Monday Sept. 27 Update

I haven’t posted much the last few days because there just hasn’t been much to share, on top of the fact I am in mode to manage my psychology as we continue to get hurt in our positions. Sometimes it takes all one has to stay focused on the mission, and now is one of those times as miners made new lows at the close of last week’s trading. Still, if we were to sell or trim anything it would be into strength, not weakness.

There are also a few glimmers of hope setting up. Despite all the tough-talk from the Federal Reserve, we realize we only have to get through this period and the rhetoric surrounding it, to get our next big move higher. To that end, the charts of the major mining etfs are now showing oversold technicals on both the daily and weekly charts. The end of the month is later this week, and with that we will get new data points on our long term charts, likely to show the miners with oversold stochastics on the monthly charts as well. I will show a few charts below, but let me say that if we were not already heavily long the miners, we would certainly be buying hand over fist right now, ahead of the earnings reports coming out in late October and early November. There is also interesting action occurring in the sector, such as Kirkland Lake trading higher most days and today up over 5% on rumors it is going to be taken over. we don’t own KL stock, but another big merger/takeover in the sector would certainly bring some interest in the group. In short, yes it hurts to be getting “schooled” at the moment, and no, we aren’t the least bit concerned that our trades eventually work out. We are aggressive, and have been in this situation many times, knowing that we must be invested IN ADVANCE of the move higher, and especially in a group like miners where the runs are super fast and steep. Recall our 2016 positioning, it seemed as if we waited forever and everybody had given up, then our stocks went on to gain 400-500% in just 6 months, making up all losses and piling on some huge gains. It’s a tough game, but we understand how it works, and now is definitely NOT the time to sell your metals and miners. It’s only a question of how much can you tolerate holding through the difficult periods that always accompany major bottoms?

James Flanagan over at Gann Global ( I am now a happy subscriber) showed a chart this weekend of the ratio between commodities versus gold which I found interesting, especially as he focused on the now famous pullback between 1974 and 1976, in the middle of an overall huge bull market for gold. The takeaway, if we are in a similar environment after a 14 month correction from all time highs in gold, is that while the other commodities have rocketed vs gold in this period now just like back in the 1970’s correction, the ratio also looks due to turn again in gold’s favor. If so, we might be on the verge of the biggest and best part of the bull, the near vertical run to top it all off. With the fact miners are trading at multi-decade lows versus the metals prices, you can see why we get excited at the prospects over the next 3-4 years. If something similar plays out, we should start heading higher soon, and gold should keep building momentum over the next year or so before it ignites into an all out frenzy and dash for real assets. Since most real assets are no longer a bargain, that leaves gold and especially silver. I wanted to show you the monthly chart going back twenty years, and how overbought the ratio is, but for some reason I am getting “network error” signals. I will get that fixed and be sure to post the chart, it might be an important indicator that warrants our attention, but know for now it is very, very overbought on the monthly, and even overbought on the weekly as well!