For many in Congo, Chinese gold mining brings upheaval but little benefit Global Sisters Report
Month: July 2022
i-80 Gold Begins Shipping of Granite Creek Ore to Nevada Gold Mines Junior Mining Network
- Dollar rally saps gold’s appeal as more Fed hikes loom CNBC
- Gold price hits nine-month low as dollar reaches two-decade high – MINING.COM MINING.com
- Gold Price Forecast: XAUUSD falls further below $1750 after US ISM PMIs, FOMC minutes eyed FXStreet
- Gold price remains under pressure as ISM Service PMI falls to 55.3 Kitco NEWS
- Gold Drops to Six-Month Low as Dollar Surges on Recession Fear Bloomberg
- View Full Coverage on Google News
Massive ‘capitulation event’ could be happening in gold – TD Securities Kitco NEWS
‘Gold hasn’t changed, the price of gold has changed’; What the gold price reveals about the macro-economy – Axel Merk Kitco NEWS
Gold and silver pricing is correct | Kitco News Kitco NEWS
Gold Silver Prices Today: Gold and silver prices crash in spot market; here’s what you pay The Indian Express
Categories
The Return of the Northern Peso
Source: Michael J. Ballanger 07/05/2022
Expert Michael Ballanger reviews recent movements in the mining and precious metals market and what moves he plans on making as we wait and see whether the Fed will pivot.
When I first began writing about markets back in 1987, I decided that I would try my utmost to avoid political commentary on the basis that free markets devoid of political interference and interventions carried little if any need for anything verging on a subjective analysis of either Liberal or Conservative party policies.
Stock and bonds went up and they went down and only in the case of isolated political bungling (Nixon-Watergate/Reagan-Iran Contra/Clinton-Lewinsky/Ted Kennedy-Chappaquiddick) or assassination (JFK/Lord Mountbatten) did political events create upheaval in the North American markets.
Then, with globalization, I was forced to monitor European and Asian political developments and because many of my junior mining deals were operating in Latin America, subtle shifts in the political winds in that continent forced me to keep an eye open for military coups and regime changes, all designed to keep the “commies” out and the “business guys” in.
“When I think about the biggest, most important economic policy this government if re-elected, would move forward, you’ll forgive me if I don’t think about monetary policy.”
— Canadian Prime Minister Justin Trudeau
Alas, here in 2022, after nearly thirteen years of nonsensical interference in markets by a non-government entity called the Federal Reserve Board, fundamental analysts trained in the art of dissecting balance sheets and income statements are fully replaced by behavioral psychologists whose job is purely to assess and decipher the mutterings and ramblings of the Fed Chairman and his band of merry governors in order to determine the future “value” of stock prices.
The problem with depending upon the interpretation of the monetary policymakers as opposed to the operating performance of companies is that all they are paid to assess is the future direction of stock prices as opposed to the future value of companies.
Sadly, at the moment that the Fed changes its mandate, there is no one left qualified to assess value, and investors are left hanging over the edge of the Cliff of Hopium, praying that these overpaid market strategists can translate Fed gibberish into actionable research ideas.
As we are seeing in spades, as the first half of 2022 comes to a dismal end, how the Law of Unintended Consequences has turned a “buy-the-dip” Fed lovefest into a “sell-the-rip” free-for-all, I watch with morbid delight as the 30% that have never experienced a bear market get savagely mauled at every turn.
As I wrote about in an earlier email alert, 2022 has now been witness to the worst starting six months in the recorded history of the NASDAQ and the second-worst start for the S&P 500 in fifty years.
Astonishingly, despite that, investors are carrying near-record weightings of equities over cash and bonds with every “guest commentator” on CNBC trotting out their list of stocks to buy proclaiming with greater and greater fervor that “the bear market is ending!” when the history of bear market bottoms (such as 1974 and 1982) would reveal that at real bear market bottoms, recommending a stock would invite a punch in the head.
In other words, this bear market in stocks will likely end with CNBC interviewers asking a bond broker questions on “capital preservation” when in fact if they still have an audience, they are actually seeking out an expert in “capital Recovery.”
That said, July is historically the best-performing month of the calendar year for S&P 500 and I fully expect that any day now a tradable summer rally will arrive.
In fact, the way stocks gapped down on today’s opening on this the last trading day for the quarter and first half reeked of reporting period “window dressing” sprinkled with ample doses of capitulation.
I added to Teck Resources Ltd. (TECK:TSX; TECK:NYSE) under $30 after watching it trade over $45 a mere twenty days ago.
That is what happens when redemptions begin to grip the hearts and minds of these 30-something money managers who were raised on a steady diet of “The Fed’s Got Our Backs” complacency, hubris, and naiveté exacerbated by massive applications of leverage and woeful misunderstanding and mismanagement of risk.
As you can see, July usually is a strong month in which to take trading positions with an exit ramp in mid-to-late August but what makes this particularly tricky is this entire dialogue over the Fed “pivot” which will, at least in the minds of the entire trading world, send stocks screaming higher.
Why?
It is because the investment industry is anchored in the memory of what happens when Fed liquidity (“tinder”) meets animal spirits (“blowtorch”) after six months of drought.
The question no one is asking as I did back in March is “What if the Fed does not pivot?” or better still, “What if the Fed does pivot and all bond yields save U.S. Treasuries (controlled by the Fed), spike higher (fearing inflation) taking stocks down?”
Bill Fleckenstein calls that “the Fed losing the bond market” and it is a brilliant analysis brought forth in a wonderful contrarian manner as only someone over the age of sixty (and very seasoned) can deliver.
The late Richard Russell always stressed capital preservation over heroics whenever his Proprietary Trend Indicator (“PTI”) turned negative which is the camp in which I currently reside and yet despite that as a guiding principle, I had my biggest loss in years when the oil trade got away from me in March.
When the primary trend is down, one is better off using put options where despite short-term errors in entry levels, the predominant downtrend inevitably rescues you.
When taking long positions, the only time one can make any time of move is from deeply oversold positions where the RSI (“relative strength index”) is sub-30.
Getchell Gold Corp. (GTCH:CSE; GGLDF:OTCQB) has been a rockstar since the June 15th announcement of 51.9 meters (51.9m) of 5.4 grams per tonne gold (5.4 g/t Au) (including 9.9m of 17.7 g/t Au) at Fondaway and has since tacked on 64.16% in a market that has seen new lows in the TSX Venture Exchange as well as new reaction lows in the Market Vectors Junior Gold Miners ETF (GDXJ:NYSE.Arca) at $32.00.
Only Getchell Gold, MAX Resource Corp. (MAX:TSX.V; MXROF:OTCBB), and Gold Resource Corp. (GORO:NYSE.American) are ahead on a year-to-date basis with the other three portfolio holdings negative.
Since virtually everyone of my junior mining newsletter gurus is now bearish (or at least “cautious”), I am taking the position that stellar drill results are the only potential driver for valuation increases so while I have a few proxy positions in copper and uranium, it is 10-20 bagger potential for which I am gunning and it should be no surprise that the three winners carry just that type of potential.
The disappointment is Norseman Silver Ltd. (NOC:TSX.V) whose Taquentren Project is a copper-silver prospect located in Argentina under the supervision of Navidad discoverer Daniel Bussandri.
These are the kind of markets that are typical of both summer markets and bear markets as volumes are reduced along with valuations while people return to the normalcy of a post-pandemic world.
Just as inflation rates spiked due to government stimulus (“rescue”) checks starting in 2021, recent data suggests that inputs are starting to abate such that these rapidly-decelerating economies may just allow for a pause in the aggressiveness of the central bank inflation fight measures.
If we get that pause, you do not want to be short so look for “bad news” on the economic front to trigger “good news” on the monetary policy front and subsequent market rebound.
Lastly, with Canadian housing now finally starting to correct, I eagerly await the revelation of massive defaults in the secondary mortgage lending arena.
There has been a huge amount of shenanigans in lending procedures so with housing in Canada many times more overvalued than was U.S. housing in 2006, I see weakness on the horizon for the Canadian currency despite its historical correlation with energy prices.
In fact, if oil starts to correct, I see a quick plunge to a 60 handle as the quagmire of overleveraged real estate speculators is revealed.
Hail the return of the Northern Peso!
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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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.
Disclosures
1) 1) Michael J. Ballanger: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) 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. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) 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.
5) 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.
As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Market Vectors Junior Gold Miners ETF, Getchell Gold Corp. and Norseman Silver Ltd., companies mentioned in this article.
Charts provided by the author.
( Companies Mentioned: GTCH:CSE; GGLDF:OTCQB,
)
Categories
What Is the Risk of More Downturn?
Source: Adrian Day 07/05/2022
Expert Adrian Day looks at the state of the market after this year’s 23% decline and discusses the risk of more possible downturn. Find out which companies he thinks are a buy — and which ones need to fly off your radar.
There is still considerable downside in U.S. stocks. We could see this through a decline in earnings or multiple contraction, or both. Analysts, though they have reduced their earnings estimates, are still looking for $228 per share on the S&P, or a gain of over 14% in the past 12 months. There is plenty of room for earnings disappointments.
As we know, stocks tend to fall more than the economy (and go up more) because of multiple contraction (and expansion) as well as lower (or higher) earnings. So we can make fairly conservative assumptions of S&P earnings being precisely the same as last year; and a p/e ratio of 17x, which would still be above the median for the decade ending 2016, and that would imply another 25% drop in the S&P.
Stocks Not Undervalued, but Rally Ahead
If we look simply at long-term historical average multiples, then the market would have to drop another 13% on a price-to-earnings basis to return to its long-term average p/e multiple, but 27% on a yield basis. And bear markets typically decline below averages just as in bull markets, they move above averages. None of this implies that such declines are certain, only that they are more than possible.
One thing is certain: the broad market is nowhere near bargain valuations yet. It is important to keep reminding ourselves just how expensive U.S. stocks were entering this year, meaning just how great is the potential decline. I suspect we may see a near-term rally, if only because of sentiment being at such extremes: CFTC positioning is at an all-time low, AAII bull-bear indicators close to lows, and Bank of America’s Bull-Bear indicator sits at zero; it literally can’t get any lower.
The end of June saw very heavy retail selling; coming after the market had already declined, that looked like panic selling and may signal a near-term reversal. Bear market rallies can be short but sharp since one often experiences short-covering. With the consensus calling for an S&P target of 4400, we likely will stop short of that, but it could still be a meaningful rally, which can be used to exit stocks you wish you had sold in January.
Little News Ahead of Earnings
The last couple of weeks have been particularly devoid of news, given the slow summer, the weak market—no company likes to release positive news in a bad market—and earnings around the corner. However, there are a few items to report.
Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) provided an update on its new Séguéla gold mine in Côte d’Ivoire, with construction on schedule and on budget, a strong achievement in these inflationary times.
Fortuna is well-positioned to fund the construction of the total $173 million mine.
Fortuna is a strong buy.
Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) was named among the Best 50 Corporate Citizens in Canada, recognizing its sustainability leadership.
Wheaton and CEO Randy Smallwood have a long history of genuine concern for environmental and social issues at the mine sites from which they derive their revenues.
Wheaton is a strong buy at this level.
Nestle SA (NESN:VX; NSRGY:OTC), Switzerland topped ranking of the Better Food Index of the U.K.’s largest suppliers for their work in building a fair and sustainable food system.
The company recently boosted its “Health Science” division with the purchase of the Better Health Co.
More than 5% off its mid-June low, we are holding Nestle.
TOP BUYS this week, in addition to the above, include the following, in line with our comment last time about hamburger and filet: Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE); Barrick Gold Corp. (ABX:TSX; GOLD:NYSE); Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ); Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE); Altius Minerals Corp. (ALS:TSX.V); Franco-Nevada Corp. (FNV:TSX; FNV:NYSE); and Orogen Royalties Inc. (OGN:TSX.V).
Questions from Readers
I read of a huge gold discovery in Uganda that will flood the market with gold for years to come. Are you concerned about the effect of this on prices?
This is one of many questions I continue to receive about this supposed huge discovery. Some want to know what I think and others how to invest in it. It’s BS. This is an alleged discovery that would equal more than all the gold ever mined in one fell swoop.
Does not that alone call for skepticism? Something like this would not just come out of nowhere. Even the fraudsters at Bre-X had the good sense to release various (fake) drill hole results and resource estimates before John Felderhof, a mastermind of the scam, started talking about 200 million ounces.
In Uganda, there is no data, no hard facts, just an offhand comment from the country’s president who just happens to have launched a program to induce mining companies to the country.
The Mining Minister or the journalists reporting his comments appear to have confused ore with contained gold, and tonnes with ounces, easy errors for the novice! The crypto cheerleaders also seem to have misread the comments, asserting that this is one gold find, whereas the president indicated he was referring to the total gold in the country. In either case, a healthy nose of rational skepticism is called for.
My broker, InterActive Brokers, sent me a “margin warning” notice, heading “Violation” and threatening to liquidate my account. How can this be? I have cash in my account.
You can stop worrying. We contacted IB and they are simply wrong. IB says they send out this notice whenever the “excess liquidity” in an account is less than 10% of an account’s liquidation value. That of course has nothing to do with being on margin or whether you would ever receive a margin call. And it is certainly not a “violation” of anything, not industry rules nor IB’s account agreement.
In this particular case, the client was not even using margin to buy stocks. Your stocks could all go to zero and you would not receive a margin call. To make matters worse, IB state that they do not send out margin call notices (in legitimate cases) to allow the client to add cash or chose what to sell, before simply “liquidating” positions. The message is extremely poorly written; not only is it headed “violation,” it suggests you send in more cash “to ensure continued compliance.”
Although IB says that they send the “margin warning” as a “courtesy” to clients, it is, on the contrary, a confusing and worrying email for an investor to receive. I did attempt to explain the concept of margin to the rep but to no avail. On a broader basis, this is one more example of the difficulties that can come from using deep-discount, online brokerages.
Though the commissions on U.S. stocks are often zero, there is often little or no customer service, and ill-trained reps who do not understand basic concepts of investing. So much is handled automatically, as in this case (an account with cash and not employing margin should never receive a “margin warning”). In investing as in life, you often get what you pay for.
UPCOMING CONFERENCES I’m excited to be able to see you in person again at several conferences. This month are two of my favorite shows: Freedom Fest in Las Vegas, followed by Rick Rule’s Resource Symposium in Boca Raton. Both shows promise to be very exciting with speakers as diverse as Sen. Rand Paul and John Cleese at the former, and industry legends including Ross Beaty and Randy Smallwood at the latter. After that is Jayant Bhandari’s stimulating Capitalism and Morality conference, in Vancouver, on August 20th. Speakers include Dr. Walker Block and Doug Casey. More information, as well as registration links, can be found on our website. I look forward to seeing you at one of these upcoming conferences.
Originally published July 3, 2022
Adrian Day, London-born and a graduate of the London School of Economics, is the editor of Adrian Day’s Global Analyst. His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”
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Adrian Day’s Disclosures
Adrian Day’s Global Analyst is distributed for $990 per year by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. www.AdrianDayGlobalAnalyst.com. Publisher: Adrian Day. Owner: Investment Consultants International, Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. © 2022. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.
Disclosures
1) Adrian Day: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: All. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management, which is unaffiliated with Adrian Day’s newsletter, hold shares of the following companies mentioned in this article: All. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) 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. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) 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.
5) 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 the 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 release. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Wheaton Precious Metals Corp., a company mentioned in this article.
( Companies Mentioned: FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE,
NESN:VX; NSRGY:OTC,
WPM:TSX; WPM:NYSE,
)
Categories
Central Banks Added More Gold in May
Central banks globally added another net 35 tons of gold to reserves in May, according to data compiled by the World Gold Council. This follows on the heels of a net 19.4-ton increase in gold holdings in April and an 84-ton surge in gold reserve through Q1. Five banks contributed to the increase in global […]
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