Category Archives: Notable Posts

Previous articles and posts of interest.

Gold Stocks: Different This Time

By Biiwii

The title does not include a (?) after it and that is for a reason.  The gold sector’s fundamentals, both sector-specific and macro, are improving and this was not the case during the last exciting upturn in the sector circa summer 2014.

Back then, everything from Russia’s move into Ukraine to the Ebola scare were imagined to be sound drivers of the gold price.  This stuff proved, as expected, to be wrong when the whole complex made new lows in November of 2014 (prior to this year’s ultimate lows).

What is driving gold and the gold sector this year?  The things that we have been saying for years now would be needed.

Continue reading Gold Stocks: Different This Time

Gold Mining Fundamentals

By Biiwii

In the previous post Steve Saville talks about the “true” fundamentals of gold, i.e. the ones that actually matter as opposed to the ones that make a good story.  In this post, let’s review something that is related but different; gold mining fundamentals.

While we (NFTRH) have been noting gold’s negative fundamentals for years (especially the status of the yield curve and a thus far ironclad confidence in the Federal Reserve and indeed, relative confidence in global central banks), gold mining sector fundamentals have been on an up-swing.  Gold’s fundamentals are generally what we have been calling macro fundamentals and the things that matter to mining operations are sector fundamentals.


In a comment included with Saville’s post linked above, we noted that acting upon manipulation ghost stories is not good for a gold bug’s financial health.  However, this is not to say that manipulation does not occur.  As we noted at the time and still fully believe, the macro backdrop was actually manipulated into being in 2011 as Operation Twist was set loose upon the financial markets with the express goal of “sanitizing” (the Fed’s own word) inflation signals out of the picture.

Op/Twist involved official selling of short-term Treasury securities and buying long-term securities.  This kick started a now years-long downtrend in the 10yr-2yr yield curve, which has been bearish for gold the whole while.  Manipulation or not, it is bearish and our advice has been that you do not stand on ideology (or worse, someone else’s ideology) with money you do not want to lose.  You hold your ideals, but play the game.

Gold Mining Fundamentals

Back on message, several of gold’s fundamental aspects also apply to the gold stock sector, but there are some wrinkles in this relationship.  For instance, a gold mining operation, unlike the metal itself, is a moving target with many inputs to its final investment case.  Unlike gold, which when tuning out the easy to comprehend promo’s about India/China demand, evil banking conspiracies and even inflation, boils down to confidence or lack thereof in centrally planned policy, gold mining is a business.  Period.  Gold itself is a refined rock.

So for instance, the strong US dollar, a negative gold fundamental as noted by Saville, is not necessarily so for gold mining.  That is because the strong dollar also affects other assets, including global (local to gold mining operations) currencies and cost-input commodities and resources that go into the mining process.

In other words and for example, a gold price rising in terms of Crude Oil is a bullish sector fundamental along with being, to a lesser degree, a macro fundamental indicator.  Here is a chart we are interpreting in NFTRH in coordination with macro events to project a future bull case on the sector.  Please don’t get over-excited; future means future.  We do not promote here.

gold-oil ratio, gold mining fundamentals

Another sector fundamental is gold’s relationship to major stock markets.  In that mainstream stock investors perceive little reason to speculate in the gold stock sector when gold is under performing stock markets, this is fundamental to the gold stock case, both in sentiment/psychology and in a practical sense.  Here is gold vs. the S&P 500, Toronto Stock Exchange and the Euro STOXX 50.  So far, it’s not very impressive.  Despite the big upset over the last month in financial markets, gold has only bumped up a little in relation to these three markets.

gold vs. S&P 500, gold mining fundamentals

au.tsx, gold mining fundamentals

gold vs. euro stoxx 50, gold mining fundamentals

And that is not even to mention the nominal technicals for gold, silver and the gold stock sector, which are and have been bearish.  That is a subject for a future article and weekly NFTRH reports.  Also, there are other macro and sector fundamental considerations beyond the scope of this article.

I just wanted to add some color to Steve Saville’s piece and also belabor the point once again that the easy to comprehend analysis you read on the gold sector is easy for a reason.  Promotions don’t work if they make you think too hard and man, in actuality it is not that easy.  It is complex and those not willing to do the work have been routinely ground up over the last several years of a negative fundamental (and technical) backdrop.  Do the work and tune out the cartoons.

Gold-Silver Ratio in Gear

By Biiwii

Now that the US stock market has gotten in sync with the rest of the world in its ups and downs, it also joins the rest of the world in generally (and loosely; it’s not a minute-by-minute relationship) being inverse to the Gold-Silver ratio (GSR, AKA the “metallic credit spread”Hoye).

Here is the daily view of the GSR, showing a gap up and spike that came with the stock market’s big disturbance and a consolidation down that has come with its relief bounce.  This is a bullish chart and so, it is a short-term bearish chart for US and global stocks.  GSR broke out and is bullish while above the MA 50’s, MACD and RSI are positive and AROON is trend up.

gold-silver ratio, daily

GSR weekly is fully bullish as well.  It adds a long-term up trend to the daily chart’s bull features.  You can see the long and grinding journey upward GSR has taken since it was drubbed in 2010 (into 2011) by full frontal QE, as silver exploded vs. gold and the ‘inflation trade’ took off in 2010 and eventually blew out (in spring of 2011).

gold-silver ratio, weekly

GSR monthly offers a different view however, as it is nearing historical resistance.  Maybe when this resistance is hit it will hold and those who have, shall we say cheered so long and hard for silver can finally deliver the ultimate “I told you so!” after 4+ years of futility.

gold-silver ratio, monthly

The bottom line is that the Gold-Silver ratio indicates more short-term problems in US and global stock markets, commodities and even potentially the precious metals themselves.  But the bigger picture view at least offers a line in the sand (long-term resistance) where an ‘inflation trade’ may finally get going again.

That scenario could be the product of a saturation of the non-stop inflation that has been promoted in the US and globally by policy makers, with a global deflationary backdrop hiding its effects.  Alternatively, it could be the product of panic by the US Central Bank, should the stock correction get serious enough.  The entire recovery out of 2009 has been, after all, about risk ‘on’ asset market speculation and wealth effects.

Whatever it is, you can bet that political animals and powerful policy makers alike do not want to see the Gold-Silver ratio break out of its big picture limits.

Man, That’s Cheesy…

By Biiwii

[edit] I actually agree with Sinclair’s views on monetary sociopaths.  Beyond that and certain dogma that rings true, it’s too much information the likes of which has frightened people into what have been incorrect positions for years.

After the now-famous WSJ post, it seemed as if a bottom had just been called in gold…

Let’s Be Honest About Gold: It’s a Pet Rock

It seemed that the elements were in place for a contrarian rally if not bull market bottom.  Along with negative gold items routinely appearing in the financial media and a Commitment of Traders structure that had become very bullish, gold sentiment was bleak by indicators we track in NFTRH.

My how a 6% rally with an accompanying stock market down spike have changed things…

sinclair, gold sentiment still not ready
Click for the video @ YouTube

Here is the article associated with the video, sent to me yesterday…

Plunge Protection Team Losing Control of Markets -Jim Sinclair

I won’t even go into Sinclair and his ‘same old, same old’ spiel, trotted out the minute the stock market cracked.  Let’s just focus on one micro element of a case that implies gold bug sentiment is not yet where it needs to be for a real bullish stance.  From the article’s comments section…

Steve (website visitor):  “I used to believe in the rampant manipulation of the gold markets until i got proper information and grew up. If Gold is always manipulated to the downside, why buy it?”

Greg Hunter (website host):  “Steve you grew up to be an idiot. I got “proper information” from Dr Paul Craig Roberts* who laid out an analytical case for gold manipulation.”

It’s concerning if you are a gold bug, because the bear has apparently not dug deep enough into all the bunkers to devour the most ardent holdouts.

  • Above we have “Dr Paul Craig Roberts”.  From NFTRH 355 (very coincidentally I was reminded of this by a subscriber this morning):

Have you noticed that the bear and/or gold communities tend to make sure they call John Hussman “Doctor Hussman”, Jim Willie “Doctor Willie”, Robert McHugh “Doctor McHugh”, Chris Martenson “Doctor Martenson” and any other Ph.D. writing about markets “Doctor”, while conveniently forgetting to label the likes of “Doctor Bernanke” as such (“Helicopter Ben”)?

I don’t know about you, but when I am reading articles and I see a writer labeling someone with whom he or she agrees (and with whom they want you to agree) “Doctor” in order to convince the reader of the material’s seriousness or worthiness I think “man, that’s cheesy”.

Bond Safety?

By Biiwii

[edit]  Upon re-reading, it’s another of those posts I sometimes receive critiques about.  Few conclusions and no clear direction.  Maybe that is just the point though.

@ Fidelity…

Equity outflows at 15-week high as investors seek bond safety

And there they go, conventional lemmings jumping from the frying pan, into the fire, soon to realize the fire is way too hot, and heading for that cliff over there.

(B)ut (i)t i(s) (w)hat (i)t (i)s and (N)otes (F)rom (T)he (R)abbit (H)ole are so named because we are all about anti-convention, as global markets have not been comfortably conventional since the late 1990’s, I think.  This most recent cycle has existed to put all of us malcontents, cranks and alarmists back in a box under the bed, if not into the dustbin of history.

Well today, conventional sheep are flocking to conventional positions.  “Bond safety” is what they run to when they are afraid of stocks.  Of course, with gold now showing strength, the promoters over there are retooling their former “China/India demand” and “employment growth will spur inflation, which will drive people to gold” pitches to something more appropriate for the times, when global economic contraction comes to the fore and deflation is front page news.

Imagine that, investors flocking to bonds while DEFLATION! is all up in the headlines.  Reminds me of Q4 2008, just before the next INFLATION.

This market is now officially fun again after the post-October drudgery that last month forced me to admit that my trading sucks and that I needed to take a time out and sit on my hands (as the market’s swings became too frequent and too contracted).

Do you see?  Investors are seeking safety in bonds.  Media are managing a global stock crash.  Bull trend followers’ heads are spinning (‘Am I still a brave, resolute, trend following stock bull?  Should I keep posting as such or is my inner fear barometer stronger than my resolve?’) and oh yes, the precious metals are bouncing while commodities continue to tank.

There are only a few entities who have called this environment.  One is an influence of mine, Bob Hoye (decisively, but on what some might find an inconveniently long time frame).  Another is NFTRH (less decisively, but on a very tight time frame).  This is a market that is going to put all the carnival barkers (including gold touts) in their rightful places because now changes are happening and it will not be so simple as ‘stocks are tanking, buy bonds!’ and obviously, the whole ‘economy brings inflation, buy gold!’ promo.

Tops are spinning on the table and it all makes perfect sense.  And I am not even a stock market bear.  I just do not buy or hold tops.  I look forward to a real bull market in the gold sector, but there is yet work to do folks.  The US market’s big trend is still up and gold’s is still down.  Not saying change is not in the offing, just saying trends have not yet changed.

With respect to gold, this summer’s event is so much more in line with fundamentals that matter than last summer’s Ukraine→Russia→Ebola pitch that was nothing more than promotion.  But there remain some rocks beneath the surface.

As to the article linked above, this certainly does put Martin Armstrong front and center, with his ‘final flight to the safety of the government bond bubble’ analysis…

LONDON (Reuters) – Equity outflows hit a 15-week high of $8.3 billion in the past week, with fears of a China-driven global economic crisis pushing investors towards safe-haven money-market funds and Treasuries, Bank of America Merrill Lynch said on Friday.

I have not really known what to make of Marty and his computer, but this is 100% in line with his forecast.

I just love a market where things are in motion.  Robo market was a dead thing, momentum waning and hopes fading.  Now resolution is to the downside.  From this point, it is now time to throw out the easy analysis and be prepared for the counter-cyclical environment we have expected upon completion of the post-2008 economic recovery (and all that paper and all those digits behind it).

Now you do not get points for just showing up and following the trend.  Now you find out if that which you hold true actually is.


By Biiwii

Right here at 8:30 AM US Eastern time, in the midst of a precious metals bounce that we (NFTRH) projected due to sentiment, price/volume dynamics (in less fancy terms, the market puke in mid-July) and especially the bullish CoT alignments for gold and silver, I state to you that there is still something unhealthy going on in the gold sector from a psychological standpoint.

This does not even include some still negative macro fundamentals that have not pivoted yet to join the improving sector fundamentals.  This is pure sentiment.  We have no way of knowing for sure whether or not a new bull market is starting right now and that is why we projected it to be a bounce, until all fundamental and technical ducks line up and start quacking.  Speaking of quacks…

Continue reading Opinion

Peak Oil? Peak Stocks?

By Biiwii

Are Stocks the Next Oil (or Uranium, Copper, Silver)?

See:  Oil collapse couldn’t come at a worse time for industry

See:  2007, when everyone was convinced of ‘Peak Oil’ and there were websites named ‘Peak Oil’, ‘Oil Drum’, etc. constantly reinforcing the mania.

I remember being away on business one day in 2007, with nothing better to do in my hotel room than watch the congressional debates about ‘peak oil’ and what to do about the evil speculators that were driving prices up.  I enjoy watching a good mania as much as the next guy.  I realized that what we were seeing was ‘Peak Hysteria’ with respect to this phenomenon.  I thought, ‘Yup, Prechter’s right’.

See:  This hilarious video someone made about those who promoted the pitch to the public.  Some of these people have re-tooled their scripts for a deflationary world today and others keep fighting the good fight I guess, or are living in a hole somewhere.  Joe Kernan actually did a great job with the mania’s star promoter.  “I’m the expert you guys, not you…”  –T Boone Pickens (ha ha ha).

Moving on, what do the charts below say about the stock market? The oil mania was a manifestation of inflation.  Inflation is willfully deployed against what is a structural global deflation that is always in play and trying to exert pressure.  The charts below show where the inflation went on this cycle.

Oh, it’s Biiwii… he’s a perma bear!  Well maybe, I sure do not think the stock market is sustainable and I sure do think it is getting the same treatment as Oil circa 2007, Uranium 2007, Copper 2010, Silver 2011, etc.  But I am more than willing to call it ready to bounce or even not yet ready to end its bull market, if only an interim correction ends up being the most probable view.  But tuning out all that casino patron stuff, what does this big picture monthly chart say to you?

What does this chart say to you?


I keep hammering this chart in particular not because the Fed should do something or should not do something with respect to ending ZIRP.  I hammer it because whether it was the Fed’s intention or not, a large and conspicuous distortion has manifested.  Period.  Here is what NFTRH 355 had to say about it…

“Pardon me if I hit you over the head too often with the following chart.  But we have just wrapped up a couple of weeks that saw the Fed receive congratulations again for doing nothing (FOMC) and speak out of both sides of its mouth (Lockhart and Powell).  We also saw another okay Payrolls report come and go.

Of course, with commodities crashed and inflation expectations well contained, must the Fed actually do anything?  One might imagine that they also look at some representation of this chart and think ‘golly, that’s one hell of a distortion built into this market’.

I can’t think of many other reasons why a rate hike would even be on the table.  They’ve seemingly got it all; a booming stock market, no inflation and no need for stern monetary policy.  I believe that the Fed is as aware as we are that there is an imbalance of epic proportion out there somewhere.  Will they try to repair the imbalance now, after 6 years?

The chart is the chart and while I cannot speak in details (since I don’t know them), I can see what historical imbalance looks like.  Either the market’s laws have been repealed or something is going to seek equilibrium one day.  If the former, well, how does it feel operating in a remotely guided market?  Risky, if you ask me.  If the latter, the risk in finding equilibrium is almost unfathomable.  This is not meant as hyperbole, it is a chart.”

Back to real time.  We have noted (as the chart above shows) that in normal times the stock market goes up as the Fed Funds rate is increased, until one day it breaks and the Fed steps on the gas (drops the Funds rate) in response.  The market could follow the rate up again on this cycle, but the distortion has severed ties with the historical comp of the last 2 cycles and that is the concern.  Oh and the Fed has not even tapped the break yet.  The stock market is in uncharted waters.

[edit]  So we noted the Hammer (bullish reversal) candles on Friday, and as if by magic in flies Stanley Fischer for a little micro management and a bullish reversal (bounce).  It is sort of a low grade Bullard per the chart above.  We also note that these jawbone parties are not real and that the S&P 500 is going to break one way or the other soon… Hammer Time Foretells Bounce Time; Now What?


By Biiwii

“…this is a Frankenmarket of their own creation…”

Ha ha ha, good one Chris.  I see my phrase resonated well in 2004.

Anyway, Chris Martenson can talk like nobody’s business.  I cannot verbally express myself the way he does.  Not nearly, not publicly.  He once woke me up with a late night phone call going on with the energy of a true believer, and I’m like ‘wow this guy is driven and on a mission’.  Me paraphrased:  ‘Ya ya ya Chris, things are bad and I think it’s great you are going to [oof, I am still listening as I post and I just heard “deflationary impulse”, another Biiwii-ism, although to be fair I’ve heard that one around elsewhere over the years.  At least I have not heard ‘Inflation onDemand’© or the ‘Continuum’© going around the internet] try to tell the world about it… hey, what time is it, anyway?’

Doctor Martenson came from the same group of alarmists that I came from early in the Greenspan Inflation around 2002-2004.  It is one thing to be alarmist (we were proven correct in 2007-2009, but my preferred tack was to play these macro swings driven by out of control policy.  First off, secure true monetary value (hint hint) and second, get rid of personal, and in my case business, debt.  Then go forth and speculate (this included bullish stock market positions in 2003-2007).

Where I disagree with certain types of gold bugs and alarmists is that you do not live your ideology or even your deepest held beliefs on a daily basis; not in the financial markets you don’t.  You continually remain vigilent as to negative potentials and you go forth and you enjoy life as best you can in sometimes insane circumstances.  But you do not scare the shit out of people in the here and now, because most of those people receiving the information are going to make emotional moves in real time and then… the macro crawls along ever so slowly to where it is going.

That is why I tune these things down, despite the obvious intelligence of the speaker.  It’s all psychology my friends.  I put the Armstrong input I get in the same category.  These are the financial markets, not some war of ideology.

This interview came my way via LinkedIn.

[edit]  I have not listened to Chris in a long time.  How long has he been talking about deflation?  I thought the big focus had been on inflation.  The contrarian in me is curious.

Armstrong Phenomenon

By Biiwii

I call it a phenomenon because not since being bombarded with Jim Sinclair-isms last decade have I taken in so much input centering around one man and his unique view.  Not since ole’ Jim has this input been so unquestioningly in line with the view of the guru producing it.

Usually I use the word guru in a negative light, meaning something closer to charlatan or promoter than anything positive.  But with Martin Armstrong I don’t feel that way.  Indeed, the main thing that makes me uncomfortable is not his theses (from what I gather from my email contacts).  It is that he seems to have come from the very place he scorns, the gold “community”.  I seem to remember him being held up by Sinclair many a time as a bullish gold forecaster.  I have heard from several people who have pretty much converted to Team Armstrong from Team Sinclair (CIGA anyone?).  :-)

Continue reading Armstrong Phenomenon