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Here are the links from this past week...
Precious Metals Ignore Correction Calls
We penned this on Friday. Its fairly long compared to recent editorials.
Video: Misreading the CoT & Rebounds After Nasty Bears
We comment on the CoT & rebounds after nasty bear markets.
Stocks, Bonds, Singapore & El Nino
The latest post from Tiho Brkan at ShortSideofLong.
Weekly Market Summary
From the Fat Pitch Blog. Great coverage of the stock market.
A Strange Pattern Emerges when Trading US$ in 2016
Interesting info and conclusion.
Profit Margins Tumble to Lowest in 4 years & Its not Just Oil
Great charts and info in this post.
Premium Snippets
Before we get to the first chart, you can download the updated version of our book at the link below.
Updated Book, PDF File
Chart 1...
Top 15 Index, Weekly Chart.
Over the past 3 weeks the index has essentially traded between 160 and 180. It had a quick 15% correction which ended on Tuesday at a low of 154. The index rebounded strongly and closed the week at 181. That is the highest weekly close since April 2013!
Since Gold crashed in spring 2013, the top 15 index has essentially traded in a big range from 90 to 180. A few weeks ago we noted that this wide consolidation would have a bullish resolution after some correction and consolidation. But the market has remained very strong. Every bit of weakness has been bought. This weeks bounce further solidifies support at 155-160. The strong close is also bullish.
Perhaps the index trades higher then retest 180 at somepoint before moving a lot higher. Does that process take a few weeks? Who knows. But my point is that the character of this market has really changed. Recent price action and historical rebounds argue that this index will be trading a lot higher in the months ahead rather than consolidating below resistance at 180.
The following is part of our summary (always on page 1) from TDG #457, a 32 page update sent Saturday evening:
A few weeks ago we noted GDX’s similar history to the late 2008 rebound and the implication that GDX could correct 20%. GDX has only corrected 10% while GDXJ (12%) and the Top 15 index (15%) corrected a bit more. New bulls that originate from long and nasty bears tend to have very strong moves during the first year without significant corrections. Examples of this are the stock market after lows in 1942, 1974, 1982,
2002 and 2009 as well as Gold after its lows in 1976 and 2008. So far Gold has advanced as much as 22% without more than a 6% pullback.
Regardless of any small or 20% corrections along the way, history argues that the miners could have a lot more upside in the months ahead. For example, the Top 15 index has 45%-50% potential upside (p21). Note that GDXJ following its 2005 and 2008 bottoms gained 213% and 285% in the first 12 months following that bottom (p17).
The GDXJ data comes from work Bob Hoye did. He used the data from GDXJ's holdings and traced it back several years.
GDX and the other indices will have a 20% correction at somepoint, but the sector likely moves higher. For those with cash do you wait for everything to correct 20% or more? I think its most prudent to have your list and then buy what is on sale. If something corrects 15%-20% then take advantage of that.
Our company report was on a producer that is undervalued, growing and could become a major player during this current bull cycle. The company is trading at only 4.25x cash flow. We projected that at $1400 Gold and a slightly higher valuation of 5.25x, the stock could double. The stock recently corrected more than 20% and we took advantage of that.
Buy and hold. Buy weakness and hold. These stocks are not going to have any major corrections anytime soon. Its tough to buy after they really run but that is why you make a list and buy value and buy weakness.
Last week we noted our old junior gold index which goes back to 2000. From the 2001 low this index gained 436% in one year. From the 2008 low the index gained 463% in 14 months! These gains were helped by a weakening US$ but nevertheless that is huge.
In addition to our exhaustive technical and sentiment research we provide one company report per week in each update. These are not fluff reports. These are around 1500 words and we project potential price targets based on valuations and various Gold prices.
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