Monday, September 18, 2017

An Interesting Chart For Speculators In Gold

The chart below should be of some interest to speculators in gold:


source: Stockcharts.com

Stockcharts have an interesting indicator - it discloses the trading volume attributed to certain price levels.

Let me take GLD as an example. The chart above shows that since July 2017 (when the current move in gold prices started) the highest trading volume was attributed to the price range of 121.7 - 122.7.

In other words, this level should be considered as strong support for GLD prices. It means also that any correction in GLD should end above this level.

Thursday, September 14, 2017

The Chinese Demand For Silver Is Very Strong

A few minutes ago the Shanghai Gold Exchange released its August report. The chart below is especially impressive:


source: Shanghai Gold Exchange

As the chart shows, the Chinese demand for silver was the highest this year. In August the Chinese investors withdrew as many as 270.3 tons of silver.

What is more, the demand was very strong despite rising prices of silver (in August the price of silver went up from 112.8 Yuan in the beginning of the month to 114.9 Yuan at the end).

Yes, I am really impressed...

Tuesday, September 12, 2017

Note For The Subscribers To The 2017 Top Five Portfolio

Today (8.30 a.m. New York Time) I sent the fourth update to the 2017 Top Five Portfolio. If anybody did not get it, please, let me know (via e-mail or in the "Comments" section).

Sunday, September 10, 2017

US Equities - Are They Still In A Bull Market?

European investors investing in US equities are not happy. Since March 2017 their holdings are losing value measured in Euro:


source: Stockcharts.com

While the S&P 500 (the lower panel of the chart) is still in its strong bull market, its equivalent measured in Euros is in its correction phase (the upper panel of the chart).

Note that a similar situation was an early indication of a bear market in the USA in 2007:


source: Stockcharts.com

Well, I am not saying that we are at the beginning of a bear market in the USA (it will never happen, by the way) now but caution is advised...

Friday, September 8, 2017

What Is Wrong With Silver?

This bull market in silver is totally different from normal. It looks like investors are using higher prices of silver to liquidate their long positions in silver held in SLV:


Note that in August and September (up to date), SLV reported an outflow of 14.7 million ounces of silver, in total. It is really a high amount.

As a result, the current silver holdings at SLV are very close to the amount of silver held at the beginning of the current stage of a bull market in precious metals (two circles marked in red):

So the question is: what is wrong with silver?

Tuesday, August 29, 2017

Is Gold Breaking Above $1,300 Per Ounce?

Higher prices of gold and silver should attract investors but it is not always the case. Look at this chart:


Interestingly, this month, despite a 3.6% increase in silver prices, as many as 8.6 million ounces of silver were withdrawn from SLV vaults (and the 2017 cumulative flow is still negative - look at the lower panel of the chart).

However, JPM Morgan warehouse still reports silver inflows and since the beginning of 2017 as many as 33.7 million ounces of silver were added to the bank's vaults. It is a huge amount of silver. For example, Fresnillo plc, the largest world's primary silver producer delivers around 55 million ounces of silver in annual production.

On the other hand, in August two gold trusts, GLD and IAU, added big amounts of gold to their vaults (look at the row indicated by the red arrow on the chart below):

So, generally, August should be a good month for gold bugs. Particularly, this day (August 29) seems to be very interesting for precious metals investors - it looks like gold is breaking above its very strong resistance.

However, in my opinion, to get let reliable confirmation of this move we should wait for a few days...

Tuesday, August 22, 2017

IAU Or GLD? That Is A Question

I closely track gold flows reported by two big gold holders: IAU and GLD.

However, there is a big difference between these two investment vehicles. Look at the charts below:






Green bars depict monthly flows of gold and red lines depict cumulative gold flows.

It is easy to spot that this year investors participating in IAU were accumulating gold (the up sloping red line) while those using GLD were doing the opposite (and as of August 21 GLD reported a year-to-date outflow of gold).

Now the question is: which gold vehicle gives more reliable signals - IAU of GLD?

Monday, August 21, 2017

Who Trades Atico Mining?

I very often wonder who invests in stocks. Let me take an example of Atico Mining, a small copper producer, operating the El Roble mine in Peru.

On August 15 the company released the following info:

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 15, 2017) - Atico Mining Corporation (the "Company" or "Atico") (TSX VENTURE:ATY) reports a temporary work stoppage at the El Roble mine pending final inspection of the clean water discharge system. The Company will work with provincial authorities to confirm the integrity and safety of the system as quickly as possible, beginning tomorrow August 16, 2017.
Here is the reaction of the market:
 
source: stockcharts.com
Notice that in middle June 2017 Atico shares started an impressive move up - between June 16 and August 14 these shares gained 53.4%.
However, on August 15, since the beginning of the trading day, somebody was desperately selling Atico shares, which resulted in a final drop of 6.7% (blue arrow). It looks like somebody knew about the company's problems.
Then, the next day, when the info was known to everybody, the shares tumbled 13.3% at their selling climax (red arrow).
Summarizing - in just four after this "disastrous" news a decent company lost 14.6% in value.  
Today the company released this info:
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 21, 2017) - Atico Mining Corporation (the "Company" or "Atico") (TSX VENTURE:ATY)(OTC PINK:ATCMF) is pleased to report that further to the news release announced August 15, 2017, the final inspection by provincial authorities concluded successfully and the operations at El Roble mine have resumed as of August 18, 2017.
So now everything is back to normal. However, a question remains open: who is trading stocks? Who thinks that a minor technical issue, a usual thing in the mining industry, can derail a decent company in just two days?

UPDATE:
Today Atico shares are up 10.5%. My question is still intact - who trades these shares?
 

Saturday, August 19, 2017

Message For The Subscribers To The 2017 Top Five Portfolio

The third update has been dispatched. If anyone did not receive the update - please, let me know (via email or in the "Comment" section)

Friday, August 18, 2017

Gold Is Doing Well But...

Gold is doing well but the latest surge is not supported by another precious metal, silver. Look at this chart:
source: stooq.pl

The today's top (the upper red arrow) is not accompanied by a similar top in the silver / gold ratio (the lower red arrow). It looks like a classic negative divergence indicating a short-term top in gold prices...

Friday, August 11, 2017

Gold Bulls - Watch Out

After an impressive rally, gold prices are very close to generate a sell signal. Look at the chart below:


The lower panel of the chart shows the relationship between gold and US 10-year treasury notes (10 year) prices. It looks like whenever the ratio Gold / 10 year is getting very close to the upper, resistance line, gold is bouncing down.

Tuesday, August 8, 2017

The Drop In Jaguar Mining Share Prices Explained

Now we know who is responsible for the last huge drop in Jaguar share prices - it is Resolute Funds Limited. Here is an excerpt from an appropriate info:


"During the month of July, Resolute in aggregate disposed of 35,000,000 common shares of Jaguar Mining on behalf of the Fund. The dispositions included 4,637,000 shares with a four-month holding period sold to an accredited investor in accordance with applicable securities regulations and which had been acquired by the Fund in a private placement that closed on June 15, 2017. As a result of these dispositions, together with other shares acquired or disposed of previously, the Fund held 2,000,000 common shares of Jaguar Mining at the end of July, 2017, representing approximately 0.62% of all outstanding shares of that class"

I think it is the good news. A shareholder, that I cannot name a smart investor (who disposes the shares in such a nasty way?), is out of the company (nearly). Very fine. Farewell Resolute. And, please, do not touch this company again.

What is more, while selecting mining picks I will be closely checking whether this fund is among company's shareholders. If it is, caution is advised...

Poor Wesdome Gold...(another mining company where Resolute is a big shareholder).

Are Copper Prices Ahead Of A Correction?

It looks like a short-term divergence between copper prices and the copper dollar index is in the making. Look at these two charts:


source: Simple Digressions

To remind my readers, the copper dollar index is built in the same way as the Goldollar index:

"It is calculated by multiplying the price of copper by the U.S. dollar Index and its purpose is to cancel the effects of currency fluctuations on the price of copper. By comparing it with the spot copper dolar index an analyst can determine if there is inherent strength/weakness in the price of copper"

Now, as a rule, copper prices and the copper dollar index go in tandem. However, if there is any divergence between these two instruments, caution is advised.

The two blue arrows on the chart above show this pattern. A few days ago copper prices broke above their resistance at $2.78 per pound but the copper dollar index is still below a similar resistance level. If I am correct, copper may start its correction soon.
  

Monday, August 7, 2017

Richmont Mines - There Is Only One Problem

A few days ago Richmont Mines (RIC) released its 2Q 2017 report. As I expected, the results were excellent. The flagship property, the Island Gold mine, delivered outstanding results. Simply put, there is nothing to comment.

However, the company has one problem, which is called the Beaufor mine. Particularly, costs of production at which the gold is produced at this mine. Look at this chart:



and this one:

source: Simple Digressions

As the charts show, in 2016 Beaufor became a cash flow negative mine. The all-in sustaining cash cost of production (AISC) of C$1,854 per ounce of gold was much above the average gold price received in 2016 (C$1,640 per ounce).

This year the company expects to cut AISC to C$1,565 per ounce of gold but:
  • in 1Q 2017 this cost was standing at C$1,580 per ounce (with gold price received of C$1,624 per ounce - slightly above 1Q 2017 AISC, which was good)
  • in 2Q 2017 the AISC was C$1,791 (once again above the gold price received of C$1,688 per ounce of gold, which was bad)
As a result, in 1H 2017 the average AISC was C$1,682 per ounce of gold while the average gold price received was C$1,659. Simply put, the Beaufor mine was once again cash flow negative (each ounce of gold sold was burning C$23).

It looks like this mine is a big problem to the company's management - the guys are surely scratching their heads on discussions what to do with this mine...anyway, the 2017 Beaufor cost guidance is endangered, in my opinion.

Further, I think that the management should focus on cutting mining costs at Beaufor. Since 2015 these costs, measured on a-per-ton-of-ore-processed basis, have been in their strong upward trend:

source: Simple Digressions

Now, in 2Q 2017 each ton of ore processed at Beaufor was grading 5.21 grams of gold. With recovery rate of 97.7% and price of gold received of C$1,688 per ounce, each ton of ore processed was worth C$276. So the Beaufor mine was very close to its break-even point (as the chart indicates, the cash cost was standing at C$263 per ton of ore).

In other words, with lower and lower grades and higher costs of mining and processing the only thing the company can do is to cut costs. If it is impossible...the only solution is to put the mine on care and maintenance and wait for much higher prices of gold....
 

Friday, August 4, 2017

USD, US Equities And Copper - Are They At Their Pivotal Points?

I am back at my desk. Today I would like to show a few charts with little or no comment.

USD



The chart shows the US dollar sentiment index build on the data delivered by the COT report (Commitments of Traders report), as of August 1, 2017. As the chart shows, there is excessive pessimism among big speculators trading in US dollar index futures.

I guess everybody noticed that today the US dollar went up strongly. Those interested in my sentiment indices - please, go to my Seeking Alpha Marketplace service here.

VIX

The US stock market is unstoppable but...big speculators betting on higher prices of US equities are overly optimistic. The chart below shows a net position held by these traders in VIX futures. A huge net short position held by big speculators means that nearly each speculator bets on higher prices of US equities (lower VIX means higher stock prices).


What is more, the amount of those taking part in the game is the highest in history. Look at the total open interest in VIX futures:


Copper

Most recently copper prices broke above their strong resistance. This breakout was followed by masses participating in this movement. As a result, money managers (another class of big speculators) betting on higher prices of copper became overly optimistic about the red metal:



Similarly to VIX, the amount of players taking part in the game "Let us buy copper" is the highest in history:

Wednesday, July 19, 2017

Gold Resource Corp Is Not A Primary Precious Metals Producer Anymore

Today Gold Resource Corp (NYSE: GORO) released its 2Q 2017 production results. The company produced the following amounts of metals:

  • Gold: 5,696 ounces
  • Silver: 397,670 ounces
  • Copper: 294 tonnes
  • Lead: 1,207 tonnes
  • Zinc: 4,176 tonnes
Now, assuming the following, average metal prices recorded in 2Q 2017:

  • Gold: $1,258 per ounce
  • Silver: $17.21 per ounce
  • Copper: $5,662 per tonne
  • Lead: $2,161 per tonne
  • Zinc: $2,596 per tonne

the metals produced in 2Q 2017 were worth:


source: Simple Digressions

Or, look at another chart:

source: Simple Digressions

As the chart shows, the value of base metals produced in 2Q 2017 was higher than the value of precious metals.

So, GORO is not a primary precious metals producer anymore, which means that from now on the company's peers are base metals producers.

Wednesday, July 12, 2017

Silver - The Demand In Action

Although for the last two days gold and silver regained some ground but, generally, precious metals investors feel a lot of pain this year. For example, on July 10 the silver was trading at this year's lowest level  so far.


However, it looks like lower prices of silver attracted a bunch of investors who started aggressive accumulation of this metal. The chart of SLV looks very promising:


source: Simple Digressions

As the chart shows, July is an exception. Generally, Western investors buy silver when its prices are going up. And vice versa. However, in July SLV added as many as 9.4 million ounces of silver at lower prices than those reported in June (a loss of 4.2% - look at the blue row  where monthly changes in silver prices are plotted).

I think it is a very positive development for silver bulls.

Interestingly, a new pattern is developing - in May the Chinese withdrew the highest amount of silver from the Shanghai Gold Exchange (which should be read as "in May there was the highest demand for silver bullion in China):


source: Simple Digressions

Note that in May SLV reported a highest inflow of silver into its vaults.

Tuesday, July 4, 2017

Centamin plc - A Dividend Company?

Precious metals mining companies are not income companies. In other words, the investors hunting for dividend-generating picks should forget about the precious metals sector.

However, there are exceptions. For example, last year Centamin plc (CELTF), a mining company operating in Egypt (the Sukari mine), paid a very generous dividend of 15.5 US cents per share. Keeping in mind that Centamin shares are trading at US$1.96 a share, the dividend yield stands at 7.9%.

Now, investors get accustomed to good things very quickly. I am sure that some of them hope that this year Centamin is going to pay a high dividend once again. However, I doubt it. Look at the table below:



source: Simple Digressions

The table shows the way the company calculates its dividend. Firstly, cash flow, defined as revenue less all-in sustaining cash cost of production, is calculated.

Then the EMRA profit share (briefly, it is that part of the company's profit that is attributed to the government of Egypt) and exploration expenses (related to other Centamin's properties) are deducted, resulting in the so-called free cash flow. 

Now, the point is that this year Centamin wants to pay off not less than 30% of free cash flow in the form of a dividend (last year it was around 70%) so, as the table shows, the dividend yield should stand at a mere 2.0%.

At least that is what the company stated in its 2016 Annual Report:


source: Centamin plc

If, due to some reasons, Centamin's management decides to pay a higher dividend, that is fine. For example, if the payout ratio is 70% (as last year) the yield should stand at 4.6%, which is a very nice figure. 

However, the question is: will they change their dividend policy? 

Monday, July 3, 2017

Are We Close To The Bottom In Gold?

Look at these two charts:

source: stooq.com

It happens all the time - there is another divergence (red arrows) between gold prices (the upper panel of the chart) and the silver / gold ratio (the lower panel of the chart).

Generally, when gold prices are diving and the silver / gold ratio is going up, the precious metals market is close to its local bottom.


Sunday, July 2, 2017

Volume By Price Indicator - Quite A Helpful Tool To Trade Stocks

My readers know that I am not a fan of Technical Analysis in its classic form. However, sometimes I have a look at a few interesting indicators that are not in common use.

Let me take the so-called  "Volume By Price" indicator. According to Stockcharts, this indicator is defined as:

"Volume-by-Price is an indicator that shows the amount of volume for a particular price range, which is based on closing prices. The Volume-by-Price bars are horizontal and shown on the left side of the chart to correspond with these price ranges. Chartists can view these bars as a single color or with two colors to separate up volume and down volume. By combining volume and closing prices, this indicator can be used to identify high-volume price ranges to mark support or resistance"

In my opinion, the Volume by price indicator is sometimes very helpful to find major resistance / support levels. Look at these two charts:


source: www.stockcharts.com

The chart shows the price action of B2 Gold, one of the best gold miners (although most recently in some kind of trouble). Notice that its shares are fighting against a strong resistance at around C$3.9 a share. Interestingly, this resistance level has been disclosed by a long, horizontal bar on the left. In other words, this bar means that vast amounts of shares changed hands at C$3.8 a share.  

Now, another example. This time it is Kirkland Lake Gold, similarly to B2 Gold one of the world's best gold miners:


source: www.stockcharts.com

Here we can easily spot what happens when the shares break their strong resistance level (depicted by a long, horizontal bar on the left). Notice that after some struggle Kirkland shares ultimately broke above their strong resistance at C$10.0 - C$10.5 a share. Since that event the company's shares are appreciating at high speed (the red arrow).

Tuesday, June 27, 2017

Paladin Energy - The Road to Zero

Paladin Energy is (or was?) one of the world's largest uranium producers. Now the company is generally non-existent - most recently Paladin shares have been withdrawn from exchanges.

Below I present a few charts showing the Paladin's road to zero.

Uranium prices:


source: stockcharts.com

Uranium prices topped in 2007, ahead of a big financial crisis. Then, in 2011, the Fukushima disaster set the downward trend in uranium prices. For many years...

Poor prices = poor investment and impairment charges

When uranium prices  go down, a uranium producer generates lower cash flow from operations:


source: Simple Digressions


Poor prices have a negative impact on the value of assets. Hence, impairment charges:

source: Simple Digressions

Then, when there is no cash, a company has to borrow money to keep operations going:


Negative cash flow from operations + debt service + impairment charges are a poisonous mixture. As a result, a company's equity goes to zero...or even lower:




source: Simple Digressions

End of story

Oh, is it? Not really - now Paladin tries to restructure its debt and...sell its best asset (the Langer Heinrich mine)

Monday, June 26, 2017

Simple Gold Trading System

In an ultra short - term the relation between gold prices and US 10-year treasury notes prices generates interesting trading signals. Look at the charts below:


source: Simple Digressions

How does the system work? Trading signals are generated when the ratio gold / 10 year is close to one of the red lines on the lower panel of the chart.

The red and violet arrows point to BUY / SELL signals.

Now it looks like gold is very close to generating a BUY signal.



Sunday, June 25, 2017

Copper - A Big Move In The Making

Uncertainty precedes big price moves. Most recently I have spotted an unprecedented event in the copper market. The so-called spreading figures, the data delivered by the Commitments of Traders Report (the COT report), are standing at the highest level in history.

According to the COT report, spreading figures are defined in the following way:

"For the futures-only report, spreading measures the extent to which each non-commercial trader holds equal long and short futures positions... For example, if a non-commercial trader in Eurodollar futures holds 2,000 long contracts and 1,500 short contracts, 500 contracts will appear in the "Long" category and 1,500 contracts will appear in the "Spreading" category"

Look at the chart below:


source: Simple Digressions and the COT data

The circle marked in red points to the last spreading figure. It can be easily spotted that this week (the report was dated June 20) this figure was standing at its highest reading in history - as many as 8.6% of big speculators trading copper futures was very uncertain about future copper prices.

In my opinion, it is a very reliable data to take a position in the copper futures market. The only question is this: what position? Long or short?

Well, it is hard to say - spreading figures cannot help here. What I know nearly for sure is that a big move in copper prices is in the making.

The validity of this signal is additionally strengthened by the total open interest in copper futures:


source: Simple Digressions

As the chart shows, the total open interest is close to its highest readings now. Therefore the message is this:

  • the copper market is ahead of a big move
  • due to a very high open interest in copper futures (there is a vast amount of traders on this market), this big move should be additionally supported
  • the problem is that the direction of this move is unknown

Thursday, June 22, 2017

SLV - The Downward Trend Has Reversed

Most recently the iShares Silver Trust (SLV), the world's largest silver ETF, has been reporting the increased silver inflows to its vaults:


source: Simple Digressions and SLV

As the chart shows, since the beginning of 2017 there was a continuous outflow of silver from SLV (the red arrow). However, in the middle of April this trend reversed and since that time (with a short break in May) we have seen a rapid increase of silver holdings at SLV (the green arrow).

Interestingly, the metal is hoarded at relatively low prices.

Tuesday, June 20, 2017

Jaguar Mining - I Am Touched...

Just to finish the previous post on Jaguar Mining (JAGGF) - here is an excerpt from the last company's announcement (SEDAR):

"The following subscribers who are “related parties” within the meaning of Multilateral Instrument 61-101 (“MI 61-101”) participated in the Offering:
  • (i) 2176423 Ontario Ltd., a company controlled by Eric Sprott, an insider of the Company, subscribed for 4,545,455 Shares;
  • (ii) Tocqueville Gold Fund, which, together with its investment adviser, Tocqueville Asset Management L.P., is a control person of the Company, subscribed for 3,770,909 Shares;
  • (iii) Resolute Performance Fund, an insider of the Company, subscribed for 4,637,000 Shares;
  •  (iv) Rodney A. Lamond, the President and Chief Executive Officer of the Company subscribed for 35,000 Shares"
Well, it is fine to see other, besides Eric Sprott, notable investors among Jaguar shareholders (Tocqueville Gold Fund and Resolute Performance Fund - two very active funds investing in mining companies) but I am very, very touched by the last acquisition. The company's CEO, Mr. Lamond,  subscribed for...35 thousand shares of the company. Well, investment of C$15.4 thousand is very impressive. Let me look at his salary:
 
 
source: Jaguar Mining
 
So last year Mr. Lamond made C$268.5 thousand. Apart from this basic salary, the CEO owns 2.33M not-exercised options valued at US$625.6 thousand:
 
 
source: Jaguar Mining
 
Well, it is good that Jaguar's CEO invests in his company but the size of this investment is very "impressive". I am touched...
 

Friday, June 16, 2017

Jaguar Mining Finds Investors For Its New Shares

Despite poor 1Q 2017 financial results (mainly attributable to the unfavorable exchange rate between the Brazilian real and the US dollar), Jaguar Mining (TO:JAG) was able to find investors for its new 17.6M shares, issued through the last non-brokered private placement financing.

When the private placement was announced I was curious whether Eric Sprott, a notable Canadian resource investor, was going to increase its stake in the company. He was.

According to the last announcement (SEDAR), now Mr. Sprott controls 64.3M shares in the company (18.7%, including the new shares added through the private placement).    

What is more, the placement was priced at C$0.44 a share, around 10% above the current market price. 

As a result of the placement (and including the second tranche of the Sprott debt financing of US$5.0M), the company should hold cash of around US$29.0M and debt of US26.3M.

Additionally, this quarter the US dollar has strengthened against the Brazilian real (which is good for the company) but investors do not care and Jaguar shares are 40% down.


source: stockcharts.com


Wednesday, June 14, 2017

No Logic In Financial Markets - The Case Of Fairfax

I know it sounds trivial but there is no logic in financial markets. Let me take Fairfax Financial Holdings (FRFHF) as an example.

Briefly, Fairfax is an insurance company run by the so-called Canadian Buffett, Prem Watsa. The company, apart from running a typical insurance and re-insurance business, is also an active portfolio allocator (investing in equities, holding large long / short positions in equity futures, betting on major economic events etc.)

Now, shortly after the US presidential elections Fairfax made the following adjustments to its investment portfolio:
  • the US bonds exposure was radically reduced (the company sold-off a large portion of its US and Canadian treasuries)
  • a short position held on Canadian and US equity markets was radically cut
As a result, Fairfax positioned itself for higher equity prices and lower treasury prices.

What is more, the company (or, better said, Prem Watsa) was right. Since the US elections the prices of treasuries went down and the US and Canadian stock markets went up.

However, Fairfax share prices did something strange - they went down:


source: stockcharts.com

In the lower panel of the chart I have plotted Tembec share price action (Tembec is one of the largest equity holdings acquired by Fairfax a few years ago; a few days ago Fairfax sold part of its stake in Tembec).

Summarizing - Prem was right but the stock market was...more right?




Monday, June 12, 2017

Is The Copper Market Worth Nothing?

The copper sector looks like the precious metals segment at the end of 2015. Look at the current market valuations of a few copper plays:

source: Simple Digressions

Now most of the copper miners are trading at very low EV / EBITDA ratios. It looks as if the entire copper market was worth nothing or close to nothing.
Interestingly, most recently the copper mining companies made similar progress as the precious mining companies did and cut their costs of production significantly. Look at a number of copper plays and their operating costs:

source: Simple Digressions

Note: operating cost is defined as: direct cost of production + royalties + depreciation + administrative expenses + share-based payments + other operating costs

As the chart shows, Southern Copper (SCCO), Taseko Mines (TGB) and Atalaya Mining (TO:AYM) are very-low-cost producers (with operating costs below $2.0 per pound of copper). 
The other miners also produce their copper at quite low prices so...what is the problem?

As usually - the problem lies in copper prices. However, the copper price action does not look bad:


source: stockcharts.com

Although I am not a fan of Technical Analysis, sometimes it is good to look  at the big picture. And the big picture delivers an important message: since late October 2016 copper has been in a strong bull market. Now, after the last correction, copper prices try to break out to the upside.

Additionally, the data delivered by the Commitments of Traders report supports a bullish thesis:


source: Simple Digressions and the COT data

The blue circle on the chart above shows the current net position held by Money Managers (mainly hedge funds) in copper futures. Notice that the blue circle is well below the red circle, which indicates the excessive optimism among traders. It means that the copper market is now generally neutral (or far away from overbought conditions).

Now, combining the last two charts it looks like the chances for another leg up in copper bull cycle are higher than the chances for the opposite move...

Thursday, June 8, 2017

Gold Bullion Flowing Into Private Hands

A positive gold price action this month is supported by gold bullion inflows into GLD and IAU:


source: Simple Digressions

On the other hand, two big silver holders, SLV and JP Morgan (its COMEX warehouse) have delivered mixed signals up to June 7:


source: Simple Digressions

As the chart shows, in June JP Morgan has added 1.6M ounces of silver but SLV reports the outflows of silver (1.4M ounces).