Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Market Election Year Cycles – What to Expect? - 4th Jun 20
Why Solar Stocks Are Rallying Against All Odds - 4th Jun 20
East Asia Will Be a Post-Pandemic Success - 4th Jun 20
Comparing Bitcoin to Other Market Sectors – Risk vs. Value - 4th Jun 20
Covid, Debt and Precious Metals - 3rd Jun 20
Gold-Silver Ratio And Correlation - 3rd Jun 20
The Corona Riots Begin, US Covid-19 Catastrophe Trend Analysis - 3rd Jun 20 -
Stock Market Short-term Top? - 3rd Jun 20
Deflation: Why the "Japanification" of the U.S. Looms Large - 3rd Jun 20
US Stock Market Sets Up Technical Patterns – Pay Attention - 3rd Jun 20
UK Corona Catastrophe Trend Analysis - 2nd Jun 20
US Real Estate Stats Show Big Wave Of Refinancing Is Coming - 2nd Jun 20
Let’s Make Sure This Crisis Doesn’t Go to Waste - 2nd Jun 20
Silver and Gold: Balancing More Than 100 Years Of Debt Abuse - 2nd Jun 20
The importance of effective website design in a business marketing strategy - 2nd Jun 20
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

PDAC 2014 Underscores Muted Sentiment towards Gold Stocks

Commodities / Gold and Silver Stocks 2014 Mar 05, 2014 - 12:20 PM GMT

By: Jordan_Roy_Byrne

Commodities

The buzz phrase at PDAC 2014 could be described as “cautious optimism.” Executives, analysts and investors seem to believe a corner has been turned but failed to show any excitement or hope beyond that. Some participants estimated that attendance was down 20% from last year and much lower than 2012. I did not attend last year but definitely noticed foot traffic was significantly lower than in 2012. Interest in my presentation this year was much lower than in 2012. Mind you, these are only anecdotal measures of sentiment. However, for me they further underscore that very few seem to believe in the immediate continuation and sustainability of this recovery.


During my flight home I read Mining Weekly’s cover story (the publication given to every attendee) which further exhibits the mild, cautious optimism pervading the industry. The various assertions and comments included: “Road to recovery will be bumpy,” “Most juniors will fail,” “Control costs in an era of lower metal prices,” and “Metals prices have reached a plateau.” Also, there was a mention of strong deflationary forces and deflation, not inflation as the risk. Furthermore, industry titan Rick Rule was quoted in the story and in the Financial Post as saying juniors still need to capitulate. This is simply not the kind of talk that precedes a market decline or prolonged under-performance.

Moreover, some of these comments are divorced from a new reality. The chart below shows the CCI (commodities), CDNX and GDXJ. Commodities have broken out from a three year downtrend and advanced above the 400-day moving average for the first time in two and a half years. Canada’s Venture (CDNX) which consists of mostly commodity exploration companies declined 65% from top to bottom but is now currently trading above its 200-day moving average and at a 10-month high. It was last above that moving average in spring 2011. Meanwhile, GDXJ is holding strong after declining 82% over a more than two and a half year bear market.



The breakout in commodities and end of the downtrend suggests that inflation and not deflation will be the next concern. It also suggests a potential future tailwind for metals prices. The road to operational recovery may be bumpy but that doesn’t mean it will be for the related capital markets. The CDNX is at a 10-month high and GDXJ has rebounded 50% in two months. Meanwhile, I’m surprised by Rick Rule’s bizarre comment about capitulation considering GDXJ just endured an 82% bear market. (Major kudos to Rick for his market skepticism in 2011 and 2012). Capitulation occurred in spring 2013 and a final wave came in December 2013. Since then, most quality juniors have rebounded 100% or more.

Ironically, the time we should be most optimistic is at a market bottom. That is the best time to buy because it has the lowest risk and is when the biggest gains are made. However, the recent bear market remains fresh in the mind of the majority of market participants and company executives. They worry about making another mistake or misleading people so they hedge their views. The toughest time to buy is where we are now, a few months following a major bottom. Prices are materially higher yet sentiment has not shifted enough to displace the bad memories from the preceding bear market. Essentially, there are two reasons (instead of the usual one) not to buy.

It is incredibly difficult to buy at this juncture but, as we noted in our last editorial, the evidence favors doing so. Pullbacks, until we see much larger gains should be brief and should be used as an opportunity. ETFs such as GDX, GDXJ, and GLDX have spent the last 11 days consolidating and digesting gains. This is not rocket science. Do your due diligence and take advantage of opportunities when there. Don’t overthink it. Be long, sit tight and have an exit strategy (to limit losses) in case things play out differently.

If you'd be interested in professional guidance in this endeavor, then we invite you to learn more about our service.

Good Luck!

Email: Jordan@TheDailyGold.com
Service Link: http://thedailygold.com/premium

Bio: Jordan Roy-Byrne, CMT  is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2013 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor.  Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.

Jordan Roy-Byrne Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules