Thursday, July 18, 2019

New Silver Bull Coming

by Adam Hamilton, Silver Seek:

Silver has been dead money over the past year or so, relentlessly grinding sideways to lower. That weak price action has naturally left this classic alternative investment deeply out of favor. Silver is extremely undervalued relative to gold, while speculators’ silver-futures positions are extraordinarily bearish. All this has created the perfect breeding ground to birth a major new silver bull market, which could erupt anytime.

Silver’s price behavior is unusual, making it a challenging investment psychologically. Most of the time silver is maddeningly boring, drifting listlessly for months or sometimes years on end. So the vast majority of investors abandon it and move on, which is exactly what’s happened since late 2016. There’s so little interest in silver these days that even traditional primary silver miners are actively diversifying into gold!

The Global Financial System Is Unraveling, And No, the U.S. Is Not immune


by Charles Hugh Smith, Of Two Minds:

Currencies don’t melt down randomly. This is only the first stage of a complete re-ordering of the global financial system.

Take a look at the Shanghai Stock Market (China) and tell me what you see:

A complete meltdown, right? More specifically, a four-month battle to cling to the key technical support of the 200-week moving average (the red line). Once the support finally broke, the index crashed.

Spending America Into Oblivion: Business as Ususal


by Peter Schiff, Schiff Gold:

Spending America into oblivion has become business as usual on Capitol Hill.

On Friday, Pres. Donald Trump signed a $1.3 trillion dollar spending bill. The legislation funds the federal government through the remainder of the 2018 budget year, which ends Sept. 30.

The bill directs $700 billion to the military and $591 billion to various domestic agencies. According to the Washington Post, military spending will increase $66 billion over the 2017 level, and the nondefense spending comes in at $52 billion more than last year.

As The Economy Teeters On The Brink Of A Recession, U.S. Debt Levels Are Absolutely Exploding

by Michael Snyder, The Economic Collapse Blog:

We now have official confirmation that the U.S. economy has dramatically slowed down.  In recent days I have shared a whole bunch of numbers with my readers that clearly demonstrate that a new economic downturn has begun.  And even though stock prices have been rising, the numbers for the “real economy” have been depressingly bad lately.  But what we didn’t have was official confirmation from the Federal Reserve that the economy is really slowing down, but now we do.  According to the Atlanta Fed’s GDPNow model, the economy is growing “at a 0.3 percent annualized rate in the first quarter”

When 43% of Americans Can’t Pay for Food and Rent, We Can Safely Say the Economic Collapse Is HERE

by Daisy Luther, The Organic Prepper:

You know all those reports about how lots of Americans can’t afford a $1000 surprise expense like a medical bill or a car repair? Well, forget additional expenses. It turns out that nearly half of the families in America are struggling to pay for food and rent. And that means that the economic collapse isn’t just “coming.” It’s HERE.

United Way has done a study on a group of Americans they call ALICE: Asset Limited, Income Constrained, Employed. The study found that this group does not make the money needed “to survive in the modern economy.”


by Wayne Jett, Classical Capital:

Select any important aspect of American life: finance, banking, economic policy, politics, environmental policy, religion, education, communications media or entertainment. Examine and you will find it is dominated by the vastly powerful global cabal which seeks the near-term end of every nation. This does not describe a capitalist society. It describes the medieval system of social domination called mercantilism – the mortal enemy of capitalism – as it has existed across much of the world for the past 400+ years.

Gold Production On The Cusp of Peaking

by Tom lewis, Gold Telegraph:

Gold is valuable because it is a finite resource. What happens when all available gold is mined and processed? There is still abundant gold deep within the earth, but it has not yet been found. Mining companies are unable, to dig deep enough. It is difficult for them to know where to locate this deep gold. All known locations have been depleting for years.

That is the reason mining gold has become more difficult and output is expected to begin decreasing steadily. The precious metal is becoming harder to find.

Keep Your Eyes On The Fundamental Ball And DO NOT Let Herd Sentiment Mislead You

from SilverDoctors:

Adam Hamilton says the keys to success with the precious metals are staying informed and being a contrarian. Here’s why… 

by Adam Hamilton of Zeal LLC

The junior gold miners’ stocks have spent months grinding sideways near lows, sapping confidence and breeding widespread bearishness.  The entire precious-metals sector has been left for dead, eclipsed by the dazzling Trumphoria stock-market rally.  But traders need to keep their eyes on the fundamental ball so herd sentiment doesn’t mislead them.  The juniors recently reported Q3 earnings, and enjoyed strong results.

Four times a year publicly-traded companies release treasure troves of valuable information in the form of quarterly reports.  Companies trading in the States are required to file 10-Qs with the US Securities and Exchange Commission by 45 calendar days after quarter-ends.  Canadian companies have similar requirements.  In other countries with half-year reporting, many companies still partially report quarterly.

The definitive list of elite junior gold stocks to analyze used to come from the world’s most-popular junior-gold-stock investment vehicle.  This week the GDXJ VanEck Vectors Junior Gold Miners ETF reported $4.4b in net assets.  Among all gold-stock ETFs, that was only second to GDX’s $8.1b.  That is GDXJ’s big-brother ETF that includes larger major gold miners.  GDXJ’s popularity testifies to the great allure of juniors.

Unfortunately this fame has recently created major problems severely hobbling the usefulness of GDXJ.  This sector ETF has shifted from being beneficial for junior gold miners to outright harming them.  GDXJ is literally advertised as a “Junior Gold Miners ETF”.  Investors only buy GDXJ shares because they think this ETF gives them direct exposure to junior gold miners’ stocks.  But unfortunately that’s no longer true!

GDXJ is quite literally the victim of its own success.  This ETF grew so large in the first half of 2016 as gold stocks soared in a massive upleg that it risked running afoul of Canadian securities law.  Most of the world’s junior gold miners and explorers trade in Canada.  In that country once any investor including an ETF goes over 20% ownership in any stock, it is deemed a takeover offer that must be extended to all shareholders!

Understanding what happened in GDXJ is exceedingly important for junior-gold-stock investors, and I explained it in depth in my past essay on juniors’ Q1’17 results.  GDXJ’s managers were forced to reduce their stakes in leading Canadian juniors.  So capital that GDXJ investors intended to deploy in junior gold miners was instead diverted into much-larger gold miners.  GDXJ’s effective mission stealthily changed.

Not many are more deeply immersed in the gold-stock sector than me, as I’ve spent decades studying, trading, and writing about this contrarian realm.  These huge GDXJ changes weren’t advertised, and it took even me months to put the pieces together to understand what was happening.  GDXJ’s managers may have had little choice, but their major direction change has been devastating to true junior gold miners.

Investors naturally pour capital into GDXJ, the “Junior Gold Miners ETF”, expecting to own junior gold miners.  But instead of buying junior gold miners’ shares and bidding up their prices, GDXJ is instead shunting those critical inflows to the much-larger mid-tier and even major gold miners.  That left the junior gold miners starved of capital, as their share prices they rely heavily upon for financing languished in neglect.

GDXJ’s managers should’ve lobbied Canadian regulators and lawmakers to exempt ETFs from that 20% takeover rule.  Hundreds of thousands of investors buying an ETF obviously have no intention of taking over gold-mining companies!  And higher junior-gold-stock prices boost the Canadian economy, helping these miners create valuable high-paying jobs.  But GDXJ’s managers instead skated perilously close to fraud.

This year they rejiggered their own index underlying GDXJ, greatly demoting most of the junior gold miners!  Investors buying GDXJ today are getting very-low junior-gold-miner exposure, which makes the name of this ETF a deliberate deception.  I’ve championed GDXJ for years, it is a great idea.  But in its current sorry state, I wouldn’t touch it with a ten-foot pole.  It is no longer anything close to a junior-gold-miners ETF.

There’s no formal definition of a junior gold miner, which gives cover to GDXJ’s managers pushing the limits.  Major gold miners are generally those that produce over 1m ounces of gold annually.  For years juniors were considered to be sub-200k-ounce producers.  So 300k ounces per year is a very-generous threshold.  Anything between 300k to 1m ounces annually is in the mid-tier realm, where GDXJ now traffics.

That high 300k-ounce-per-year junior cutoff translates into 75k ounces per quarter.  Following the end of the gold miners’ Q3 earnings season in mid-November, I dug into the top 34 GDXJ components.  That’s just an arbitrary number that fits neatly into the tables below.  While GDXJ included a staggering 73 component stocks in mid-November, the top 34 accounted for a commanding 81.1% of its total weighting.

Out of these top 34 GDXJ companies, only 5 primary gold miners met that sub-75k-ounces-per-quarter qualification to be a junior gold miner!  Their quarterly production is highlighted in blue below, and they collectively accounted for just 7.1% of GDXJ’s total weighting.  But even that isn’t righteous, as these include a 126-year-old silver miner and a mid-tier gold miner suffering temporary production declines.

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