Hello and good Sunday to you. Here are the links of the week.... 
 

Relative Strength in Gold Stocks Portends to Rebound
Wrote this on Thursday. The relative strength in gold stocks is bullish for the sector in the short-term and potentially bullish for the gold stocks beyond the short term.  
 

My Interview with Mike Swanson
Mike Swanson and I spoke on Friday. I shared my latest thoughts on Gold, gold stocks and the US$ index. 
 

Brazil, US$ Positioning & Gold Miners
Tiho Brkan's latest thoughts on several markets including the gold stocks.  
 

Interest Rate Spreads Drive the US$
From the blog of economist Scott Grannis.  


Weekly Market Summary
From Urban Carmel's Fat-Pitch Blog. Must read every week.

Note: If you come across anything worthy of being included, feel free to send it my way!

 

Premium Snippets 



Chart 1 details the US$ index and Fed Funds rate.

The image I shared last week showed that the US$ often rallies when the Fed begins to hike. Well, I think it made an error with its 1999 data and it did not include 1983 (red).

The main point is twice the Fed started hiking when the US$ was already in an established uptrend (as it is now). That was in 1983 and 1999. The US$ kept rising. The US$ is correcting after testing major resistance at 100. The correction could last a few weeks or maybe a few months. This chart argues we should continue to expect higher highs in the US$ in 2016 and not a prolonged counter trend move.    
 

Turning to the gold stocks….

Chart 2 looks at GDX and its premium or discount to NAV.   

The chart below includes GDX, its premium/discount to NAV and then the volatility of that premium or discount. Spikes in the p/d and rising volatility in the p/d have helped mark important lows in GDX. The 14-day volatility indicator hit its highest level in a year. If we use a 30-day or 50-day volatility indicator then it would be at 7-year high. No indicator is perfect but this could be sending another bullish signal.



 



Chart 3 is the updated gold stocks bear analog. 

The Barron's Gold Mining Index does not always perfectly follow HUI, GDX, etc. I expect the next few data points (collected weekly) will show much higher prices. I don't know how anyone can look at this chart and make an argument that the bear market in gold stocks is going to continue through 2016.  




Last week we wrote:

To repeat myself, it is a tricky situation. Will Gold continue to plunge and take the miners and Silver with it? Or are the miners and Silver telling us Gold will bounce at $1040, or even $1000?

The gold stocks continued to hold their lows to start the week even though Gold traded lower. As a result on Wednesday we added a few positions. Gold made its low on Thursday but rocketed higher with miners to end the week. Wish I had added a few more positions but more opportunities will come. 

TDG #442 was 34 pages and included some of my best work. There are a handful of actionable charts in the update. 

I also discussed my goal to accumulate and buy positions on weakness and then to hedge my portfolio if I think there is downside risk. That will keep things simple and prevent overtrading. The bear market in miners could be over or it will end soon. Buying quality and holding it for a few years should produce great returns. Trading in and out of your favorite positions (amid the volatility) is a risk. Sometimes I try and wait for the perfect entry point rather than just take advantage of a good entry point. If a quality stock is down 30% and you are waiting for it to decline another 10% then you are letting the perfect be the enemy of the good. Hence, I took advantage of some "good" entry points last week.

Whether this is the bottom in the miners or its coming later with the metals (in my view), there will be more opportunities in the months to come. 

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I have subscribed to many investment services over my lifetime. I can honestly say Jordan Roy-Byrne has developed not only one of the most analytically accurate, but also has hit the high water mark by making his analysis feel personalized. In addition to a detailed weekly report, he often sends additional emails with daily observations of not only the physical metals and miners, but also related metrics such as the market and currencies. His service is a great integration of history and future probability that has not only helped me make money, but also avoid losing. In fact, the only time I do lose is when I take more aggressive positions than he has recommended, or follow my gut instead of his objective reasoning. It truly is a 5 Star Service at a great price.

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