Heads Up PM Traders

Plunger is working on his Phase III Part III
It will be posted HERE first at Goldtent TA Paradise
where Quality PM Analysis lives

Plungers Previous Essays
http://plunger.goldtadise.com/
Stay tuned for the final instalment

Meanwhile enjoy our resident TA Eagleseagle and his most excellent charts and commentary

dow-jones-omg-a-possible-sling-shot-move

http://armstrongeconomics.com/2014/10/31/dow-jones-omg-a-possible-sling-shot-move/

$HUI Nested Wave 4’s

Second Wave 4 confirmed with today’s gap – now we can look towards the FINAL low targeting 86 ish, FWIW

 

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Washer, where are you man?

Want to know where you bought your monkey and  hand-powered portable organ?

Anyone who is short the market…I get “worried” past SPX 2019…

Factoid Nite

So far this bear market has delivered

HUI -74%

GDX -73%

GDXJ – 79%

Today marked an interesting maybe significant event. We just filled the last remaining gap in GDX from the advance off the 2008 lows in that great crash! Who says the market doesn’t fill its gaps! It took 6 years but it finally double backed to get that one

sc-343

We are now in the annilhilation zone…does it feel any different?

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THE TWILIGHT ZONE

huigold

click twice

hgr

Goldcorp

Down over 12% on high volume.

Plunger Posted THIS Yesterday at Rambus Forum

Knights and Ladies It has begun

a href=”http://goldtadise.com/?attachment_id=342297″ rel=”attachment wp-att-342297″>PLUNGER

Plunger’s right on.

Good call.

We are in “Plunger’s Annihilation Zone”…

Kudos to you Sir…Plunger do you have anything to share? Or is it self explanatory?

UVXY 60 Gap Chart…Let The Games Begin….

 

let the games begin

Et Tu David Petch

http://www.kitco.com/ind/Petch/2014-10-29-Gold-s-Obituary.html

A Yen for Precious Metals

http://rambus1.com/?p=28447

VIX Target Met…

 

 

 

 

 

 

 

 

 

 

Finally They have repealed the law of Gravity

GRAVITY

The Most Important Chart on the Planet

http://rambus1.com/?p=28361

JJG-CORN, WHEAT, AND SOY

http://stockcharts.com/h-sc/ui?s=JJG&p=D&b=5&g=0&id=p47072015048&a=360362371

Trader Dan on GLD

For hundreds of years, dreamers, theorists and inventors, along with a huge assortment of quacks, hucksters and con men, have sought to either create or to peddle to the unsuspecting, a machine that when once set in motion, would continue moving without the application of any outside energy to feed it. Of course science has long ago disproved that this is possible because of what are widely acknowledged and irrefutable laws that govern our universe – namely the first and second laws of thermodynamics.

This is not a site dedicated to the exposition of those laws nor is this post directed at refuting the theory of perpetual motion.

What it is directed at this time around is yet one more novel theory concocted by the GIAMATT crowd. For newer readers this is the short-hand abbreviation I have assigned to the “Gold is Always Manipulated All The Time” crowd.

That perpetual motion has been disproved has not stopped some from promoting it in order to create an income. Same goes for some in the GIAMATT group – that their wild and logic-twisting theories have been disproven time and time again, does not stop them from coming up with yet another and another and another. One must hand it to them – they seem to never grow weary, shame-faced or at a loss in their ingenuity at devising one more scheme to justify substantially higher gold prices.

I have chronicled some of these in the past three years and have written many refutations in an attempt to provide some balance that has hopefully spared some of their victims from losing a substantial portion of their hard-earned wealth.

Please see this previous post for a laundry list and note that this is not all of the theories that I have seen over this time period but only the more prominent ones.

http://traderdannorcini.blogspot.com/2014/10/gold-mining-stocks-continue-to-sink.html

I would like to focus in on the latest. I am forced to admit this is one that stretches the ability of those whose minds work in a logical manner to conceive of anyone falling for such a twisted example of convoluted and contradictory assertions.

I referenced this the other day in that post linked above but here it is in a nutshell.

The big gold ETF, GLD, is being drained of its gold inventory in order to meet insatiable demand coming out of the East and that this is BULLISH for the metal.

Let’s start with a brief history of GLD, ACCORDING to some of the very same people promoting this latest theory.

Remember, in their mind, it is a contest between the PAPER gold markets here in the WEST and the REAL ( their word) gold market, which is in the far East.

Their claim is that were it not for manipulation of the gold price here in the West, that gold would be substantially higher because the true price would be set in the East by the physical market there. According to their new priests and prophets which lead this gold cult, once all of the gold is finished being drained from GLD, it will liberate the metal from the constraints being placed upon it in the West and the price will soar. Therefore, according to this view, FALLING GOLD INVENTORIES in GLD is ultimately WILDLY BULLISH!

( Please note that every single one of these theories is ALWAYS wildly bullish and PROOF POSITIVE that sharply higher gold prices are imminent).

Let’s proceed to dismantle this latest theory by taking a trip back in time. When GLD was first introduced, a large number, if not an outright majority of those in the gold bug community swore up and down that its introduction was further evidence that the powers that be in the West were intent on siphoning true demand for gold AWAY from the physical gold market ( remember – in their mind that is the real gold market ) by creating another PAPER vehicle, just like the Comex. This paper vehicle would divert millions, tens of millions and hundreds of millions of dollars into an entity which could be manipulated by the “evil bullion bankers” and thus serve as a sort of Trojan Horse ( remember that phrase because it was extremely popular back then- Trojan Horse).

The big case against it however was its auditing process and specifically the point that the custodian for GLD was none other than HSBC, one of the noted “conspirators” in rigging the gold and silver prices (their claim – NOT mine). In other words, it was a case of the Fox guarding the chicken coop as far as they were concerned.

Additionally, they railed against the Authorized Participants of GLD – Bear, Stearns, Lehman, Citigroup, Merrill Lynch, Goldman Sachs, JP Morgan, UBS and Morgan Stanley as being unfit to be associated with anything the least bit related to gold, since they could not be trusted ( again – THEIR claim; NOT mine).

I distinctly recall the mockery and vociferous criticism raised by many of the ringleaders in the GIATMATT crowd when referencing the reported holdings of gold in the ETF. They screamed again and again that the auditing process was “a joke”, and could not be trusted as they sarcastically put the following words in the mouths of those who managed the ETF:

” JUST TRUST US, the GOLD is THERE”.

Do some of you remember this as well?

They cited the fact that the Trustee had no right to visit the premises of any subcustodian for the purposes of examining the Trust’s gold as evidence that NO ONE COULD BELIEVE the REPORTED GOLD HOLDINGS in the ETF.

In other words, the GIAMATT crowd was reeking with disdain for any numbers coming out of GLD as unfit to be trusted.

Thus, they LOUDLY claimed that the gold was not there at all and that which was there was rehypothecated, subject to COUNTER-PARTY risk. This counter-party risk was something that they made a big deal about at that time.

Remember that other wild and popular claim that many of the gold bars were fake, being filled with tungsten?

All of their claims AGAINST GLD were to specifically DISCREDIT it as a viable gold investment vehicle that no one who really wanted to own gold should have anything to do with.

Here is the point – many of the same people who were mocking GLD back then and pooh-poohing the gold numbers it was reporting as its holdings, are NOW NEW BELIEVERS, NEW CONVERTS and have SUDDENLY had a REBIRTH of FAITH in the numbers coming out of GLD each day.

Now, some few years later, all of that Gold, Yes, the Gold that was NOT THERE in the ETF ( just trust us, the gold is there they said mockingly), the Gold that was rehypothecated, the Gold that had huge counter-party risk, and the Gold that was not really gold, but rather tungsten-filled bars is all being “RAIDED” and heading to the EAST to supply the insatiable demand from that corner of the globe.

I am not sure what world that many of my readers live in but in the world in which I live, this is what is referred to as hypocrisy. It is also one of the most egregious examples of illogic, inconsistently and blatant disregard for sound reason that I have ever seen in the arena of financial matters.

I guess these people who promote this sort of idiocy think we all have very short memories.

Then again, I suppose we should expect this sort of perverse reasoning when it comes to the gold cult. After all, this is just a sort of mirror image of the same “logic” that asserts that when gold experiences a sharp selloff at the Comex it is proof of “price suppression by the gold cartel banks”. However when it experiences a sharp, blow your socks off sort of rally, that is normal, just, and righteous price action. Thus when it comes to the reported holdings of GLD, when they are rising, it is evidence that the numbers are bogus and should not be believed but when they are falling, it is incontrovertible evidence that the East is draining the ETF of all our gold.

Reductio ad absurdum perhaps???

To those readers who are actually serious-minded and are who are attempting to make fact-based investments or trades, rising GLD reported holdings are bullish for the gold price. Falling GLD reported holdings are bearish for the gold price. It really is that simple.

Don’t fall for yet another hoax coming out of the GIAMATT cult. They see what they WANT TO SEE and not what is supported by the obvious facts. That is called “Observer-Expectancy Effect”.

In closing here are two charts that illustrate perfectly what I stated in this last paragraph.

Here is the chart of GLD showing the rise and the fall in reported holdings.

d1

And here is the gold chart:

d2

Notice how closely the price of gold corresponds to the rise and fall of the reported holdings in GLD. Please note that I am NOT saying that there is a perfect correspondence in the daily price movement of gold in response to the reported holdings. What I am saying is that the general trend in the price of gold very closely mirrors what is happening in GLD holdings. When holdings rise, so too does the gold price. When holdings fall, so too does the gold price.

Keep that in mind when you come across yet another theory coming out of the GIAMATT crowd.

shark blood

GDM Line Chart

From Rambus

gdm

GDM at a triple bottom…

GDM 2 HOURMy oh my, not making this easy!

VIX

VIX

GDM 2 HOUR…

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Silver Summit Field Report

Here are a few observations from the Silver Summit. Just a few thoughts as opposed to a comprehensive view. First off the turnout was pretty dismal compared to previous years. That’s partially because this conference is conducted simultaneously with the grand daddy of financial conferences the New Orleans financial conference, so I am sure a lot of attendees were siphoned off. Nevertheless, it was an interesting contrast as opposed to say the 2010 or 2011 show when silver was riding high. Back then there were 2-3X the number of companies represented and everyone was of course fired up back in those pre-POR days. Overall its pretty clear the silver crowd has been fully neutered and bullish sentiment has been fully eradicated. So bullish sentiment is completely gone now, however I thought it interesting that the gold/silver bug narrative of evil FED prints money leads to hyperinflation is still very much alive. There is just a lot of confusion as to why it has not happened yet. At $18 silver there is not much belief from anyone that prices could dip much lower. Whenever I expressed my view that silver could trade down to $12 (I didn’t even mention the possibility of $8) it was not met with hostility as in previous years , but just as an impossibility. So bottom line the average silver bug is no longer living in denial, but they just don’t have any model to explain to them what has happened. There was an exception, however and that would be the views held by Dr. Mike Berry and John Kaiser. These are some of the few who actually get the big picture.

As far as ideas, I took a look at the companies and spoke with management. Simply stated Primary silver producers are in deep trouble. Since 70% of all silver comes from secondary recovery, (copper and gold mines) a primary producer has costs that simply cannot compete. The industry now calculates costs as all in costs as opposed to cash costs so I will use those numbers. The average cost for the primaries is likely around $17-20 so if prices trend down below that for any length of time there is going to be additional massive carnage in this industry. I would say most companies are simply not prepared for this eventuality. They are all holding on at this level hoping for the best. For the most part structural costs won’t be able to go down below $15. So its going to be interesting to say the least. Before comments on individual companies let me answer the question of why bother with the silver space? Well here is my thinking. The silver market is made up of 2 elements in my mind. The industrial supply demand element and the silver bug, monetary or religious element. I am not sure the silver bug element will ever be removed, but it certainly is being priced out of the market equation. So I am just looking at the industrial supply demand side of it. Maybe the silver bug premium gets reintroduced someday and powers the price, but I want to just plan on the industrial supply & demand reality.

So with that in mind the best 2 bottom line ideas I have on the silver market remain the same as I had last year Silver Wheaton and MAG Silver. I would not buy any of these companies until phase III runs its course, but once that event occurs these are going to be lifetime value events. We are talking 10-50 baggers in my opinion

Silver Wheaton (SLW) – This company without question is the most professional, disciplined serious company in the silver space. Over the years every person I have spoken with in this company knows his stuff, knows his numbers. No goof balls exist in this company, I have always been impressed with the talent working here. These guys have discipline, when silver was above $30 they simply refused to do any more deals, they sat on their hands. Their cost per ounce will remain around $4/oz for the indefinite future. Not only that but most of their supply comes from big name base metal producers that are not going to be shutting down even if silver does go to $8. This is the Marque silver investment play. My only reservation with this company is their use of debt for acquisitions. I drilled down on them with my concerns and feel pretty good about how they use this facility and don’t see it as a problem the way they have it structured even at $8 silver. This is the company you want to own at lower prices of course.

MAG Silver (MVG) Mag is the development play thats getting close to production. This company is now about 13 years into the making. It was conceived to make money back when silver was $4/ ounce. Super high grade with huge discovery upside and a top geo to map it out. Take a look at its stock price it has held up really well actually considering they don’t produce anything yet. $90m cash on the balance sheet with total capex of $120. They are almost there. They have held up well due to committed institutional ownership. This company allows one to sleep at night. I am waiting to buy this baby during phase III and a few of the institutional holders are forced to sell and the price gets cut in half. It won’t stay there for long however. Its a keeper.

The Big Boyz (TAHO,PAAS,HL,CDE) I listed these in order of quality. TAHO is actually the new guy and is a great company. PAAS is run well with good mgt, however Argentina properties will hold it back. HL & CDE are debt laden companies but they do have cash on their balance sheet. If we have a crash in silver that I see coming their stocks will continue to get crushed. If they don’t go BK they will have unbelievable leverage to the upside once the bull market begins so keep them on your radar. I do have to say that I was impressed with the people of CDE. This has been the most despised silver company I know with a history of being moronic, however this is changing, as they have cleaned house of 90% of previous management moved from Coeur d’Alene to Chicago. They have a top notch geo and a good shareholder rep. This is a company that bears watching I believe. I never though I would say that as I have hated this company, although they did buy my position in out in Palmarejo in Mexico, but thats why I have had such a low opinion is that they way overpaid. Anyway with higher silver prices and their stock so severely beaten down this could be the turnaround candidate of the sector. Put it on your watch list and don’t hold grudges

First Majestic (AG) This was of course the darling of the last cycle, mainly because Keith Neumeyer executed so flawlessly and delivered what he promised. He is a good operator. I am sure this will continue to be a great upside stock in the next cycle, but there are a few things I don’t like. Maybe its just me, but I place a lot on how serious a company presents itself to the public, as it is a reflection of a companies culture and discipline. That’s one reason I am so impressed with Silver Wheaton. Well Keith has chosen to place his daughter as the shareholder rep and frankly I am not impressed. She is just a girl who got a job to pass along information. She has no passion for the business along with the sidekick she has working with her. They left their company table early in the day to go goof off. She does not really know that much about the numbers of the company. With so many other companies competing for my limited investment dollars this tells me a lot and i will send them elsewhere.

Mid tier companies in trouble. I would say that all primary silver producers are in trouble mid and small cap especially. Here is a quick summary

Alexco (AXU)- Roadkill thats all their is to it. Maybe someday they survive if higher silver prices come sooner rather than later. To bad I like the CEO.

Aurcana (AUN.V) Beyond roadkill…didn’t even show up. I remember I had lunch with a guy 2 years ago who boasted he had over $1 million in this stock, its lost 97% since then.

Endeavour (EXK) well run company with a future, however they are in denial about lower prices ahead. Did not get the impression they have a plan below $16 silver

Great Panther (GPL) Same old story, good company but way overvalued and can’t survive at $16 silver. CEO is looking for an exit plan (retirement)

Silvercrest (SVL.to) Probably the best small cap silver stock. The chart has held up well actually

Fortuna (FSM)- Really a top notch company. Managed well, no drama. Will fly with better silver prices, very safe, but still goes down with lower silver prices.

Honorable mention US Silver and gold ( USA.to) This company I gave up for dead last year, but I am putting it back on my radar screen for when better days return. For two reasons management and its resource. They once had an all in cost of $33/ounce. They are on their way towards achieving $13/oz. That’s some serious restructuring. They have a huge ability to scale upward when prices start to rise. Eric Sprott owns 25% of this company. So when the silver price gets knocked down to lets say $10 it will be time to check into this company and take a look at their balance sheet and game plan….it will be time to back up the truck!

Most outlandish value speculation: Anyone ever heard of Apogee silver?, APEX silver? How about George Soros? Well back in the day in the mid 90’s when the world’s most famous billionaires (Gates, Buffett, & Soros) staked out a position in the silver market because they could smell value Soros took a primary position in a silver mine in Bolivia. This is an old mine that produces the highest grade in the world. Well through all the political threats and changes over the years it has changed hands a few times and most recently managed by Apogee silver. A very gifted Mining engineer named Neil Ringdahl has worked the project. I have spent some time in previous years speaking with Neil and he was just the right kind guy to do the job for this project, but it just wasn’t the right time. Well Apogee is getting bought out by Prophesy Coal a Canadian company with coal interests in Mongolia. Think of them as more of an incubator or holding company of projects. Prophesy coal has also been an industry casualty and its stock is down somewhere around 95%. Recall I mentioned this silver asset is the highest grade deposit in the world and is very simple type mining. Everybody always wants an outrageous shoot for the moon speculation right??? Well here one is. Maybe call this one Plungers lottery ticket. $ :)

OK now what you have all been waiting for my take on our gold market prognosticator Bo Polny. First let me say I always admire someone who is willing to lay it all out on the line, damned the critics. That no doubt is Bo, yet I started out with an objective non critical perspective willing to listen. Well, knights I have to come before you and report that Bo is nothing more than a confidence man armed with a few pet theories that don’t hold much water and will be sure to be shredded over time by Mr Market. I was hoping there might be something to his analysis but there just isn’t. Its mostly made up of some goofy numerology applied to cycles that just don’t hold up. As I said as a confidence man it may sound good, but the main argument is made for people that don’t know real market dates and events and can be BS’ed. Example, in his presentation he made a big deal about the number 21 and how all recessions (depressions maybe) come every 21 years. He proceeded to show a 200 year historical timeline and how this all fit. Well, that just so happens to be an area that I know pretty well off the top of my head and his attempt to fit these events to a 21 year recurring cycle was simply film flam. For instance his 21 year recession cycle landed on 1869 and this was supposed to be the down point. Well, if you know anything about stock market history 1873 was the big crash due to the liquidation of railroad debt, so this tool is totally useless since it came 4 years before the crash while he assigns the 21 year cycle to the year 1932, thats 3 years after the top. Pretty worthless tools and that was the main basis of his argument.

I am not really interested in character assassination, but I have seen these flash in the pan prognosticators before and they come and they go. They sound credible for a while but then they get humbled by the market. A case in point I recall back at the 2006 Silver summit the Keynote speaker was a guy named Jason Hummel. I am sure some out there know of him. He was a young kid who was a sensation for making outlandish predictions about the silver market and the stock prices seemed to validate him. He called for stupid prices in just a few years like $500 silver or something similar. It goes back to the old saw that people (investors) will believe anything as long as the price is going up. I remember thinking I know this guy is a flake, but maybe its me that has it wrong. Well, Jason made a ton of money on paper but eventually of course crashed and burned. The thing about Bo is if he had waited until the price of gold bottomed after phase III then started to make his misinformed outlandish predictions he would be a great success as far as selling newsletters. He started spewing his numerology stuff to me telling me that the number 12 was God’s completion number and everything is based off of it. Well time out, I know a thing or two about numerology, biblical or otherwise and its the number 7 that’s God’s completion, I pointed this out and he said some gibberish to try to dig himself out of a hole. Bottom line he ended up being a huge disappointment as its just all fluff and baseless. Now if one wants to listen to some sound reasoned prognostication one might want to subscribe to Tim Woods work. Here is a guy who is not a flake:

Tim Wood

So the silver space is a place I keep my eye on as someday it is going to be the destination to make a lot of money in my opinion, but one must be a student of the market not to get run over first.

Peter Brandt is a level headed PM Analyst

www.scribd.com/doc/244253053/Chart-History-of-Gold-Market

Peter Brandt is a veteran commodity futures trader with no particular axe to grind as to the future of gold. Above is the link to his charts and background. It’s a free site and think you’ll find it of interest. Take aways:

“After charting and trading Gold for more than 30 years, I have come to three major conclusions.

1. Gold is the purest of all markets to trade. This is probably because there are no real
fundamentals in Gold.

2. Gold is the truest charting market that exists. When the Gold chart speaks, a trader needs to listen and listen carefully. Chart patterns are extremely reliable in Gold. Of course Gold provides its fair share of false chart signals. But, when a chart fails in Gold there is usually a lesson to be learned. The lesson most often deals with patience, or lack of the same. Failed chart patterns in Gold combine into much longer-duration chart patterns that will eventually work.

3. Gold does not make large moves without first ringing a bell. Big moves in Gold are announced.

* The next bull market (on a monthly scale) in Gold (if and when) will be ushered in with a
clearly recognizable pattern. No such pattern exists. Thus, my quess is that Gold will go to
new lows for this bear phase with a breach of 1,000 very possible.”

I always tend to be objective as possible via chartology–However…

shark

I SMELL BLOOD…

Fully

Anemic is kind. Looks like it is mouldering to me. :)

GDX DAILY CONSOLIDATION…. For you FGC

GDX CONSOLIDATION

Eagle are you Long PMs or Short ?

Tough call here with divergences BUT the sector looks anaemic !

GDX 15 this is “speculative”…

GDX 15