Jack Chan: This Past Week in Gold

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Technical analyst Jack Chan charts the latest moves in the gold and silver markets.

Our proprietary cycle indicator is up.

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.

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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.

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Speculation has now dropped below the level of the previous bottom.

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Gold stocks are testing resistance.

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Silver is on a long-term buy signal.

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

Summary
The gold sector is on a major buy signal. The cycle is up. Short-term gold is also on a buy signal, looking for a trend-line support to establish and set up.

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.

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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

NexGen’s High-Grade Drill Results Signal a Bright 2017

The continuing stream of high-grade drill results from NexGen Energy’s Arrow deposit has one analyst predicting 50% resource growth.

Throughout 2016, NexGen Energy Ltd. (NXE:TSX; NXGEF:OTCQX) has been announcing drill results. On Dec. 20, NexGen released the results from the final 10 holes of the 2016 drill program at the Arrow deposit, part of the Rook I property in the Athabasca Basin in Saskatchewan.

David Talbot, an analyst with Dundee Capital Partners, noted that “positive highlights include four intercepts along A2 Shear, and another on A3 Shear. Mineralization continues to be intersected at higher than [the] current resource grade of 2.63% U3O8.”

These results, Talbot stated, “complete 2016’s massive 73,091m drill program designed to expand and improve upon the existing 202 MM lbs resource at Arrow. We believe results should 1) increase confidence with closer spaced holes to upgrade to measured and indicated; 2) expand the mineralized footprint; and 3) delineate higher grade areas within areas previously believed to be lower grade. We estimate resource growth of at least 50% to over 300MM lbs U308.”

In a Dec. 14 report, Talbot noted that “management has spent time and effort attracting a strong and experienced technical team. Plenty of geotechnical and metallurgical work is going on behind the scenes in preparation for the PEA. This should provide a strong valuation footing for investors. In the meantime the Arrow Deposit continues to grow and improve with each press release.”

Gwen Preston, editor of Resource Maven, concurs, writing on Dec. 14, “If uranium continues to strengthen I would expect NXE shares to offer strong leverage, given that Arrow is the best uranium discovery in the world. The price will also rise as we approach that resource update, which could well grow the already-impressive 202-million lb. resource by 50%.”

Talbot is also optimistic: “We expect NXE to remain a leader in the uranium sector moving into 2017, particularly should the uranium price wind be at its back. It remains our top exploration pick.”

Garrett Ainsworth, NexGen’s vice president of exploration and development, stated on Dec. 20, “Infill and step out drilling in 2016 across the Arrow Deposit has exceeded our expectations with material growth across the mineralized area as well as confirmed strong continuity. We look forward to the upcoming winter 2017 drill program which will focus primarily on infill and expansion drilling at Arrow and high priority regional targets in the vicinity of Arrow.”

NexGen CEO Leigh Curyer outlined the company’s next steps on Dec. 20. “With the final 2016 assays received for Arrow, we will commence the resource modelling and estimating process in order to publish an updated mineral resource estimate in the first half of 2017. Prior to the updated resource being published, we will commence our winter 2017 drill program together with the various engineering and development studies.”

Read what other experts are saying about:

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Disclosure:
1) Patrice Fusillo compiled this article 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 article are sponsors of Streetwise Reports: NexGen Energy Ltd. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The 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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

Additional Disclosures for this Content

( Companies Mentioned: NXE:TSX; NXGEF:OTCQX,
)

Great Panther’s Savvy Coricancha Acquisition Provides ‘Substantial Upside’

The deal Great Panther announced last month to acquire Coricancha in Peru from Nyrstar is getting high marks from one analyst.

Great Panther Silver Ltd. (GPR:TSX; GPL:NYSE.MKT) announced on Dec. 20 that it had reached an agreement with Nyrstar (NYR:BSE) to acquire the Coricancha gold-silver-lead-zinc-copper mine and mill complex (CMC) in Peru. According to the company, the purchase price comprises “(i) US$0.1 million to be paid on closing, (ii) an amount equal to cash on hand in Coricancha at completion, and (iii) earn-out consideration of up to US$10.0 million. Under the earn-out, Nyrstar will be paid 15% of the free cash-flow generated by the CMC during the 5-year period after which the CMC is cumulative free cash-flow positive from closing.”

Heiko Ihle, an analyst with Rodman & Renshaw, noted in a Dec. 21 company update that “this transaction presents Great Panther with substantial upside, as management believes Coricancha could produce 3.0 million silver equivalent ounces per annum, while limiting downside due to the structure of the transaction.” He added that Great Panther “should benefit from Coricancha’s past producing nature (as recently as 2013) and corresponding infrastructure present at the site. . .management estimates that the project could be brought back into production for approximately $25.0 million, which is already fully funded.”

Ihle indicated support by stating that “we applaud management’s diligence with respect to acquiring assets,” adding that “Great Panther’s management team has remained steadfast in its commitment towards acquiring the right assets at the right price.” He also stressed that “we are supporters of the new agreement as just $0.1 million in upfront capital is expected to be paid with no additional payments made to Nystar until initial capital costs are recouped and the mine is FCF positive.”

Great Panther’s President and CEO Robert Archer stated, “We are very excited about the prospects for the Coricancha Mine. . .the project has the potential for annual production of approximately 3 million silver equivalent ounces, which would be a significant contribution to our growth. Importantly, with more than US$54 million in cash, the Company is fully financed to bring the mine back into production.”

Rodman & Renshaw sees the Coricancha acquisition as “a low-risk way to significantly add to Great Panther’s consolidated production profile. Moreover, we like that the firm is evaluating assets outside of Mexico in order to add a touch of jurisdictional diversity to its portfolio of operating assets and expect the evaluation of additional assets for acquisition to continue despite the Coricancha purchase agreement,” Ihle stated.

Want to read more Gold Report interviews 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 interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Patrice Fusillo compiled this article 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 article are sponsors of Streetwise Reports: Great Panther Silver Ltd. The companies mentioned in this article were not involved in any aspect of the article preparation. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The 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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

Additional Disclosures for this Content

( Companies Mentioned: GPR:TSX; GPL:NYSE.MKT,
)

The Ultimate Resource Portfolio for 2017

Gold Vs. 2-Year Treasury Yield

Investors can profit in resources, says Lior Gantz, editor of Wealth Research Group, by partnering with and investing like the big players in the field.

The natural resource industry is a maze of companies—thousands of them—but when you get right down to it, this entire sector is 95% made up of average businessman and a small and tight-knit group of top dogs.

Partnering up with them and investing like them has proven to be enormously profitable.

Ray Dalio is the most successful fund manager in history. LCH Investments says its estimates show that the hedge fund Dalio founded in 1975, Bridgewater Associates, has produced more net gains in absolute U.S. dollars than any other hedge fund, surpassing all others.

Bridgewater’s Pure Alpha hedge funds have generated $45 billion in net gains since inception, compared to the $42.8 billion produced by Soros’ funds, LCH Investments reported.

Dalio allocates 15% of his portfolio to commodities. The reason is that they have the most upside potential of all stocks.

In order to become a Metalionaire, a resource investor privy and well aware of the boom and bust cycle, one must learn to use these waves of riches to their advantage.

Resource investing is a sector reserved for professionals who know how to look at data and form hard, non-compromising decisions, like today’s gold technical analysis chart.

Before one becomes a true resource investor, is it genuinely beneficial that every investor have core investments in companies that compound wealth over decades—these are Wealth Stocks. This unique group of companies outperforms 95% of managed money, and it does so with far less risk.

Just as critical in today’s ultra-low interest rate environment is a balanced exposure to companies that provide high yields.

Government Bond Interest

In order to really capture the potential of these stocks, we searched only for the safest companies with an over 7% yield, and we are constantly conducting due diligence on more.

These types of investments are what we call “Income Champions.”

Most of your wealth and portfolio should be devoted to safe income ideas or long-term wealth, but a true investor always makes room for speculation.

Resource investing is, by far, one of the most tremendous opportunities to create a fortune in a short period of time.

Gold Stock Bears

It’s because most minerals suffer absolutely brutal bear markets that then make the stage ready for epic bull markets, and the more severe the bear, the more exponential the bull.

Watch These Metals in 2017
This is going to be a seriously great year for zinc investments.

Zinc Rally

What is also unique and could be truly profitable are cobalt companies. We are actively conducting due diligence on 141 projects, and we have narrowed it down to three stocks we have complete confidence in. Members will receive a full report in the coming days.

We are also expanding our reach to include nanotechnology, biotechnology, marijuana and high-tech stocks.

Investing in the future by positioning now is the key. There are absolutely remarkable gains for those who can be in early.

This is a great year to be an investor, and I urge you to remember that a crisis can happen at any moment because of central bank manipulation. Therefore, always stay vigilant with the five timeless principles of success.

Lior Gantz, an editor of Wealth Research Group, has built and runs numerous successful businesses and has traveled to over 30 countries in the past decade in pursuit of thrills and opportunities, gaining valuable knowledge and experience. He is an advocate of meticulous risk management, balanced asset allocation and proper position sizing. As a deep-value investor, Gantz loves researching businesses that are off the radar and completely unknown to most financial publications.

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 Lior Gantz and not of Streetwise Reports or its officers. Lior Gantz is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Lior Gantz 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.
3) 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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

Charts courtesy of Wealth Research Group

Fake News, Farcical Policies, and Phony Markets

Gold COT Report

Precious metals expert Michael Ballanger examines market forces and outlines his trades for the first part of the year.

I was listening to a news report on CNN yesterday covering this travesty surrounding the impending exit of Barack Obama and wife Michelle from the White House and as the commentator described the sequence of events leading up to the January 20th arrival of Mr. Donald J. Trump, you could detect a sense of melancholy in his voice, a faint trace of sadness, of loss, of hopelessness. And I was immediately taken back to the 1960s and the days of Walter Cronkite whose on-air persona was clipped and professional with the only emotion ever observed was when he had to announce the death of JFK in 1963. Those were the days when news was what reporters reported, when news was real, and when markets were free.

Fifty years later, we have CNBC commentators commenting on their “interest rate models” (when the only models of which they are qualified to speak are the ones in the window of Macy’s) and news anchors sounding off on something DJT tweeted or the “safe space” of some liberal arts university being invaded by insult-wielding Trumpladites.

I used to think my father got grumpier as he got older but he really didn’t; he simply grew less tolerant of the things he deemed “idiotic.” That is where I find myself as we roll into 2017 with global markets flirting with record highs despite record debt: GDP levels and borrowing costs on the rise. I am becoming less tolerant of all of the garbage spewed at us in order to make us believe that markets are fine, economies are growing, and gold is a barbarous relic of a bygone era.

However, I have to constantly remind myself of the old adage which was given to me back in 1979 at the end of the inflationary 1970s: “Never underestimate the replacement power of equities within an inflationary spiral” as the printing presses continue to run feverishly with the most recent evidence being a $15 billion bond issue being floated by Italy’s Banca Monte Pasci, one of the oldest banks in the world. The investors buying into this totally insolvent financial institution are undoubtedly central banks or their surrogates such as Deutsche Bank or JPM so the issue being floated is really nothing more than yet another bailout designed to keep the global financial Ponzi scheme in motion.

Now, there is nothing I would love to do this last day of the trading year than put on a massive bet against the stock markets for January but the problem is that you just cannot. Are the markets overvalued based up the Case Shiller P/E at 28.2 times? Of course. Is the S&P 500 index now rolling over with RSI rapidly reversing from an RSI reading above 70, the first such reading since November 2014? Absolutely. Are gold stocks cheap relative to where they were in July-August? Undoubtedly. Then why am I not buying the Gold Miner ETFs and pairing them with the SDS (short S&P500 ETF)? I will tell you why: the stock, bond, and precious metals markets are all linked, correlated, and managed by the coordinated global central banks with the NY Fed controlling the Americas, the Bank of England controlling Europe, and the Bank of Japan controlling Asia, ex-China and Russia. HFT-controlled algorithms are pre-programmed to respond to specific patterns in the markets such as dollar-yen, 10-year bond yield, and, of course, the gold price and all of this combines to create chaos for old-timers who were trained in a free-market environment without the magic hand of the price managers.

Nevertheless, here are a few trades that I put on during the heat of the DJT advance; I was a tad early on all of them and this is what I will hold for the first few weeks of the New Year.

1. Long GDXJ: One look at the COT from last Friday tells me that the junior gold miners led by the GDXJ (VanEck Vectors Junior Gold Miners ETF) are once again back on the radar screen and I will be looking to add and possibly attempt to replicate the spectacular trade from last year. The Commercials have now pared that massive short position by two-thirds and are actually long nearly 90,000 contracts.

Since the COT structure is now and finally in full “retreat mode” with the Commercials having booked an insane amount of bonus money for 2016, it would appear to this humble scribe that it has now become much less hazardous to go back into the water again, those ominous Deutsche Bank dorsal fins nowhere to be found nor those of their Commercial Carcharodan cohorts, HSBC, Scotia, and UBS. While the Commercials still carry over 12,000,000 phony ounces of synthetic gold on the books as a short position, it is doubtful whether we will see it near the incredible zero level of December 2015; accordingly, I hold a token position in the GDXJ via the Feb $35 calls and will add around the middle of the month, in all likelihood.

GDXJ Chart

2. Long the UVXY (ProShares Trust Ultra VIX Short) from $14.50: I was REALLY early (wrong) on this one as it bottomed at 10.93 a few days ago and I refused to average down because of the leverage that caused the erosion in this little hellion. However, you only have to catch it right once and it can make you a lot of money and that is what I see in January.

UVXY Chart

3. Short Freeport-McMoRan Inc. (FCX:NYSE) at around $14.40, I will hold this looking for a return to the 200-dma at $11.72. The company lost a boatload of money this year and had a big management shift.

Freeport McMoRan chart

4. Long Western Uranium Corp. (WUC:CNQ): I helped WUC raise some money last year and purchased a chunk of the $1.70 private placement while trying to help them get properly positioned ahead of the big turn coming in the uranium space. However, this is also a vanadium story and one no better told than by the Northern Miner’s Trish Saywell. (The link may require a password.) In addition, the company’s CEO, George Glasier, is interviewed by INN in an interview entitled: Uranium Outlook 2017: CEOs Expect a Better Year .WUC is going to have a very bright 2017 as money flows toward uranium and as I commented in the 2017 Forecast Issue, I added at year end and will continue to add after the 15th of January. I know that uranium falls way outside the realm of “Gold and Gold Miners.”

Western Uranium

On Dec. 30, the market opened higher by over 150 Dow points with China “data numbers” kicking the algobots into “Buy Commodities” mode giving FCX a shot in the arm and the VIX a shot in the chops. As you look back three months from Feb. 1, 2017, we’re all going to have an epiphany and realize that we should all have “bought the election and sold the inauguration” but I think that stocks will begin to discount that by end of this week. Institutional money flows favor up markets in the first few trading session of January which is why I usually take the pulse of the markets after the first five trading sessions, again at mid-month, and then at month-end to get a feeling for how the year MAY progress. Mind you, it was a great deal simpler before interventions, algobots, and soon-to-be Commander-in-Chiefs firing off tweets every five minutes about official U.S. policy on trade, markets, and foreign affairs.

If there was one simple resolution I made for 2017, it was to refrain from letting the constant shenanigans that prevail in the markets in which I toil lure me into “aberrant” as opposed to “abhorrent” behaviors that will affect those that live with and around me. However, reading that DJT threatened General Motors with a “border tax” for building cars in Mexico, you have to wonder what this wonderful New Year truly has in store for us.

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

Want to read more Gold Report interviews 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 interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Michael Ballanger: I, or members of my immediate household or family, own shares of Western Uranium Corp. and I consult for the company. I am short FCX from last November via put options. 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. 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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

All charts and images courtesy of Michael Ballanger.

( Companies Mentioned: FCX:NYSE,
WUC:CNQ,
)

Gold: Getting There A Little At A Time

Gold: Getting There A Little At A Time JANUARY 1, 2017 1 COMMENT   One of life’s hardest-to-learn but most necessary lessons is that things usually take a lot longer to work out than you’d like them to. That’s where the sayings “Being too early is the same as being wrong” and “The market can stay irrational longer than you can stay solvent” come from. A current case in point is gold. After the metal’s decade-long bull market, a correction was inevitable. But when it finally came, rather than being short and cathartic it was long and grinding, stretching from 2012 through 2015 and causing many who got back in prematurely to eventually walk away in disgust. Then, after a nice pop in the first half of 2016, came the current long, slow-mo correction that’s fraying the nerves of remaining gold-bugs. This latest correction may not be over, but — … Continue reading

How Savvy Investors Use Sentiment to Make Fortunes

Bob Moriarty of 321Gold explores how sentiment affects trading in the precious metals markets, and discusses a new service that can help investors gauge sentiment.

I saw a correction in the metals coming as early as August. I wrote a piece early in the month I called Money Always Moves from Weak Hands into Strong Hands. I was both right and wrong. Yes, we were going to have a correction in gold and silver but I missed the top by three weeks. If I had known about a site I just discovered, I could have nailed the top in gold nearly to the day as I did with silver in 2011.

People tend to get confused with tops and bottoms in markets. Gold hit its lowest price in twenty years in August of 1999. But silver didn’t hit its lowest price until late November of 2001. Silver was cheaper in nominal terms in 1993 but in inflation adjusted terms, the low for silver was late 2001. I called that too.

So which was the bottom? Was it gold in August of 1999 or silver in November of 2001? But wait, the HUI and XAU bottomed on the same day in late September of 2000. The low in metals and resource shares took over two years to complete. So is the bottom in the metals a date and time or is it a process?

Actually it’s both. If you can find accurate enough data on sentiment you can forget TA and fundamentals that do a poor job of calling tops and bottoms. Since gold and silver are different and the shares in gold and silver are entirely another breed, you need to understand that tops and bottoms are both a process but individual components are something that can be timed, often nearly to the day with an precise measure of sentiment.

I made my first investment in gold in 1969. I was a pilot stationed in Vietnam. I looked around me at all the money the government was spending fighting what seemed to be a pretty stupid war and realized that someone had to pay for all that and it wasn’t the US taxpayers. Johnson had put in a 10% income tax surcharge but it was a drop in the bucket compared to the cost. As an O-1 Birddog pilot, I tallied up how much I could expend in one three-hour flight just to see if I could do it. I managed to drop over $1 million (and remember, this is 1969, gold was $35 an ounce) in a single mission.

There were not a lot of gold bugs around in the late 1960s but I figured if the dollar was going to go down, gold might go up. I started buying small amounts of gold as a hedge against inflation. I ended up selling all that gold a week too early in January of 1980.

We didn’t have the Internet then or even personal computers. The best source of financial information was the daily paper or the Wall Street Journal for those who could afford it. I wasn’t a serious investor; I was just flying blind using Kentucky Windage.

When I left Vietnam I started college and ended up at Southern Methodist University. One of the required courses was based around a semester of reading and discussing Extraordinary Popular Delusions, the classic book about human psychology written over 175 years ago. It’s a long plodding book difficult to read but eventually the reader figures out that all the author was doing was pointing out how stupid the behavior of people is. Humans fall for everything.

Once you learn that very vital piece of data, investing becomes easy. Making profitable investments has little to do with squiggles on charts or market fundamentals and everything to do with the stupidity of the mob of investors. If you can measure with precise accuracy what the mob is doing, all you have to do is to do the opposite. It’s so simple that most ordinary investors never get it. They fall for the honey baked words of every scam artist and con man peddling a popular theory no matter how daft. Those con men soon learn that if you feed people’s fantasies, the punters would hurl money at them. That hasn’t changed in 175 years at all.

A year ago almost exactly I said this in a piece, “The Commitments of Traders numbers are more favorable for gold than they have been for 14 years, going all the way back to 2001. Silver is not quite as positive but still positive. We are perfectly positioned for a bull phase even if you believe gold and silver are in some kind of permanent bear market.”

That was on the 23rd of December and gold had hit its lowest price in four years a week before. By measuring the sentiment reflected in the COT number on gold, I could accurately predict a trading low in gold. You can do exactly the same thing if you understand both the importance of sentiment and what the COTs are saying.

I’m always looking for the perfect measure of sentiment in any market I trade. Gold is one of those financial instruments that the Fake Stream Media loves to bash. It often takes them years to figure out it has gone down but at bottoms they show an incredible ability to trash the wisdom of something that is about to explode. They all write using their rear view mirror and never look forward.

If you look around today you can find pieces on both Barron’s and The Financial Times bad mouthing gold. Those are important signals of an impending turn. And while there is a world of bad information on the Internet well worth ignoring, there are a few sites that do understand financial markets and the data they provide. I found a wonderful article just a couple of days ago based around sentiment.

If you want to measure turns almost to the day, you need to find a source of very finely turned sentiment. When I saw this article, I knew I had found something both valuable and accurate. I did some research into the source of data for the piece and found an entirely new website to me that has a subscription to the precise sentiment in 40 different commodities that comes out every day an hour after the close of the stock market. It’s called Trade-Futures.com and run by Jake Bernstein with forty years’ experience.

I called him and told him I wanted to do a piece about his service and needed access to his data so I could see for myself just how finely tuned it is. He sent me a password and a file showing historical data going back years.

I looked at the numbers for gold and they showed a Daily Sentiment reading of 4 on Dec. 15, 2016. I pulled up a chart of gold and sure enough, it showed a low of $1,124 and change on Dec. 15, 2016. The lowest reading for DSI matched up perfectly with the low for gold.

I was already predisposed to be looking for a low in gold; after all, a 29-year low for DSI in the 21-day moving average for gold is a giant signal. So I believe Jake’s service called it literally to the day. For verification of my theory, I looked at the DSI for the Dollar Index. After all, gold has traded for months as the inverse of the Dollar Index. My opinion is that way too many people are on one side of the boat on the Dollar Index and we should be looking for a top with a major high in the DSI.

The DSI for the Dollar Index peaked at a reading of 96 on Dec. 15, 2016, the same day as gold hit a reading of 4 proving one is the opposite of the other. The price of the dollar index topped some few trading days later on the 21st of December at about 103.4. While the DSI for the Dollar Index didn’t exactly mark the top in the dollar, it was pretty close.

There are two issues readers need to be aware of with this or any other sentiment service. You can’t know until afterwards if you have hit an extreme of emotion either high or low. For example, the DSI on the Dollar Index marked a reading of 92 on Nov. 24 when gold hit a reading of 5 on the same day. But that was neither the top for the dollar nor the bottom for gold.

So when you use the data you probably should be looking for other sentiment measures to confirm the DSI. Is 5 the low for gold or could it go to 3 or even 2 or 1? That’s why knowing a 29-year measure of a 21-day moving average does nail the bottom in gold. It’s hard to get more negative than in 29 years of measuring even if it is possible.

The other issue with the DSI service is price. It is valuable but it’s not cheap. A six-month subscription to the DSI for forty different commodities will set you back $1,295. If you are a serious investor in the metals or the Dollar Index or even the stock market, you should try it. If you think investing in gold means having a couple of American Eagles in a safe deposit box, the service would probably not provide good value for you.

For those who would like to read an excellent discussion from a serious trade on the role of sentiment in investing go here.

Jake Bernstein offers a number of various options on his site. Other than the DSI, I simply cannot comment. I don’t ever trade futures and I can’t say if what he sells has value or not. I will say the Daily Sentiment Index is as close to the Holy Grail of investing as you will find. If you will take the time to at least understand contrarian investing you can either make a lot of money or save a lot of money by subscribing to his DSI service.

I wrote a book about the basics of investing last March I called Nobody Knows Anything. In it I discussed Extraordinary Popular Delusions at length and gave readers a short course on contrarian investing. At $14.99 it’s the cheapest good financial advice you will ever get. If you haven’t read it, you should.

I have no financial connection to Jake Bernstein or his company in any way. I simply don’t have a dog in the fight but I really like the DSI a lot.

Bob and Barb Moriarty brought 321gold.com to the Internet almost 14 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 820 missions in Vietnam. He holds 14 international aviation records.

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 Bob Moriarty and not of Streetwise Reports or its officers. Bob Moriarty 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. Bob Moriarty was not paid by Streetwise Reports 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.

Jack Chan: 2016 Year-End Review and Forward Analysis for 2017

Technical analyst Jack Chan looks back on the precious metals and energy markets in 2016, as well as forward into 2017.

As always, I provide no predictions or forecasts for the future. As a successful long-term investor, I remain faithful to Warren Buffett’s life-long commitment in investing by observing his two rules.

Rule #1 – do not lose money
Rule #2 – do not forget rule #1.

Looking back on 2016

Our long-term investment model has switched back to favoring equities after placing us on the defensive in 2015. A false alarm in hindsight.

chanspx21-1
The growth sector as represented by $SPX also switched back to a major buy signal in late 2016.

chanosx1-1
The oil and energy sector as represented by $OSX had a major buy signal in early 2016, ending the major sell signal from 2014. The multimonth consolidation after the new major buy signal provided us with excellent entries, with a 40% allocation for the long term.

chanhui1-1
The gold sector as represented by $HUI had a major buy signal early in 2016, but it was a price spike and no entries could be made. No consolidation with no trendline support has been established so far to set up for a long-term allocation.

chanfcx1-1
The copper sector also had a major buy signal in 2016. TECK went straight up, while FCX consolidated. We entered near the bottom of the consolidation range, with a 10% allocation for the long term.

Summary
All three sectors are on major buy signals at the end of 2016. The best opportunities were in the energy sector, where we took a 40% allocation intended to be held for the long term. These positions are up on average of 14.8% as of 12/31/16. We also took a 10% long-term position in FCX, a giant in the copper sector. FCX is up 23% as of 12/31. It was another profitable year.

Looking forward to 2017

Our long-term stocks/bond model switched back to favoring equities in 2016, therefore, I am looking for new opportunities to be fully invested in 2017.

chanspx31-1
The growth sector is in a super bull market with no overhead resistance. The major breakout in 2013 after a 12-year consolidation rendered this a young bull and should have plenty of upside in coming years. Any sharp correction with a spike in VIX will be buying opportunities in 2017.

chanusd1-1
USD remains on a major buy signal since 2011. As long as the dollar remains in a bull market, precious metals will be under pressure overall, although we may see some sharp bounces periodically.

chanhui21-1
$HUI is on a major buy signal, and we need to see a multimonth consolidation, with trendline support established, before considering any long-term allocations.

chanwtic1-1
Crude oil bottomed in 2016 and a new bull market is in progress.

chanosx21-1
$OSX is on major buy signal with established trendline support. We look for new buying opportunities in 2017 at cycle bottoms.

Summary
All three sectors are on major buy signals.

• The growth sector has no overhead resistance. Any sharp correction with a spike in VIX in 2017 will be buying opportunities, ideally confirmed with a cycle bottom
• The energy sector has trendline support and plenty of potential upside; I am looking for new buying opportunities at cycle bottoms in 2017
• The gold sector needs to establish trendline support on the monthly chart, ideally after a multimonth consolidation. If so, I may consider some long-term positions at a cycle bottom
Freeport-McMoRan Inc. (FCX:NYSE) is an individual stock and I am content with a 10% long-term holding. However, should we see a correction to the 50/200ema in 2017, I may consider adding to positions if there is investable capital
• I will also consider some short-term trading upon set-ups and if risks are manageable
• I am looking for new opportunities in 2017 to put the remaining capital to work to become fully invested.

Thank you for your continuous support and looking forward to another profitable year together.

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) Jack Chan: I, or members of my immediate household or family, own puts on the following companies mentioned in this article: Freeport-McMoRan Inc. 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. 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) 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.
5) 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.
6) 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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

Charts courtesy of Jack Chan

( Companies Mentioned: FCX:NYSE,
)

Jack Chan: 2016 Year-End Review and Forward Analysis for 2017

Technical analyst Jack Chan looks back on the precious metals and energy markets in 2016, as well as forward into 2017.

As always, I provide no predictions or forecasts for the future. As a successful long-term investor, I remain faithful to Warren Buffett’s life-long commitment in investing by observing his two rules.

Rule #1 – do not lose money
Rule #2 – do not forget rule #1.

Looking back on 2016

Our long-term investment model has switched back to favoring equities after placing us on the defensive in 2015. A false alarm in hindsight.

chanspx21-1
The growth sector as represented by $SPX also switched back to a major buy signal in late 2016.

chanosx1-1
The oil and energy sector as represented by $OSX had a major buy signal in early 2016, ending the major sell signal from 2014. The multimonth consolidation after the new major buy signal provided us with excellent entries, with a 40% allocation for the long term.

chanhui1-1
The gold sector as represented by $HUI had a major buy signal early in 2016, but it was a price spike and no entries could be made. No consolidation with no trendline support has been established so far to set up for a long-term allocation.

chanfcx1-1
The copper sector also had a major buy signal in 2016. TECK went straight up, while FCX consolidated. We entered near the bottom of the consolidation range, with a 10% allocation for the long term.

Summary
All three sectors are on major buy signals at the end of 2016. The best opportunities were in the energy sector, where we took a 40% allocation intended to be held for the long term. These positions are up on average of 14.8% as of 12/31/16. We also took a 10% long-term position in FCX, a giant in the copper sector. FCX is up 23% as of 12/31. It was another profitable year.

Looking forward to 2017

Our long-term stocks/bond model switched back to favoring equities in 2016, therefore, I am looking for new opportunities to be fully invested in 2017.

chanspx31-1
The growth sector is in a super bull market with no overhead resistance. The major breakout in 2013 after a 12-year consolidation rendered this a young bull and should have plenty of upside in coming years. Any sharp correction with a spike in VIX will be buying opportunities in 2017.

chanusd1-1
USD remains on a major buy signal since 2011. As long as the dollar remains in a bull market, precious metals will be under pressure overall, although we may see some sharp bounces periodically.

chanhui21-1
$HUI is on a major buy signal, and we need to see a multimonth consolidation, with trendline support established, before considering any long-term allocations.

chanwtic1-1
Crude oil bottomed in 2016 and a new bull market is in progress.

chanosx21-1
$OSX is on major buy signal with established trendline support. We look for new buying opportunities in 2017 at cycle bottoms.

Summary
All three sectors are on major buy signals.

• The growth sector has no overhead resistance. Any sharp correction with a spike in VIX in 2017 will be buying opportunities, ideally confirmed with a cycle bottom
• The energy sector has trendline support and plenty of potential upside; I am looking for new buying opportunities at cycle bottoms in 2017
• The gold sector needs to establish trendline support on the monthly chart, ideally after a multimonth consolidation. If so, I may consider some long-term positions at a cycle bottom
Freeport-McMoRan Inc. (FCX:NYSE) is an individual stock and I am content with a 10% long-term holding. However, should we see a correction to the 50/200ema in 2017, I may consider adding to positions if there is investable capital
• I will also consider some short-term trading upon set-ups and if risks are manageable
• I am looking for new opportunities in 2017 to put the remaining capital to work to become fully invested.

Thank you for your continuous support and looking forward to another profitable year together.

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) Jack Chan: I, or members of my immediate household or family, own puts on the following companies mentioned in this article: Freeport-McMoRan Inc. 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. 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) 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.
5) 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.
6) 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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

Charts courtesy of Jack Chan

( Companies Mentioned: FCX:NYSE,
)

The Outlook for 2017

shille12-29

Precious metals expert Michael Ballanger reflects on how events of 2016 affected the markets, and lays out his strategy for 2017, which includes diamonds and uranium.

One of the most bothersome peccadillos of the advisory community, be it emanations from home computer blogs or the Ivory Towers of Wall Street, is the annoying tendency to accentuate good calls and understate bad ones.

Confusion, diffusion, and illusion . . .
Take Dennis Gartman. The Zerohedge community is constantly laughing at his mistakes while ridiculing him for every single trading error and roasting his every slip-up by taking his trading comments out of context. Let us not forget that The Gartman Letter is a commodity trading letter and his subscribers are trained to look at a “long-term trade,” as one that lasts as long as a) it is working, b) markets are open, or c) until one has to go to the men’s room. So when he says that he is “getting very short of stocks,” it means that he is already short and probably out either by way of stop-loss or by way of a decent “trade” going into the close.

And yet, as DG gets pilloried every time he opens his mouth, I find him extremely articulate and, in fact and fiction, quite entertaining as he adds a touch of wit and self-deprecation to the world of TV financial news coverage and is a far more ingratiating person to whom to listen rather than Canadian Shark Tank megalomaniac money guy Kevin O’Leary or the vast majority of the gold bugs.

In other words, it is all relative. When I listen to podcasts or interviews or commentaries from industry “experts,” I always try to cut through those peccadillos that are derived from a facial feature or a method of speech or an overdone make-up job and instead focus on the actual message contained and in the same spirit, you should do the same with what I write as well. Being a “humorist” does not necessarily qualify me as a “guru” and nobody knows that better than me, my spouse, my banker, and my dog (should I ever be able to find him again).

Last year, when I wrote the 2016 Forecast Issue, I did so with an incredible sense of relief.
I was relieved that the most debilitating, depressing and dastardly bear market in the history of the precious metals markets was coming to an end and I wrote that in the Dec. 4 issue of “Gold and Gold Miners,” where I pounded the table with both fists exclaiming to all that were (still) listening that “I am long the GDXJ (again—after being stopped out three times at great loss and anguish to Fido) and am delighted to see it creeping ahead.”

On Jan. 5, I cancelled my 10% stop-loss and on Jan. 19 of this soon-to-be-ended year, I watched the GDXJ hit a new low, despite gold trading $30 higher than its Dec. 4 low. In a punctuative act of frustration and remorse, not only did I not jettison the GDXJ position, with ample fortification of painkillers and high-quality bourbon, I doubled down that very day and by the end of January, I was long the core from $19.32 and the margined stock from $17.38, and was sitting with an incredible Feb. 19 close of $23.44. Immediately resisting the temptation of doing the Kevin O’Leary victory lap, I elected to stay muted while watching all of the gold “gurus” climb back onto the Golden Bandwagon while claiming that they had “called the bottom.”

The reason I resist the testosterone-enhancing lure of media adulation is that as much as it is a wonderful narcotic for the wounded soul, it is also very much like Frodo’s “magic ring” in that, while saving his life on numerous occasion, it could easily have had the poor Hobbit to living his days out as a subterranean Gollum-ite addicted to the “Magic of the Ring,” which, in our world, is tantamount to Joe Granville End Days.

So despite the fact that my actual gold portfolio, constructed in late 2015, has had a great year, it would have had an even better year if I’d taken my advice and hedged it in July with the Large Speculators at +340,000 contracts, versus Commercials short an equal amount. I did not follow my own trading advice and I took a few hits in the latter half of 2016—not big hits, but just enough to annoy me. The lesson I learned this year is just one of many I continue to learn after 40 years in the space: Trust the Commercials—they do not lose. (And listen to my own advice.)

Alas, here in very late 2016, it is not going to be easy to formulate a coherent investment plan for 2017 because of two very fundamental problems:

1. The issues surrounding intervention, manipulation and fraud have not been dealt with, and
2. Donald Trump

These two problems are actually anything but “mutually exclusive,” because on the topic of Point 2, DJT and his Band of Merry Men, while certainly not archers and swordsmen, are most certainly billionaire “Swamp Creatures of the Black Lagoon” vintage.

If you were watching (as I was) the recent American election campaign, you would most certainly come away with the mistaken idea that with a mere twenty-five days until Inauguration, we might be seeing some “Swamp Drainers” arriving into the Donald’s Cabinet. Well, we are not. What that means is that Point 1, covering “the issues surrounding intervention, manipulation, and fraud,” are vulnerable to false hope and questionable intent and, to a greater degree, total collective losses of stock market advances and currency volatility.

When stocks wake up to the fact that all 2016 accomplished gains were the product of massive Wall Street interventions of the absolute highest order, based upon wishes of the elites, it is only then that we ignorant plebes can truly see the picture, unclouded by CNN or CNBC or BBC or CBC. All of the “information” we receive via the MSM (“MainStreamMedia”) can only be therefore rendered moot. Or, more sadly, ineffectual. Or even more than sadly ineffectual—how about lame. . .

Applying bullet points to this 2017 Forecast Issue, I shall try to describe in detail the confusion, diffusion and illusion of the current state of global capital markets.

Confusion: To state that “confusion reigns” over the world’s money markets these days is an understatement taken to the point of hyperbole. With debt-GDP levels soaring around the world, managers have flocked en masse to stocks as a prudent replacement for bonds due to three factors: 1) Interest rate directional risk, 2) sovereign risk, and 3) geopolitical risk. In “Modern Portfolio Theory,” all stock valuations are measured against the risk-free return, which is normally the U.S. three-month treasury bill (currently at .536%), so it cannot be that difficult to determine that with inflation at 1.7% (according to government figures), stocks with dividend yields in the 2% range appear to be a better proxy for fixed income portfolio allocations that would bills, or even the two-year at 1.28%.

Here is where the confusion starts: if stocks led by the financials (and primarily Goldman, the Vampire Squid for the Dow Jones Industrials) have decided to add 10% since the election against the 10-year yield, which has since doubled since early 2016, what is happening to stock valuations? If you are a purist, as am I, you have to believe that stocks are overvalued based upon simple modern portfolio theory. However, stocks continue to rise and this, for many, is confusing.

Diffusion: This is defined as “the net movement of molecules or atoms from a region of high concentration to a region of low concentration,” but I use the term in defining investor sentiment for stocks, gold and bonds.

In the beginning if 2016, there were a preponderance of gold bears and stock bulls, but as January progressed, global geopolitical events gradually diffused these concentrations. In July 2016, the gold market was saturated, with massive concentrations of gold bulls, but thanks to the efforts of commercial traders and the bullion bank behemoths, that bullishness underwent mass diffusion of sentiment. In November 2016, stock market “gurus” all pointed to financial Armageddon in the event of a Trump victory; by the wee hours of the morning on November 9, despite a Trump victory, the terror conveyed by an 800-point drop in the Dow and a $100 up-move in gold underwent an interventionalist-triggered diffusion of its own reversing all stock losses and gold gains. All of the collective wisdom of the Wall Street “strategists” was rendered completely and thoroughly useless when measured against the financial muscle of the elite-controlled banks, both Central and money-center, for whom there is no more important a process than. . .

Illusion: “A deceptive appearance or impression” is precisely the tool used constantly by the powers that be to dumb-down the masses, which includes the majority of Wall Street analysts and money managers, into a state of total receptivity to subliminal messaging and suggestion. There is no better illustration of the Power of Illusion than in the weeks leading up to the U.S. elections.

In the chart above, you can see how the mainstream media joined in a chorus of negative outcome in the event of a DJT victory. This was the consistent message delivered by the financial news media in the same way that the UK financial media tried to frighten the voters into voting against Brexit.

However, in the U.S., the accumulation of stocks was done quietly and carefully during the period in which the Trump Machine began to close the gap as investors watching the polls had swallowed the illusion that a Trump victory was going to cause an immediate 10% crash in stocks. No better way to illustrate that point than to observe the action in gold and the S&P futures as the results began to arrive on the faces of horrified CNBC news anchors. Shortly after midnight, it was like the point in “Trading Places” where Eddie Murphy keeps asking Dan Aykroyd, “Now, Winthorpe? Now?” in reference to whether they should cover their OJ shorts after a huge spike down. The powers that be, after creating mass confusion through mass illusion, then lowered the boom on the gold and stock markets and the rest, as they say, is history.

Confuse them into action, diffuse sentiment through constant intervention and MSM “reporting,” and finally, use illusion to create the “set-up.” Brilliantly planned, masterfully played, and artfully executed, the money taken out of the Wall Street casino in late 2016 by the elites who control the banks (and therefore policy through the CBs) was hedonistic, criminal and obscene. Commercial traders run by the bullion banks and backstopped by central banks around the world sold over 36 million ounces of phony, synthetic gold by way of the Crimex, during which time the big players like Stanley Druckenmiller and Ray Dallio pledged allegiance to gold and sucked in the Large Specs including hedge, funds, technical funds and other generalist commodity funds, creating the large aggregate long position in Crimex history.

And just who are the investors in these funds? John Q. Public—perhaps not Joe Sixpack or Barney Fife, but it sure isn’t Carl Icahn, who smugly remarked the morning after the election that he has bought the S&P futures the night before, followed by Stanley Druckenmiller, who confessed that he sold all of his gold position the night before.

And then, one by one, all of the CNBC “guest commentators” were trotted out to take the television and YouTube pulpits to begin the “Sermon on the Trump,” as to just how and why this massive swamp-draining exercise was bullish for the stock market, which currently resides at a Case-Shiller P/E of the historically-nosebleed level of 28.1.

You can decide for yourself whether or not you want to “get in the game, ” and start enriching yourselves by listening to all of the Fast Money traders on CNBC boasting about how fast they reacted to the Trump victory and are now sailing ahead completely in-sync with the rally. But I guarantee that they are now completely at the diffusion point, as the last man standing at the Wall Street trough has now been encircled and entrapped. But enough of stocks and this travesty called Wall Street; if you own stocks in today’s world, you are the patsy at the poker table.

As for gold and gold miners. . .
I look back at 2016 with a large dollop of mixed emotions. As mentioned earlier, my greatest regret was not sticking completely to my analytical guns and by listening to the gold and silver bugs that denounced my midyear concerns about the sharp rise in commercial shorting.

I recall one former client shouting, “Screw the Commercials!” in a violently capitalized email and thinking, “He will need a case of Prep H for Christmas.” And sure enough, the silence from the gold perma-bull camp has become deafening. I write this not to gloat, but more to underscore the extreme difficulty of forecasting in today’s world. To quote a phrase now legendary among the free-market thinkers like me, and coined by GATA cofounder Chris Powell, “There are no free markets anymore; there are only interventions.”

Yet, despite that, my #1 pick for the year last year, the Junior Gold Miners ETF (GDXJ), looks poised to close out the year up over 60%, versus the S&P 500 up 11%. Gold bullion resides at the bottom of the chart with a 7.3% advance after being up 30% in July. Needless to say, I go into 2017 long the GDXJ through calls established in mid-November, which represent about 5% of my total maximum GDXJ dollar exposure at the peak in July. I will undoubtedly add in January, but I have a rule, and that is to wait until the 15th in order to see the lay of the land.

gold12-29

In 2017, I plan to diversify into more into the uranium names and to return to the world of gem-quality diamonds after a near-20-year absence. This decision is not to be construed as a waning of bullish conviction toward precious metals, but more of a need to avoid the massive drawdowns that can occur in gold and gold mining stocks due to the confusion, diffusion and illusion carried out so magnificently by the likes of Deutsche Bank, HSBC, Scotiabank and the rest of their porcine brethren.

How many years have I been chortling about the latent value in gold and silver ownership? It is the same number of years that I have been raging against the illicit behavior of the bullion banks. And yet every year—even this year—an absolutely perfect technical and fundamental set-up for enormous advances in gold and silver was flattened unmercifully by criminal collusion and deceit.

So, until the civil proceedings against DB blossom out into Federal prosecution and indictments, I am going to continue to follow the COT report and trade accordingly. Thanks to the great work of GATA and many other bloggers and newsletter writers, the jig for gold manipulation was up years ago. But since this is such a lucrative racket (as in RICO Statutes—hello?), the billion or so dollars taken out by the bullion banks in 2016 alone is enough to keep the status quo in place. And that alone, my friends, is ample reason to derisk but not abandon precious metals.

In many of the conversations I’ve had with friends and colleagues, the topic of the penny exploration issues and the TSX Venture Exchange inevitably arises because I earn a living consulting for a small few of these high-risk endeavors. Trust me when I tell you that it is getting increasingly difficult to operate in a hostile regulatory environment dominated more and more by the big banks that turn their noses up at “speculative investing.” These Canadian banks comprise the power behind the regulatory regime, and if you recall the “illusion” word I used earlier, the banks tell their advisors to refrain from dealing in the penny miners because they are generally “unsuitable” for the bank’s clients. As the magician flagrantly waves the right hand with the pink handkerchief in the air above his head while switching rabbits with his left hand, the banks have now become the dominant players in junior resource “penny” financing, having squeezed all but a handful of smaller boutiques out of the game.

Look at Canaccord Genuity, formerly the most dominant player in junior resource financings, which is now firmly pursuing the “wealth management” area of the business, which is an amazing transition and one that would make even Caitlyn Jenner envious. When you add in the roles of the ETFs that duplicate the penny explorers, once again the bank-controlled ETFs determine who gets included and who gets booted from inclusion in the “fund.” This automatically sucks liquidity from the TSX.V, and since many portfolio mangers controlling large books demand and require liquidity, sparsely traded names with above-average projects are excluded from consideration.

The portfolio I put together at the end of April, referred to as the 357 Magnum (because like the weapon, it carried the potential to “change lives”), was a hit until the end of July and then it became a literal “hit” against my net worth as it plummeted from up 31% to down 16.6% in the last quarter of the year. I am making a couple of changes to the portfolio here at year-end, and in order to make room for additional uranium exposure, I am adding 10,000 Western Uranium Corp. (WUC:CNQ) at US$1.20 (CA$16,600), with the proceeds of sale of 100,000 Iconic Minerals Ltd. (ICM:TSX.V) at $0.12 ($12,000), plus $4,600 cash. I am adding a new recommendation to the mix in the form of 340,000 shares of Gem International Resources Inc. (GI;TSX.V) at $0.05 ($17,000), with the sale of 100,000 West Red Lake Gold Mines Inc. (RLG:CSNX) at $0.17 ($17,000). Stakeholder Gold Corp. (SRC:TSX.V), with $1,000,000 in working capital and only 19.3m shares issued, remains as one of two gold explorers, along with Canuc Resources Ltd. (CDA:TSX.V), our silver proxy for 2017 and one which should have completed the RTO with Santa Rosa Silver Mining Co. in early January. One of the hidden positives behind Canuc is gas production in Texas, which is not only increasing but, with natural gas up over $3.75/mcf, the cash flow accruals to CDA is more than enough to offset the monthly burn rate. And that, my friends, is a huge advantage.

Top Pick for 2017
Canuc Resources Ltd. (CDA:TSX.V) (CA0$.25):

My involvement in this company actually had as its genesis back in 2014, when I was introduced to the Santa Rosa Silver Mining Co., a private company based in Toronto with an intriguing asset in Mexico. I needed to plan for a silver component to the deal inventory, and since the Tinka Colquipucro silver asset had been shelved due to low silver prices and the smallish nature of the resource, I was looking for a replacement.

As Santa Rosa was a private company and had been financed at (much) higher levels back in 2011–2013, it was going to be quite a challenge, and since there were property payments coming up and no working capital to speak of, I decided to show it to a very competent geologist, SRC VP exploration John Nebocat. It didn’t take JN very long to arrive at an assessment, and by PDAC 2015, I felt that Santa Rosa was going to be a big, big winner. However, it was private and nobody wanted to tie up capital in a horrific bear market with little chance of success and no immediate exit strategy.

After sitting down with management and shareholders, I wanted to find a listed partner with a low share count, and hopefully some cash flow to offset the monthly burn, and see if this was a fit for both the Canuc shareholders and the Santa Rosa shareholders.

After struggling with it all through 2015 and the first half of 2016, we raised enough money for CDA and SRSMC to pay for all of the legal fees and exchange fees associated with a reverse takeover, whereby SRSMC with 44 million shares o/s (net 22m after rollback) effectively absorbs the 11m CDA share o/s and assumes control. After battling with the exchange for month after month, they finally received conditional approval in November, in advance of the final approval and closing in January.

Now, the last hurdle to overcome is the wraparound financing that will allow CDA to come out of the gate with a minimum $1.3M in working capital and positive cash flow from the gas production (as mentioned above), and around 38m shares o/s subject to revision based upon the financing size.

I am not going to discuss geology or share price potential at this time because it has passed mustard with John Nebocat and that is all I need. With the bad news being that it was halted a lot longer than I anticipated, the good news is that the halt allowed the company to bypass the brutal Q4/16 correction in the penny miners, with the 357 Magnum portfolio as evidence. Look for a trading resumption in January and we will take it from there.

Summary for 2017
My longer-term assessment for gold and silver prices has not changed since I wrote the Streetwise article in late February entitled: “Patiently Climbing Aboard the New Golden Bull,” where the short-term outlook was mixed at $1,130, but solidly bullish for the intermediate and long-term trends.

I was in error in my cautiousness back in March, but still stayed fully invested, so while I refrained from buying more and missed another $250 of upside in the gold price, I captured all of my return in the GDXJ. As we close out 2016, my short-term outlook remains mixed, as the COT structure is still in the minus 134,000 range. The GDXJ is oversold beyond all recognition going into the end of the year, but I refrain from going “all-in” until the Commercials have lightened their shorts by at least another 100,000 contracts. If we get a market correction in January (which I think is a no-brainer), that could be the event that prompts the final regurgitation of the net long 105,000 contracts held by the Large Speculators.

Once we get this last flush out of the way, I believe that the intermediate and long-term trends will kick in, taking everything back into the upward vortex that we saw in February of this year. Of course, and sadly, until the regulatory regime clamps down on the price managers and bullion bank opportunists, I will have to continue to monitor the COT and make decisions as if I were residing in the minds of the Interventionalist criminals.

May you all have a prosperous and healthy New Year. . .

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

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Disclosure:
1) Michael Ballanger: I, or members of my immediate household or family, own puts on the following companies mentioned in this article: Western Uranium Corp., Gem International Resources Inc., Stakeholder Gold Corp., Canuc Resources Ltd., Santa Rosa Silver Mining Co. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: Stakeholder Gold Corp. Santa Rosa Silver Mining Co./Canuc Resources Ltd., Gem International Resources Inc.. My company has a financial relationship with the following companies mentioned in this article: Stakeholder Gold Corp., Canuc Resources Ltd./SRSMC, Gem International Resources Inc., Western Uranium Corp. 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. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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All charts and images courtesy of Michael Ballanger.

( Companies Mentioned: CDA:TSX.V,
GI;TSX.V,
WUC:CNQ,
)