Gold stocks have been on fire this year, blasting higher to 2014’s pole position of best-performing sector.
And this powerful rally’s internals are looking as good as its headline gains. The recent months’ gold-stock buying has been on big volume, with large capital inflows.
This is very bullish behavior revealing a sea change in sentiment and strong conviction among returning gold-stock investors and speculators. [Read more...]
Selling has finally returned to the US stock markets, short-circuiting their year-old levitation. This new downside action of the last couple weeks looks very different from anything witnessed in 2013. Is it just another minor and short-lived pullback, the vanguard of a full-blown correction, or the dawn of a new cyclical bear market?
The prudent strategy for traders varies greatly with this selloff’s likely magnitude. [Read more...]
It’s been an incredibly tough last couple years for the miners. Not only have they had to endure sharply falling metals prices, they’ve had to battle continually rising operating costs. For the producer companies this combination has been a margin killer. And for the non-producers it’s been flat-out devastating.
Mining companies that are non-producers obviously don’t generate any revenue. They are junior-level companies in various stages of exploration and/or development. And they primarily rely on investor capital to fund their operations. In some cases they are able to procure bank loans, but this is the exception.
If it costs more to operate, and the prospects of juniors’ metals of focus fade via falling prices, investors lose incentive to subscribe to their shares. And if investors aren’t subscribing to their shares, then capital quickly runs dry. This is a major problem in a capital-intensive business! [Read more...]
Investors’ interest in silver is starting to rebound after last year’s carnage. As capital prepares to return to this beaten-down asset, many investors are wondering how to game silver price action. Gold is the key. The white metal closely mirrors and amplifies the price action in the yellow one. Gold is not only silver’s primary driver, but its overwhelmingly dominant one.
Gold is critical for timing silver buying and selling. [Read more...]
Despite its miserable 2013, latent investor interest in silver remains strong. This manifested in robust worldwide demand for physical silver driven by its lower prices. The hidden strength in silver was also evident in the holdings of its flagship ETF, which held steady in defiance of plummeting silver prices.
SLV’s massive bullish divergence reveals big dormant silver investment demand ready to be unleashed. [Read more...]
Silver is on the verge of a massive short squeeze. Speculators’ silver-futures shorts surged to extreme bull-record levels less than a month ago. And they’ve barely started to mean revert, which means big buying to cover is still coming soon. While speculators’ silver-futures positions are always a great contrarian indicator at extremes, exceptional shorts are the most bullish portent of all.
Unlike new long-side buying, short covering isn’t optional. Silver futures’ hyper-leverage guarantees that speculators have to quickly buy to cover as silver’s price rises. This feeds on itself, igniting a buying frenzy as traders rush for the exits. The bigger their aggregate shorts, the greater the rally their covering sparks. So the recent bull-record shorts are a super-bullish harbinger for silver and its miners’ stocks. [Read more...]
Silver has cratered in 2013, spawning a sentiment wasteland of extreme bearishness. Yet peak despair is the very best time to buy low. Silver prices have converged on multiple major secular support zones, an exceedingly bullish technical launchpad.
The white metal is also very cheap relative to gold, which is its primary driver. All this is setting up silver and the stocks of its miners for a fantastic new upleg in 2014. [Read more...]
The gold-mining stocks have suffered a disastrous year, plummeting while the rest of the stock markets soared. This vast performance gap has catapulted bearishness on this sector to epic extremes. Few own gold stocks anymore, and everyone aware of them loathes them. This has crushed their stock prices to unsustainable fundamentally-absurd levels. They now offer the ultimate contrarian buying opportunity.
Gold stocks are so absurdly cheap that some of the smaller miners are trading under 7x earnings even at today’s gold prices! Contrast this with S&P 500 valuations around 23x. No matter what gold does, sooner or later value investors are going to take stakes in the dirt-cheap gold stocks. And since this sector is so out of favor, it won’t take much buying to catapult these stocks higher. It is inevitable.
Lewis Carroll’s Alice in Wonderland is a timeless tale that chronicles the journey of a young girl into a psychedelic fantasy land. This tale is one that turns logic upside down, and takes us into a bizarre world that defies reality. To get to this world Alice falls down a precarious rabbit hole, perhaps the same one that has swallowed the junior gold stocks.
The juniors have seen so much carnage lately that investors have completely disregarded their sector. And this disregard has sent them down a proverbial rabbit hole, into a world that is bizarre and illogical to say the least. Though these stocks certainly don’t have much support with gold prices so weak lately, popular consensus that their sector is dead is pure fantasy. [Read more...]
Already beleaguered, gold suffered another sharp drop this week. When the minutes from the Federal Reserve’s latest policy meeting implied it might slow its QE3 bond-buying campaign “in coming months”, futures speculators responded with heavy selling. But their extreme gold bearishness is highly irrational, they are missing the forest for the trees. Taper or not, quantitative easing remains super-bullish for gold. [Read more...]
Heavy and relentless selling by American futures speculators has been one of the primary drivers of gold’s horrendous year. These traders abandoned gold on the long side while piling in on the short side, unleashing withering selling pressure. But just in recent weeks, these speculators have started buying gold-futures contracts again on the long side. This critical and long-awaited reversal is very bullish for gold. [Read more...]
Gold’s 2000s bull market has prompted the miners to scour the world over in search the Ancient Metal of Kings. And over the course of this bull, they’ve indeed reached far and wide to find their glory. Now rather than only a small handful of countries responsible for the lion’s share of production, mine supply is truly a global affair. [Read more...]