Loading ...The monthly close is all that matters really, but if you were shaken out near the lows, I’m sorry. If not, I would suggest holding tight and adding on weakness if you can. The historic levels of gold demand I’m hearing about (direct from bullion dealers) will feed through to price at some point. The PM miners are amongst a new breed of ‘sectors’ which will be favoured for growth and investment (and profits) in coming years (in my view).
I understand people looking at the numbers and asking ‘why all the panic?’, ‘we lose many more to seasonal flu each year.
The problem is that if we allow it to spread freely, unhindered, it’s likely close to 80% of us will get it. The European medical, scientific advisors are clear about that. Unlike seasonal flu, this is a completely new (novel) virus. There is no immunity in the population, so we all get infected and pass it on (even if we don’t suffer too badly from the symptoms). With around 1 death per 1000 infected (best estimate from the UK government health advisors today), we would be looking at 53,000 fatalities out of our 66 million population. Remember, that implies hundreds of thousands would require intensive care beds – most would recover, but that 53,000 would die. We do not have hundreds of thousand of intensive care beds. We only have 8000 ventilators (and some of those are already in use).
If you look at Italy you can see the strain that just a fraction of this is already putting on healthcare systems.
I think it’s easy to see the problem here. A complete collapse of the healthcare system, with people dying without being able to get any kind of medical assistance whatsoever.
Every effort has to be made to try to avoid this.
Another problem is that there is no ‘exit strategy’. There is no credible plan for allowing the community to come out of isolation, without the virus just continuing to spread. The ability of the virus has to be curtailed before that can be allowed, somehow.
GDXJ fell to $19.50, now it’s back to $25 !!!
Gold Silver Ratio now way higher than anytime in the last 100 years
Does this suggest the ratio will decline via a collapse in gold price ?
Protect your wealth now. The spill-over into the banking sector is inevitable. We reportedly came within a few hours of a global banking collapse in 2008. This is worse. Much worse. Stock markets around the planet are approaching the very long term bull market support lines. One will go soon, followed by another, then another. The banks will blow up, taking the entire modern monetary system with it.
Someone please explain to me how we can shut down the whole of Europe for months and not witness total collapse. Please, because I really want to hear it.
http://om/world/2020/mar/14/coronavirus-northern-ireland-schools-will-close-for-at-least-16-weeks
The guardian is not a ‘fear-mongering’ publication, and this echoes what I’m hearing through other ‘professional’ sources.
I just came off the phone to a large bullion dealer. She said ‘we have never seen anything like it, it’s crazy‘.
Sit up. Wake up. Take notice. Act.
Edit: The Spanish stock market is staring into the abyss – support has failed. This will be repeated across the whole of Europe. How do you think this might affect the banks ? What about the US stock market ? Is that somehow, miraculously going to see stock valuations avoid further collapse below all remaining support levels ?
Watch very closely for early signs of stress. Big banks/derivatives/liabilities and mass lockdowns in multiple countries ending all trade/business don’t mix very well. If one domino falls, they could all go this time. Protect yourself.
I can only repeat and endorse Plungers message. I began to realise what had happened yesterday. The price of gold and silver isn’t being ‘smashed down’ (‘paper’ price has). Not only that, there’s been a massive surge in demand. So much so that all of my usual suppliers have messages like this on their websites…
Does that sound like usual ‘bear market’ behaviour ? Of course not. In my view, Plunger is 100% correct. That being the case, quality names are (temporarily) available at deep discount and should be bought.
Ask yourself this… just how many big companies/organisations are going to be in financial difficulty because of Covid-19 ? How many profit warnings will result ? How many bankrupcies are likely ? Let’s face it, our governments can’t step in and save them all. They might try, but it just isn’t possible. Then ask yourself how much profit a well run gold mining company must be generating at these prices (just go online and check out the ‘all in sustaining cost’ required by some of these companies). The short answer is that they must be doing exceedingly well, and we’ll know more once they release their most recent accounts. This tiny sector will suddenly look very attractive to hedge fund managers and investors. It doesn’t take much of a shift in the allocation of ‘big money’ to set these shares alight.
In summary, my advice is to position into these quality producers (Plunger mentions a few) and not get shaken out of the market. Maybe we could have a discussion about the best names. Plunger mentions Franco Nevada Gold Corp, Newmont, Pan American Silver Corp (I’m not sure who ‘Gold and AU AGI are). I would add Sibanye, Yamana, Sandstorm, Kinross, and maybe (I know many don’t trust them) Barrick.
Like many, I’ve been trying to figure out where we go from here. A few things are pretty clear…
1 – Covid-19 is in the process of shutting down most European countries, along with the USA, and many other countries aren’t too far behind.
2 – The lockdowns are ‘complete’, with little to no commercial activity, little to no travel, transport or trade.
3 – The lockdowns will need to be in place for a number of weeks (here in the UK, we’re told to expect the peak of the virus in 2 to 3 months time !)
4 – The 3 points above will represent a worst-case scenario for business/industry.
5 – Many millions of jobs depend on travel/tourism/hospitality, with the sector contributing nearly 800 billion Euros to GDP in Europe. These sectors will be decimated.
Putting these simple facts together suggests to me that this is many times worse than the GFC of 2008. I think it might be beyond the ability of the Central Banks and governments of the world to ‘fix’, so what are the options ? This is where it starts to get very disturbing. Unless I’m missing something, there are only 2…
1 – Individual countries central banks drop interest rates to zero (or less), possibly suspend things like mortgage payments and utility bills, and drop ‘free cash’ on every household.
2 – Hit the big red ‘reset’ button. This would involve a new global financial system. I don’t know how we’d get there, or how it could be implemented.
Number 1 probably wouldn’t work (or it wouldn’t work for long). Number 2, well, I have literally no idea. The idea that the financial damage will be limited enough that we can ‘get back to normal’ seems highly unlikely to me. What do you all think ?
Echoing what Fully said in a recent post, Plungers ‘Post-Bubble Contraction’ work has been superb. If I’m reading it right, commodities and general stocks are screwed, the Dollar is heading to new highs and gold/gold stocks are set to out-perform (please correct me if I’m wrong). I’m not sure where Silver fits into his thoughts, as it’s part commodity, part monetary (on occasions), but if it starts to take on it’s monetary persona instead of its industrial one, it could do very well.
Where I’ve always agreed with Plunger is that Gold is in the early stages of its new bull market. Although my ‘Domed Dollar’ chart hasn’t broken yet, I now expect it to.
Earnings/revenue for so many of the companies that make up the main stock indices are going to fall off a cliff. Global trade is decimated. Travel, tourism and hospitality destroyed. Not just in a few countries, but everywhere. Not just for a 2 or 3 weeks, but many months. It’s the worst case scenario. Shutdowns, lockdowns, borders shut, curfews everywhere. Social unrest is a very real possibility. This is not to mention the enormous cost in human life which is at risk of unfolding/already unfolding.
There are very few places to protect wealth in such times, but you can look at the great depression where gold more than doubled between 1929 and 1934 and gold miners went up by hundreds of percent. The 1920’s and 30’s were a long time ago, but I do think gold will reflect the monetary debasement we’re about to see in a very big way.
It’s going to be a dangerous and rocky road ahead. The world has become so intricately interconnected in a way that just wasn’t the case 100 years ago. The dominoes are going to start falling soon, companies cutting back, scaling back, laying off workers. It’ll gather pace and risks turning into Lehman x 1000. Organisations collapse, default, then bigger organisations, connected companies, global companies, financial institutions, banks, the banking system and sovereign states. It’s no exaggeration to say, that unless this passes by April/May and we can all get back to ‘normal’, the damage will be too big to repair. A complete, and total write-down. I have no more idea than you do about the detail of how it will play out, but the big picture is coming into clear view and it’s ugly, very ugly.
The value of gold and silver could end up being the last thing on any of our minds.
As I said yesterday, gold is ok down to about $1400/$1430, but Silver has gone to the dogs.
Edit: GDX is on the edge of oblivion
I don’t want to jinx things, but gold has held up remarkably well (so far). Both gold and silver find themselves at pretty important points here…
Edit: I should’ve said that a close above about 2650 would mean the SPX is back in business. Huge long-term, global economic damage is being done though, so it’s hard to imagine a sustained recovery anytime soon.
But global stock markets are down 10-15%. Relative strength. Am I grasping at straws ?
An update to my earlier chart…
Copper & silver hanging by a thread. A monthly close below these supports would foretell something very bleak. Rhodium is on its way to ‘da moon’.
The UK and Italy have about 5% of Chinas population. China detected 81000 cases, and registered 3169 deaths. That means we should expect to see 5% of those numbers – 3240 cases and 126 deaths.
Italy already has 12462 cases and 827 deaths.
What’s going on ?
I was curious to see where $1430 fits in with my ‘golden arc’. Seems perfect…
It would be interesting to see what happens to the miners…
If we’re going to see countries around the world following Italys example (and the US example of halting travel), how can stock values recover when so many companies/organisations are going to go insolvent/bankrupt ? Where is the ‘recovery’ going to come from ? You can’t ‘stimulate’ your way out of a virus and the virtual cessation of world trade and travel. How does this end ?
The global situation is going from bad to worse. Stock markets reacting badly today, but, interestingly gold and silver doing well (so far). Synchronised (huge) global financial stimulus (long-term disastrous) on the way. Gold and silver are ticking time bombs. We could see enormous scaling up of national infrastructure projects to try and encourage growth/employment. When this turns the corner $2000 gold will be disappearing in the rear-view mirror. The human cost shouldn’t be forgotten. Sadly, many of us had a sense that something like this was on the way.
If the rest of Europe has to do the same, its game over
https://twitter.com/silvia_sb_/status/1237844107713638400?s=20
Looking at it from a ‘glass half full’ point of view…
With aggressive rate cutting and fiscal stimulus coming, I expect attention to turn to the PM sector again. Only time will tell.
Whilst gold looks fine, I have to be honest – it looks bad for the miners
Just a look at the big picture. $1500 would be perfectly normal.
Not sure where to start this piece, but here goes… I try to keep my posts/articles balanced, but I’m struggling a bit here. What I mean is that I’m struggling not to sound alarmist. How about I start with some basic facts (as they are currently understood):
Those 4 statements alone are at the heart of what’s troubling me. In the UK seasonal flu kills (depending on where you get your numbers from) 10 to 20 thousand people each year. If Covid-19 affects (let’s assume the forecast is too high), 30% of the population (around 20 million people) with 30 times as many fatalities, that gives us over 600, 000 fatalities. Let’s half that number and call it 300, 000 fatalities, heck, lets half it again and call it 150, 000 fatalities – that’s still 7 or 8 times as many as the worst flu season.
Apart from the personal tragedy of all this loss of life – our critical care facilities would be overwhelmed. We’re told after every bad flu season that the system was ‘only just’ able to cope, with ambulances containing patients having to wait hours outside the hospital because there are no beds.
More facts – there are no known anti viral drugs which can touch this, there is nothing licensed or approved for use at all, and we don’t expect anything for at least a year.
Short of a complete global shutdown for 2 to 3 months, with everyone staying at home for that entire period, this thing will just spread. School/university closures and social distancing only has a limited effect.
All of which makes me think – what happened in China ? What’s happening there now ? Did they lie ? On one day last month, they ‘changed the way they report the numbers’…
But since then it’s apparently gone away, and everyone can get back to work. Really ? What am I missing in all of this ?
All I know for sure, right now, is that if the epidemiologists in Italy, Germany, UK, USA are right (I really hope not), then society across the world is about to face a test it really isn’t ready for. The UK just slashed interest rates to 0.25%, the US is likely to be into negative territory this year. The financial fallout is hard to quantify. You can say goodbye to the airline and travel industry, hospitality, hotels, bars, cafes, restaurants, sports clubs – all wiped out with near zero trade for months. Supply chains, manufacturing, production all gone.
So there you have it. Is China right ? Can it be halted that efficiently ? Can we all look forward to normality by May/June ?
If I could give back all my gold/silver/PM investments to stop this, I would, in a heartbeat. If things escalate and PM’s explode (which they very well might), I won’t be gleefully posting about it. Tracking the reaction in world markets is fair enough, but there is no pleasure when there is such sadness around the world. Maybe one day, some good will emerge from this crisis – I live in hope.
Northstar
The handing over of the baton is getting closer – keep watching the gold/silver ratio…
Its all about ‘Zone 2’.
Zone 5 was THE bottom of the 16 year cycle. Zone 4 was when many were in disbelief, and thought gold would head to less than $1000 – I was busy pointing out the cyclical low was behind us and buying miners as fast as I could on every pullback. It was around this time I started experimenting with the ‘golden bowl’, or arc formation. The zone 4 breakout (bull flag) was something I posted about as the flag was forming. That shot us up into zone 3, and a ‘mid-zone’ consolidation, which I suggested would take us to somewhere between $1700 and $1800. We touched $1700 and find ourselves firmly in zone 2, so is that it ? It might be, but I suspect a final burst on rate cut/stimulus news will send us to $1800 and the top of this zone.
So here we are, what next ? It’s up to the miners and silver now. The ‘golden bowl’ I gave you has pretty much done what I said it would. However, we’re not happy are we ? The miners (where most of us are invested) are languishing. Look at the gold/silver ratio – historic highs. So there it is. Thank you gold, you’ve done it. You’ve got us to the starting line. It’s over to your smaller sibling, silver now, and your family of miners. It’s going to be a rocky handover, and may take quite some time, but that baton is coming your way…
Total turmoil of unprecedented proportions unfolding. Is it possible gold sees it’s largest one day rise in history next week ?
