metals, mining, and more......

[djAdvocate]

ah.  the calm, reassuring, rational voice of reason.  well done, verrip1. 

i generally agree with the regression to the mean analysis.  however, i would also add that i think this cycle is likely to land us back near our lows, which means we still have a way to go.

the most reasonable expectation is that we will see some inflation and loss of economic growth because of this.  how much?  it is anyone's guess.

[verrip1]

But, it might be fallacious to consider that there is a landing point.  What if US currency strength is just a sine curve?  There would be no endpoints, just moves towards short-lived, instantaneous peaks and valleys of inflection points.  If so, the only part worth watching would be what occurs right before inflection points.

[Edited because my first attempt to write this was more garbled than my usual garbling.  ]

[djAdvocate]

no, i agree.  so what we saw around Jan 1st was a local maximum.  what i mean is that it is heading for a local minimum, which should be about the last one (about 20% below where we are now).

(i saw the edit.  good thinking.  )

the question is, how much inflationary impact we could expect.  in the first (6) months we had 3% inflation in a period where the dollar fell 6%.  that sounds about right, actually.  if the dollar falls another 20%, it should add another 10% to inflation?  who knows?

not me.  never watched it before.

[Aman A.K.A. Ahamburger]

Aug 5, 2017 12:29:09 GMT -5 verrip1 said:

I think it's important to keep in mind that currency trends are much more comparative than absolute.  Sure, one can bring up the Weimar Republic and the price of bread being a barrow full of Deutchmarks if one wants to be absolute about it.  But such a condition is a historical rarity.  It's good fodder for the Virgil/ZeroHedge crowd to bemoan, but it doesn't have practical value. 

To look at the fairly recent but consistent weakening of the USD, put it in the context of the preceding growth trend of the dollar.  That growth was generally, and I think accurately, described as a situation not where the USD was so fantastic a currency, but that the others in the comparison basket sucked so bad at the time.  Recall all the dark days of Europe?  Greece, then Ireland, then Italy, then Portugal,  then Greece again, then Spain, then Iceland really did go bust, then Greece again, then flooding of immigrants.  Meanwhile there was Abenomics.  Then there was serious worry of a China implosion.  Tensions in the Ukraine affecting the ruble.  What else was there - the bhat?  The zloty?  The rand?  As I recall, the Canadian dollar did quite well during this time, even when Harper pulled the rug out from under the royalty trusts without notice.  But most of the world's currencies were in the shits.

Most currency ebbs and flows are not some chest pounding, patriotic exhibitions of our collective growing or shrinking penis lengths.  Currency is only one part of the fairly unpredictable mish mash of metrics called The Economy.  People who predict the future of the economy are notoriously and quite frequently proven wrong.  How long have we heard doom and gloom about interest rates going through the roof (which never happened)?  How long have we heard that bonds will crash and burn with Fed rate hikes (which never happened except for one short term blip at the outset)?  Taking currency trends to the extremes is as invaluable as pondering what is the real life significance of the square root of -1.

So we now have a situation where the USD is dropping at an unusually rapid rate.  Per the above, just before this drop began we had an unusually rapid rate of strengthening.  Why not consider the current status to be part of a cyclical normalization?  IOW, it's all good. 

We've had more than a century of governments lying their asses off SAYING that they want a strong currency, when in fact they ACT (or deliberately fail to act) to allow the currency to weaken to support near term economic growth.  It's the main tool in the box of fiscal policy, and always will be.  It just requires that top officials lie, and we all know that's what always happens, like it or not.

Without a doubt currency ‎is subjective, and really for the most part is controlled by the "money changers." As you point out it can go poorly in some cases; Germany in the 1920's, a few South American countries have had bad experiences since then. But in the last 100 years since the USA has had a single currency for the entire country; a currency crisis has been nothing but fodder for the perma bears, agreed. I think it's important to note here that North America is the only place on earth where two countries are the entire continent; and I don't think I need to repeat what Churchill said about the friendship between us.

I thought about what you said IRT economic forecasts quite a bit last night, V; and the conclusion I came to is the reason most are notoriously wrong is that they don't want to admit when they are wrong‎. Which is ludicrous when you think about it. The future maybe predictable because of the mathematical nature of life on this rock; but as I had to learn the hard way humans are actually predictably irrational. 

You know the history of this place; the watch out for 2013 and how things would be substantially different by 2015. Right now if I wanted I could be spinning an everything is awesome storyline no problem. The one belt one road, the fact the EU is still here, I could say that these terrorist acts are a "non issue"; Putins delusions of grandeur are a "non issue." That the war in the Mid East is "getting better" and that what's going on in SE Asia is a "non issue". I could be ignoring history and saying that China is a command economy and they will be able to avoid market forces - like Mobuis is; and that China's debt bomb won't now explode instead of implode because of this command structure.‎ But the reason I'm not sayig all this is because I was wrong about Putin's delusions of grandeur - which I have stated multiple times since 2014 - and at that point forecasts had to be adjusted.

You know my feelings on had Hillary won the election‎... but since that didn't happen; we are without a doubt regressing to the mean, and if you live in North America like we do; it's all good without a doubt!

[djAdvocate]

keep in mind that for over half the last century, the dollar was not FIAT.  so it is really half a century of FIAT currency for us, which is not a small feat.  but it is not really all that large of one, either.

i would not be the first person to say that fiat currencies eventually collapse.  it is their nature.  that is a statement that you either believe or disbelieve, because we are not immortal- so we won't get the chance to see "eventually".  we can only judge based on history, and the history is not good.

so, yeah.  i am one of those guys predicting a currency collapse.  i just have no idea WHEN.  if it is a sufficiently distant event, there is no reason for concern.  but clearly, these things DO happen.

[Aman A.K.A. Ahamburger]

The gold standard in the US after the creation of the FRB wasn't much of a standard. Essentially, when they wanted to increase the money supply, the price of gold was increased. FDR in 1933 is another reason the gold standard was never really implemented...

The reason I made a note about the north America continent and China's command economy above is because the main reason for the failure of FIAT in the past was due to lack of resources within country/a command structure.

I firmly believe that the next cycle is going to be a deflationary not inflationary due to the historical debt accumulated around the globe mixed with conflicts across the Eastern Hemisphere. This, mixed with a "Debt Jubilee" in North America will leave us in the position where we are the safest place to have assets. The interesting thing here is that while assets(paper) will not like this coming cycle, the general economy of North America will. AKA, support for a bottom in paper assets and the USD remains the currency of choice globally for years to come yet.

IMO, the biggest wild card in the currency market are these crypocoins out there. IMO, we won't see bitcoin(or whatever) displace the USD; but the blockchain is going to change the way payments happen.

[djAdvocate]

HDSN had a popping earnings report while i was out of town and went to $10.40.

a bunch of shares sold at around $10.  it is now getting hit hard, and is down into the mid-8's.

good buying opportunity, here.  this stock will produce earnings of probably 90 cents/share this year.  it is growing at a huge clip, so it is probably conservatively valued in the high teens.  i don't know how long it will take the market to catch up with the stock, but it will happen eventually.  even with long term growth falling into the low double digits, this thing is still worth way more than it is selling for, now.

[djAdvocate]

buy recommendation last week:

HDSN @ $8.50-$8.60

buy recommendation today:

SORL @ $5.50-5.75

i expect a clean double on both within (12) months, unless it all goes to hell. 

[djAdvocate]

mining juniors up spectacularly today.

CSFFF +12%
TRX +11%

overall +2%

NOTE: this last week has sucked.  i am about even for the week, thanks to a spectacular today.  this is due to SORL and HDSN getting clobbered by institutional investors bailing on them after earnings reports.  i really hate institutions.  the metals juniors have almost no institutional exposure, so they are much cleaner plays, less subject to the herd mentality. 

..but i digress...

[djAdvocate]

nice opening for metals:

bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=cef&insttype=&freq=1&show=&time=6

testing a 2 month high this morning.

[djAdvocate]

this sector has been sucking for a couple of weeks, again.  i am off 2% from my highs.

[djAdvocate]

today, it is SSW, popping +10%.  it is about my 10th largest holding as of this morning.
i bought a bunch around $6.67? (see this thread), , looking to it at $9.

[djAdvocate]

CSFFF is popping.  $1.05 this morning.  anyone riding this train?

edit: CSFFF hit $1.10 today.  i think it is going to $1.50.

copper is over $3/lb

[verrip1]

Is cobalt the latest in the Tulipomania-style shortage schemes?

An article in the Financial Times a week or two ago made me look into this a tad.  Not that I had any desire to buy cobalt, but that the article just seemed to me to be a bid slanted.  The article was based upon statements by metals biggie Glencore that the new battery explosion for cars is leading to an imminent worldwide shortage of cobalt, where total cobalt production lags their estimation of cobalt consumption just for batteries.

Checking the blogosphere, I found mining bloggers from several years ago predicting that this exact situation would be tossed out by the big mining producers.  Apparently, there are only a few mines which have cobalt as a primary product (one mining blogger asserted that there was only one in the world); instead cobalt is a by-product of many mining activities, and the primary producers turn out to be BHP Billiton and Glencore.  Not unexpectedly, these two biggies are the two who have enough capital and enough ore mass to be able to profitably process out this otherwise minor contaminant.  Smaller miners have to leave it with the tailings and process waste.  So guess who benefits most from a shortage of cobalt - the two guys who make the most cobalt.  Who'd a guessed? 

History repeating itself reminds me of the last alleged metal shortage: rare earths.  Gawd, how the suckers pined over that.  Allegations were that they were strategic metals for electronics manufacturing available only from China who might limit the production except for in-country use.  The trace amounts of known deposits (if you could actually define these low concentrations as 'deposits') included one company whose US mine was currently closed.  It got a lot of news attention, but had lots of problems in trying to re-open.  Last time I heard, it was back dead in the water.

I suspect cobalt may well be the next generation of fear and greed in metals.

Meanwhile, DBB is doing great! 

[re previous discussions, I've recognized that the performance of etf EMCB is negatively correlated to US stock market moves recently.  EMCB is abbreviatically correlated instead to its holdings; emerging market corporate bonds - but is a rather thinly traded issue, so it requires some work to get a good price.  Also AMLP and AMZA (oil MLPs) finally showed a bottom for me to buy into.  Dumped EWZ and doubled down on INDA, EPOL and ECH in the single country etfs.]

[djAdvocate]

cobalt has industrial uses as a hardfacing material for food processing equipment.
because of that fact, i am quite familiar with how the ebbs and flows of this market work.
periodically, there IS a shortage, and it DOES drive up the price.  invariably, the miners
get to work and dig up more, production rises, and prices decline.  but mine development
takes YEARS, so cobalt will probably have a good run for a bit.

and yes, DBB as been a good investment.  saves a lot of thinking when
a sector does this well, doesn't it?

[djAdvocate]

gold is popping this morning.  i am +1%, and at a 6 month high.

[djAdvocate]

the gold stocks are following through on yesterday's gains.

i ended up +1.6% yesterday, and another 0.4% today.  now resting comfortably on a 6 month high.  i am still not within striking distance of my Valentine's Day High, which i briefly reviewed yesterday.

between Christmas and Valentines of this year, i was up over 25%.  you read that right.  it was an insane rally.  day after day of gains.  some of them huge.  i lost almost all of that gain, but things have been slowly picking up again recently.

i think MUX might be a good play right now.  it is still languishing near $2.5, which is low by recent historical standards.  this miner has first rate management.  i have made a lot of money of McKewan (sic) projects.

UNWPX might be another good intermediate term play, if you believe that this rally in metals prices has staying power.  i do.

[djAdvocate]

this was a good day for JUNIORS.  UNWPX was -0.5%, but i was +1%.  that means that a lot of juniors which lagged the big burst yesterday were higher today.  hooray for juniors!    another 6 month high for me.  this summer is shaping up way better than last summer.

[djAdvocate]

hey guys.  i got a new one for you.

this morning, i massively increased my holdings in ARCTF. 

this stock was a spinoff from another issue i held in my account and sold a while back.  i left it there because it seemed to be holding it's own.  this morning, i looked into the financials for it, and i am really liking what i see.  they have been steadily increasing revenue, and reported their first profit last quarter. 

it is difficult to say where this one is heading, because it is basically a STARTUP (though that is not really a fair way of looking at it, since it was an established operation previously within another venture), but they seem to be doing a few things right.

this would be considered a junior mine.  it is Canadian.  and it is primarily gold.

i have no specific target with this one.  i will simply say that it has flown underneath the radar (including my own) since the spinoff, and appears to have good potential for gain.  current price = $1.13

[djAdvocate]

NOTE: on the previous issue, i wondered why there was no "cost of goods sold" for their revenue.

it is because it is all ROYALTY income, which is super cool.  they get paid for a mine that they have a stake in, provided that Gold is over $1250/oz and Copper is over $2.50.  the biggest source of income there is the copper, which is currently trending sharply higher at $3.08

edit: metals stocks were -1%, but the metals themselves were even, which puts them at a discount.

[djAdvocate]

juniors are popping again today.  CSFFF is at a 2 year high, at $1.17.  CEF is up again.

i am showing a gain of 1.2% at this hour, and another 6 month high.  closing in on a record high.  i am now less than 4% below the peak that i hit on February 14th.  i am reasonably confident i will hit it in September.  everything is clicking right now.  the underlying market is struggling to get over 22k, gold is testing it's interim highs, and the general instability is leading people to safer harbor.

[djAdvocate]

gold has pretty much decimated upper resistance at 1230, and is moving higher.
next resistance is at 1365/1400.  if it breaks that, the next limit is 1500.

this is looking pretty good to me, fellows.

[djAdvocate]

another absolute banger.  +1.4%.  another 6 month high.  now just 3% below my old record.

[djAdvocate]

up another 0.6% this morning.  the gift keeps on giving.

nothing is standing out super strong, just general, across the board gains with few losses.

[djAdvocate]

ok, this was a spectacular week.  CSFFF lead the way.  i was up another 1.3% today, and now about 2% below my all time high.  8th best close of the year. 

i still think CSFFF has some run left in it.  bought more shares at 77 cents, but it still looks good at 1.25 to me.  i am going to some more at $1.50.  it is already overweight for me.

not much else was really spectacular- just good and solid across the board.  the mutual UNWPX was up nicely today, but did not have a particularly good week (+4%).  the gold/silver fund CEF did about the same (+3.5%), meaning that there is still a lot of juice in the stocks- at least a 3% bump over current just to catch up.  furthermore, gold has no resistance to 1310, which is another 5% on metal and about 10% on equities.  the story with copper is even brighter, though CSFFF is arguably ahead of the metal at this point (it is running on pure love).  i still think MUX is a good play at $2.60.  at current pricing, it is not even at a ONE month high.  this thing could EASILY go to $4 by EOY.  the stock has gotten battered because a FIVE YEAR effort to control costs has gone off the rails this year.  however, i am UTTERLY confident in McEwan to be able to reign in costs and churn profits out of this venture.  look for this company to break 65M in revenue this year and turn a profit.  it would need to turn a small profit in the 3rd quarter to make that target.  that report is due out in about a month.

stay tuned, and have a great three day weekend.

[djAdvocate]

wow.  gold is crashing through the 1330 level and heading higher overseas today.  next stop is 1400.  above 1400 there is no significant resistance all the way to 1800.

markets will be closed tomorrow in the US and Canada, but we should be able to see what is going to happen in the Australian and European stocks.  and it should be very good.

edit: so the DAX is open today, and the gold miners are doing very well.  McEwan hit a (2) month high (+5%), and there were many other strong performers.  as long as gold doesn't lose it's shine overnight (that rarely happens), we should have one hell of an opening tomorrow.  CSFFF, for example, was +11%. 

[djAdvocate]

gold is higher, but equities are sharply lower, and the result is.....zip.  booo-ring! 

edit: LOL!  i lost $10 today. 

[djAdvocate]

-0.2% today.  100% of it is due to SORL, which fell another 7% (it is getting into bargain zone).

[djAdvocate]

gold is sharply higher today on NYMEX.  testing $1345 again. 

stock futures are trading even in premarket.

this looks like a good setup for advancement, again, in the gold/silver equities.

CSFFF had a nice day yesterday, and i expect it to move higher today, as well.

[djAdvocate]

i dumped 20% of IAG at $7 and doubled up on SORL at $3.90
the latter is probably going to earn $1.50/share this year.
it is ridiculously cheap.  should be a $10 stock.