By Erik Townsend – Re-Blogged From Gold Eagle
Silver
Gold Correction Not Over
Gold has been correcting following last summer’s powerful bull-breakout upleg. Since peaking, gold has inexorably drifted lower in a well-defined downtrend. Traders are wondering when this necessary and healthy sentiment-rebalancing selloff will bottom, paving the way for gold’s next upleg. But this correction still has a ways to run, according to speculators’ gold-futures positioning which dominates gold’s price action.
Gold has enjoyed a strong 2019, still up 15.0% year-to-date as of the middle of this week. Unfortunately its gains have been overshadowed by a bigger stock-market surge, driven by extreme Fed easing. This central bank shifted its rate outlook from hiking to cutting, made 3 rate cuts in just 3.0 months, and birthed its massive 4th quantitative-easing campaign to monetize Treasuries! That’s incredible in just a half-year.
The resulting stock-market euphoria from the hyper-easy Fed squelched traders’ interest in gold. Yet it still enjoyed a strong surge after breaking out to its first new bull-market highs in 3.0 years in late June. Over the next 2.5 months it blasted 14.3% higher, a major move compressed into such a short span of time. That climaxed a bigger 32.4% upleg that unfolded over 12.6 months, the largest of this secular bull so far.
Fiat’s Failings, Gold And Blockchains
The world stands on the edge of a cyclical downturn, exacerbated by trade tariffs initiated by America. We know what will happen: the major central banks will attempt to inflate their way out of the consequences. And those of us with an elementary grasp of economics should know why the policy will fail.
In addition to the monetary and debt inflation since the Lehman crisis, it is highly likely the major international currencies will suffer a catastrophic loss of purchasing power from a new round of monetary expansion, calling for a replacement of today’s fiat currency system with something more stable. The ultimate solution, unlikely to be adopted, is to reinstate gold as circulating money, and how gold works as money is outlined in this article.
Instead, central banks will struggle for fiat-based solutions, which are bound to face a similar fate with or without the blockchain technology being actively considered. The Asian and BRICS blocs have an opportunity to do something with gold. But will they take it?
Silver Miners’ Q3’19 Fundamentals
The silver miners are finally enjoying higher prevailing silver prices, a great boon for this sector. Silver surged this past summer after gold’s first new bull-market highs in several years rekindled enthusiasm for precious metals. The long-neglected silver stocks rallied strongly with their metal. Their recently-reported Q3’19 results reveal whether those gains are justified, and how much fundamentals improved on higher silver.
Four times a year publicly-traded companies release treasure troves of valuable information in the form of quarterly reports. Required by the US Securities and Exchange Commission, these 10-Qs and 10-Ks contain the best fundamental data available to traders. They dispel all the sentiment distortions inevitably surrounding prevailing stock-price levels, revealing corporations’ underlying hard fundamental realities.
Gold and the Lender of Last Resort
By GE Christenson – Re-Blogged From The Deviant Investor
Investopedia says, “In the United States, the Federal Reserve acts as the lender of last resort to institutions that do not have any other means of borrowing, and whose failure to obtain credit would dramatically affect the economy.”
The Fed has created $billions in the past ten weeks (more on the way) and fed those billions into troubled banks, hedge funds, foreign banks and others. Lack of Fed transparency forces us to guess which institutions the Fed helped with $billions of nearly free currency units.
The Fed “Party Line:” We don’t disclose the recipients because it might cause a run on that institution. The Fed is important because it protects the economy from massive and destabilizing failures.
This is like announcing that we ignore graft and corruption in congress because telling the truth about our “leaders” could destabilize trust in congress.
Gold Mid-Tiers’ Q3’19 Fundamentals
The mid-tier gold miners just reported their results for a phenomenal gold quarter. In Q3’19 this metal surged after its first bull-market breakout in years, driving much-higher prevailing prices. That should’ve led to soaring profits for these mid-tiers in the sweet spot for stock-price upside potential. Last quarter’s results are the most important this sector has seen in a long time, a key fundamental test for gold miners.
Four times a year publicly-traded companies release treasure troves of valuable information in the form of quarterly reports. Required by the US Securities and Exchange Commission, these 10-Qs and 10-Ks contain the best fundamental data available to traders. They dispel all the sentiment distortions inevitably surrounding prevailing stock-price levels, revealing corporations’ underlying hard fundamental realities.
The global nature of the gold-mining industry complicates efforts to gather this important data. Many mid-tier gold miners trade in Australia, Canada, Mexico, the United Kingdom, and other countries with quite-different reporting requirements. These include half-year reporting rather than quarterly, long 90-day filing deadlines after fiscal year-ends, and very-dissimilar presentations of operating and financial results.
