The news gets better, because “Including the mystery purchases, central banks globally added 393.3 tons of gold (net) in Q3 alone. With Octobers purchases, the total for 2022 stands at roughly 704 tons. That’s higher than any annual increase in central bank gold purchases since 1967 with two months remaining.”
This is the QUARTERLY log chart for GLD, and it looks to me that Gold is setting up for. a huge move higher, as Jan 1, 2023 should see the stochastics cross higher, after this quarter being the first green bar and trading over last quarter’s high. We could even see a move similar to the ramp higher that started in early 2009, where gold could DOUBLE over the next 2 years, we can only imagine where silver would go if that happens. I would also suggest that we are in an even better environment now for gold and silver, with plenty of catalysts to push it much higher than that. It’s starting to look like calls for $3K to $5K gold will be here soon. If one isn’t getting invested or already loaded up by now, the window is closing!
For the gold bull market to resume in earnest, we will want to see the recent trend of gold outperforming commodities continue. I’ve posted a daily chart of the ratio, and it shows today (Monday) that GLD is making another new recovery high for this bounce versus the DBC etf, which tracks the DB commodity index. If the trend has changed to going higher once again, there is still lots of potential upside. We might have some resistance in the area of the horizontal trend line, especially considering how sharply the ratio has moved higher, but after a little consolidation period I expect to see this ratio move much higher over time. Note the ratio sits above all moving averages as well, and how easily it cut through them all with little resistance.
Gold vs. commodities shows gold gaining against energy and agriculture, this is also good news for miners that have had rising costs hit affect their profits.
After breaking down last week, and seeing what appears to be false breakdowns in the major miners like NEM and GOLD, I am comfortable adding to EQX assuming it’s breakdown will also reverse. It has already done that the last couple days, but I’m expecting a longer term trend higher to start again soon, so we have added to our EQX holdings, buying the shares at an average cost today of $2.97 and will look to buy more into pullbacks when they occur. Here is a weekly EQX chart, and there is very little doubt in my mind the stock will blow through it’s 200 week MA up near $7.20 per share. Just reaching the 200 week MA would be a 142% gain from where it is trading right now!
Ross Beatty runs the ship over at Equinox, I feel our money is safe parked alongside his own investment, and this stock was up at $13.66 as recently as August 2020. Paying $3/share is alright by me, for a miner already in production with several mines, and a current price-to-book ratio of just .36, and now under a $1 billion market cap!
With the big bounce this week, SLV was up about 8.5%. If it can follow through higher, the 200 week MA is at $19.37, then the 50 week MA at $20.07, which are very achievable being it closed the week at $19.26 and with oversold technicals.
SLV took the first step to turning the trend higher this week, with a strong 8.5% jump pushing it to near its 200 week MA. It looks like SLV should have more upside, let’s see what it can do over the next few weeks.
We are starting to see several miners push higher, back up over their 200 day MAs, such as MAG and CDE shown below. This is important for the miners as they try to change the trend back into bull mode, and we expect to see more of this going forward. Today we see that not only are the metals and miner trading significantly higher, but the general stock market is also weaker, down about half a percent on the day. We expect to see a disconnect between the stock market and miners, one that lasts for several months at least, which will attract investors as more of them realize that real assets are the only game in town, and metals are real money. Let’s take a peek at the charts…
MAG Silver looks ready to leave the bear market behind, back over it’s 200 day MA again, and first time since April.
Coeur Mining was one of the weaker miners in the group, now its become one of the better ones. This stock can really move when it gets attention, like it did back in 2016 when it rallied from $1.70 to $16.40 in 7.5 months! Let’s see what CDE does once it clears that horizontal resistance in the $4.00-$4.15 area.
We did add to a few of our positions this week, but both MAG and CDE are components of the SILJ etf, which we also own.
Lots of news out this Friday morning, and after a tough week for miners with the FOMC talking asset prices lower, we finally see a huge rebound attributed to several things. First, Yamana Gold received another surprise buyout offer from both Pan-American Silver (PAAS) and Agnico-Eagle (AEM), pushing AUY stock up over 20% on the day. This has investors wondering which miners might be next to get scooped up, because both big money and mining executives are buying now, while much of the retail investor class is shunning gold and miners. Another big new event is central banks have done the biggest gold buying last quarter that we have seen in 55 years, so they also think gold is a good place to be going forward. Lastly, somebody stepped in to clean up this 300 tonnes of gold, we always hear about all the sellers, but how about the guy that can write a check for 300 tonnes of gold? I assume he is sharper than the average Robinhood trader.
Yesterday was brutal for the group, as the biggest names NEM and GOLD (Barrack Gold) got hammered to new 52 weeks lows. But just like that they have made all that back and more today, adn I’ve included a daily chart of Newmont Mining (NEM), and a weekly chart of Barrack Gold (GOLD) with some horizontal trend lines that show here is another good area to make a stand, and maybe reverse the trend back to higher. While I am aware that the FOMC will continue to raise rates, at least that is what they say they will do, I would not wait until they stop raising or reverse course and start cutting rates before getting invested. Across the board today, most of our miners are up 10% or more. An investor can’t miss too many of these type days without seriously denting their performance, we need to be in them ahead of time.
Newmont Mining daily chart, was that just a false breakdown to shake out the last of the bulls?
Barrack Gold shows resistance back in 2019 might now be support on the weekly chart.
On both of these charts, we see oversold technicals that look ready to turn and make a trip higher. Time will tell, its been a tough trade but that is always the case with miners, and any group that moves as much as they do. We want to be around for move up, because bull markets in metals and miners are equally spectacular on the upside.
Besides adding to CDE, HL, FSM, and EXK, I also initiated a position in SLVP, another silver miner etf. I included the chart below, even though it looks a lot like SILJ, the only reason I started the new position is SLVP has some different stocks in the top 10 holdings, like NEM, WPM, and HL is the second largest holding at around 12% of the fund, than the SILJ, which oddly enough shares five miners in its etf with the GDXJ etf as well.
To try and catch readers up with all our recent activity, we have been buying and adding all week, but especially on down days, even picked up our first junior explorer in a long time. It’s a PGM (platinum group metals) play, that also has a nickel/copper project in northern Michigan on the upper peninsula. The explorer was brought to my attention by Bob Moriarty at 321.gold, and I couldn’t resist buying shares yesterday knowing I was getting them for half what Bob paid, and he thinks his higher price is a screaming bargain too! He has clued me into some big winners over the years, so I am not chiding him for paying more than me, instead I treat it as good fortune and luck for me. I will post the chart of Biterroot Resources below, as well.
SLVP looks a lot like SILJ, even though SLVP has several much larger cap miners in its portfolio.
And here is Bitterroot’s weekly chart, I like that their projects are in the US, should have less jurisdictional risk.
BITTF could be a 10X stock once the group turns higher and gains momentum.
Throughout last week, I was adding to many of the miners I have mentioned here in the most recent posts. I just wanted to mention the new buys, and also point out that we might be at another turning point (to head higher), once again. Friday saw good volume in the group, as well as the SLV and GLD etfs, and the miner etfs GDX, GDXJ, SILJ and SIL managed to work above some important moving averages, an important first step in changing the trend back into bull mode.
I will just post the SILJ chart to illustrate, it is now over its 10 day MA, its 50 day MA, and its 10 WEEK MA, not bad for a day’s work on Friday. Also, while I don’t make trading decisions based on the weekly COT reports, I do like when they line up in support of an anticipated trend change, which appears to be the case again this week as the professionals covered more shorts and added to long side positions, while retail and money managers again did the opposite, shorting metals while taking off some long positions. This action on both sides is typically a sign that prices of the metal are about to turn up. If we can get a new intermediate cycle started, we could have 6 months or so of general upside. It could consist of a screaming bull run, or just a modest move higher, but the trend should be up if we can work the miners just a little higher than where they closed trading for the week. For example, GDX closed at $24.34, but only needs to close above $24.59 next week to signal a new Intermediate cycle has begun.
SILJ’s strong move up could be the start of an uptrend, the miners were the standout group in the markets Friday.
And here is the WEEKLY chart of GDX, to show how close it is to starting a new intermediate cycle.
GDX just has to move a little higher, and it could initiate a 6-10 month rally.
