Monday, May 22, 2017

Is the Gold Correction Over?

Source: Rudi Fronk and Jim Anthony for The Gold Report   05/22/2017

With confidence in the post-election "Trump inflation trade" waning, Rudi Fronk and Jim Anthony, cofounders of Seabridge Gold, set out their thesis for the end of the current correction in the gold market.

On balance, we think the gold correction is over. There are still some small flies in the ointment; the gold stocks are underperforming gold. . .a negative divergence that is often a sign of weakness. . .and the speculative positioning on Comex is neutral rather than bullish. Silver is underperforming when it usually leads to the upside.

On the plus side, the spot gold chart looks good at this point. The price is now above both the 50 dma (50-day moving average) and the 200 dma. The 50 dma crossed above the 200 dma last Wednesday for the first time since falling below it back in November. The long-term downtrend line since 2011 is just $25 away at this point, at around $1,280.

But to understand why the current correction may be over, it is important to understand what drove it in the first place. Gold was in the middle of a standard, run-of-the-mill correction prior to the U.S. election. Comex positioning and sentiment readings were very bullish, and the market was in the process of working off the excesses when the election hit. Within days, a curious new narrative emerged called the reflation trade. The reasoning went like this: President Trump will follow through quickly on his promises of large tax cuts and higher spending on infrastructure and defense, thereby pumping up corporate profits; inflation will accelerate; the Fed will raise rates faster than inflation; and the dollar will soar. The bottom line of this narrative: Buy stocks and industrial commodities, and sell gold. The standard gold correction morphed into something worse.

There are some obvious logical problems with this chain of "logic." First, the Fed has never pre-emptively raised interest rates faster than inflation. Second, a higher dollar depresses export earnings and reduces inflation by undercutting commodity prices and the cost of imports. We also thought from the very beginning that there was almost no chance such a program could actually pass. It seems we were right about that.

Confidence in the Trump inflation trade is now fading. While it has taken longer than we had thought, the dollar is now weakening as uncertainties over Trump policies and Fed rate hikes have begun to assert themselves. The CME Fedwatch chart (above) is showing that the market now places the odds of a 25 basis point June rate hike (the grey line) at 73.8%, still high but down from 90% a little more than a week ago. The percentage expecting no rate hike in June (the blue line) has nearly tripled in that same time period to almost 36%.

This morning, the Fed's Jim Bullard stated in prepared remarks for a speech in St. Louis that "financial market readings since the March decision have moved in the opposite direction" of what would normally occur after a rate hike, adding "this may suggest that the FOMC's contemplated policy rate path is overly aggressive relative to actual incoming data on U.S. macroeconomic performance." Bullard admitted that U.S. macroeconomic data have been relatively weak, on balance, since the Federal Open Market Committee (FOMC) met in March and raised the Fed Funds Rate. He said that economic growth is unlikely "to move meaningfully" this year, noting that "tracking estimates for second-quarter real GDP growth suggest some improvement from the first quarter, but not enough to move the U.S. economy away from a regime characterized by 2 percent trend growth."

Bullard also said that inflation and inflation expectations "have surprised to the downside," noting that "even if the U.S. unemployment rate declines substantially further, the effects on inflation are likely to be small" and that "labor market improvement has been slowing, perhaps close to a trend pace, given the current labor productivity growth regime."

Bullard has played the role of leading spokesman before. Back in 2014, as the market was plunging, he famously stopped the bleeding when, in a Bloomberg interview, he said that a "logical response" to the tumbling market, would be to "delay the end of QE" and he strongly suggested that "QE4" would be considered to prevent further market losses. The S&Ps exploded.

The turn down in the data Bullard alludes to is easily seen in Citigroup's Economic Surprise Index, which nets out the economic reports that exceed expectations and those that fall short. Below is the evidence. Note that the S&P 500 price-earnings ratio has diverged sharply from the economic data.

citigroup

In our view, Bullard has signaled the approaching demise of the Trump inflation trade. The equity markets have not yet got the memo. In the midst of a manic bubble, all news is still good news. . .rate hikes or no rate hikes, inflation or no inflation, accelerated economic growth or not. But the prop under the run up in stocks and the narrative behind the correction in gold are fading. Wile E. Coyote has sprinted out over the edge of the cliff; he just hasn't looked down yet, in our opinion. When he does, we think equities and gold will begin to change places.

This article is the collaboration of Rudi Fronk and Jim Anthony, cofounders of Seabridge Gold, and reflects the thinking that has helped make them successful gold investors. Rudi is the current Chairman and CEO of Seabridge and Jim is one of its largest shareholders. The authors are not registered or accredited as investment advisors. Information contained herein has been obtained from sources believed reliable but is not necessarily complete and accuracy is not guaranteed. Any securities mentioned on this site are not to be construed as investment or trading recommendations specifically for you. You must consult your own advisor for investment or trading advice. This article is for informational purposes only.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosures:
1) Statements and opinions expressed are the opinions of Rudi Fronk and Jim Anthony and not of Streetwise Reports or its officers. The authors are wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the content preparation. The authors were not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the authors to publish or syndicate this article.
2) Seabridge Gold is a billboard sponsor of Streetwise Reports. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.



from Streetwise Reports - Exclusive Articles https://www.streetwisereports.com/pub/na/17455

Stock Life Cycles and Maximizing Profits

Source: Clive Maund for The Gold Report   05/22/2017

Technical analyst Clive Maund describes the life cycle of stocks, and pinpoints the stage in the cycle that is optimal for investment.

Stocks are like living things. They are born, grow, mature, age and decline and then die, or are reborn, which reflects the fact that the companies on which they are based do likewise.

This should not be so surprising since companies are comprised of people. Whole industries come and go as a result of the evolution of technology and changing fashions. A simple example of this is provided by the music industry, where first you had vinyl, then cassettes, then CDs and now the industry is moving to downloads, with vinyl making a niche comeback. If you as a company had insisted on continuing to produce music on vinyl or on cassettes, you would have gone the way of the Dodo bird.

The only instances where companies and stocks do not go through the entire cycle to the death phase are unique cases where the company comes out with a very distinct product that has staying power, like Coca Cola and McDonalds, and even these can't go on forever. Even Apple's grandiose donut HQ near San Francisco will probably end up a tumbleweed-strewn ghost town, but don’t tell management that—they have to find something to do with their current massive windfall profits.

The normal stock life cycle plays out over a matter of some years although it can vary wildly with individual stocks depending on the industry the company is in. A chart showing a simplified stock life cycle is shown above.

A company is born into Stage 1, the basing phase, which can be likened to a young tree in a forest, which has to contend with hazards like rabbits and falling branches and needs enough light to make it through the canopy above. At this stage many young companies fall by the wayside, due to insufficient funds and/or being crowded out by the competition or other reasons. During this stage the company must "get its act together," and if it succeeds in establishing itself in the marketplace and securing a revenue stream from sales, it makes it to Stage 2, the growth phase, the equivalent of the young tree making it to the canopy above and finding its place in the sun, and growing and developing.

This is the stage at which a company's products may become very popular and sales may expand a lot generating big profits. Eventually, however, growth reaches its limit: "No tree grows to the sky." With Parkinson's Laws dictating rising bureaucracy and costs with management typically feasting on the profits, growth slows as the company matures and ends up treading water until it succumbs to the growing inroads made by leaner and meaner competition, or to a decline in popularity of its products, or both. This is Stage 3, the top phase.

Once the company loses its edge and sales and profits decline, it enters Stage 4, the declining phase. This often ends in a crisis where either the company goes broke or it reinvents itself, in another Stage 1 basing phase from which it may succeed in emerging into a new Stage 2 growth phase.

There are innumerable examples of this stock life cycle playing out in the markets all the time. Sometimes you have entire sectors caught up in it, like precious metals stocks, which enjoyed a Stage 2 boom in the 2000s before a Stage 3 top out in 2011 that led to a vicious Stage 4 bear market, which wiped out a lot of believers. A dramatic example was the tech bubble leading into 2000. Cannabis stocks are believed to be completing a heavy correction within an ongoing Stage 2 bull market. We have a range of more obvious Stage 2 stocks on the site, like Scientific Metals Corp. (STM:TSX.V), Select Sands Corp. (SNS:TSX.V) and UGE International Ltd. (UGE:TSX.V; UGEIF:OTC).

With an awareness of this stock life cycle, our goal is to find those stocks that are in Stage 2 uptrends and ride them for all they are worth. Sometimes we can finesse it, as we have done successfully with Scientific Metals, and keep dodging the corrections to maximize profits.

The Stage 3 top area is a tricky place to make profits, although aggressive traders may successfully play the swings, if they are big enough. Stage 4 is a no-go area, unless you are out to make money on the short side. Stage 1, the basing phase, is associated with "Smart Money," which gets in cheap and ahead of the crowd in Stage 2, although even here you have to be careful—the basing phase can last years and you can end up feeling like a lemon if you buy too early and get stuck with something that does nothing for a long time, as happened to us with some of our recent picks that we bought too early. A stock may be fundamentally very cheap, at say 20 cents, in the Stage 1 basing phase, but because it is very cheap it can easily drop to 10 cents, in which case you are nursing a 50% loss, regardless of whether it goes on to break out into Stage 2 and advance to $2.00 or whatever.

Here we should note that some stocks never make it from Stage 1 to Stage 2—they wither and die like a young tree in the forest starved of sunlight. It is tempting to try to anticipate the breakout into Stage 2, however, because a breakout from a low level can quickly lead to 100% or 200% gains in short order just on the breakout move. We achieved this with UGE International, which we bought last December, aided by clues provided by the volume pattern. The correct interpretation of the volume pattern is the most effective way to call these breakouts ahead of time.

This is where we should focus our attention. . .

maundstage2image

A key point to make is that the simplified life cycle chart shown above makes it look very easy to pinpoint where stocks are in their life cycle. In practice it is not so easy—don't forget there are armies of brokers, investors and computer bots that are trying to do just that, which is why most stock charts are not so clear. Anyone who has experience of the markets knows that seemingly insane gyrations are not an infrequent occurrence, so we cannot expect to be right all the time in our interpretations, and only a fool would expect that. What matters is to be right most of the time, and to limit loss when wrong.

To recap, our goal is to isolate those stocks that are in Stage 2 uptrends and ride them for all they are worth. We also try to anticipate breakouts from Stage 1 basing patterns into Stage 2 uptrends, because of the increased leverage that affords. While this can be tricky, the success rate can be improved considerably by the correct interpretation of the volume pattern. As pragmatic traders we couldn't give two hoots what sector they are in, because we don't fall in love with sectors like precious metals or tech or whatever. If you want to fall in love, do it with a man or woman, or a pet dog, or even a tree, not some company's stock.

The stock market is a game, and the best way to win it is to find stocks that are definitely in Stage 2 uptrends, and then ride them until they top out in Stage 3, then switch to others. It is an entertaining quest to find such stocks, and I will appreciate the reduction in my workload that will result in you finding some of these stocks and then alerting me to them. Write to me at clivemaund@gmail.com with any you think you have spotted and I will give you my opinion.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Clive Maund: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own shares of Scientific Metals, Select Sands and UGE International, companies mentioned in this article.



from Streetwise Reports - Exclusive Articles https://www.streetwisereports.com/pub/na/17454

Sunday, May 21, 2017

The Marijuana Sector: Timing the Next Upleg

Source: Streetwise Reports   05/21/2017

Canadian and U.S. marijuana stocks have taken divergent paths over the last six months, and technical analyst Clive Maund examines why.

Naive investors who thought that the multi-state vote in the U.S. on November 8 in favor of legalizing the pharmaceutical and recreational use of cannabis would lead to further big gains in cannabis stocks and bought the sector shortly after the vote got a nasty lesson in the reverse logic of the stock market. What happened is that the market had already discounted the favorable outcome of the elections before the votes were even counted, and after the results were announced, and even before to some extent, the sector was hit by a wave of self-feeding profit-taking that caused most would-be buyers to shy away from it. Hence the persistent punishing downtrend in the sector that has resulted in severe losses for anyone who bought near the top six months ago.

We made big money in this sector last year and hit the exits shortly after the vote, so were unaffected by the downtrend that followed, and have stayed on the sidelines until now. However, the outlook for the industry continues to brighten, with the pharmaceutical use of cannabis set to become mainstream, a development which has the approval of most older citizens keen to use it to treat various ailments, while the more controversial recreational use of cannabis will probably end up being treated similar to alcohol, which is not subject to a blanket ban because a percentage of fools abuse it. Thus, we have had a profoundly paradoxical situation develop over the past six months, where the cannabis industry has been continuing to advance and move forward, whilst the stocks of most companies in the industry have been locked in an ongoing downtrend. This is the sort of situation that must incubate a new major uptrend, and so the challenge for us now is to determine at what point it is likely to reverse to the upside—and the reason for this update is to point out that the sector looks ready to reverse to the upside very soon or even immediately.

Growing interest in the sector has led, among many other things, to the birth of an interesting website, marijuanaindex.com, which has usefully created several indices for the sector, a Canadian index, a U.S. index, and a North America index that appears to be a composite of the two. We will look at these now to see if they give us any clue as to when the expected reversal might occur.

We will start with the Canadian index and stack the U.S. index beneath it for direct comparison. Comparison of the two indices of the neighbor countries immediately reveals that Canadian cannabis stocks have been much stronger than U.S. stocks. The reason for this is that in Canada, the cannabis industry is not illegal at the Federal level as it is the U.S., and the young Canadian Prime Minister, who has the ladies swooning, has a more relaxed attitude towards it than some of the old fogies on Capitol Hill.

In the U.S., investors fear that the government will crack down on the industry and possibly stifle it. However, this seems increasingly unlikely for various practical reasons. One is growing public pressure for legalization. Another is that the government must realize that it is better to make money out of taxing the industry than force it underground so that criminal cartels walk off with the money instead. Cannabis taxation has provided windfall revenues for Colorado which has used the money to make widespread improvements across the state, and if the Feds try to crack down on Colorado, and other states, there is likely to be a revolt. A further motivating factor for the U.S. government to relax its attitude is the fact that if it doesn't, the business will simply go to Canadian companies.

Canadian Marijuana Index

U.S. Marijuana Index

Charts courtesy of marijuanaindex.com


On further consideration of the Canadian and U.S. cannabis index charts, we see that the Canadian index is currently at about two and a half times what it was at the start of 2015, whereas the U.S. index has halved. The takeaway from this is extremely important—it makes clear that should the Federal threat to the U.S. industry ease, there is huge scope for U.S. cannabis stocks to catch up with Canadian stocks, resulting in big gains. Canadian stocks are unlikely to drop instead because the industry continues to expand rapidly.

Another technical point to observe is that the retreat from the November highs to the present looks like a normal correction to the big impulse wave from September through November, and the drop of recent weeks has brought the index sufficiently close to the strong support at the peaks of last March and April that is likely to arrest the decline and reverse it into a new upleg.

Whilst it does look superficially like a major top may be forming in the Canadian index following the parabolic ramp into November, the only fundamental circumstances that would permit this scenario would be intense competition in the industry collapsing the price of product combined with a stock market crash. With regards to competition, the pie is already so big and growing so rapidly that most competent companies should make money, and while a market crash will happen one day, it is more likely that we see a melt up first.

If we now zoom in on the U.S. marijuana index chart and look at the 1-year, we see that the correction from the November highs may be a 3-wave A-B-C correction, what the Elliott wavers call a "flat correction." If this interpretation is correct, then it will be followed by another powerful uptrend—and there are indications on the charts of various individual stocks that the correction has about run its course, not least of which is current light volumes.

U.S. Marijuana Index

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent articles with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Chart courtesy of marijuanaindex.com



from Streetwise Reports - Exclusive Articles https://www.streetwisereports.com/pub/na/17453

Jack Chan’s Weekly Gold and Silver Market Update: The Correction Continues

Source: Jack Chan for The Gold Report   05/20/2017

Technical analyst Jack Chan charts the latest moves in the precious metals market, noting a price bounce off positive divergence.

Our proprietary cycle indicator is down.

I chanhui15-20
The gold sector is on a long-term buy signal. Long-term signals can last for months and years and are more suitable for investors holding for long term.

chan25-20
The gold sector is on a short-term buy signal. Short-term signals can last for days and weeks, and are more suitable for traders.

changld5-20
Prices are bouncing firmly off the positive divergence.

chansilver5-20
Silver is on a long-term buy signal.

chanslv5-20
SLV is on a short-term buy signal, and short-term signals can last for days to weeks, more suitable for traders.

chanslv25-20
The sharp selloff of the past three weeks has shrunk speculative activity to levels of previous bottoms.

Summary
The precious metals sector is on a major buy signal. The cycle is down, barely. The multimonth consolidation continues.

Jack Chan is the editor of simply profits at www.simplyprofits.org, established in 2006. Chan bought his first mining stock, Hoko Exploration, in 1979, and has been active in the markets for the past 37 years. Technical analysis has helped him filter out the noise and focus on the when, and leave the why to the fundamental analysts. His proprietary trading models have enabled him to identify the NASDAQ top in 2000, the new gold bull market in 2001, the stock market top in 2007, and the U.S. dollar bottom in 2011.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Statements and opinions expressed are the opinions of Jack Chan and not of Streetwise Reports or its officers. Jack Chan is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation or editing so the author could speak independently about the sector. The author was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) Jack Chan: We do not offer predictions or forecasts for the markets. What you see here is our simple trading model, which provides us the signals and set-ups to be either long, short, or in cash at any given time. Entry points and stops are provided in real time to subscribers, therefore, this update may not reflect our current positions in the markets. Trade at your own discretion. We also provide coverage to the major indexes and oil sector.
3) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Charts courtesy of Jack Chan



from Streetwise Reports - Exclusive Articles https://www.streetwisereports.com/pub/na/17452

Thursday, May 18, 2017

Is the Market Plunge Just a Storm in a Teacup?

Source: Clive Maund for The Gold Report   05/18/2017

Technical analyst Clive Maund analyzes Wednesday's drop in U.S. stock markets amid concerns over political turmoil in Washington.

The Deep State and the liberal elites have never accepted Trump as president, despite him being democratically elected, and have been trying to undermine and discredit him since he came to office, a job that is made easier by them controlling most of the media. They are pushing for impeachment on trumped up (no pun intended) charges, and while the chances of this succeeding look rather slim, if they do there will be a lot of angry people out there and even more polarization that is likely to lead to widespread rioting and social unrest.

It is partly increasing fears of impeachment that triggered the sudden nosedive in U.S. stock markets yesterday, which has soured sentiment and probably marks the start of the traditional "Sell in May and go away" summer correction, when wealthy investors sell out and go off to pursue their more important leisure interests. Let's look at the setup now on the latest 6-month chart for the S&P 500 index.

On the S&P 500 index we can see that the index had been spluttering for several weeks after breaking to marginal new highs with momentum (MACD) very weak and there is certainly plenty of room for a correction with a big gap having opened up between the 50- and 200-day moving averages. So, what we have here is a failed breakout, and it doesn't look likely that the market will succeed in pushing to new highs in coming months, which are seasonally weak anyway, and in fact a correction here would set the market up for renewed gains in the fall. We should remain aware, however, that if the Deep State succeeds in unseating Trump, the chaos that ensues could lead to a market crash. Barring this, how low might it correct? Probably no lower than the rising 200-day moving average.

Over the longer term, and assuming Trump is not removed from office, the outlook remains bright for the market, with money that has been sat on the sidelines since 2009 pouring in and the central banks weighing too and buying stocks in a big way, so that this bull market ends as most of them do, with a parabolic blow-off top, like the Tech bubble of 2000, and then it crashes. This is a scenario that we are going to look at shortly on the site, and our aim is to play it utilizing the strongest Stage 2 growth phase stocks, reversing to short before the crash.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent articles with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Charts courtesy of Clive Maund.

Originally posted on Clive Maund's members-only website at 8.00 am EDT on 18th May 2017.



from Streetwise Reports - Exclusive Articles https://www.streetwisereports.com/pub/na/17451

Don't Waver—Hard Asset Bull Market Still Intact

Source: The Gold Report   05/18/2017

The severity of the commodities bear market from 2011–2015 makes Matt Geiger, managing partner at MJG Capital, confident that the current hard asset bull market will last into 2019 and quite possibly longer. In this interview with The Gold Report, Geiger discusses commodities he is especially keen on right now and several companies that he expects to perform well.

The Gold Report: Your firm, MJG Capital, invests exclusively in natural resources. What is your view of the precious metals market?

Matt Geiger: We are still in a three- to five-year hard asset bull market that began in January 2016. I believe this due to the severity of the bear market we went through between 2011 and 2015. It was unrelenting. It was deep. We saw companies go out of business, turn the lights out. Management teams scuttled off into the marijuana or tech space. Only the credible players survived the four- to five-year culling period.

As Rick Rule famously says, bear markets are the authors of bull markets and vice versa. The length and the severity of what we just underwent gives me the confidence that the upside over this next three- to five-year period is going to be quite spectacular.

After a flying start to this year, the sharp pullback we've seen since mid-March should be viewed as a test of faith for long-term resource investors. These sharp pullbacks always happen in bull markets; those with the right temperament understand not to panic and instead to gravitate toward quality projects with quality operators. The high-quality names are much cheaper than they were even 60 days ago.

I think precious metals are going to surprise to the upside through the rest of this year. These next two years in particular should be very special for owners of precious metal equities.

During the downturn, particularly in the precious metal and base metal space, majors offloaded marginal assets. And some had to force sell quality assets as well due to debt concerns. Now that the market is on the upswing, these very same companies are looking at their reserve base and they're getting worried that they won't be able to maintain current levels of production into the future. That's why we're seeing the best late-stage development projects getting taken out at pretty substantial premiums.

Two recent examples are Eldorado Gold Corp.'s (ELD:TSX; EGO:NYSE) acquisition of Integra Gold Corp. (ICG:TSX.V; ICGQF:OTCQX) and Sandstorm Gold Ltd.'s (SSL:TSX; SAND:NYSE.MKT) acquisition of Mariana Resources Ltd. (MARL:TSX.V; MARL:AIM). Once all these high-quality later-stage development projects are taken out, we're going to see companies move further upstream to the exploration companies and the early-stage discoveries. That's where I am focusing; I think that's where the greatest wealth creation will occur.

In the precious metals space, I'm biased toward silver given that 50–60% of demand is industrial. With silver being the most conductive metal in the world, the future looks very bright for clean-tech demand (namely photovoltaic solar panels) and other high-tech, 21st-century applications.

TGR: How do you feel about uranium?

MG: From a long-term supply/demand perspective, uranium is one of my favorite commodities. While precious metals have led the way so far in this mining bull market, uranium will outperform later in the cycle. . .think 2019/2020. For the patient investor, now is an excellent time to load up on uranium equities, particularly given the sharp pullback we've seen after a very hot start to the year. We won't see a major spike in uranium prices until the offline Japanese reactors start coming online en masse. For me personally, whether this happens later this year or in 2018 is not particularly worrisome. The upside when it does occur will be too big to ignore.

The demand picture for uranium, from my perspective, looks phenomenal. Nuclear is the only form of baseload, 24/7 power that has no dirty emissions and no carbon dioxide (CO2) emissions. There's no form of electricity generation that competes with nuclear on this front.

And while we don't yet feel this in the United States, clean electricity that doesn't emit CO2 or dirty emissions is becoming a political necessity in the emerging world, China being the foremost example. There are 460 reactors operating globally with hundreds more to come on-line over the next decade.

On the supply side, the uranium producers have been absolutely slaughtered. Generally, when I look at a commodity or a certain industry, any time 50% of the global production is underwater or losing money at current prices, that gets me excited. That to me looks unsustainable.

Very recently, we saw uranium prices dip below $22 per pound. At these prices, 100% of global production was losing money on an all-in basis. We're not far above this level, with uranium prices currently hovering around $23.

To me, the only answer is for the U308 price to rise. It might not happen in these next 12 months, but by the end of this bull market it certainly will. The main catalyst in the near term will be the Japanese turning on their idle reactors. This could happen in H2/17, more likely 2018. I'm not too worried either way. The inherent upside when it does happen is going to be so enormous for investors already positioned in uranium that the extra wait, whether it's an extra 12 or 18 months, will not make a difference.

TGR: What other commodities are you watching closely?

MG: The "battery metals" also look attractive at this point. This includes copper, cobalt, manganese, nickel, lithium, and vanadium. Investors need to be extremely careful, however, as these metals will be prone to speculative manias over the coming years. Additionally, the management quality of many juniors pursuing these metals is suspect. Focus only on serially successful management teams with significant skin in the game. Forget the rest.

Tesla Motors Inc. (TSLA:NASDAQ) just made an adjustment in its battery chemistry, which will have major implications. Until recently, Tesla was using nickel-cobalt-aluminum (NCA) lithium ion batteries for its vehicles. For its stationary energy storage products, however, the company was using nickel-manganese-cobalt (NMC). Now, based on studies done internally within Tesla, it's looking as if the company is going to move all of its batteries to NMC chemistry. That gets me quite excited for both manganese and cobalt. I'd say both of those stand out among the battery metals, as well as copper. You can't go wrong with copper.

TGR: What companies do you have your eyes on?

MG: I'm excited about the following three companies in particular:

Dataram Corp. (DRAM:NASDAQ) (soon to be named U.S. Gold). I know it sounds like a tech company, but it is doing a reverse takeover (RTO) with U.S. Gold, a privately held company.

I was able to make a site visit to U.S. Gold's Keystone Project outside of Elko, Nevada, last fall. The story is attractive to me for the following reasons:

1. Management. Dave Mathewson is head of exploration. He's a founding member of Gold Standard Ventures Corp. (GSV:TSX.V; GSV:NYSE), which has gone from zero to $400 million in market capitalization over the past eight years. Dave is the right guy at the right project.

2. Long runway. Dataram has just under $10 million in the treasury ready to be put into the ground. The company has no need to come back to market for financing this year, unless the terms are too good to refuse.

3. Imminent news flow. U.S. Gold has spent the past nine months completing an RTO. This has inhibited the company from issuing market updates, despite the fact that significant work has been done at Keystone over the period (including an 8–12 hole drill program). The RTO looks like it will be completed this week, which means a slew of press releases should be expected over the coming months. The drill assays from Keystone may prove to be a significant catalyst for the stock.

On the uranium front, I like UEX Corp. (UEX:TSX) right now. We participated in its recent placement alongside Rick Rule's group at Sprott. The Athabasca-based company is 15% owned by Cameco, a major stamp of approval for both CEO Roger Lemaitre and the company's two main projects, Christie Lake and Hidden Bay. The company has announced some pretty remarkable results at Christie Lake, most recently 8.5 meters of 20% U308 at the project's Orora Zone. The news flow will be continuous over the coming months, with additional drill results expected at both Christie Lake and Hidden Bay, as well as a Maiden Resource at Christie Lake.

Due to UEX's proximity to existing uranium mills and its partners in the basin, the company can get to first cash flow much quicker than the Western Athabasca Basin projects like Fission Uranium Corp.'s (FCU:TSX; FCUUF:OTCQX; 2FU:FSE) Triple R and NexGen Energy Ltd.'s (NXE:TSX; NXE:NYSE.MKT) Arrow deposit. This shorter time frame to first production is a key advantage.

Another company is Nevsun Resources Ltd. (NSU:TSX; NSU:NYSE.MKT). Right now, the shares are too attractive to ignore and we're actively buying. Taking into account the company's $167 million in cash and no debt, Nevsun has an enterprise value of only ~US$475 million.

Nevsun's Timok project is located in Serbia. It's one of the top three copper discoveries of the past decade, the other two being Kamoa, which is a Congo-based project being worked on by Robert Friedland's Ivanhoe Mines Ltd. (IVN:TSX), and Cascabel, a more recent discovery in Ecuador that is being worked on by SolGold Plc (SOLG:AIM), with Cornerstone Capital as a minority partner.

The economics outlined in Timok's April 2016 preliminary economic assessment (PEA) are absurd. Depending on the underlying assumptions, the project has an internal rate of return of 90%, if not above 100%. That's wildly economic. I think Nevsun shares are undervalued based on this PEA alone, which only applies to Timok's Upper Zone.

However, at current share prices, you also get Timok's Lower Zone, of which Nevsun owns 46%, for free. Freeport-McMoRan Inc. (FCX:NYSE) owns the rest. The Lower Zone won't be in production for quite some time, but it will be a massive underground operation with a multi-decade mine life.

Additionally, Nevsun is generating substantial free cash flow from its Bisha mine in Eritrea, producing zinc, which is obviously a hot metal right now. You also get Bisha for free, as well as any exploration upside around the mine. So, to me, this is a really attractive company that is one of the strongest buys out there.

TGR: Thanks for your insights, Matt.

Matt Geiger is the managing partner at MJG Capital, a limited partnership focused on long-term capital appreciation through investments in natural resources.

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Disclosure:
1) Patrice Fusillo conducted this interview for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this interview are billboard sponsors of Streetwise Reports: Integra Gold and NexGen Energy. The following companies mentioned in this interview are billboard sponsors of Streetwise Reports: Gold Standard Ventures and Fission Uranium Corp. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Matt Geiger: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Dataram, UEX Corp, and Nevsun Resources. I, or members of my immediate household or family, are paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this interview: None. Funds controlled by MJG Capital hold shares of the following companies mentioned in this article: Dataram, UEX Corp., and Nevsun Resources. I determined which companies would be included in this article based on my research and understanding of the sector. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own shares of Dataram and Sandstorm Gold, companies mentioned in this article.

( Companies Mentioned: DRAM:NASDAQ, ELD:TSX; EGO:NYSE, FCU:TSX; FCUUF:OTCQX; 2FU:FSE, GSV:TSX.V; GSV:NYSE, ICG:TSX.V; ICGQF:OTCQX, NSU:TSX; NSU:NYSE.MKT, NXE:TSX; NXE:NYSE.MKT, SSL:TSX; SAND:NYSE.MKT, UEX:TSX, )



from Streetwise Reports - Exclusive Articles https://www.streetwisereports.com/pub/na/17450

Energy's Day in the Sun Is Coming for Investors

Source: The Energy Report   05/18/2017

Market trends are aligning in energy's favor, says Louis James, editor of International Speculator, and in this interview with The Energy Report, he discusses several segments of the market that he believes could see large gains.

The Energy Report: Would you tell us about your thoughts on energy investing?

Louis James: I'm seen as a metals and mining guy. Many people think I'm a goldbug. I think gold is a good thing to invest in and to speculate in right now, but it's not the only thing.

For example, I think oil's day in the sun is coming.

Ideally, you want to buy necessary things when they're hated, when everybody thinks they are terrible investments. Gold has been range bound and it's making people nervous. That's a good thing for buyers. The same thing is true for oil. The Organization of the Petroleum Exporting Countries (OPEC) is trying to tighten production, but the shale producers keep swamping the market. There's a war going on in the oil space. The failure to rise when they wanted it to has disappointed many energy investors.

People are also worried that Tesla Motors Inc. (TSLA:NASDAQ) is going to eat oil's lunch. All these electric cars are going to put OPEC out of business. Actually, I agree with that idea. I just don't think it's going to happen for 10, 20, maybe 30 years. Ten years may be way too fast. It's going to take a long time for enough electric cars to take over the marketplace to really shut Big Oil down.

In the meantime, in the time frame that's relevant to most investors and speculators—the next few years—there's no question that oil will remain the world's dominant energy source. Yes, there's more production coming out of shale oil. Yes, there are questions as to whether OPEC can keep things together or not.

But there's no question that as the global population keeps growing, the number of cars in the world will keep growing. The Chinese are buying cars as fast as they can. They want oil to put in those cars. I actually think oil is a more interesting investment and speculation right now than many people give it credit for. I'm not calling a bottom necessarily. But it is a commodity that will and must go up at some point. So, if you're a patient investor, you can get in now and simply wait to be right.

TER: Are there any specific oil companies that you are watching?

LJ: Because oil can go down before it goes up and that scares investors, my favorite picks in the oil patch now are the midstream companies. They don't explore for or produce oil. Nor do they run gas stations that can get squeezed on margins. They have pipelines and ships and other transmission vehicles for oil. As long as oil is being pumped and going to market, these people get paid, whatever the price of oil is.

A prime example of this would be Kinder Morgan Inc. (KMI:NYSE). It's a solid company. It makes money hand over fist. It's not going anywhere. But it will benefit from higher oil prices. It shouldn't matter, but when oil goes up, Kinder Morgan goes up. You don't have to worry about this company drying up and blowing away. I like companies like that.

TER: What are your thoughts on uranium?

LJ: Uranium is hated, so I love it. It's one of those things that you want to buy because there's blood in the streets. There was a price rebound earlier this year. A lot of people got excited and piled in, but now uranium is retreating again and people are panicking. There are great uranium stocks on sale again right now. And uranium is also very much a commodity that must and will go up.

"I like Fission Uranium Corp. a lot; it's super high grade and near surface in the Athabasca Basin, Canada's premier uranium mining district."

Maybe in 20 years we won't need uranium. But over the next two, three, four, five years, there's absolutely no question that we have to have it. And it's going into supply deficit. Our projections are that uranium, which has long been in a surplus, will go into a supply deficit by the end of this year. That makes uranium very much a "when," not "if," story. That doesn't mean I think it's going up next week. That just means I think it's a good value, and the stocks offer a lot of leverage.

TER: Are there any uranium companies you have your eye on?

LJ: In the uranium space, the go-to name is Cameco Corp. (CCO:TSX; CCJ:NYSE), but it has an issue with the tax man. I like the company, and I'm sure it's going to do spectacularly well when uranium recovers. But until the issue with the tax man is settled, I see it as too risky. But word to the wise, if Cameco suffers an adverse decision from the Canada revenue people, that might create the perfect buying opportunity. The company is not going away. And uranium prices, I'm absolutely convinced, will go up.

To buy right now, I like Fission Uranium Corp. (FCU:TSX; FCUUF:OTCQX; 2FU:FSE) a lot. It's super high grade. It's near surface in the Athabasca Basin, Canada's premier uranium mining district. I think it's going to be a mine in the not-too-distant future. Meanwhile, it's discovering new deposits on the property. It could end up even bigger and better than it now looks.

TER: Any final thoughts?

LJ: If readers want to find out more about what I'm researching and what the latest results are, please stop by CaseyResearch.com and click on the button for the International Speculator. That's our flagship publication. I'd be happy to help you out some more with these types of investments.

TER: Thanks for your insights.

Click here to read Louis James' thoughts on gold investing.

Louis James is at Casey Research, where he's the senior editor of the International Speculator, Casey Investment Alert and Conversations with Casey. Fluent in English, Spanish and French, James regularly takes his skills on the road, evaluating highly prospective geological targets and visiting explorers and producers at the far corners of the globe and getting to know their management teams.

Want to read more Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new interviews and articles have been published. To see a list of recent articles with industry analysts and commentators, visit our Streetwise Articles page.

Disclosure:
1) Patrice Fusillo conducted this interview for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this interview are billboard sponsors of Streetwise Reports: Fission Uranium Corp. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Louis James: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I, or members of my immediate household or family, are paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this interview: None. I determined which companies would be included in this article based on my research and understanding of the sector. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

( Companies Mentioned: CCO:TSX; CCJ:NYSE, FCU:TSX; FCUUF:OTCQX; 2FU:FSE, KMI:NYSE, )



from Streetwise Reports - Exclusive Articles https://www.streetwisereports.com/pub/na/17449