Tag Archives: Gold

Pure Gold & Soggy Dollars

By Monetary Metals

We’re going to be introducing some new formats. One of them is quick article links, with the good ones labelled Pure Gold and the bad ones labelled Soggy Dollars.

Pure Gold

When a Fed-induced boom turns to bust: “In the lynch-mob atmosphere that inevitably follows the bust cycle of Fed-induced business cycles, it was not hard to convince Americans that the corporate bankruptcies and the subsequent recession were the handiwork of criminal executives.” Of course, this sentiment prevails today too. Look for the coming “corporate crime wave“.

A Soggy Dollar

The headline reads, “China Bought Gold With Proceeds From Record Sale Of US Treasurys”. It’s been in the news for a while: China is selling Treasurys (i.e. dollars). The PBoC is forced to sell dollars and buy yuan, to prevent a yuan crash as people are selling yuan. However, many mistake this for China “de-dollarizing” in favor [of] gold.

According to this article, China sold $83B of Treasurys (i.e. dollars). And how much gold did they buy? Less than $600M, or 0.7%.

Prediction: Gold and Ratio Up, Stocks Down

By Monetary Metals

[Biiwii comment: While I personally don’t like making predictions, I have put this post up regardless, because once I commit to a guest author I do not edit or filter their viewpoints.  FWIW however, I generally agree with Mr. Weiner’s assessment of the gold-silver ratio’s target as current NFTRH (and Biiwii) noted targets are ‘low 80’s to 90’; and we also are on a “stocks down” path currently.  Also see Catching Up on Some Gold Ratios just posted at NFTRH.com this morning]

The price of gold moved up moderately, and the price of silver moved down a few cents this week. However, there were some interesting fireworks in the middle of the week. Tuesday, the prices dropped and Thursday the prices of the metals popped $23 and $0.34 respectively.

Everyone can judge the sentiment prevailing in gold and silver articles for themselves, but we think there is a growing feeling of optimism (that is a renewed fall in the dollar, which most think is a rise in gold). This goes along with a sense that the long bull run in the stock market is rolling over.

Continue reading Prediction: Gold and Ratio Up, Stocks Down

Gold and Silver: Price Moves & Term Structures

By Monetary Metals

The prices of the metals moved up a bunch this week, with gold + $32 and silver +$0.55. We have seen some discussion of gold backwardation in the context of scarcity, and hence setting expectations of higher prices. That’s good, as the swings from contango to backwardation and back are the only way to understand changing supply and demand in the market.

You should be cautious about trading yesterday’s news. There was indeed backwardation in gold and silver. However, the cobasis is a sensitive indicator. It predicts the likely path of the price, but you should get an updated picture before buying based on an old reading after a sizeable price move.

In this Report, we’ll look at both metals bases, as well as their cobasis term structures. So read on…

First, here is the graph of the metals’ prices.

The Prices of Gold and Silver
letter sep 20 prices, gold and silver

We are interested in the changing equilibrium created when some market participants are accumulating hoards and others are dishoarding. Of course, what makes it exciting is that speculators can (temporarily) exaggerate or fight against the trend. The speculators are often acting on rumors, technical analysis, or partial data about flows into or out of one corner of the market. That kind of information can’t tell them whether the globe, on net, is hoarding or dishoarding.

Continue reading Gold and Silver: Price Moves & Term Structures

Gold vs…

By Biiwii

Note:  Hey, go check out the new NFTRH.com.  I think it’s pretty cool.

An update on Gold vs. stock markets, as at yesterday’s close.  These charts have improved today, but there is still no conclusive change in trend in gold vs. stock markets.  There could be some short-term chop if for example, SPX decides to rise again (I am not necessarily buying – or should I say selling? – today’s post-FOMC drop, though I have started to position that way, while holding a few longs that are doing just fine today) to the upside target of 2040 +/-.

[confusing language alert:  the above attempts to say that I still hold a few longs but started shorting the market on yesterday’s post-FOMC hysterics]

Gold vs. S&P 500

gold vs. spx

Gold vs. Euro 50…

gold vs. euro stoxx 50

Gold vs. Toronto…

gold vs. tsx

Make no mistake, gold sector fundamentals are looking good and the macro fundamentals are slowly creeping along.  But nothing worth its while happens in a flash.  This is a long grind (boy don’t I know it) to a new macro picture.  Meanwhile, the “community” has burped up the likes of this…

jim sinclair

and this…

Plunge Protection Team Losing Control of Markets -Jim Sinclair

Per this, lately…

Man, That’s Cheesy

And now today the “community” is glad handing itself in similar, but far less egregious fashion as it did in 2013 immediately after the Fed rolled over and punted on withdrawing QE 3.

Scary Gold Bug Article, on Cue

Hey look, just because I am getting more bullish on gold’s fundamental picture it does not mean I am going to try to make nicey nice with people (i.e. the “community”) who have guided to ruin the average gold bug looking for supposed expertise, for years now.  Besides, the sector is still nowhere, technically.

Let me see Gold vs. SPX blast upward and Treasury yield dynamics change trend and then we’ll bring out our own pom poms, though they’ll never be as brightly colored as the perma-poms.

[edit]  Well, it just got a little more egregious.  Here is a screenshot of a comment below the ‘glad handing’ article linked above, from the Gold Report.  These guys just can’t seem to help themselves.  Here is what I need to tell you; all through the bear market when certain gold bugs chest thump or try to get you to buy their view, things have not gone so well for those who took the hook.  Maybe it’ll be different this time.  Cue the stopped clock…


[edit 2]  Oh wait, isn’t the commenter a principal at The Gold Report?  Isn’t Streetwise affiliated with tGR?  Wow, an inside scoop on what Jeb Handwerger thinks.  Wow, I stand corrected for my wise assed skepticism.  I can speak like this because I’d never get put on the Gold Report, anyway.  That was after all, the entity that headlined an unfortunate article associated with Eric Sprott last year…

An Ebola Armageddon Could Trigger a Rebirth in Gold and Silver Prices: Eric Sprott

I can’t stand this and am now getting in a bad mood over it.  So in service to mental health, I leave the subject.

Elliott Wave Theorist, Free

By Biiwii

Robert Prechter’s August Elliott Wave Theorist is free, no strings.  I skimmed it and it is a big enough picture of the markets to be very applicable now.  A big review of Dow Theory and US stocks and gold, silver, miners, oil and commodities.

Say what you will about Prechter – and he certainly elicits strong feelings both ways – but he nailed crude oil going back to 2007.  He has infinite patience; maybe too much patience, it seems sometimes.

Anyway, the EWT is always an interesting read.  Go get it for free…

The Elliott Wave Theorist

elliott wave theorist, robert prechter

Gold, Silver & Horse Betting Report

By Monetary Metals

Consider the sport of betting on the sport of horse racing. It’s actually similar to the analysis of the gold and silver markets. How’s that?

First, there is the manic-depressive crowd. Sometimes (as we are told—we don’t hang out at race tracks) the bettors sometimes get overly excited about a horse with slim chances to win, or get totally unexcited about a strong horse. The track responds by lowering or raising the payout for winning, respectively. The more betting on a horse, the lower the payout.

The track does not care which horse is likely to win or not win. What it wants to do is take its rake from the total bets placed. It does this by making a spread between what it takes in on all the horses, and what it will have to pay out if any given horse wins. We don’t know the precise formula, but if horse X gets ¼ of the total bets then the payout if X wins had better be less than 4:1.

Continue reading Gold, Silver & Horse Betting Report

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 and Silver Supply/Demand Report

By Monetary Metals

[biiwii comment: introducing a new, quality contributor to our exclusive short-list]

This was a fairly quiet week in the market for the metals, with a min-rally on Thursday especially in silver which hit almost $15. By the end of the week, the price of gold was down $13 and the price of silver was up 3 cents. The action was elsewhere (e.g. equities and currencies).

We don’t think that the price action necessarily tells us anything by itself. That’s why we look at it in the light of the basis action—the spread between spot and futures. What happened to the fundamentals of the metals this week? Read on…

First, here is the graph of the metals’ prices.

The Prices of Gold and Silver
letter sep 6 prices

Continue reading Gold and Silver Supply/Demand Report

The Right Way to Think About Gold Supply

By Steve Saville

Here’s the wrong way to think about gold supply: “Although gold’s aboveground inventory is huge compared to current production, only a tiny fraction of this gold will usually be available for sale near the current price. Therefore, changes in mine supply can be important influences on the gold price.” I’ll now explain the right way to think about gold supply.

Whenever I point out that the supply side of the gold market consists of the entire aboveground gold inventory, which is probably somewhere between 150K tonnes and 200K tonnes, and that the gold-mining industry does no more than add about 1.5%/year to this inventory, an objection I often get is that only a tiny fraction of the aboveground inventory is available for sale at any time. This is of course true, and nobody who has a correct understanding of gold supply has ever claimed otherwise.

Continue reading The Right Way to Think About Gold Supply

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”.

Gold Manipulators Should be Fired…

By Steve Saville

Gold Manipulators Should be Fired for Poor Performance

Despite the huge differences between gold and all other commodities, gold is still a commodity and its US$ price is still affected by the overall trend in commodity prices. In particular, a major decline in commodity prices will naturally put downward pressure on the gold price and a major advance in commodity prices will naturally put upward pressure on the gold price. That’s why gold’s performance can be most clearly ‘seen’ by comparing it to the performances of other commodities. When this comparison is done it becomes apparent that gold is now very expensive or at least very highly-priced relative to historical levels.

As evidence I present the following chart of the gold/CRB ratio. This chart shows that relative to the basket of commodities represented by the CRB Index, gold has just made a new multi-decade high.

gold crb ratio

When I look at the above chart I can’t help but think it’s just as well that gold is being manipulated lower, because just imagine how expensive it would otherwise be.

It won’t surprise me if gold moves even higher relative to commodities in general over the coming month in parallel with an on-going flight from risk. Also, I expect the long-term upward trend in the gold/CRB ratio to continue. Lastly, it’s clear that the operators of the great gold-market price-suppression scheme have been doing a lousy job and deserve to be fired for poor performance.