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Bubble Charts: War Between Tech Investors vs. Gold and Silver

The cyclical nature of commodities and equities goes back at least until the 1970’s. When commodities are doing well, equities are performing poorly. Then the cycle flips and investors pile into equities, eventually making them expensive and commodities like gold and silver become cheap. But what do you get when you take the extremes of both equities and commodities? The extreme side of equities, technology stocks (NASDAQ Composite) being driven by lines of code you can’t touch. On the opposite end of commodities, you get tangible precious metals, silver and in particular gold. Tech investors versus gold and silver couldn’t be more different. Their history of being at a tug-of-war has rarely been discussed until now.

When we look at the NASDAQ Composite (NASDAQ) in relation to gold and silver in US dollars, going back to 1971, when the Nixon shock occurred. You get a striking relationship that confirms the cyclical nature between the commodities and equities. This was four years before Paul Allen and Bill Gates read the famous popular mechanics issue highlighting the world’s first microcomputer kit. That magazine propelled the creation of Microsoft. The 1970’s were a period of rising commodity prices, high inflation, a stagnant economy, and multiple recessions.

 

The Pendulum of Gold and Silver vs. NASDAQ Composite

1) 1971 – 1980: Commodities went on an epic bull run, increasing by more than twenty-five times, clearly outperforming the NASDAQ. By 1980, the NASDAQ was incredibly cheap relative to gold and silver.

2) 1980 – 2000: From 1980 onward capital flowed out of gold and silver and the overall commodities complex. as interest rates lowered, and confidence in the public sector was renewed. Equities were the cheap asset class in relation to commodities. This then set up the bull run in technology with the NASDAQ peaking in 2000. Gold and silver by this time were incredibly cheap to the NASDAQ.

3) 2000 – 2011: The cycle rotated back to gold and silver until they peaked in 2011.  This is in contrast to the S&P/GS Commodity Index (GSCI), that peaked in 2008. For gold and silver investors that followed the GSCI, they would have sold out early, as gold almost doubled almost three years later in 2011.

4) 2011- Today: Investors could have rotated into the NASDAQ in 2011, when gold and silver peaked in 2011, as NASDAQ has since almost tripled. Today, both gold and silver are incredibly cheap to the NASDAQ. Today, silver may bounce around, but it will be small moves in relation to the coming years ahead, that just like the past four cycles the beginning moves were small until the end of the cycle. This fifth cycle will swing back to silver and gold and we expect them to outperform the NASDAQ on a multi-year basis during for the fifth rotation.

This back and forth pendulum swinging between the two, confirms the cyclical nature between equities and commodities, but at their extremes.

Gold and Silver Warn Tech Melt-Up

With the manufacturing starting to experience headwinds from the tariffs. Investors are rotating out of manufacturing stocks, and further into technology because for now, tech stocks are less impacted. This rotation may be the final push higher, which investors like Paul Tudor Jones are referring to a second half of 2018 peak in the markets. Remember, based on past cycles we have seen between gold and silver to the NASDAQ Composite, there was a big thrust UP at the peak. Will this time be any different?

As the NASDAQ pushes ahead while the S&P 500 languishes we are experiencing an accelerated melt-up. Is the blow-off-top going to be driven by technology because of the famous FOMO? It doesn’t have the same sensations of Bitcoin in 2017 or the Dotcom bubble yet. But as investors rotate out of Dow components because of trade concerns and into the asset light, businesses you end up at technology stocks. Gold and silver say, yes.

“Rates go up, and stocks go up in tandem at the end of the year. I can see things getting crazy, particularly at year end, after mid-term elections. I can see things crazy to the upside.” Paul Tudor Jones

Was Paul Tudor Jones referring to tech stocks?

US Economy Is Holding Up The World

The US economy continues to be strong, with the underlying ISM Manufacturing PMI at 58.7%, and the US ISM NON-Manufacturing PMI 58.6% for May. No, a recession isn’t in the cards yet. But we sure are getting close as the QE experiment is in tightening mode, and central banks are raising rates around the world.

The Melting Up of Tech Warns – Expect Lower Returns Next 5 Years

For the remainder of the year, it is still quite possible the NASDAQ could go higher, as the NASDAQ is still hasn’t experienced its phrase transition relative to gold and silver. Based on past cycles, there was always a melt-up and outlier for gold, silver, and the NASDAQ. Will the NASDAQ repeat history? With global central bank liquidity decreasing, increasing rates, and the ever-increasing tariffs, maybe it won’t break through the highs in 2002. Investors should reduce expectations to generate the same returns on a multi-year basis going forward as the past five years. For gold and silver investors, this is a massive long-term opportunity.


BULL MARKET SETTING UP FOR GOLD AND SILVER NEXT 5 YEARS

Once the NASDAQ peaks, capital will flow to commodities, setting in the new trend for the commodities boom. From an investors perspective, on a multi-year basis, the reward is clearly to gold and silver, the downside risk clearly to the NASDAQ. Tech investors will swear they will never own commodities. But do you want to continue the streak after the tech boom?

An investor does not need to be precisely right, but just approximately right over multiple years to take advantage of this gold and silver opportunity.

“You only need one bull market to build life-changing wealth. And a new bull market may be knocking at the door…” – Rick Rule

Taking a multi-year view and not shorter-term view, silver and gold are incredibly cheap right now and they stand to benefit from the capital outflows from technology based on the cyclical rotation that has historically occurred. We are only in the first inning or two for gold and silver, particularly when you look at the where the NASDAQ is today.

Takeaways from Tech vs Precious Metals Cycle

  • In all three booms that occurred between the NASDAQ Composite, gold, and silver, there was a melt-up higher for each of them. But the bottom may have already been set in 2016.
  • What is in favor today (Technology) will soon be out of favor in the future, and what is out of favor today (Silver & Gold) will become in favor tomorrow.
  • High-quality businesses with exposure to gold and/silver will give investors an edge to massively outperform the commodities complex and in particular the NASDAQ Composite on a multi-year basis.
  • Don’t marry the trade.
  • Following the Bloomberg Commodity Index is not bulletproof particularly for tech and precious metals investors.
  • Precious Metals will outperform the technology sector over the next 5 years because tech is peaking.

Buy Cheap and Sell to the Crowd

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We will be hosting a Live Webcast on Tuesday, July 3, at 4:20 PM ET. Mr. Paul Farrugia (President & CEO) will be discussing an unconventional approach for gold and silver investors in the coming commodity cycle.

There will be no replay. We have limited seats.  

Reserve Your Seat Today

————————————–

 

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Mexico’s president-elect vows to preserve NAFTA

The Globe and Mail (Alberta Edition) July 3, 2018 ADRIAN MORROW WASHINGTON STEPHANIE NOLEN MEXICO CITY DANIEL LEBLANC OTTAWA   Leftist leader says he wants bilateral agreement with Canada if U.S. pulls out Mexico’s left-wing president-elect is promising to avoid fighting with Donald Trump, stay the course in renegotiating NAFTA – and keep the pact as a bilateral agreement with Canada if the U.S. President pulls out. Mr. Trump, meanwhile, is again floating the possibility of cutting separate deals with Canada and Mexico, while his administration warns Ottawa that fighting back against his steel and aluminum tariffs will not end the trade war. After a landslide election victory Sunday, Andres Manuel Lopez Obrador rushed to reassure businesses and his country’s trading partners that he is committed to the trilateral agreement and to trying to get along with Mr. Trump. “We do not fight. We will always look for an agreement,” … Continue reading

China Preparing For Gold To Reenter The Monetary System Thousands Of Dollars Above The Current Price

China Preparing For Gold To Reenter The Monetary System Thousands Of Dollars Above The Current Price

With many people wondering when the paper manipulation of gold will come to an end, it looks like China is now setting the stage for gold to reenter the monetary system thousands of dollars above the current price.

June 17 (King World News) – Dr. Stephen Leeb:  “The Chinese apparently, and with good reason, view Americans as a naïve people that will accept almost anything at face value. When you analyze recent news stories covering or related to U.S.-China relations, you start to see how China is playing on this in gaining the upper hand in a battle for worldwide hegemony…


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Dr. Stephen Leeb continues:  “As China gets closer to achieving its goals, I believe the battle for the East and most of the developing world is nearly over, but I still hope it will allow for a win-win situation that let’s both East and West flourish. Though win-win is looking a little more quixotic these days, I’m still hoping the U.S. can emerge as a vibrant 21st century economy.

Gold Reentering The Monetary System
Whatever the outcome, though, the real winners will be those who bet heavily on commodities and especially on gold. As I have pointed out before, gold and the yuan have become closely linked. Both the 52-week and 200-day moving averages of gold’s price in yuan have been remarkably steady for more than a year. Whether this is due to arbitrage or manipulation, it really does not matter: The message is that the yuan has become as good as gold.

This is the first step in creating a gold-based monetary system that will govern in the East – and if the West is smart, in the West as well. As China clears away the obstacles to ever more Eastern trading in yuan, gold will rise longer and higher than most people imagine. The current transition is arguably the most significant in the history of modern civilizations.

But as I said, China has managed to keep its progress well disguised. Let’s begin with the recent Korea summit between President Trump and Premier Kim. The clear takeaway is that the U.S. will be willing to limit its military involvement on the Korean peninsula in exchange for North Korean denuclearization. Unlike the many skeptics, I believe this actually will happen, along with a much more vibrant North Korean economy and eventual North-South reunification. Moreover, I believe the denuclearization will happen fairly quickly, and that by the turn of the decade there will be little doubt about the outcome.

By 2020, China will be helping to turn North Korea’s nearly moribund economy into one that is vibrant and trading with many other Eastern partners. The entire Korean peninsula will be well on its way to joining the Eastern economic bloc of countries. If you’ve followed my King World News interviews with for a while, this prediction shouldn’t be a surprise. Nearly one year ago on KWN I talked about Korea in the wake of Steve Bannon’s exit from the White House. That exit had been precipitated in part by comments Bannon had made that contradicted Trump’s bluster. Specifically, Bannon said it was nonsense to believe the U.S. had a military option, because any military action would lead to the deaths of 10 million people in Seoul in the first 30 minutes through conventional weapons alone.

I noted then:

“Bannon raised the idea of a deal in which China would get North Korea to freeze its nuclear build-up and agree to verifiable inspections in exchange for the U.S. removing all its troops from South Korea. But he called the likelihood of that happening remote.”

My comment at the time was:

“I don’t think such a deal is farfetched…there are few alternatives…The big picture is that China continues to make unrelenting progress in uniting the East and the developing world under its umbrella, while overcoming whatever remaining obstacles the West could pose.” 

A week before that, talking about the North Korea nuclear threat, I said:

“The current crisis could easily mark America’s last gasp at keeping a foothold in Asia as well as in the rest of the East. These geopolitical implications should be seen as potentially momentous and as enormously positive for gold.”

That was a year ago, and everything I said then seems borne out by the most recent events. Stay tuned.

Now some thoughts on ZTE and the state of Chinese technology in general. In mid-April, the U.S. government charged Chinese phone maker ZTE with violating a previous sanctions settlement and banned ZTE from buying U.S. technology for seven years. ZTE indicated that once its inventory of critical products was used up, the company would have to cease operations, and 75,000 employees would lose jobs. You could almost hear the sighs of relief among Americans who had feared China had caught up, or nearly so, to the U.S. in developing critical technologies. The putative plight of ZTE seemed to say there was no need to worry, and that for the foreseeable future the U.S. would continue to call the shots in the tech arena.

In line with this, on June 10 The New York Times introduced a new weekly feature by Li Yuan whose mission was to examine “the paradox of modern China through the lens of technology.” The inaugural article focused on ZTE. Examining whether China really has “defied the axiom that a free political system and economic growth go hand in hand”, Li wrote that: “As the Chinese ask how they can keep up, many are also wondering why they didn’t realize they were so far behind to begin with.” 

There’s a problem with this analysis, however, which is that loss of access to U.S. suppliers did not necessitate the failure of ZTE. The optical chips and the more important SoC chips, the critical components of a phone’s modem and operating system, are available elsewhere, from South Korea and Taiwan, for example. In fact, another potential supplier is Huawei, a private Chinese company that is the leading developer and manufacturer of smartphones in China and perhaps the world.

Unlike ZTE, Huawei is a vertically integrated company, which means it makes both hardware and software for its phones. Though the company imports about 25 percent of its phones’ components from the U.S., these are commoditized products available from a number of other suppliers outside the U.S. and in many cases in China itself. Huawei, similar to Apple, has firm control of both the software and hardware it requires. Both companies use Taiwan Semiconductor to manufacture their internally designed SoC’s.

The latest versions of each SoC are Apple’s A11 and Huawei’s Kirin 980. When compared on the most popular benchmark, AnTuTu, the Kirin is ahead by about 50 percent and indeed blows out all other SoC’s as well. One website, Archyworldys, called the Kirin’s benchmark reading, “a real leap into the unknown.” Yet Li’s article failed to mention Huawei.

I see two possible explanations for the whole ZTE situation. One is that China wants to keep the U.S. at bay by appearing to be less technologically advanced than it really is. The New York Times is an inadvertent partner in this strategy. I’m sure I sound like a broken record, but once again I must cite The Art of War’s oft-cited maxim that it’s smart to show your weakness, hide your strength.

The other possibility is that China’s government decided to make an example of ZTE to warn other Chinese companies that if they become too dependent on the U.S., they won’t get a chance to find new suppliers. It’s possible, maybe even likely, that the government told ZTE that it had made a mistake and must pay for it.

A final comment: one other thing Apple and Huawei have in common is that they both use the same China-based company, Foxconn, to assemble their phones. That should tell you a lot about which country, the U.S. or China, could lever the greatest blow against the other.

The Gold Road
I want to briefly return to how China is paving the road – perhaps more precisely the Belt and Road – for broad-based yuan/gold backed trading. China is off and running in trading its yuan-based oil benchmark. That the yuan can be exchanged for gold may be one reason for the tight relationship between the yuan and gold. It may be a natural consequence of arbitrage (plus, perhaps a little meddling from the Chinese).

And the “good as gold” yuan is spreading its wings. Just this week the lead article in “liveMint”, a well-respected financial daily out of India, had the following subhead: “China has chosen the right time to step up its efforts to make the yuan a global currency.” The article points to a recent forum in Harare, Zimbabwe in which 14 East African and Southern African countries met to consider using the yuan as a reserve currency in the region.

These countries all owe large debts to China, clearly giving China the leverage to make it happen. The article states:

“After becoming the preferred trade partner for the African continent, China’s ambitions have expanded to operate the preferred reserve currency for nations in the region. This strategy could have significant consequences at a time when Africa is being touted as the ‘next factory of the world’ after China…one may take manufacturing out of China, but one cannot take China out of manufacturing.”

Equally significant was news out of Dubai in late April. The Reuters headline was “Abu Dhabi, Shanghai plan exchange focusing on China trade.” Richard Teng, head of the Abu Dhabi Global Market (ADGM), noted “the new exchange will support not only the Belt and Road initiative but also the internationalization of the Chinese yuan in the region.”

China’s ultimate goal, as I’ve discussed before, isn’t to replace the dollar with the yuan. Rather, it’s to create some sort of basket of currencies and commodities linked to gold. The size of the Chinese economy and its vast gold holdings will give it enough sway over any such basket while sparing it the headaches associated with having a reserve currency.

For investors, the bottom line is that whether the new reserve currency is the yuan itself or a basket, transactions will be gold-backed, implying a gold price many times the current level and many times the past high. The message is to ignore the day to day turbulence and continue to insure your future by aggressive accumulation of gold.”

To listen to the timely KWN audio interview with James Turk that discusses the smash in the gold and silver markets CLICK HERE OR ON THE IMAGE BELOW.

***ALSO JUST RELEASED:  ALERT: Criminal Bullion Banks Shorted The Hell Out Of Silver Ahead Of Yesterday’s TakedownCLICK HERE.

 

 

Will 2018 Be A Repeat of 2002 Tariffs on Resource Heavy TSX, ASX and TSXV?


Tariffs are front and center right now in the markets, and during the 2002 steel tariffs, the steel tariffs were not good for the U.S. markets. The Dow Jones Industrial Average, S&P 500, and the NASDAQ were all down between 20-30% during the 2002 steel tariffs, before recovering, when tariffs ended in December 2003. With the US now imposing steel tariffs on Canada, Mexico, and the European Union. While exempting Australia, South Korea, Brazil, and Argentina. What does this mean for the Canadian stock markets, and what will happen to the Australian markets, if Australia gets hit with the steel tariffs? Both the TSX & ASX are heavily weighted to financials and materials, and both experienced huge housing booms over the past decade. Will gold be a safe haven for Canadian and Australian investors?

“I do think that this trade stuff is a negative. It is going to hurt sentiment. Its badly thought through. Its not strategic. There are legitimate complaints about trade. But this is not the way to go about it. And you see it in the volatility in the market” Jamie Dimon (Chairman & CEO of JPMogran Chase)  (Source CNBC)

2002 TARIFFS IMPACT ON CANADA TO THE S&P/TSX Composite & S&P/TSX Venture 

Even though Canada was exempt during the 2002 steel tariffs, S&P/TSX Composite fell by almost 30% during the US imposing the steel tariffs in 2002. The S&P/TSX Composite finished slightly positive by the time the tariffs were over. The S&P/TSX Venture Composite (Venture), Canada’s junior market, not only FELL less during the bear market but significantly outperformed by the end of the tariffs. The Venture was up by almost 50%. The sector rotation out of technology and into commodities had begun, and the Venture saw HUGE fund flows because of its heavily weighted in junior mining (gold stock, silver stocks, copper stocks, etc.) and junior oil & gas stocks. You had capital pull out of speculative tech stocks (Nortel Networks) and venture capital and put into high-risk commodity focused junior explorers, developers, and junior miners. The Venture is the largest venture capital space in the world to invest in small cap natural resource stocks, providing exposure to exploration, development, production, and mining services. If history repeats, then the TSX Venture is set to outperform the broader markets once again.

2002 TARIFFS IMPACT ON THE ASX 200?

The broader ASX 200 fell less than the Canadian and US markets during the 2002 US steel tariffs while the North American equities were selling off in the second half of 2002. The broader ASX Materials Index finished positive, just over 10% by the end of 2003We can see that even in Australia the sector rotation into materials had started to take place following tech burst. What was surprising, in 2002, was that both the ASX 200 bottomed in February 2003, posting modest negative returning during the trade situation. The ASX Materials in contrasts bottomed in September 2002. While only a few months into the US steel tariffs, the overall ASX Market continues to be up, with the ASX materials up but lagging the broader index ASX 200. Gold significantly outperformed the ASX, even when adjusting for currency appreciation.

WHAT IS DIFFERENT THIS TIME FOR CANADA?

Unlike the U.S Federal Reserve, that was decreasing rates, after September 11, only a few months prior to the steel tariffs, and the bursting of the tech bubble. In Canada, the Bank of Canada (BoC) raised its target four times over the same time period, by 125 BPS, from 2.25% to 3.5%. But it didn’t stop there. In July 2003, the tightening was over, and the target was reduced to 3.25%, then again to 3.00% Where the is Bank of Canada today? No change in its target yet since the US steel tariffs started and no reaction yet to them being implemented on Canada. But will they be forced to raise their targets?

The economic progress we have seen makes us more confident that higher interest rates will be warranted over time, although some monetary policy accommodation will still be needed,” Governor Poloz said. “We will continue to watch how households and the entire economy are reacting to higher interest rates. And we will be cautious in making future adjustments to monetary policy, guided by incoming data.”

Canadian households have built up about $2 trillion of debt, including $1.5 trillion of mortgage debt….a prolonged period of low interest rates that allowed borrowers to take out larger mortgages for the same payment size. This debt is now a vulnerability, both for the whole economy and for highly indebted households who will face increased debt-service costs when interest rates rise. “We are closely watching the vulnerability represented by this group and the debt they carry, and how it poses a risk to both the financial system and the economy,” Governor Poloz said.  – Bank of Canada

Canadian households continue to be significantly more leveraged than they were before the 2008 recession. But will the Bank of Canada raise rates? They may have no choice. Are household and businesses going to be able to handle inflation pressures they are already experiencing from rising gas prices? Brent crude hits its highest level since 2014. There is also the July 1st deadline of tariffs being added to US imports.

“The problem for the Bank of Canada is this. What do they really control? So, when we get the Bank of Canada press statement, what is it they do? They actually just have an influence on the overnight rate and the overnight rate you can say as sort of an impact to the very front end of the curve. But the reality is that the Canadian bond curve is 90% correlated to the US Treasury market. What are US Treasury yields doing? They’re back up. There’s nothing the Bank of Canada can do about that. US Treasury yields are backing up. We are importing a good part of that into Canada. Mortgages are ultimately priced off the bond curve. And so, look at what happened last week. Even just weeks after the Bank of Canada said we’re are on, maybe on hold indefinitely. Mortgage rates went up last week because of the importation of higher bond yields south of the border.

…. This is the shocking statistic. Normally conservative Canadians that historically really went and took out five-year mortgages. They didn’t want to take on refinancing risk. Half of the Canadian residential mortgages rollover in the next year. Almost half, the number if 47%. That shocking” – David Rosenberg (Source BNN Bloomberg)

WHAT IS DIFFERENT THIS TIME FOR AUSTRALIA?

The Reserve Bank of Australia (RBA) during the 2002 episode of tariffs, followed the similar path to the Bank of Canada by raising its cash target rate four times, by 100 BPS from 4.25% to 5.25%. But there were no reductions, only hikes, and holds. Where is the RBA now? The RBA has stayed the course by holding rates, but will it follow history and begin raising rates? What about the impending interest-only loans that need to be refinanced over the next three years? Will the RBA hold back from raising rates? Time will tell.

In Australia interest-only mortgages, which during “their recent peak, they accounted for almost 40 per cent of all mortgages. While interest-only loans have a role to play in Australian mortgage finance, their value has limits.” Will overseas funding costs that are impacted by the US increasing rate, rise well? Over the last 20 years to 30 June 2014 the correlation between Australian and US 10-year yields has been 0.84 measured over quarterly periods with a correlation of 0.71”Source: Franklin Templeton. While not the short-end of the curve, as we have seen recently with many emerging markets rising interest rates is becoming the new normal and Australia will have to raise the cash rate soon if the Fed keeps going.

IMPACT ON CAPITAL MARKETS IN CANADA & AUSTRALIA

Due to the tight correlation that Australian and Canadian rates have to US rates, we could see banks hike their mortgage rates higher if the US Fed continues to raise its target rate. We would also expect this would further put pressure on both of their housing markets and the capital markets if a broader sell-off takes hold because of the tariffs as had previously occurred in the 2002 tariffs. This may present opportunities for royalty stocks like to provide funding to the sector because capital markets funding through equity issuance and commercial lending from banks would dry up.

WINNERS FROM THE US 2002 STEEL TARIFFS

  • Gold was the clear winner in the US Steel Tariffs.
  • Canada’s TSX Venture Index was the clear index winner in terms of performance because it is heavily weighted in small-cap natural resource stocks in mining and oil & gas.
  • If history repeats, the tariffs may be the signal over a 1-2 year time period, the start of the rotation out of technology and into commodity assets, just like the 2002 US tariffs signaled the rotation into the 2000’s commodities boom.

The outlier remains how long will the US Federal Reserve continue to keep raising and removing liquidity until something breaks?

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Oil Targeting $58 PPB Before Finding Support

June 13, 2018 With the G7 meeting concluding and the world about to start reacting to what was said and what was heard, it is time to take a look at the Crude charts with our Advanced Fibonacci price modeling system.   Our research team, at www.TheTechnicalTraders.com, believes Crude will continue to drift lower over the next few weeks testing the $60 ppb level before breaching this support level and ultimately targeting $58 or lower.  Lacking a real resolution to the trade and other global issues, we believe continue global economic pressures will drive oil prices dramatically lower over time – at least through the Summer months. This Monthly Crude Light chart shows our Advanced Fibonacci price modeling system at work.  As of right now, we see a recent price rotation top (highlighted by the RED DOWN TRIANGLE) near the right edge of price as well as the RED and GREEN … Continue reading

American Manganese Inc. Announces Publication of Lithium-Ion Battery Cathode Recycling Process Patent Pending

May 29, 2018 AMY Process Patent Still Under Patent Pending Protection in 152 Countries and Jurisdictions. American Manganese Inc. (TSX.V:  AMY; OTC-US:  AMYZF; FSE:  2AM), is pleased to announce that the Company’s U.S. patent application has been published on May 17, 2018 under publication no. WO2018/089595 and titled: PROCESS OF COBALTOUS SULPHATE/DITH-IONATE LIQUORS DERIVED FROM COBALT RESOURCE. The publication is available for viewing and downloading on WIPO’s website.  The pro-duct application discusses the Company’s hydrometallurgical process for the successful recycling and recovery of cathode materials such as: lithium, cobalt, nickel, manganese and aluminum from lithium ion batteries. “Publication of the patent process takes us away from the area of a ‘black box’ technology and now discloses the underlying process, which we believe will assist the Company in moving forward with potential partnerships”, says Larry W. Reaugh, C.E.O. With increasing metal prices, decreasing resource availability and environmental regulations becoming stricter, ownership of this intellectual property creates … Continue reading

Upside Dow Breakout May Be Just The Beginning

 

 

At this point, all we can say is “Wow – did you see that breakout?”.  If you have been following our analysis, you already know we’ve been predicting this upside price move for over 4 weeks with our specialized price modeling systems, cycle analysis models and other specialized trading tools.  Last weekend, we posted very detailed analysis of the Elliot Wave and Fibonacci price levels that suggest we could see another upside price move that no one is expecting.

Please take a minute to read our two recent Elliot Wave research posts before you continue reading this post.  We want to make sure you understand the components of this price setup and what we believe will be the most likely outcome.

The upside breakout in price on Monday actually originated with an upside gap Sunday night.  This upside gap was likely the result of a combination of factors, yet it supported our analysis that the US major markets are poised for a dramatic upside price move soon.  Our Elliot Wave analysis suggested we could be setting up for a Wave 3-d upside price move that will end with a corrective price move sometime in early/mid 2019.  In order to confirm this analysis, we have to see new all-time price highs established before the end of 2018 with a solid upside price rally in place.

While the YM (DOW) was the only US major to show a clear upside price breakout, we believe the other US major markets will follow along soon enough.  We have highlighted what we believe is a critical support zone on this YM chart to try to illustrate that price rotation is normal.  We expect to see a 1~2% price rotation throughout this upside move that is completely natural and healthy for the markets.

 

Again, this is completely natural as the YM (Dow Jones index) is tied to the DOW Industrials and the Transportation Index which are breaking out this week. A breakout move like this in the YM suggests that the overall US economy is strengthening and that the future expectations are good that increased levels of transportation of goods will unfold. In our next post we will go into detail on these two sectors and show you some new opportunities emerging.

Additionally, we wanted to show you this NQ chart that is waiting for breakout confirmation from price.  Sometimes, the US majors do not always move in unison.  There are times when the S&P or the Nasdaq will move with greater velocity while the other US majors appear to move in a more muted manner.

The NQ, being tech-heavy, relies more on earnings and revenues from the FANG group.  A move higher in the NQ would indicate that future earning and revenue expectations are strengthening.  This is something we believe will happen in the near future as we expect the NQ to follow the YM with an upside price breakout very soon.

We are still very early in this trading week and we have lots of time for this move to unfold.  We can help you find and execute better trades with our advanced market timing and trade setups for active traders.  Our members already know what our predictive modeling systems are suggesting for the next 5+ weeks.

Our 53 years experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text. Our newsletter, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

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I Like the Penny Stocks Right Here and Right Now

May 16, 2018 By Dudley Pierce Baker http://JuniorMiningNews.com http://CommonStockWarrants.com Hello Investors, Crazy as it may sound, I love this game of investing in the penny stocks and possibly some of the stock warrants trading on resource companies. While some of you may believe this is a crap shoot there is actually some logical reasoning that could make you a substantial amount of money in the up coming bull market in the resource sector. Higher gold, silver and copper prices are coming believe it or not. Yes, gold has just plunged below $1300 for the first time in many months but as I write, it is holding around the .618 retracement of $1290 or so. True, I do not want to see much more of a decline from here and we really need to get back above $1300 ASAP. So, my cautionary warning for you, is that you should be prepared … Continue reading

Fibonacci Price Ladder Points To Higher Prices

This first Daily ES chart shows a pretty big picture of the Fibonacci price legs (the Fibonacci price “ladder” as we will refer to it in this article) and how these legs work in tandem with other types of support and resistance channels/level as price expands or contracts within new trends.  As you probably remember, one of the key factors to understanding Fibonacci price theory is that “price MUST attempt to establish new highs or lows at all times”.  Therefore, as we can see by recent price action, new price highs have been reached.  This is a clear indication that a new bullish trend is in place and we should now be searching to key levels to enter new trades.

We know the massive support zone exists below 2620 in the ES and we know a critical price channel exists between 2625 & 2660.  We don’t believe price will retrace enough to threaten any of these levels.  We believe price may retrace to near 2700 before finding additional support and developing a new base for a “ladder move” higher (likely to near 2855).

 

To confirm this analysis lets take a look at the YM (DOW futures) Daily chart below as well.  The Daily YM chart, below, paints a fairly similar example as the ES (S&P500 futures) chart, above).  Yet, this YM chart shows that the recent high price is very close to the Fibonacci 100% price level (a “ladder rung”) and should find moderate resistance near this level (24993).  We expect price may rotate lower to near 24598 before finding support and establishing a quick, possibly V-shaped or large lower wick type price rotation, bottom that would propel price higher to the next Fibonacci ladder leg near 25937.

 

This, zoomed in view of the Daily YM price chart below with our Fibonacci price levels drawn, helps to better understand what we expect to see.  As we keep trying to instill into your thinking, “price MUST attempt to establish new price highs or lows as it continues to develop trends and trend reversals in Fibonacci Theory”.  Therefore, price MUST attempt to rotate lower after establishing a new price high (as it has done recently) only to FAIL to establish a new price low (which would be a move to below 23460 – a long way away).  In doing so, the failure to establish a new price low (through price rotation) would indicate that price MUST do what?  That’s right, establish another NEW PRICE HIGH.

It is our belief that any price rotation below 24700, when price appears to be holding or forming support, would be a tremendous opportunity to identify new long entries.  Of course, the deeper the downside move, the better the entry levels will be created, but we don’t believe this future downside price rotation will be very deep – possibly just below 24500 as the lowest points for the YM.

 

If you have been following our research and analysis, you know we called this move nearly a month ago and have been sticking to the analysis of our advanced modeling and predictive analysis systems.

We offer some of the most complete and informative research anywhere and we invite you to visit www.TheTechnicalTraders.com to learn how we can help you find and execute better trades.  Your subscriptions help us continue to deliver these incredibly valuable research reports and we urge you to consider how our work has helped you over the past few months.  If you feel our work is superior and valuable, then support our research team and start using our research. 2018 is proving to be a fantastic trading year and we urge everyone to join us in creating greater success.

Our articles, Technical Trading Mastery book, and 3 Hour Trading Video Course are designed for both traders and investors to explore the tools and techniques that discretionary and algorithmic traders need to profit in today’s competitive markets. Created with the serious trader and investor in mind – whether beginner or professional – our approach will put you on the path to win. Understanding market structure, trend identification, cycle analysis, volatility, volume, when and when to trade, position management, and how to put it all together so that you have a winning edge.

Chris Vermeulen

New Articles from Chris Vermeulen – The Technical Traders


Hello Investors,

I am happy to now be sharing some great investment content with you from
our friend Chris Vermeulen at TheTechnicalTraders.com.

US Indexes Setup Bottom Confirmation Pattern

Congestion Basing Can Present Incredible Opportunities

Enjoy the read,

Dudley Pierce Baker
Founder – Editor
http://JuniorMiningNews.com
http://CommonStockWarrants.com