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It was another
wild week in the markets with some breakouts higher which failed then
breakouts lower which failed only to see massive moves higher coming into the
end of the week, especially Thursday.
You don’t see markets, namely the S&P, move like that very
often.
As
for the precious metals they had a great week all in all but I would have
thought gold would have been much higher as Greek basically defaulted on half
of their debts.
But
had gold risen as it should have that would not have been a good signal to
market participants so the powers that be didn’t let it rise. Alas, they can only halt the short
term moves, not the major uptrend which has been in place for a decade now.
Gold
and silver are still very cheap and while buying today may seem expensive, in
a year or a few years out you’ll wish you could have bought gold sub
$2k and silver under $40.
Metals
review
Gold gained a
solid 6.18% this past week after last week’s head-fake lower. It was a sweet move just in time. I would have thought that news of a
Greek debt default would have seen it rise more but it is what it is for now
and I’m glad gold is held in check so we can keep buying more at these
still low levels.
We
moved up and out of the channel and are now stalling slightly at the 50 day
moving average which is totally normal and healthy. We should be back on our way to $1,800
very soon from here.
The
GLD ETF saw a nice bump up in volume as it broke out which is exactly what
you want to see in something breaking out one way or the other. Volume dropped off near the end of the
week as gold is stalled at this resistance level which is perfect.
Up
is the only way I can see this playing out in the short term although it may
take a couple more days to best this resistance level.
Silver soared
12.79% this past week up and out of the triangle it’s been building for
the past month. Great stuff!
We’ve
got lots of resistance ahead here as many moving averages converge around $36
but once we take some time to get past those we will see $40 in short order.
Silver
is still cheap now. Get some!
The
SLV ETF saw an uptick in volume on the breakout but nothing at all crazy
which is perfect. This is not a
top and all the top callers or bubble bursting thinking pundits once again
have egg on their faces.
I
don’t get why they don’t realize precious metals have only one
way to go and that is up.
Then
again once they are all on the right side of the trade I’ll be getting
mighty nervous. I am far from
nervous.
Platinum
shot higher by 8.95% this past week and is fast approaching moving average
resistance as well as a major trend-line. The moves in precious metals were
awesome this past week after a nice correction that washed out the weak hands.
I
know I didn’t sell one share or ounce in this period,
rather I had my shopping list ready and was buying new companies. I love sales!
The
PPLT ETF saw very heavy volume on the breakout higher and follow through
days. Great stuff that is just
what I want to see after a breakout.
I
expect the $1,700 to $1,750 areas to slow down the ascent but not for too
long.
Palladium
rose 7.59% this past week and is trading in a nice uptrend channel here and
we’re at the upper end of it which happens to be where the 50 day
moving average sits. Expect some
consolidation here.
The
PALL ETF volume was solid but not really anything to write home about. I expect the moves higher to continue
after some sideways or lower work here at this time.
Fundamental Review
Well,
the big news which I thought had been baked into the cake as it was all but a
certainty before it actually happened, was that Greek defaulted on half their debts.
This
will not be kind going forward as bond investors were forced to take a 50%
loss. Who’s to say it
can’t happen again and why would anyone buy something with that chance
being a real possibility?
I
am sure there were some sweet back-room, dealing
with the big banks who mainly own those bonds which all but assured their
existence going forward when they get into trouble again, and they will.
What
I really find interesting about this is that it sets a precedent for the rest
of the worlds major nations who are also saddled
with debt and it’s much worse in many cases.
There
are two ways out of the debt.
Either print money and inflate the currency until it’s all but
worthless and pay it off that way, or simply default on the debt.
Neither
solution is great but this is where we are today.
This
Greek precedent is likely to be echoed around the world. In other words debt holders will be
forced into taking huge write-downs, with benefits!
The
relationship between the bankers and the government is about to get a whole
lot cozier and it’s not a good thing.
This
tactic, or semi default is doing one thing and one
thing only, kicking the can down the road once again.
The
rate countries have seen their debt accelerate it won’t be too many
years until we’re in the same situation again, or worse.
On
the bright side it’s also going to prolong the precious metals secular
bull markets which is already a decade old. I could see it running another decade
for sure and possibly as long as two decades as financial tomfoolery becomes
more sophisticated and skilled at passing the buck onto others.
Owning
physical gold and silver with well more than half my wealth is a no brainer
for me. It just makes sense. I sleep well at night.
With
the rest of my wealth I like to own heavy dividend paying stocks, some of
which pay nearly 20%, I also have a good varied exposure to medium small and
exploration mining companies and I also have a good chunk in a swing trading
portfolio which is a great fun time and is a large focus on a daily basis for
me.
This
strategy and wealth allocation is working very well and gives me exposure to
the areas I think matter and work, and most importantly I sleep well every
night.
I
haven’t come across a better strategy yet, but if you do, let me know!
There
was only one bank to fail this past week and join this years
list of biggest losers.
I
warn constantly about the dangers in investing in mining companies and
sovereign risk is high on my list.
Even countries like Australia are ranked among the worlds
riskiest places to mine according to a top mining executive.
He
view the proposed mineral resources rent tax as the most pressing issue the
country has to deal with and it could totally change the face of mining in
Australia as we know it. Any
country who basically reneges on a contract and
enforces new rules or taxes is a dangerous place to operate and that is
exactly what Australia is doing.
If
they do this with miners who are now profitable after years of struggling
then what’s to say they can’t do it to other successful
industries or companies.
It
really bugs me to see success punished.
Why bother trying to succeed if they are going to make it harder on a
person? And as much as I hate big
monopolies I do enjoy successful independent businesses or large
companies. After-all
they’re the ones who create real jobs, not the government.
If
the government stopped creating jobs that are unneeded and made it easier for
businesses to open and operate the world would be a far richer, freer and
more pleasant place to live.
I
read some more talk of the logistics and potential ramifications of Venezuela
repatriating their gold this week and while that’s all well
and good, the real thought in my mind is can they get their gold. Is it there? Are the custodians scrambling to find
enough physical gold to give back to Venezuela?
I
don’t know the answers but I do know that Venezuela will scream to high
heaven if they can’t get the gold.
I
also wonder if they have the serial numbers of their gold and if the numbers
don’t match what will be said.
The one piece of advice to Venezuela I have is to ensure you personally
assay each and every bar.
Congratulations
to Scotland as they are set to open their first gold mine. The mine is set to mine 154,000 oz of gold and 589,000 oz
silver over the next ten years.
Certainly not a game changer but still it’s creating jobs and
potentially the government will just scoop up all production to increase
their reserves.
The
CEO of one of the largest gold miners in the world this past week said he is expecting gold to rise to $2,200 next year
and I think that is a very realistic number. While many companies take other metals
produced into account when talking production numbers he said the real cost
to mine an ounce of gold is close to $1,200. It’s a breath of fresh air to
hear an honest account of the real cost of producing gold.
The
costs are not cheap and if you really think about it gold cannot fall too
much or else mines will shut and supply will dwindle just as central banks
and investors appetites for physical gold is
rising. It just ain’t gonna happen!
An
official at the World Gold Counsel said the trend
of central banks buying gold rather than selling
it, looks set to continue.
It’s just so funny that so many central banks sold all or most
of their gold around the turn of the century and now they are scrambling to
get it back!
I
wonder if the big banks were the ones advising them to sell.
If
you ever feel like life or anything is overwhelming you, just visit
this site and everything will be ok. Go ahead press the button and see for
yourself!
I
had to visit the site several times this week as our swing trading positions
went against us by gapping in the opposite direction as the next days trading session opens. It happens but, and it’s never
fun.
The
week was crazy in that regard.
We’d get a nice positions going and see it move for us and close
the day nicely only to wake up to a large gap in the other direction forcing
us to take larger losses than I’d prefer.
It
wasn’t a great week in the swing trading portfolio but we’ll live
to trade another day with lots of capital left in it. Personally, I had a hard time with it
as I don’t mind taking losses as they are part of the game, but seeing
some subscribers lose money really gets me down in the dumps.
Thankfully
it doesn’t happen often, but when it does, it sucks!
On
the bright side we were accumulating mining shares who
are still very on sale at the moment.
We added several new companies to the mix that I’ve been eyeing
for a long time now. Waiting for
a good pullback is essential when you find a miner you want as they always
come.
Well,
I think I’m going to hit the links this afternoon for what is likely to
be my last round of golf this year.
It will be a tad chilly but the sun is bright and I’ll still
have much fun I’m sure.
Especially since the greens have been aerated and we play a two putt
maximum. I’ve suddenly
shaved 5 or 6 strokes off my game!
Have
a stellar fall weekend and week ahead.
Warren Bevan
www.preciousmetalstockreview.com
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