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Gold & Precious Metals

Harry Dent’s Gold Prediction Invalidated

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Posted by Przemyslaw Radomski - Sunshine Profits

on Thursday, 23 November 2017 05:41

We were recently asked to comment on Harry Dent’s predictions for the gold market and we thought that our reply might benefit other gold investors as well. To be precise, we were asked about Harry Dent’s 30-year cycle that supposedly peaked in 2011, and we supposedly could expect gold to peak again somewhere between 2038 and 2040 (you can watch the interview here). The indirect implication is that gold is not likely to soar sooner and that it’s likely to decline for a relatively long time.

Mr. Dent is referring to gold as a premier commodity and he claims that it moves up and down with the commodity cycle, which, in his opinion, is 30 years.

If the above is really the case, then the previous prediction may be well founded. But is it really so?

We respectfully disagree for two reasons.

The first reason is fundamental. Gold’s price reacts more to flows of gold than to mining supply and demand and thus it behaves more like a currency than a commodity. So, from the fundamental point of view, it may not be justified to view gold simply as a commodity (even a premier one).

The second reason is… Simply checking the facts and the facts confirm our thesis from the above paragraph, invalidating Mr. Dent’s claim that gold moves in a 30-year cycle.

The price of gold was fixed for most of history, so it’s impossible to analyze this cycle directly. No, that’s not our case against the theory. Our case is that we can use the best proxy that we have for the price of gold. The price of gold was fixed, but the prices of gold stocks were not and since the major tops and bottoms in both asset classes correspond to each other, gold miners could be used to check what gold could have done. The gold stocks ratio to the general stock market is even better because by using it we are taking out the part of the mining stocks’ price movement that depends on the stock market volatility.

Let’s check if this is indeed the case with the HUI to S&P 500 ratio (chart courtesy of http://stockcharts.com).

1-hui-spx



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Gold & Precious Metals

SELLING OUT OF PRECIOUS METALS & BUYING BITCOIN…. Very Bad Idea

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Posted by Steve St. Angelo - SRSRocco Report

on Wednesday, 22 November 2017 06:01

There is a new trend by individuals in the alternative media community who are now selling out of precious metals and buying into Bitcoin and cryptocurrencies.  While this may seem like a good idea, especially when Bitcoin and the cryptocurrencies reach new all-time highs, it is likely a big mistake.  Now, I am not saying that individuals shouldn’t invest in cryptocurrencies.  Rather, it’s a lousy idea to sell all of one’s precious metals holdings and put it all into Bitcoin and cryptocurrencies.

Recently, Sean at SGTReport published a short video in which part of the headlined was titled as “SILVER BULL CAPITULATES.”  In the video, Sean explains how past frequent guest and precious metal analyst, Andy Hoffman, has sold out of all his silver and is now only in Bitcoin and gold.  Andy explains in his interview on Crush The Street that he sold all of his silver this summer as he really has no interest in it.  He goes on to say, “Because, in a digital age, I just don’t believe people are going to store thousands of pounds of silver hoping that the gold-silver ratio is going to come down.”

I have to tell you, not only do I find this sort of thinking, utterly preposterous, I also find it quite troubling that analysts who have been promoting precious metals for the past decade are now implying that gold and silver are no longer high-quality stores of value.  I disagree entirely with this faulty and superficial analysis.

There are several reasons why I believe it is essential to hold most of one’s wealth in precious metals than in Bitcoin and cryptocurrencies.  However, the most important factor has to do with the fragile nature of a highly technical complex system that allows Bitcoin and cryptocurrencies to function.  It takes a tremendous amount of energy to maintain and power the internet, servers and computer systems that give life to Bitcoin and cryptocurrencies.

Unfortunately, the majority of the alternative and mainstream media analysts believe in the ENERGY TOOTH FAIRY ( a term coined by Louis Arnoux).  What do I mean by the ENERGY TOOTH FAIRY?  It is the belief by a significant portion of the public and analyst community that the advanced world economy and markets will continue to prosper and grow forever.  Yes, it’s true that some analysts, such as Harry Dent, believe that if we got rid of the corrupt bankers and politicians and allowed people to have a lot more babies, then economic growth will continue indefinitely.

For some odd reason, Harry Dent totally omits the impact of energy on his demographic analysis of the markets.  Does ole Harry not realize that the exponential increase in global oil production has coincided with the exponential growth in human population???  Of course not.  If he did, he would stop focusing on demographics and place his attention on what is happening in the global energy industry.

Regardless, selling out of one’s precious metals holdings might be unwise if we consider that the price of gold and silver are closer to their lows, and Bitcoin and the cryptos are reaching new highs.

PRECIOUS METALS PRICES NEAR LOWS vs. BITCOIN AT RECORD HIGHS

For example, the current gold price at $1,280 is only 10% above its annual average low of $1,160 set in 2015, while silver at $17 is only 8% higher than its average yearly low of $15.68 during the same year.  However, if we look at Bitcoin, the price is near its current high of $8,200:

Bitcoin-2017-Chart

Here we can see that Bitcoin has increased more than ten times from $800 at the beginning of 2017 to over $8,000 currently.  While Bitcoin traders and speculators with Dollar signs in their eyes are betting on much higher prices, let me show you another chart.  This is the first Bitcoin price spike that skyrocketed to over $1,000:



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Gold & Precious Metals

What History Says for Gold Stocks in 2018-2019

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Posted by Jordan Roy Byrne - The Daily Gold

on Tuesday, 21 November 2017 06:06

It has been a while since we’ve applied historical analysis to the precious metals sector. It is something we really enjoy as history can help define and contextualize current trends and help us spot opportunities. Back in March of this year we noted that the gold stocks could be following the path of recovery of housing stocks since their 2009 bottom. Recently, James Flanagan of Gann Global Financial has produced some excellent videos discussing some historical comparisons that are quite relevant to the gold stocks at present. We saw his videos, remembered our housing analog and wanted to take it a step further. What was the path of recovery of markets following mega bear markets?

We define a mega bear market as at least an 80% decline that lasted roughly three to four years. The image below highlights the data we’ve compiled. Some of the bears are only two years long but they follow the general recovery path. That consists of a very strong initial rebound that lasts six to twelve months which is followed by a correction and consolidation which usually lasts 18 months to two years. Then, the market begins its next impulsive advance.

MegaBearRecoveries

Next we will look at the three best fits to the gold stocks at present. 

The housing stocks may be the best analog. They lost 81% during a bear market which lasted nearly four years. Then they recovered 137% before correcting 42% over 18 months. Over the next 18 months (from the 2011 low to 2013), the housing stocks gained 177%



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Gold & Precious Metals

Gold Consolidates & Uranium Blasts Higher

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Posted by Morris Hubbartt - Super Force Signals

on Friday, 17 November 2017 06:12

Today's videos and charts (double click to enlarge):
 

SFS Key Charts & Video Update

w1



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Gold & Precious Metals

Two-Thirds Of The Top Primary Silver Miners Suffered Production Declines In 2017

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Posted by Steve St. Angelo

on Thursday, 16 November 2017 06:40

It has been a rough year for many primary silver miners as two-thirds have suffered declines in production.  Also, many high ranking silver producing countries are also experiencing a pronounced reduction in their domestic silver mine supply.  According to the data put out by World Metal Statistics, Chile’s silver production is down 20% in the first eight months of the year, while Australia is down 19%, Mexico declined 2% and Peru lower by 1%.

The Silver Institute will be releasing their 2017 Silver Interim Report shortly which will provide an update on current silver production and forecasts for the remainder of the year.  However, I believe global silver production will take a big hit this year due to several factors including, falling ore grades, mine closures, and strikes at various projects.

For example, Tahoe Resources was forced to shut down its Guatemalan Escobal Mine in July due to a temporary suspension of its operating license by the country’s Supreme Court.  However, even after the Guatemalan Supreme Court reinstated Tahoe Resources Escobal Mine’s license in early September, an ongoing road blockade has hampered the ability of the project to continue mining.  Regardless, Tahoe’s silver production declined a stunning 6.7 million oz Q1-Q3 2017 versus the same period last year.

Now, on the other hand, silver production at Fresnillo’s operations in Mexico jumped by nearly six million oz during the first three-quarters of 2017 primarily due to the start-up of its San Julian Mine phase II expansion and a ramp-up of its phase I:

Top-Primary-Silver-Miners-Q1-Q3-2017-Production-768x550



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