Tag Archives: gold stocks

GDX Drops Almost to Target (14 to 14.50)

By Biiwii

The build up in gold and especially silver’s CoT commercial net short positions (and corresponding over bullishness by large and small specs) was troubling.  So too was a meeting of interest rate manipulators last week (never goes well for Team Honest Money).  Combine the two and the anticipated correction hit the gold sector.

A problem I have had is that it usually takes weeks to unwind a terrible CoT situation.  Since my tin foil hat is in the shop for repairs I cannot chase around those that may or may not be manipulating gold and silver.  I play it straight.  But it sure did seem like a convenient buildup into the FOMC’s word play and tough guy act and sure enough, we had post-FOMC pukage in the metals and miners.

Now however, GDX has dropped to NFTRH’s target zone (14 to 14.50) in quick time.  The only way CoT is going to have proved (come Friday) to have unwound the bearish alignment that quickly is if indeed gold and silver were purposefully gooned up in what we might call a focused and coordinated operation.  i.e. wax on, wax right the hell off again.

Whatever, for now I covered my silver and gold miner shorts very profitably but am in no hurry to get bullish and add to my small group of ‘relative quality’ miners until I get a better read on the CoT situation.  May even short again.  Who knows?  I am going to let the market tell me, not the other way around.

gdx daily chart, gold and silver

I understand that the miners can (and should) lead gold in a bullish phase.  Here is the daily view of GDX-GLD looking pretty good.

gdx vs. gld daily chart

And it had better look pretty good because the long-term (HUI-Gold) looks pretty horrific.

hui-gold ratio monthly chart

So maybe the miners are done with their correction and ready to lead the still struggling metals.  Then again, maybe not.  All I can tell you is that if the rally resumes (we have HUI 150’s open) this will have been the quickest smack down and recovery in recent memory.  It would also be a ripple in the bear market’s character.  It’s interesting to say the least.

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

HUI’s Bearish(?) Engulfing Updated

By Biiwii

Well, was the bearish engulfing candle a one day wonder?  Was it too perfect with respect to its predecessor in August?  Did every genius who can look at a chart see it and act upon it?  Well, this genius took a loss on his hedge but also took more miner profits to stay balanced.  That is because the US dollar is at a decision point and the stuff that has bounced while it has dropped to that decision point should take their cues shortly.

All of this in the context that Huey has an eventual higher target that you might just be able to make out by the declining red line there.


HUI Sports a Bearish Engulfing Candle

By Biiwii

NFTRH subscribers were apprised of the growing risk of a negative reaction in the gold stocks on Friday and again this weekend.  This was done first in an update and then in the regular report.  The recommended courses of action were ‘take at least partial profits’, hedge or at least ‘do not chase’.  Personally, I chose (b) and hedged.  Today I took some profits while still holding the hedge (DUST) in consideration of this chart’s Bearish Engulfing (BE) candle.

hui, gold stocks

Frankly, I am now net short while still holding my top miners.  Per the earlier post, NGD was sold as it has already reported earnings, pleased the market and was an obvious profit taking candidate.  But the picture is not as simple as gold bears might want to believe.

The cottage industry in gold bearishness is happy to see Mr. Bearish Engulfing although I have watched certain of them try to short this rally all the way up.  Maybe this time they’ll get a big score?  Well, a daily BE is a short-term thing with its effects basically valid for 1-3 days.  What is more bearish is the CoT data and SLV’s sentiment profile, each of which were discussed in #364.

However… (nope, we’re not done with the discussion because there are lots of things in motion now) there is a bullish fundamental underpinning in play for later this month.  This was discussed as well in the weekend report.

Man, none of this is easy and the bears who think charts are the only consideration (as fundamentals slowly improve over time) or the perma-bulls who just set and forget their viewpoints (and bias) paying little attention to charts, CoT and sentiment are unwilling to do this complicated and frankly sometimes annoying work.

That’s fine.  We are going to nail this thing because we do the work.  That will not include any ‘we called the bottom!’ b/s because this is a bear market and when it is either technically over or 100% in line fundamentally, we will make a call.  It will be late because it will have already been called about 10,000 times elsewhere over the last 3 years.

Back on the here and now, a reaction of some sort was likely.  But there are targets higher for this rally that could come about in late October or early November.  Let’s see how it shakes out and avoid automatic thinking.

NGD: Do You See This Stock?

By Biiwii

Do you see this stock?  It is one I have traded and/or had on radar since it absorbed Metallica Resources, which I held many years ago.  Do you see the chart?  It is semi-hysterical and I took profits at the SMA 200 while it was still green this morning.  Do you know what I would have been doing if not for sound guidance on LatAm and Mexico based miners?  I’d have been looking in from the outside.

ngd, new gold

The sound guidance came courtesy of Otto at IKN.  He is 100% responsible for my having bought this thing at much lower levels when he saw value in it.  It’s a sector populated by a lot of people who think they can analyze gold stocks and a very few of them who actually can analyze gold stocks.  He’s not always right (who among us is?), but I always have a level of trust with him that he has done the work required to give me a leg up on what to consider in this volatile space populated by a lot of scams and a few real gems.

Having IKN on my side is an invaluable asset for NFTRH, when this sector is in season.  Otto has no idea I am making this post.  But it is the least I can do when I owe somebody a debt of gratitude for a trade well done.

NFTRH 363 Out Now

By Biiwii

We have been successfully managing an ‘in motion’ market since the August festivities kicked off.  It is October and Money Managers (NAAIM), Newsletter Writers (Investors Intelligence) are thoroughly spooked and Small Speculators are thoroughly short the market.  It’s a perfect contrarian setup.

Meanwhile, over in Goldbugsville there is a lot going on as well.  NFTRH 363 is 30 pages of commentary and in depth analysis on all of this and also gets its geek on (with the aid of FloatingPath.com‘s awesome graphical breakdowns) and gets inside the September Payrolls report in order to flesh out the dynamics in a flagging economy.

NFTRH 363, a very helpful market management report if I do say so myself… out now.

nftrh 363

Today’s Top Headline!

By Biiwii

Newsflash!!… → → →

Hillary Clinton Drops ‘Pricing’ Bomb on Biotech Sector With Nulcear Tweet, Gold Stocks Drop More Than 3% in Response

Ha ha ha… you have to be a long-time aficionado of this sector to get the humor.

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.

13 Yr Old Gold Miner Gap

By Biiwii

It’s not serious analysis, but it is amazing how a gap in a chart can haunt a market for so long.  While there is no such gap on HUI, I took a look at the GDM and found one way back there at the start of the former secular bull market.  It is almost as if 2015 is finishing 2008’s unfinished business.

Is that what this is all about?  Is that why this market had to break the higher highs and higher lows (green arrows)?  To fill a stupid gap?  Don’t interpret the blue dotted line as support (because it isn’t).  It is just there to show how much (or little) further down the gap is.  There is no stop sign at a gap, it just wants to be filled.


The index put in a bottoming attempt last year amidst hype about Ukraine and gold’s geopolitical hedge qualities (which don’t exist beyond short-term momentum) and the Ebola virus that the “community” concocted at the most obnoxious point, right before the index failed.  Now it’s a red arrow (lower low) and a fateful gap fill looking likely either sooner or later.