive infrastructure spend to 2025. Sure, as long as the EM bull market continues. But the minute DM interest rates rise, do you think it'll be so easy to fund a highway in India? I mean, without access to cheap credit?
Mining.com - Germany gives up trying to get their gold back from the US. Ha ha ha! Because it's not there! Ha ha ha! God, we make fun of goldbugs, but then a story like this comes along. Kipper the Keenmeister himself has fun playing the conspiracist goldbug in this writeup.
Here are some points to ponder:
Ritholtz - the market is frustrating the majority. Quote:
Economists are unhappy because they do not know what to believe: this month’s forecast of a strong economy or last month’s forecast of a weak economy. Technicians are unhappy because the market refuses to correct and gets more and more extended. Foreigners are unhappy because due to their underinvested status in the U.S., they have missed the biggest double-play (a big currency move plus a big stock market move) in decades. The public is unhappy because they just plain missed out on the party after being scared into cash after the crash. It almost seems ungrateful for so many to be unhappy about a market that has done so well. … Unhappy people would prefer the market to correct to allow them to buy and feel happy, which is just the reason for a further rise. Frustrating the majority is the market’s primary goal.Sounds descriptive of today's market, eh? That was written in 1989. How'd the market do in the ensuing ten years? Have you shut up and bought SPY yet, Barry?
New Deal Demoncrat - consumer credit is not a leading indicator, dumbass. Where NDD points out that Joey the Weasel is a dumbass for thinking consumer credit is a leading indicator when in fact it's a lagging indicator.
Liz Ann Sonders - on credit and debt. Lots of great charts from Liz Ann Sonders, who you should read religiously, not just because she's a babe.
Humble Student of the Markets - this turnaround in gold stocks is nothing. Because there's no inflation, he says. Sorry guy, but Shaoul says there is, and he's smarter than you. In any case, who cares? The turnaround in gold stocks could just be because of June-September seasonality, and if so, it's a guaranteed 50% win.
BI - Wall Street thinks inflation is coming. I don't care if it really is, I just want to be ahead of Wall Street on this play, and thanks to Shaoul, I am.
Sunday, June 22, 2014
So, apparently, Sarah McLachlan is dating former hockey player Geoff Courtnall, so tiny is the Canadian famous people scene that it's inevitable for two horribly unlikely people to meet and go out.
Anyway, you might remember Geoff Courtnall from Lupaka Gold, the company which eventually sank like a stone on terrible metallurgy results, after having already merged with Andean-American.
Here's Al Korelin interviewing Geoff a couple years ago, where after 3:40 he talks about how he founded Lupaka and raised money for its IPO:
So I wouldn't be surprised if, in the next year or two, Sarah puts some money into an ill-advised investment in a llama-pasture exploreco somewhere. She's now running with the Vancouver Venture crowd, after all, and she has money, and boy junior mining does so damn well as an investment, doesn't it?
Oh well. SOCAN cheques mean she'll always have enough money for food and shelter. If things get tight maybe she has to move into a mobile home down east, but that's not such a bad life, is it?
Oh, by the way...
Completely unrelated to the topic of founding and managing a junior gold exploreco, here's Geoff talking about the post-concussion syndrome that forced an end to his NHL career: