Friday, June 20, 2014

Gold Bulls In Command

And price points to watch.... I think the $1,341 resistance level mentioned in the below will be breached.

A Quick Note On Gold and Precious Metal Performance

Hopefully you had added to and started positions in the precious metal space as gold, silver and the precious metal stocks are all heading higher. Although I would not be surprised to see some draw down after yesterday's explosion to the upside (on heavy volume across the spectrum), I would use pull backs to add to positions. At the very least, we are likely to see the yellow metal test the area in the range of $1,400 and silver may head to a price point between $22 to $25 in the near-term.

I could offer up many charts and analyses to support this claim but lets look at the price chart of Royal Gold (ticker:RGLD), the gold broker and one of the equities most leveraged to the delta in precious metal prices.


RGLD broke out to the upside of it's 52-week trading range on accelerated volume. As I have mentioned before, the precious metal stocks usually lead the price of the metals. RGLD breaking out above the yearly range not only suggests the price of the stock is heading higher but that price of the metals will follow. 

Tuesday, June 17, 2014

Fed Mandated Exit Fees Coming to Your Bond Funds

How safe is your bond fund? If this another move to push funds out further on the risk curve? 

From David Stockman's Contra Corner......

In short, in its mindless drive to manipulate financial markets and generate artificial demand for credit, the Fed has created the potential for a massive run on bond funds should a new financial crisis be triggered  by one black swan or another. And once again it is evident that the market’s natural process of “price discovery” has been destroyed in favor of ham-handed “price administration” by our monetary central planners.

Yet the monster they have already created—-a massive log-jam at the bond fund exit gates—-would pale compared to the deformations and anomalies that would result from the imposition of a government dictated exist fee on unsuspecting investors. Even the announcement of a rule-making would potentially trigger the very kind of sell-off that it would be designed to prevent. And if corporate bond prices took a tumble, it would not take long for equity markets to recognize that the massive flow of new debt capital which has been used to fund record stock buybacks could suddenly dry up.

Not surprisingly, the big bond houses are lining up in favor of government imposed exits fees and gates. They would like nothing better than to keep investors captive, collect the fees and blame Washington for the inconvenience to investors.

The next round of crony capitalism is already underway.
Exit fees would seek to discourage retail investors from withdrawing funds, thereby making their claims less liquid and making a fire sale of the assets more unlikely.
Such fees could be highly unpopular with retail investors unable to access funds without paying a fee. But some in the industry would welcome them; BlackRock, the world’s largest asset manager, has called for international rules setting exit fees on some funds.

The remainder of the article can be found here.

Monday, June 16, 2014

Gold Stocks Performing Better than the Metals

Schiff, in the interview at Gold Seek Radio, highlights one of the better bullish (in my mind and others) signals in the precious metal space- the equities performing better than the metal.


Just look at the performance figures for the Phily Gold/Silver Index (green), Gold (red), Silver(purple), with the Gold/Silver Index generally performing better than the metals through 2014.


Further still, take a look at the performance of the gold/silver brokers, Royal Gold (RGLD) and Silver Wheaton (SLW). In the below chart RGLD (pink) and SLW (green) have outpaced both gold (red) and silver (purple). The brokers have some of highest leverage to changes in the precious metal prices and their outperformance suggests that equity investors are lining up for an improvement in the metal prices.



Precious Metal Market Machinations and the Potential Long-Term Buying Opportunity

It has been a while since I updated the following publicly, but if you follow the precious metal markets you have undoubtedly noticed interesting dynamics going on the trading of gold, silver and the related equity names. Aside from rehashing commentary you can read elsewhere, lets jump in to the timing models and what they telling us here.

6- month model: current reading -0.7, last month 0.2, three months ago 1.2


1-year model: -1, -0.6, -0.1


Long-term model: -1.1, -1.1, -1.2

Currently, the 6-month, 1-year, and long-term timing model calculations are firmly in the negative. This is after the 6-month model flirted with positive indicators a few months back. Remember, negative results in these models indicate a more positive climate for buying opportunities and the more the negative the results the better opportunity. To me, the models (with the differences between them being timing diffrentials from more short-term to more long-term) suggest a cautious buying opportunity exists in the precious metal space at current prices. I say cautious as the risk models I also employ (not shown) suggest downside risks do remain- more so in the short-term than the long-term. That said, as long the money supply continues to expand, any pull back in the precious metal space should probably be viewed as an opportunity to add to long-term positions.