Friday, March 31, 2017

What to do Before the Next Heart Attack

This story was originally posted on Uncommon Wisdom Daily on March 31, 2017

The market has been cruising along for so long that many investors forget bad things can happen. Boy, they can happen. And before they do, you need to buy ONE THING.

See, the market is like a big, beefy guy out mowing his lawn on a weekend morning. He carries a lot of weight, but he needs that weight to throw around. He always gets his way.

And the lawn. Well, the wife has been crabbing at him to mow that lawn all week. He has to get it out of the way before the games start in the afternoon, right? So he is striding across that lawn, chopped grass flying around like money confetti, and nothing is going to stop him.

Until something does.

It starts as a twitch in his arm. Then a pain spreads down his arm into his chest. Damn, must have pulled something, right? Probably tugging on that lawnmower too much in the turns.

So the big guy slows down. But the pain doesn’t. It gets stronger. And then there’s tightness all across his chest, and up into his jaw. For Pete’s sake, what’s that about? Then he realizes his breath is coming short and fast. He can’t seem to fill his lungs to save his life.

And by the time he falls to his knees, he can only pray his wife sees what’s going on and calls the paramedics before it’s too late.

That’s just what happened, metaphorically speaking, to the stock market in 2000. Stocks dropped by 50%.

It happened again in 2007-’09. It was worse that time, like all second heart attacks are. That time, the S&P dropped by 57%.

Guess what went up both times? I’ll give you a golden minute to think about it. Then look at this chart of the action in the S&P 500 from 2000 to 2002.

The bad news started in August. I remember that, by February, you could see the signs of worry on faces all over Wall Street.

Except the gold traders. In February, they started to smile. And that smile spread wider for gold … even as the S&P 500 went down for the count.

I could show you a chart of 2007, but you get the picture.

Fast-forward to today. Let’s talk about the weight the market is carrying around. That big lug, he’s only piled on more pounds.

You want to talk debt? The national debt was recently $165,542 per taxpayer. My, that is on the portly side.
You want to talk household net worth to GDP? That’s a metric that the boys at Sprott are using in a new commentary. Analyst Trey Reik says this measure is WA-A-AY out of whack. And if it adjusts down to a reasonable level, Trey writes, it implies:
"A decline of between $36 trillion and $46 trillion in the aggregate value of the three major U.S. asset classes (stocks, bonds and real estate)."
Wait … $46 trillion? Now we’re talking real money.

But hey, let’s keep it simple. Let’s talk good ol’ fashioned P/E multiples. The S&P 500 is at 24.5. That’s a lot, especially considering lackluster earnings growth and an economy stuck in second gear.

Yeah, the P/E ratio has been higher before. During the financial crisis, and twice during the dot-com boom and bust.

Do you remember what happened to markets during those times?

I sure do. I still have the scars.

But gold, now, gold is a safe haven when the market has a heart attack. Or gets run over by a lawnmower. Use whatever metaphor you want. But you know that there will be another crisis.

When the market clutches its chest and keels over, you’ll want a layer of gold to armor your wealth. Buy it now while it’s cheap.

You know that heart attack is coming. Be ready.

All the best,
Sean Brodrick

P.S. Record-high margin debt is just another example of the market carrying too much "weight." Here’s what that may mean for stocks 

If you liked or hated this article, please comment on the original post at

Silver Miners' Dirty Little Secret

This article was originally Posted on March 30, 2017 at

by Sean Brodrick

I like silver miners a lot. I strongly believe they could lead the next leg of the precious metals bull market. I laid out a bunch of reasons why on Tuesday, in "Silver is Poised to Take the Gold."

However, there is a dirty little secret in mining: Not all silver mines are really silver miners.

By that, I mean some produce more gold than silver. Some also get large amounts of revenue from copper, lead and other metals.

Now, that’s not necessarily a bad thing. But if you’re buying a "silver" miner, be aware of just how much of its production mix is actually that metal … and not something else.

Here’s a chart of five popular silver miners. It breaks down the company’s revenue contributions by metal.

There are two obvious leaders …

First Majestic Silver (AG) derives the highest percentage of its revenue from silver. Last year, about 70% of its revenue came from silver sales.

I’ve visited First Majestic projects multiple times. Those guys are sharpies. They have given their company the motto: "One metal, one country." That’s because they own six producing primary silver mines, all in Mexico.

Pan American Silver (PAAS) is the other leader. It gets about 51% of its revenue from silver. Pan American is also the second-largest primary silver producer in the world.

It has seven operating silver mines in Mexico, Peru, Bolivia and Argentina. Three of those mines produce more revenue from gold than silver. But the silver production at its other mines manage to make silver the biggest part of its revenue mix.

There’s also an honorable mention …

Silver Wheaton (SLW) isn’t on the chart, but it’s the No. 1 (whoo-hoo!) silver producer. The reason it’s not on the chart is Silver Wheaton isn’t a miner. It’s a streamer. That is, Silver Wheaton buys "streams," or production, from other mines. Lots of ’em. And that gigantic silver streamer is hard to beat.

Then there are the others in the chart …

  •    Tahoe Resources (TAHO) gets only 40% of its revenue from silver.
  •   Hecla (HL) gets 39% of its revenue from silver.
  •   And Coeur Mining (CDE) made only 37% of its revenue from silver in 2016.
  • But wait a minute! Isn’t Tahoe known for the richness of its Escobal silver mine in Guatemala? Yes, it is.

But it bought Lake Shore Gold, which was one of my favorite small gold producers before Tahoe acquired it. And then Tahoe acquired Rio Alto and its Shahuindo project, an open-pit heap leach gold mine.

That’s a lotta gold.

What’s in a Name?

Wait one more minute! I’m leaving a big silver producer off this list — Silver Standard Resources (SSRI). I mean, it has "Silver" in the name, right? It must be a primary silver producer. Right?

Nope. Only 33.9% of Silver Standard’s revenue comes from silver. It has three big mines, and two of them are primary gold producers.

So that’s the dirty little secret of some of the world’s top silver miners. They’re actually gold miners that also produce silver.

So why are silver miners buying and developing gold mines? It’s not just to make a buck. The fact is, new, good silver mines are as rare as hens’ teeth.

And in those that do exist, the grade of the ore mined is going lower. Here’s a chart of the average grade at the world’s top seven silver-producing companies, through 2015.

You can see that grades are going down. Not surprisingly, production at the big seven is also going down.

And that brings me to one last chart …

Yep, the world hit Peak Silver. In other words, production of silver from the world’s mines has peaked. That’s according to GFMS Thompson Reuters.

Silver production fell about 3% last year. And it should keep going down. It takes years — often more than a decade — to bring a new mine online.

So that’s why I’m bullish on silver, and silver miners.

And if you’re thinking there are some good little primary silver producers I haven’t mentioned in this article, you’re right. I’ll tell you about them later. When I roll out my new publication for Uncommon Wisdom Daily.

For now, you can do your own due diligence and buy individual miners. Or just buy the Global X Silver Miners ETF (SIL). It’s a basket of rock-solid companies.

Just be aware that many of the miners held in the SIL get more of their revenue from gold than silver. That limits their stock prices’ leverage to silver prices.

And that shows just how tough it is, when a silver-biased ETF ends up owning a lot of gold miners.

All the best,
Sean Brodrick

Wednesday, March 29, 2017

Silver is Poised to Take the Gold!

Silver has its racing shoes on, and it is pulling away from the pack. Take a look at the year-to-date performance of silver, gold and the S&P 500.


The S&P 500 is up 5.77%, riding a wave of Trump-mentum. Gold is doing better, with an 8.47% gain. But silver is sprinting, with a 13.5% gain.

If silver keeps up this pace, that would work out to a 65% gain for the year.

Now, there’s nothing to say silver must keep up that pace. It could slow down. Then again, it could speed up. We’re in a new precious metals bull market, after all.

Importantly, silver is at a critical point. Let me show you another chart of silver, as tracked by the iShares Silver Trust (SLV).


You can see that silver gapped higher on Monday, jumping right to its 200-day moving average. Now, it is testing its big downtrend from August.

Silver made that gap higher on strong volume. That’s bullish, too.

It’s likely that one of two things will happen here:

  •    The less-likely thing is that silver will plow through that overhead resistance like a rampaging bull. I say less likely, but the metals have surprised us for months.
  •   The OTHER thing that could happen is silver could pull back to test its uptrend, which I’ve marked as a blue dotted line. If silver does that, I’ll be happiest.

Why? Because more coiling up means the eventual explosion higher will only be bigger. A pullback will also be an opportunity to pile into miners with exposure to silver.

Fundamentally, what’s powering this move?

Silver is Rare. Pure-play silver mines are precious indeed. Most silver comes as a byproduct of other metals. That means silver production can’t be cranked up to meet rising demand.

Peak Silver. In fact, production from silver mines peaked in 2015, according to GFMS Thompson Reuters. And it should keep going down. We’ve hit "Peak Silver."

Solar Surge. Silver is an industrial metal as well as a precious metal. Industrial fabrication makes up about 50% of silver demand each year, vs. less than 10% for gold demand.

Silver is used for all sorts of things, from wiring in cell phones to chemical reagents to the paste used in solar cells.

Many industry analysts thought solar demand for silver was peaking. That turns out not to be the case.

Prices of solar modules are falling as the industry becomes more efficient. That is stoking demand, especially outside the U.S. And that’s pointing the way to more silver consumption.

Weaker Dollar. Just like gold, silver straddles the "Seesaw of Pain" with the greenback. When one goes up, the other usually goes down. Now, the dollar appears to have peaked. And that opens the door to higher silver prices.

I hope we get that pullback in silver. It would be a buying opportunity. Silver is ready to run — the starter pistol is cocked. The race is beginning, and silver could take the gold.

Investors should get out of the way, or ride this rally for all it’s worth.

This story was originally posted on Uncommon Wisdom Daily on 3/28/2017

Tuesday, March 28, 2017

I Can Pick 'Em! Exeter Acquired for $250 Million

On March 6, while I was at the PDAC in Toronto, I ran my video interview with Exeter Resources' CEO, Wendell Zerb.

If you click through, I also explained in detail why Exeter was sitting on the next big gold mine. And I also had a chart of stock action, showing Exeter was outperforming its peers.

Now, Goldcorp just bought Exeter for $250 million. That's 2.5 times its market cap.

In retrospect, the fact that Exeter insiders were buying the stock hand over fist was kind of a clue.

More details on what Goldcorp is up to HERE.

This isn't the end of the story. It's just the beginning. There are many more acquisitions to be made in this gold bull market.


Buy This Copper Crunch

Investors are getting a case of the jitters watching copper’s recent trading action. Since mid-February, copper has been in a big correction. And it’s handing you an opportunity.

This pullback has implications for all kinds of markets beyond metals. Investors call this metal "Doctor Copper," because it has a Ph.D. in economics. When copper prices go higher, the global economy heats up. When copper prices go lower … well, you can see why people get worried.

Don’t worry. Be happy. And buy this danged pullback.

Let me show you the Big Picture in copper …

Longer term, copper broke out of a multi-year downtrend. So, some pullback is to be expected. And it’s a buying opportunity for copper and the companies that produce it.

Let me give you three copper-plated bulls for this year.

Lack of Big, Rich Deposits. Copper mines must be big to make any economic sense. They require a LOT of investment. Too bad that most of the big deposits have already been found. In fact, only six big new projects to build mines or expand existing operations will be completed by 2020.

Tightening the squeeze, the grade of copper ore coming out of the ground is half what it was in 2008. That means miners get half as much copper with every ton of dirt.

And the long bear market didn’t help. That forced copper companies to mine their richest grades. Now, that ore is gone — used up.

Watch China. Asia, especially China, accounts for 62% of the world’s copper usage. Sorry, Uncle Sam, but you use only 14%.

So, it’s bullish that imports of copper into China rose 1.9% in the first two months of 2017, to 2.7 million metric tons. In fact, Chinese copper demand looks poised to rise all year.

China is mainly used for copper wire. And a lot of that goes into infrastructure. China plans to spend $720 billion on infrastructure projects over the next three years.

Labor Troubles Squeeze Supply. So far in 2017, we have seen production stoppages at major mines like and BHP Billiton’s (BHP) Escondida mine and Freeport-McMoRan’s (FCX) Grasberg mine. Escondida alone produces 5% of the world’s copper.

Just in Chile alone, a whole gallery of copper companies face tough labor negotiations: Antofgasta with its Zaldivar Mine, Glencore with its Altonorte Mine, Anglo American and Glencore (again!) with their Collahuasi joint project, Teck Resources in its Quebrada Blanca Mine, and Lundin at its Candelaria Mine. And that means more production could be lost to strikes.

We’ve already seen 200,000 metric tons of copper production lost to strikes so far this year. Annualized, that would be 10% of global production.

Prices are made on the margin. So this all points to prices getting squeezed higher.

So why have copper prices — and miners — been under pressure lately?

Some investors fear that Donald Trump won’t be able to follow through on his plans to rebuild America’s infrastructure. A plan that requires a lot of copper.

But as I’ve shown you, the U.S. is a small piece of the global copper demand picture. China is much more important.

I think we should see a rally coming in the iPath Bloomberg Copper ETN (NYSE: JJC), which tracks copper prices.

The JJC has been in correction along with miners. But if supply gets crunched the way I think it will, this fund could follow copper prices much higher.

This story was originally posted on Uncommon Wisdom Daily 

Friday, March 24, 2017

Dollar-Yen Is Losing Its Zen

Happy Friday.

My wife and I just saw the musical "Something Rotten" last night. Highly recommended. It's the best musical comedy I've seen in years, perhaps ever. This Wikipedia page contains some inaccuracies, but gets the gist of it.

Anyway, let's talk about an opportunity that is right in front of us.

As Reuters reports: "The dollar edged up against the yen on Friday, recovering from its worst run of daily losses versus the safe-haven currency since 2010, but gains were capped by worries that U.S. President Donald Trump was on course for defeat on a new healthcare bill."

Here's a chart of the Dollar-Yen. I've added gold for shitzngiggles, as well as a trend indicator on the bottom.

As you can see, the trend in the dollar-yen is bad. It mirrors what is going on in gold. In other words, the dollar's decline is boosting gold.

Now, the dollar is going to try and bounce. It could for a few days. This could add to the pullback in gold, which I talked about in yesterday's Uncommon Wisdom Daily afternoon edition.

You can read the rest of my Thursday analysis on gold by pointing your browser HERE. Read Brad's fine column on healthcare, then scroll down to see my "Mining for Metals" column.

Now, let's get back to the first chart, the chart of the US Dollar-Yen. Look at the ADX trend indicator. It has turned bearish for the dollar-yen. It's true this is a rear view mirror. But the bearish trend really started on the 15th.

And it has plenty of room to get more bearish. There is no guarantee that will happen. But more investor disappointment in Washington could certainly deepen that trend.

So a short-term bounce in the dollar might be a short-term buying opportunity in gold and miners.

Just something to think about on this happy, yappy Friday. 

Thursday, March 23, 2017

Oil Says: Big Drop Ahead!

This post appeared yesterday at To get the news first, be sure to subscribe to our free ezine.

By Sean Brodrick
Most investors hope this market correction ends sooner rather than later. I hope that, too.
Now brace yourself for some bad news: Oil price action is telling us not to get our hopes up. Not at all.
You’ll remember on March 17, I posted a chart of the Dow Transports. That index was screaming a warning cry that all was not right with the market.
Then, on Tuesday, the Transports’ warning came true as the major indices went into "Sell! Sell! Sell" mode. Pretty much everything but utilities and gold miners fell out of bed. Hard.
You can see an updated chart of the Transports’ dire warning HERE. It still looks terrible. The bearish trend is getting stronger.
Now, the price of West Texas Intermediate Crude is chiming in. And many investors will wish the Texans kept their big yaps shut!
WTI crude is the American oil benchmark. It’s what markets use to track U.S. oil prices.
Thanks to some wheeling and dealing by the Saudis, OPEC and other foreign producers managed to put a lid on production and a floor under oil prices early last year. That agreement was reinforced at the end of 2016.
But U.S. shale oil producers aren’t part of that agreement. And recently, rising U.S. production caused oil prices to fall off a cliff.
You’ll see I’ve indicated what may be a "bear flag" on the chart. We won’t know until it resolves. But there’s a saying on Wall Street: "Flags fly at half-mast." In other words, the downward move in oil may only be half-done.
Mind you, outside events can flip the whole picture for oil overnight. It’s a very volatile commodity.
So how does oil relate to the S&P 500? Well, it turns out that corrections in oil often proceed corrections in the broader market.
Take a gander …
On top, I track the performance of oil. On the bottom is the performance of the S&P 500.
Sure enough, big moves up or down in oil are often followed by the big stock index. That’s not too surprising. Energy stocks are a big part of the S&P 500.
Now look how oil just broke its uptrend. Will the S&P 500 do the same? That would be a heck of a move. About 10% lower!
Sure, charts are an art — not a science. Just because a chart gives a warning doesn’t mean it must come true. If that were so, all chartists would be billionaires.
But there’s enough of a coinkydink that investors might want to pay heed to oil. And pray that crude finds its footing sooner rather than later.
Because otherwise oil is warning: "Look out below!"

Want to comment? Follow the LINK to the original story at 

Getting Religion on Gold

Lawyer Clarence Darrow was famously a religious skeptic. Someone asked him: "Suppose you die and go to heaven. And it turns out the conventional story is true?" Darrow replied that he would walk up to the divine judges’ bench, bow low and say: "Gentlemen, I was wrong."
Now it’s time for my true confession. I may have been wrong. On March 16, I laid out my case for gold being in a big bull market in my article, "Your Golden Opportunity."
I was bullish, sure. I said gold made a major bottom in January 2016. And the correction since July was just that — a correction to the new bullish trend.
However, I also said we probably hadn’t seen the bottom of the correction … yet.
Gentlemen, I may have been wrong.
Gold may not wait for March to end.
Here’s what I was thinking: March is usually a terrible month for gold. Look at a monthly chart of the metal. March usually sees gold stumble.
Those blue dotted lines show the month of March. Down, down, down. Even after the new bull market started in 2016, March was Debbie Downer.
Longer term, this still holds true. Since it became legal to own gold again in 1975, gold has AVERAGED a loss of 1.04% in March. That’s worse than any other month. Yeesh!
So you can see why I was hesitant to call the correction over ...

Wednesday, March 22, 2017

Bears Raise a Flag for Oil

Here's a chart of the U.S. oil benchmark

Visit to see more great charts.

I made this for a bigger story I wrote for Uncommon Wisdom today. It's about the relationship between oil prices and the S&P 500. I'm saving the best chart for Uncommon Wisdom subscribers. 

So to see that chart, make sure you subscribe to our FREE newsletter.

Tuesday, March 21, 2017

My Interview with Amir Adnani of UEC on 03-07-2017

While at the PDAC in Toronto, I had a chance to sit down and catch up with Amir Adnani. Naturally, he's bullish on his company Uranium Energy Corp (NYSEMkt: UEC). He also gives his reasons why he thinks 2017 is uranium's year to blast off again.

I posted this video and a longer story to Uncommon Wisdom Daily. You can read that story HERE

And remember, to get the scoop first, subscribe to Uncommon Wisdom Daily.

Monday, March 20, 2017

Chart of the Week Glows in the Dark

This column originally ran on Uncommon Wisdom Daily on March 17, 2017.

Gosh, not very long ago, it sure seemed like the uranium market was dead. 2016 saw uranium prices crumble to 12-year lows. Today, prices are off that bottom, but only a little.

It’s so danged bad that Kazakhstan, source of 30% of the world’s uranium supply, is cutting its own production by 10%.

Nobody undercuts the Kazakhs on price, so that’s the equivalent of a B-movie atomic-powered monster doing a face-plant. Game over, man!

Meanwhile, the guys who run uranium mining companies have been promising me that prices would rally — any week now — for three years. THREE. LONG. YEARS.

Yeah, you could say I’m a bit disgusted with the uranium industry.

Well, lo and behold. That atomic-powered monster is rising from the rubble and coming back for a sequel. Take a look at a chart of the Global X Uranium ETF (URA).

This chart shows that URA rallied big since November. In February, it started pulling back. That consolidation brought it back to nearly a 50% retracement of the big move.

If you read JR Crooks’ fine stuff, you know that 50% is a common Fibonacci retracement. It’s often tested before a stock or fund takes off again.

Now, URA has clawed its way back above its 50-day simple moving average. This can be seen as a dividing line between bullish and bearish movements.

Finally, on the bottom of the chart, I’m using a momentum indicator called the "Force Index." It’s one of my favorites.

Here’s why: Just like in Star Wars, you want someone who is strong in the Force. URA’s Force Index just switched from bearish to bullish — from the Dark Side to the Light Side, if you will. Momentum is with the bulls on this one.

So what is the URA ETF anyway? This is a basket of leading uranium producers and explorers, including Cameco Corp. (CCJ), NexGen Energy (NXE), Uranium Energy Corp (UEC) and 23 more. The URA even has the Uranium Participation Corp. (U) which holds physical uranium hexafluoride gas, among its components.

That’s a glow-in-the-dark lineup.

Now, you could buy one of those individual miners. Heck, I do it. But the beauty of the URA is you get plenty of upside without single-stock risk.

What am I talking about? Well, do you want to see a picture of a heart attack on the trading floor? Let me introduce you to Cameco, North America’s biggest uranium producer …

You can see that in January, Cameco suffered a one-day, 18.5% drop. It recovered most of that. But then it careened into a 19.5% drop. Again it recovered. Then it went into a "Slope of Nope."

By that, I mean, "You gonna buy a stock sloping like that?"


Now, this is not Cameco’s fault. Some events are beyond its control. Japan suddenly decided it was going to break long-term uranium supply contracts. Ding-dangity dang it!

But at this point, if you’re trading Cameco, the odds are better than average that you’re a masochist.

Cameco is a well-run company, and I’m sure it will be a good buy once it looks like it will put its troubles behind it.

Now go back to that chart of URA. Sure, it had a bumpy start to 2017. The whole industry was riding like an old Ford with bad shocks. But URA’s ride was much smoother than the coronary special that Cameco went through. And all the extra it charges is a 0.7% annual expense fee.

Do the fundamentals in uranium support the price action in URA? No. Not yet. But as often is the case, stocks can lead the news.

Next week, I’ll show you an interview I filmed at the world’s top mining conference with the CEO of a uranium company. He talks about the industry generally. He strongly believes prices are about to ramp up.

That’s what we may be seeing priced into URA right now.

Sure, I’m disappointed with how uranium has acted these last three years. But you can’t let emotion get in the way of trades. And now, it sure looks like that Atomic Monster is rearing its ugly head.

Pass the popcorn. This could be fun.

All the best,

See the original article at Uncommon Wisdom Daily

Friday, March 17, 2017

Why Junior Miners are on the Launch Pad

Here’s a chart that won’t just open your eyes … it could grab you right by the eyeballs. It’s a chart of exploration spending on non-ferrous (non-iron) metals. It’s used as a proxy for spending by gold and silver producers on exploration.

And it’s falling off a cliff …

The chart comes from a report by S&P Global Market Intelligence’s Corporate Exploration Strategies (CES). The report states:
"The 2016 exploration budgets by 1,580 companies totaled only U.S. $6.89 billion, a year-on-year drop of 21% and barely one-third of the level budgeted in 2012."

Gold exploration accounts for 48% of total spending. So that’s good. But as this chart from Bloomberg shows, it’s just not enough. Year-over-year, gold discoveries are plunging.

Meanwhile, the big miners are merrily producing away. But metals are NOT a renewable resource. As you take metal out of a mine, the amount you have left goes down. Unless you can find more.

A survey of the world’s biggest gold miners — Agnico-Eagle, AngloGold, Barrick, Kinross, Newmont, Newcrest and Yamana — as of June 30 2016 — shows their global reserves.

See if you can spot the trend.

Down, down, DOWN!

And that brings me to junior miners.

There’s a reason why the big companies are spending less money on exploration. There are junior miners willing to do all the hard work. They spend their own sweat, time and, importantly, money making discoveries.

Many of those juniors don’t find gold, or enough gold. They fail, run out of money … and never get to try again.

Others do find something. Something precious. Something worth developing.

And let me tell you a secret of the mining business: Explorers are not mine-builders.

These guys who explore, they love being out in the field … chasing after the next golden dream. Do you think they want to spend the next 10 years of their life looking at the same danged hole in the ground, trying to turn it into a mine?

No. Make that, "Heck no!"

For true explorers, the chase is all there is.

So they’ll sell it. They’ll sell the project to someone else. This next guy, he sees the potential. He’ll go out and raise capital and spend a lot of time and cash "de-risking the project."

Again, some fail. That shiny dream turns into so much dust. The resource won’t be as big as first imagined, or it will have the wrong geology, or the wrong metallurgy, or just the wrong darned luck.

Some projects fail. They never turn into mines. But those that are worthwhile, ah …

Now — NOW — the senior miners get interested. They have massive pipelines of future production to fill. IF the project is in the right place, and IF it combines well their existing business, they’ll buy it.

Sure, they’re paying up. They have the cash. They run freaking gold mines, for Pete’s sake. Of course they have the money.

And even though the big miners pay up, they end up spending a lot less money and, importantly, time than if they had tried to find that new project from scratch.

So the junior miners of today are sitting on the big projects of tomorrow.

And they know it.

I recently talked to a Canadian exploration company working down in a rich Mexican gold belt. They have seen their neighbors bought up left and right. And they know — THEY KNOW — they are on to something big.

Meanwhile, they have a rich silver project in another part of Mexico. Let me tell you, there are plenty of gold projects around, but very few primary silver projects that are worthwhile. This explorer believes it has a significant silver find.

So what it would like to do is sell that gold project to get enough cash to explore its silver project some more.

And from what I’ve seen, this is fast becoming the kind of market where that explorer will be able to name its price. Name it! The big miners will pay it. They have to. Go look at those first three charts. The big miners are up against a wall, and they are flush with cash like sailors straight off the boat.

They will pay up, and they will be happy to do so. That will launch this junior explorer’s share price higher.

And shareholders of this gold explorer will reap the benefits.

So stay tuned. This gold bull is just pawing the ground now. The big charge is yet to come.

Read the rest of this article at Uncommon Wisdom Daily

And if you like reading this kind of stuff, you should subscribe to Uncommon Wisdom​'s free daily ezines. There's a form on the lower right corner of the page.

Or you can always like Uncommon Wisdom on Facebook.

Wednesday, March 15, 2017

Gold Exploration Spending Is Plunging

Gold miner spending on exploration is plunging. Down 4 years in a row. Read it here. An excerpt

“The 2016 exploration budgets by 1,580 companies totaled only U.S. $6.89 billion, a year-on-year drop of 21% and barely one-third of the level budgeted in 2012,” stated S&P Global Market Intelligence’s Corporate Exploration Strategies (CES) report.

I'll tell you why. Because the big fish find it much easier to have small companies do the exploration for them. They can then buy those companies on the cheap when they find something. 

But two questions ...

  • Gold explorers are trading at stupid discounts right now. What happens when that discount goes away?
  • As more gold explorers get bought, there are less good ones to choose from. Will those companies start trading at a premium?

In other news, the Fed dishes up "Goldilocks" announcement for the gold market. Some stories from Kitco:

Transports Utter a Warning Cry

Do you believe in Dow Theory? If so, then the fact that the Dow Transports are not confirming the rally in Dow Jones Industrials is a distinct warning sign for the market. I've uploaded a chart with a quick explanation of how Dow Theory works (as I understand it).
Be careful out there.

Tuesday, March 14, 2017

Nobody Expects the Spanish Inquisition

Something very interesting happened last week. The $NYAD -- the New York Advance-Decline Line -- turned lower and broke its uptrend.

So far, the broad New York Stock Exchange index hasn't followed suit. So far ...

The Advance-Decline Line (AD Line) is a breadth indicator based on the number of advancing stocks less the number of declining stocks. In this case, all stocks listed on the New York Stock Exchange, including foreign ADRs.

What this means is that less stocks are participating in rallies on the NYSE. The market is holding up, but that's thanks to outsized gains among fewer leaders.

The action in the $NYAD is often seen as a good predictor of what happens in the broad $NYA, or stocks listed on the New York Stock Exchange.  It reveals things hidden by the actions of the big leaders.

Here's another tell. Insider buying is drying up fast. In other words, company insiders aren't interested in buying their own stocks. As the Wall Street Journal reports ...

"There were a total of 279 insider buyers in January, the lowest number going back to 1988."

What's this mean? Well, considering all the cheerleading going on for the broad stock market right now, you might want to prepare to expect the unexpected. Certain industries could still rally, sure. But for the broad market, a tradeable correction may be on the horizon.

Thursday, March 9, 2017

Two Crises that Could Drive Gold Short-Term

The stock market just hit new highs. We're gonna Make America Great Again! What could go wrong?

Plenty! In fact, there are two crises that could rear their ugly heads in the very short term. And both could be price drivers for gold.

The Ides of March

First, on March 15 -- the Ides of March -- America hits the debt ceiling negotiated by President Obama and then-Speaker of the House John Boehner. That's $15 trillion.

The last time, two adversarial sides negotiated a deal after much kicking and screaming. This time around, Wall Street expects the debt ceiling to just be a speed bump. The Republicans are on Trump's side, they'll raise the debt ceiling, and Trump can go on to spend more on infrastructure and military, while slashing taxes and health care.

But what if Congress doesn't play along so meekly? There are some particularly stubborn parts of the Republican Congress that may not roll over so easily.

I do expect Trump to win that battle eventually, but I could be wrong. In any case, the brouhaha could shake the markets and whip gold around.

What happened last time? Well, let's set the stage. It was March 2013. Gold was in the depths of a bear market. The President and the Republican-controlled Congress were at loggerheads. A crisis loomed.  It was called "Sequestration."

Here's a chart showing the action in gold and the U.S. dollar during the crisis. Since they move on vastly different scales, I have used a price scale for the greenback and a performance chart for gold.

The U.S. dollar ran up into the crisis. As I said, gold was in a bear market. When the dollar really started to ramp, gold fell initially. But then it found support -- and even went higher.

The Sequestration crisis probably had a lot to do with gold's support. After the crisis passed, gold plunged like it jumped off a bridge. The bear market went back into its grind.

Fast forward to today. I've told you how gold and gold miners are back in a bull market. These markets are cyclical. Some stubborn cement heads insist that gold won't be back in a bull market until it crosses above $1,400. Those dudes will miss a good chunk of the move.

Here's a cyclical chart of the Gold Bugs (gold miners) index I showed the folks at the PDAC, as well as the recent Money Show in Orlando.

It shows the cycle in gold miners playing out. These cycles usually run 4 to 5 years. And if you believe Mickey Fulp, up to seven years.

So, will gold act differently in this new budget crisis? I don't know. I do know the odds favor some kind of impact.

The Tides of Politics

Now for the bad news. That's not the really big crisis looming over our heads.

After all, Washington may be overrun with dunderheads, but they'll get through it. No, the big crisis is looming in France. That's where Marie Le Pen is going to win the next Presidential election. Probably on April 23, though there is a second round of voting in May if there isn't a majority winner the first time.

Most political bobble-heads do not believe Le Pen, a populist, will win. So why do I believe Le Pen win?

For the same reason I predicted Donald Trump would win. I first predicted his victory last February at a Money Show event. I pounded the table again about a Trump victory in a July column for "Where to Invest Before Trump Takes the White House."

Here's the reason: Voters are feeling stiffed, ignored, and even cheated by the ruling elite. They're in a "throw the bums out" mood. In the U.S., that mood was captured by Trump. In France, it's Le Pen.

And it doesn't matter who you WANT to win. As I say over and over, it's who's most likely to win.

Now, one place I was wrong was in predicting Trump's victory would boost gold. It didn't, at least at first. Gold sold off (because "sell the news," I guess). Gold's rally was delayed but not denied.

Because we're in a new gold bull market. 

Le Pen has made noises about leaving or at least shaking up France's relationship with the European Union. 

So, her victory will likely send the euro reeling, and boost the U.S. dollar. But it could also boost gold.

And here's something both crises I have mentioned here could do: Give the Fed reason to pause in its rate hikes.

Investors are worried the Fed rate hikes will weigh on precious metals. They have been selling gold and silver ahead of a feared staircase of rate hikes.

What if that view changes?

Mind you, I don't think rate hikes are bad for gold anyway. In an inflationary environment, rate hikes rarely keep up with the real rate of inflation. So, gold goes higher as an inflation hedge.

What now, if the Fed decides to pause? What could happen to gold, silver and miners then?

I say be ready. The tides are shifting in gold's favor. The next wave could be a great ride.

Wednesday, March 8, 2017

Gold Pulls Back -- Grow Some Cajones!

So I want to know the name of the supervillain, the evil mastermind, who has invented an amnesia ray. No doubt as part of a plot to conquer the world. Bwa-ha-ha-ha!

The fools! He'll show them all!

There must be an amnesia ray. Because every danged year, precious metals investors lose their minds -- or at least their memories -- about this time.

Sure, last year was a little different in the miners. But we were coming out of a 4 1/2-year bear market in gold. Of course things are going to be a bit screwy.

And as the old saying goes: History doesn't repeat, but it often rhymes. Right now, the market is dropping a beat set to the squealing of panicked investors in precious metals.

Never mind that gold does this every year. And gold miners do it nearly every year.

Here are two charts to show you what I mean. First, gold ...
(Updated chart)

Using closing prices, we can see that gold rallied starting at the end of 2015. It rallied on into the end of February. It then took a break in March, to the tune of a 3.65% drawdown. Then it jumped again in April, slumped into May-June, then bolted higher into July before slip-sliding lower again.

Then, this year, gold started rallying in December. That lasted until early February. Then the correction started. We've seen a 3.85% drawdown so far.

Boy, does that look familiar.

No, I'm not calling a bottom in gold. But we're a lot closer to the bottom than the top.

Now, let's look at gold miners.

(Updated chart)

Last year was weird. Gold miners didn't slump along with the metal in March. They only paused for a 1-week, sharp correction. Then they blazed their own path higher into May. That's when the big correction came. Then gold miners resumed their sprint until July. 

Does anyone remember any of this? The market sure acts like it doesn't. Buddy, that is one heck of a super-villain amnesia ray at work. We'll be receiving the super-villain's demands any minute. Let's hope we remember to pay the ransom.

The point is, we are closer to a bottom than the top. And I would prefer to buy things on sale, thank you very much, rather than pay top dollar.

So to all the nervous Nellies out there -- man up! Grow some cajones. Precious metals are not for whiny cry-babies. There's a reason for that: the rewards can be downright extraordinary. 

And now, now you get to buy the best miners, explorers and developers on sale. If we're really lucky, the sales prices will get marked down even more. 

The best is yet to come. Be ready for it.