Saturday, January 13, 2018

Gold And The GolDollar Index

One of my readers has asked me about the Goldollar index. Here are the updated two charts:

Long-term picture


source: Simple Digressions

Note that most recently the Goldollar index has bounced off its long-term trend line and now it is marching higher.

Short-term picture

source: Simple Digressions

However, in the short term there is quite a big divergence between gold and the index (which, generally, go in tandem). Gold has crossed above its strong resistance (the blue circle) while the index is still below a similar resistance level. It looks like a short-term correction or a stall in gold prices is in the making.

Thursday, January 4, 2018

Sandstorm Gold 2017 Production Figures

Today Sandstorm Gold (SAND), one of my favorite streaming companies, announced production figures for 2017. Here is the chart showing historic figures:

source: Simple Digressions

The picture is clear - there is steady growth at Sandstorm. Each year the company adds new streaming / royalty contracts and lifts up the amount of gold equivalents delivered.

However, let us look at the company's sales from a short - term perspective (two years). Here is the appropriate chart:


source: Simple Digressions

Well, now the picture is not that bright - since the first quarter of 2017 the sales have been going down (look at the red arrow).

What is the takeaway for investors? Well, I would not bother too much about the short-term perspective. Precious metals mines do not deliver  the same or only higher amounts of gold and silver each quarter - sometimes production goes down for a while. It is the long-term perspective that counts so...relax. Sandstorm is on the right track.

Monday, January 1, 2018

My Lack Of 2018 Predictions Of Gold / Silver Prices

2017 has just ended so it is a good time to make predictions for 2018. However, the problem is that I do not make predictions - I have no crystal ball and no idea what will happen this year. The only thing I can do reliably is to look at the current state of a few financial markets and discuss the patterns they present.
Let me apply this approach to the gold and silver markets. As usually, I am going to use the data delivered by the Commitments of Traders reports 

Silver
From the contrarian perspective silver looks very attractive. For example, Money Managers, big speculators trading silver futures, hold a net short position (the red circle):

Source: Simple Digressions and the COT data

Last time they were that pessimistic about silver was July 2017 (the blue circle). At that time Money Managers were also holding a net short position in silver futures. Then, over the next two months the prices of silver went from $15.6 to $18.2 per ounce (an increase of 16.7%).

Another example – the ratio defined as:
Gross short position held by Money Managers / gross long position held by Money Managers

Now the ratio stands at 1.14 which means that the majority of speculators are betting on lower prices of silver:


                           Source: Simple Digressions and the COT data
In the past, when the ratio was in the area marked in yellow, silver presented an excellent medium-term (up to six months) buying opportunity. As the chart shows, the ratio is once again in that area.

Gold

Although gold looks less attractive than silver (from the contrarian perspective), it is still a buying opportunity. My self-invented gold sentiment index is below 40%. In most cases such a low reading indicates pessimism among big speculators trading gold futures (but it is not excessive pessimism):


                                    Source: Simple Digressions

And pessimism is what the contrarian speculators look for. Note that at the end of 2015, when gold was bottoming, the index was standing at 0% (everybody was busy in predicting lower prices of gold) indicating an excellent buying opportunity. Then a bull market in gold started.

Now, during bull market cycles the best buying opportunities are when the index is flashing low readings…but not necessarily very low ones (as, for example, 0%). As the chart above shows, the readings of around 20% – 40% are sufficient to expect a bottom. Now the index is flashing 35.2% so, despite a recent rally, gold looks still attractive for the buyers. However, due to the fact that gold prices are close to their strong resistance level (the area marked in yellow on the chart below) a near-term correction is likely:


                                                        Source: stooq.pl

Final note

I am sure that nobody can predict financial markets. However, there are a few tools that can help to assess the state of any market and identify the oversold or overbought conditions. As you know, a few days ago I started my paid service (2018 Precious metals portfolio and Newsletter). This time, apart from managing a portfolio of precious metals plays and discussing interesting investment ideas I also want to provide my subscribers with medium-term precious metals buying / selling signals. These signals will be available for those subscribing to the portfolio or newsletter. In other words, if there is a medium-term buying / selling opportunity for gold or silver, you will get an appropriate notice (as an attachment to the portfolio or newsletter or separately).

 

Wednesday, December 27, 2017

A Good Start Of The New Portfolio

A new precious metals portfolio for 2018 has been launched. Since the inception (December 20,2017) the portfolio has returned 6.0% while the broad precious metals market, represented by GDX, delivered a mere 2.9%. A good start into the next year, indeed.

Thursday, December 21, 2017

My Proposal For 2018

As announced - the 2018 edition of Precious Metals Portfolio and Newsletter is ready. Here are the details of my proposal:
 
Proposal

First of all, I have decided to continue my investing experiment (Precious Metals Portfolio) initiated in December 2015. However, this time I want to offer you something a little bit different. Namely, my service can be divided into two parts: a standard portfolio and a newsletter.

2018 Precious Metals Portfolio

This year I am going to expand my portfolio to maximum ten picks. Generally, I am not a big fan of diversification but, to protect the portfolio against big price swings, I have decided to place between five and ten picks in the portfolio. So, the rule is: minimum five, maximum ten picks.

What is more, I am going to bet on a few picks indirectly related to the precious metals sector, as, for example, streaming or mineral drilling companies. However, do not be afraid because the gold / silver producers will always constitute the main part of the portfolio.

Similarly to the 2017 portfolio, this year’s portfolio will be actively managed. It means that from time to time I will exchange certain picks for new ones (for free). What is more, I am going to be more active this year – you will receive an update once a month at least (but it does not mean that I am going to get crazy and exchange my picks every month…not at all – I am still a long-term investor).

Now, the price. The existing (2017) subscribers are asked to pay $60 (sixty US dollars) for the annual subscription but the new ones (those that have not subscribed to the 2017 portfolio) are asked to pay $75 (seventy five US dollars).

Newsletter

Each newsletter will consist of two parts: “Portfolio” and “Discussion”:
  1. Portfolio – simply, it is 2018 Precious Metals Portfolio discussed in the section “2018 Precious Metals Portfolio”
  2. Discussion – in each issue of my newsletter I am going to deal with at least one new idea. Very often it will be a BUY, SELL, AVOID or HOLD recommendation but I cannot rule out something different. Apart from that, in this section you may find other issues, as, for example, my comment on the current state of the market, unusual situation I have spotted in the precious metals market etc. However, the main content is definitely a new idea.

Similarly to 2018 Precious Metals Portfolio, you will get at least one issue of Newsletter a month. 

Just to be clear – if you are interested in the portfolio only, do not subscribe to Newsletter (subscribe to 2018 Precious Metals Portfolio in that case). However, if you are interested in the portfolio and new ideas – subscribe to Newsletter (you will find both in Newsletter).

Newsletter’s price is $120 a year for the 2017 subscribers and $150 for new ones.  Why such a price? Let me put it in this way: in the case you are a new subscriber you pay $150 and receive this:

·         2018 Precious Metals Portfolio worth $75 a year

·     "Discussion" worth another $75 a year. Or, using different wording, one new idea worth $6.25 a month (or even less in the case there are additional issues of Newsletter)   

Alright, both services (Portfolio and Newsletter) are ready to dispatch – just go to the appropriate section ("Services – 2017 Subscribers” or "Services - New Subscribers") and then choose “2018 Precious Metals Portfolio” or “Newsletter” buttons and make an appropriate payment. Then, as soon as possible, you will get the report you have ordered.

Last but not least – all fees are non-refundable. The rule is simple - you make one annual payment and I care about the rest until the end of 2018...

Wednesday, December 20, 2017

Two New Services Incoming

This week I am going to start two new paid services: Portfolio and Newsletter. The details will be announced soon.

Saturday, December 16, 2017

Silvercorp - They Are Buying...At Last

Silvercorp (SVM) is repurchasing its shares. At last. Well, I am really touched - the company fulfills its promises and has started its buy-back program.

According to the latest statement, it has repurchased as many as 788 thousand shares since November 23, 2017 (when the program was announced). I have no idea whether a recent jump in Silvercorp share prices is attributable to the buy-back program but...why not? Look at the chart below:


source: Stockcharts.com

Summarizing - since the start of the buy-back program as many as 12.2 million shares of Silvercorp have changed hands at the Toronto Stock Exchange with 6.5% of this turnover being attributable to the program.