Month: October 2020

Look for gold to test these key levels – Gary Wagner  Kitco NEWS

Gold miners: it’s time to buy  Kitco NEWS

Sharp price declines for gold, silver as USDX rallies  Kitco NEWS

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Source: Michael Ballanger for Streetwise Reports   10/12/2020

With the presidential election less than a month away, sector expert Michael Ballanger offers a forecast for the gold and silver markets.

With a mere twenty-six days to the election of the “leader of the free world,” of the richest, most powerful country in human history, financial markets are noticeably apprehensive as to outcome and understandably concerned with the reaction of the two deeply divided camps. With the Antifa and Black Lives Matter (BLM) “movements” mobilizing to disrupt at every turn, their ideological opponents carry little in the way of monikers but are passionately anti-BLM and anti-Antifa and even more passionately “pro-American,” a descriptive often marching shoulder-to-shoulder with paramilitary and/or white supremacist groups.

The sad part of this misunderstood and misreported conflict is that the 1% elite, empowered by the politicians and the bankers that support them (the “banco-politico cartel”), would have us all believe that this conflict is the ultimate showdown between the conservative forces of law-and-order and the socialist forces of anarchy.

The stark reality is that the vast majority of the 99% that make up the unentitled non-elite, whose role has been to act as doormats upon which the 1% wipe their shoes, have finally had enough. It started with globalization, which shut down the manufacturing core of U.S. industry and shipped their jobs off to China and Mexico, and has culminated in a global pandemic that saw the politico-banco cartel once again enriching, with massive bailouts and liquidity injections, the 1%. This has resulted in all-time highs in stock prices, and wall the while the jobs of the working classes (the “doormats”) were not simply transferred; they were terminated.

I put forth the notion that civil unrest in the U.S. is anything but “ideological” and totally “apolitical.” It is the result of a systemic abuse of the rights of literally everyone not invited into the “club”—the one to which legendary comedian George Carlin referred when he coined the line: “It is one big club (the elite) and guess what? You ain’t in it!”

All you need to do is go back and watch “The Big Short,” the movie based upon Michael Lewis’ bestseller, which chronicled the biggest rip-off of taxpayer capital in history. While Andrew Ross Sorkin’s “Too Big to Fail” glamorized the bankers led by Bernanke and the cast of criminals led by Treasury Secretary (ex-Goldman Sachs) Hank Paulson, the Lewis book lifted up the Wall Street banker’s carpet, revealing a vast network of evils far in excess of anything the mainstream media (MSM) would report. Once you have grasped the contrast between the two versions of the Great Financial Bailout of 2008, you come away with a sense that this is one “club” unlikely to issue us any invites.

Here, in the autumn of presidential election year 2020, we watch the American electorate caught in a crossfire of special interest bullets being showered upon them by the machine gun media, whose contrasting messages are 100% correlated to the individuals or conglomerates that own that media, be it nouveau-riche newspaper barons or the compromised moguls that own cable news. Similarly bombarded by data bombs of varying interpretation and diverse agendas, the poor investor class is getting fed a load of conflicting malarkey that would have them accept two divergent assumptions:

• the U.S. economy is in a V-shaped recovery, as evidenced by the performance of the NASDAQ and other stock market barometers, or
• the U.S. economy is in dire need of another massive, multitrillion-dollar stimulus package to “rescue” the average American worker.

In case you have not yet noticed, those two assumptions are contradictory. Any economy being described as “recovering” does not need stimulus. What the politico-banco cartel wants is to once again be the portal through which the government debt is channeled down to the “average American,” because when you are the guy in the booth at the tollgate, you get your toll regardless of where the drivers go.

Bankers are middlemen that luxuriate in the splendor of legalized and legitimized counterfeiting. What percentage of every dollar of stimulus that winds up in the reserve accounts of the member banks is unknown, but if it were zero, the bankers would not take the job, because bankers do not work for free. “Pro-bono” is not in the banker vocabulary.

From an investment standpoint, I continue to believe that the forces of intervention and interference are hard at work in the capital markets arena, working on the assumption that a Trump victory will be a distinct preference over Biden when it comes to friendly versus hostile attitudes toward the financial industry.

Accordingly, a booming stock market and subdued precious metals will be viewed as beneficial to the Trump cause. The handlers all believe that “optics are everything” in the final days before elections, and incumbent presidents want to know that their Wall Street campaign donors are “on it.” Judging from the miraculous recovery by the POTUS from his COVID-19 bout, stocks were given a perfect cover story with which to assault all-time highs by Nov 3.

That is the assumption I have made, and it is one shrouded in cynicism and cradled in revulsion. There is nary a day that goes by that GATA co-founder Chris Powell’s now-famous line fails to resonate loudly: “There are no free markets anymore; there are only interventions.” Were that it be untrue can only be a whim for the terminally naive.

I have taken only one investment posture into the final weeks of the most heavily polarized election campaign in U.S. history, with the 2020 election being second only to the election of 1860, where the major issue was slavery. The outcome of the 1860 election resulted in the cataclysmic American Civil War, and while Hollywood has bestowed saintliness upon many of the cast and characters of the era, it was the darkest moment in U.S. history and resulted in mayhem, destruction, and unprecedented loss of life. One-hundred and sixty years ago, racial issues dominated the political landscapes and here in 2020, racial issues once again front and center.

In an environment where the term “depression” is now used far more commonly than the CNBC color commentators would prefer, the investment posture that is most suitable for the times can only be one that prepares for the loss of purchasing power of one’s savings. I am avoiding cash wherever possible, and I remain overweight precious metals on the assumption that regardless of outcome, the fiscal and monetary bubble machine will remain active. As long as the leaders of the world’s largest debtor nation continue to throw inflationary gasoline on the fires of insolvency and uncontrolled debt, gold and silver will protect one’s wealth over stocks, bonds and (God forbid) cash.

The “line-in-the-sand” for gold bullion is now US$1,862/ounce, which is also the 100-day moving average (dma) around which prices have been clinging for the better part of the past three years. While event-driven declines are rare, the 2008 subprime crisis and the 2020 COVID-19 crash created generational buying opportunities. But what I find interesting is that if the recent 11.4% plunge to $1,850/ounce was the extent of the correction and comparable to the March decline of 14.9%, and if the ensuing rebound of 44.5% was the March-August gain, a similar September-May rebound of that magnitude will take prices to US$2,673/ounce.

The charts shown below give you both upside target prices (in the first chart) and the suggested stop-loss point (in the second chart); a two-day close under the 100-day moving average would invite a move down to the $1,725 level and the gold miners would not be immune.

We ended out the week in superb shape, as the precious metals turned higher, with gold reclaiming US$1,935 and silver almost US$25/ounce. The stage is now set for a strong year-end advance, but only if gold can clear the 50-dma at US$1,950 and silver comfortably above US$26.

We shall see.

Originally published Oct. 8, 2020.

Follow Michael Ballanger on Twitter @MiningJunkie.

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

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Disclosure:
1) Statements and opinions expressed are the opinions of Michael Ballanger and not of Streetwise Reports or its officers. Michael Ballanger is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Michael Ballanger was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Michael Ballanger Disclaimer:
This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.

o

Source: Peter Krauth for Streetwise Reports   10/12/2020

Peter Krauth explains why he believes investors should hold a position in silver.

We’re still in the early innings of a precious metals bull market.

And if you’re wondering whether you need to own some silver, my answer is categorically yes.

It’s only a matter of degree.

With silver that’s important because it acts like gold, but on steroids.

Silver can languish for extended periods, even if gold moves. But then it tends to play a rapid game of catch-up.

Timing such moves is difficult at best. Instead, it’s better to build a silver position on price weakness, then simply sit patiently.

Because as I’ll show you, the payoff tends to be very rewarding.

Silver Dramatically Outpaces Other Assets

Silver has been on a tear so far this year, up 38.3% versus gold’s 25.7%.

Much of that gain came in Q3, when silver clocked a 33% gain against gold’s more modest 6.7%.

By all accounts, silver’s being driven by its monetary metal characteristics. The jury is out on whether gold or silver was first to be used as a currency, but we do know that they were used going back at least 5,000 years.

Fans of both metals should be happy, since the oldest known coin is the Lydian trite from around 600 BC. It was made of electrum, which is a gold and silver alloy. Still, silver was the most commonly used metal in daily transactions until the 20th century.

More recently, demand for silver has exploded. The Silver Institute breaks down demand into five main categories: industrial, photography, jewelry, silverware and physical investment. 2019 saw smallish decreases in four of these categories over 2018. However, within the industrial sector, photovoltaics (solar panels) enjoyed a 6.7% increase.

The standout, however, is net physical demand, where 2019 saw an impressive 12.3% increase over 2018. In my view, given the large price gain this year, that trend will persist.

As well, Goldman Sachs equity analysts believe global solar installations will jump 50% between 2019 and 2023 as green energy silver demand surges higher.

Silver Investors Are Loyal

One telling indicator of the “stickiness” of silver ETF buying is the action of Robinhood account holders.

There were four bouts of weakness since the February/March selloff in silver stocks as represented by the SIL ETF. The number of holders of SIL dropped in a small but notable way in March, but then barely weakened after that, even when the price of SIL retreated.

Most impressive is the early August action, when SIL dropped from $52 to $44, yet the number of users holding SIL actually continued to rise.

If we look at the recent price action of silver, we see some renewed strength.

Both the RSI and MACD momentum indicators have been trending upwards. But “smart money” silver hedgers are still short just over 56,000 contracts, not suggesting bullish sentiment right now.

If silver manages to rise from here, I’d watch for it to possibly “test” resistance near its 50-day moving average around $26. If it reverses from there then we’re likely looking at more weakness/consolidation before rallying.

The silver stocks to silver ratio has been rising slightly since early August.

But momentum has been flattening, and the 200-day moving average has been acting as overhead resistance. Also, in late September we saw the 50-day moving average cross downwards over the 200-day moving average, which also suggests possible ongoing weakness in the near term.

In my view, silver could require more selling to rebalance sentiment. If that happens, then of course I’d expect silver stocks to magnify such a drop.

Still, I expect any near-term weakness to remain short-lived. All the fundamental and technical drivers are in place to push gold and silver much higher in the months and years ahead.

As the next chart of SLV versus GLD shows, silver is up 108% against gold’s 29% since their March bottom. That’s nearly four times the return.

I think we could see silver take out its August $30 high, and possibly test the $37 level before year’s end.

So, if you’re concerned about silver’s volatility, then just allocate a smaller slice of your portfolio while maintaining some exposure.

Remember, when silver gets going, it’s like gold on steroids.

–Peter Krauth

Peter Krauth is a former portfolio adviser and a 20-year veteran of the resource market, with special expertise in energy, metals and mining stocks. He has been editor of a widely circulated resource newsletter, and contributed numerous articles to Kitco.com, BNN Bloomberg and the Financial Post. Krauth holds a Master of Business Administration from McGill University and is headquartered in resource-rich Canada.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. The author was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

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