Options
***JANUARY 2013 Gold and Silver Stocks/Options/Futures trading thread***
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This is a continuation of the monthly trading thread to discuss the trading of PM-related stocks, options, and futures.
On Dec 31, gold completed a 38.2% retracement of the last move down. I have no predictions on where it goes from here, but now the patter is "free" to go lower if it chooses.
Gold and palladium finished the year up 6.9%, silver finished up 8.4%, platinum up 9.6%, and the SP500 finished up 13.3%.
On Dec 31, gold completed a 38.2% retracement of the last move down. I have no predictions on where it goes from here, but now the patter is "free" to go lower if it chooses.
Gold and palladium finished the year up 6.9%, silver finished up 8.4%, platinum up 9.6%, and the SP500 finished up 13.3%.
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Comments
Keep an open mind, or get financially repressed -Zoltan Pozsar
<< <i>Is the "bookstore" getting ready to break out higher and void that double top?
Nope, I dont think so. It is just testing broken uptrend and channel lines. It needs to trade about $10 higher and maintain to convince me otherwise. But risk/reward is HUGE. Risk $10 upside for over $100 downside. Dont get many opportunities like this one is setting up.
Gold and silver at critical points. Any further sustained downside and its going to be a very ugly year.
Knowledge is the enemy of fear
<< <i>effect of QE on S&P 500. Note that each successive QE has resulted in a less vigorous increase in equity prices. Is the FED's ability to jig the market running out of gas? Will bigger amounts of money need to be created to quinch the thirst?
Probably a similar if not worse looking graph for PMs.
Knowledge is the enemy of fear
<< <i>Probably a similar if not worse looking graph for PMs. >>
I know you're good at making charts, and you know exactly what it looks like.
Stocks do look ready to rally in the near term.
<< <i>
<< <i>effect of QE on S&P 500. Note that each successive QE has resulted in a less vigorous increase in equity prices. Is the FED's ability to jig the market running out of gas? Will bigger amounts of money need to be created to quinch the thirst?
Probably a similar if not worse looking graph for PMs. >>
Undoubtedly PMs are an unintended consequence of QE. But, the question remains - Will bigger amounts of money be needed to quinch the equity thirst? After all equities are the intended beneficiary.
Undesired, positive affect on PMs can be dealt with. Can't recall the last time I saw a margin requirement increase for equities.
Keep an open mind, or get financially repressed -Zoltan Pozsar
The struggle at key support continued today. PMs NEED to hold the last few weeks levels.
Knowledge is the enemy of fear
<< <i>Probably because the requirements to equities are already MUCH HIGHER than for PMs.
The struggle at key support continued today. PMs NEED to hold the last few weeks levels. >>
PMs are going lower, but that will not prevent them from going much higher.
Keep an open mind, or get financially repressed -Zoltan Pozsar
<< <i>
<< <i>Probably because the requirements to equities are already MUCH HIGHER than for PMs.
The struggle at key support continued today. PMs NEED to hold the last few weeks levels. >>
PMs are going lower, but that will not prevent them from going much higher. >>
But what about the PMs are going higher cuz QE to da moon talk? So people are supposed to be comfortable with losing 40% of their money. What a scam this PM thing is turning into. Its ok if you lose 1/2 your money, because you will get it back someday!!! Yeah, ok.
Knowledge is the enemy of fear
auction week (3-10-30 yr). Would not surprise me to see PMs do ok for the next 2-3 weeks. But there's a good set up in the last 5-6 trading days of the month to time a nice hit.
I doubt the commercials will let that opportunity go by. With junior miners (GDXJ, GLDX, CDNX) outperforming the seniors since mid-December, that's another positive signs that
things are trying to turn around. GDX was dragged down today by lousy reports from Barrick and AU. There's also the intermediates (EGO, AUY, GOLD, AEM) they still may be
trying to fill deeper gaps. Those guys could help drag things down a bit further.
What PMs have lost 40% of their price on this latest 3 month correction? Or are we still referencing the $50 silver peak from April 2011? I'm still waiting for someone to show
me a single live person that bought silver at $50. If there is such a person it's probably the same guy again that bought silver at $50 in January 1980.
I'm glad I was scammed into buying silver at $4.50 back in 2003-2004. How come the SEC doesn't investigate the "scam" of $700 Apple, $38 Facebook, CMG, or Green Mountain Coffee?
At least the CFTC spent 4 years "investigating" claims of silver manipulation by big banks. Took them 4 years to find "nothing." What are the odds of that? How many other govt
investigations lasted 4 years and found nothing? A gold medal should be awarded for persistence. The CFTC might be a good choice to audit Fort Knox too. 4 yrs to find nothing.
People that held on to their dollars since 2001 lost at least 33% of their money. How come no investigation there? Many coins lost 30-40% from summer 2008 to 2009. Scam?
If gold is such a scam how has it closed higher for 12 consecutive years? Had the stock market done such a thing, there would be permanent euphoria all across the nation. I'm sure
there are some bears out there that have bet against gold for 12 yrs straight. Maybe we should talk to them about the scam?
<< <i>
<< <i>
<< <i>Probably because the requirements to equities are already MUCH HIGHER than for PMs.
The struggle at key support continued today. PMs NEED to hold the last few weeks levels. >>
PMs are going lower, but that will not prevent them from going much higher. >>
But what about the PMs are going higher cuz QE to da moon talk? So people are supposed to be comfortable with losing 40% of their money. What a scam this PM thing is turning into. Its ok if you lose 1/2 your money, because you will get it back someday!!! Yeah, ok. >>
Losers in PMs have been those that panic sell. I have purchased silver for 17, watched it drop to 11 and sold it for 40. Even though the price dropped while I held it, I never lost money on it. Will this bull trend continue forever? Of course not, but that is no reason to deny it exists.
You really need to start viewing PMs as just another asset class and not some overated, juju miracle cure. It is this view of them that convinces you everyone else has fallen under their spell. Get over the fact that this class of assets has been performing better than you think it should.
Keep an open mind, or get financially repressed -Zoltan Pozsar
<< <i>But what about the PMs are going higher cuz QE to da moon talk? So people are supposed to be comfortable with losing 40% of their money. What a scam this PM thing is turning into. Its ok if you lose 1/2 your money, because you will get it back someday!!! Yeah, ok. >>
Better than losing the value of your FRNs by letting them sit in your bank account. You will NEVER get that value back.
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Keep an eye on junior and beaten uranium "miners". This beaten down sector is attracting some attention lately. MJ >>
other miners as well:
Pan American Silver (PAAS) Shares Cross Below Book Value
Keep an open mind, or get financially repressed -Zoltan Pozsar
oil services and base metal miners and into gold/silver miners? Molycorp got whacked on lowered estimates for 2013. Not every beat down miner is a buy. Today SSRI
got smacked because they are adding $200 MILL in convertible bonds....15% of market cap. Sometimes just using an ETF can shield you from these out of the blue hits. A lot
of miners will probably end up selling/trading for below book value just because of the jurisdictions they are in. PAAS has some exposure to Bolivia and Argentina. SSRI has heavy
exposure to Argentina. Not some of the best jurisdictions to mine in.
I like the weekly trend change in the 10yr/2yr treasury yield ratio as well as in CDNX and XAU/TNX. GSr is teetering on the edge of a cliff right now. Could still spring back for one
more leg higher though. All 4 of these moving in the right direction is a big plus for PMs.
<< <i>effect of QE on S&P 500. Note that each successive QE has resulted in a less vigorous increase in equity prices. Is the FED's ability to jig the market running out of gas? Will bigger amounts of money need to be created to quinch the thirst?
Don't forget QE1 and 2 expanded the balance sheet hugely, in Aug 2008 the Fed was at 900 billion.
By november 2008 it was 2.2 trillion thats a huge jump at the QE1 point
QE2 was slower and much smaller
Operation twist didn't expand anything it was a wash
Its 2.9 trillion now
Without QE3 the balance sheet is deflating by 500 billion maybe by the end of 2013 . QE3 halts the slide at 2.9 trillion so far . Now QE4 is stepping up to the plate with 45 billion in treasury purchases a month . Is QE4 designed to pump it to 4 trillion or hold it where it is ?
Currency swaps that are never cancelled but perpetually renewed?
TBond and TNote purchases - typically $50-100 BILL every month. A significant % of this are new purchases, not recycled ones.
Fed's foreign custodial account - $3 TRILL last I looked.
$1.8 TRILL increase in bank reserves from 2008-2010 which have allowed the big banks to continue betting at will.
M2 increase year after year of $800-$900 BILL.
Unlimited otc derivatives that essentially bring in paper income to the big banks. In 2011 they added $100 TRILL notional in < 6 months. No matter how you cut that, it's at
least $1 TRILL in actual "cash" value.
<< <i>The struggle at key support continued today. PMs NEED to hold the last few weeks levels. >>
So far so good, but still tenuous.
Knowledge is the enemy of fear
Copper is about to make a major direction change.
Knowledge is the enemy of fear
should support rising commodity prices, copper included. Year 13 for gold looking from here. PMs and oil/gas should lead. If it weren't for the $900 TRILL in otc interest rate contracts out there, I'd say the 30 yr bull market in bonds in over. But the 800 lb. gorilla might not be agree.
Keep an open mind, or get financially repressed -Zoltan Pozsar
<< <i>I'm contemplating some GDXJ. >>
Why would you give up all the leverage that you currently get in the other 2X and 3X ETF's? Those seem to work well for you.
Fwiw GLDX and CDNX (tiny juniors, explorers and ventures) are outperforming GDXJ and GDX. GLDX has been in bullish mode for weeks. GDXJ and GDX still trying
to get into breakout mode. They're waiting for gold while GLDX didn't bother. We're only a couple days from next week's miner OE. Miners usually get hit during
the Tues-Thursday of those weeks. But there have been exceptions where at the start of strong bull runs they either got through the week flat or saw hits early (Mon-Wed)
and a strong rise by Friday. If it were me, I'd probably wait until mid-next week and see if this last gap up doesn't get filled first. GLD and SLV filled their lower gaps on Friday.
But GLD still has one slightly lower at 159.5. GDXJ has an hourly gap around 19.9.
Keep an open mind, or get financially repressed -Zoltan Pozsar
I'm not sure why. Maybe I'm just an idiot.
I knew it would happen.
Charts 35 and 36 show bullish sentiment readings being at levels seen at most 6X in the past 6 years. Along with Hulbert GSI that's 3 of them.
I would disagree with their finding from chart 47. While "cash margins" maybe increasing, cash costs are only about half the costs of a producing miner. Just in the past couple
of years tax costs/royalties have risen from $150/oz. Current average all-in costs for large gold miners is about $1400-$1500/oz. Exploration, mine construction, and cost of supplies-
energy-electricity-labor have not been managed well. The industry is getting away from valuation based on total reserves in the ground (pie in the sky) vs. gold actually coming out of
ground.
First, silver demand from Exchange Traded Silver Funds (ETFs) is repeatedly setting new historic highs. It currently stands at around 18,760 tonnes of silver -- or about 80% of all the silver mined in the world, in a year. And more silver is getting siphoned off the market by the ETFs almost daily.
In addition, hedge funds and institutional investors are sharply increasing demand for silver through silver futures contracts. Indeed, the US Commodities Futures Trading Commission reports the number of silver contracts have increased 12-fold since the end of June to a net of 34,862 futures and options.
<< <i>I get some spam/newsletters and thought these comments were worth passing on:
First, silver demand from Exchange Traded Silver Funds (ETFs) is repeatedly setting new historic highs. It currently stands at around 18,760 tonnes of silver -- or about 80% of all the silver mined in the world, in a year. And more silver is getting siphoned off the market by the ETFs almost daily.
In addition, hedge funds and institutional investors are sharply increasing demand for silver through silver futures contracts. Indeed, the US Commodities Futures Trading Commission reports the number of silver contracts have increased 12-fold since the end of June to a net of 34,862 futures and options. >>
Hard to believe those stats when silver is vacillating.
That's still a relatively hefty level of net short to start a rally from. But it's possible as the commercial short to long ratio (futures only) is down to 1.91, typically a neutral to bearish
level.
I knew it would happen.
Knowledge is the enemy of fear
<< <i>Still riding the 7 month uptrend line.
Copper is about to make a major direction change. >>
Some more in depth analysis on copper.
Knowledge is the enemy of fear
Platinum prices have eclipsed Gold for the first time since April of last year. Last year, we saw the Platinum:Gold ratio fall to the lowest level since 1985 due to economic uncertainty. While Gold is expected by many to have a strong 2013, it may, in fact, be Platinum that has a banner year. Auto Sales are seen rising 2% globally to a new record. At the same time, Anglo American Platinum, or Amplats, has been mothballing older, less productive mines, which is going to stress already tight supplies. Technically, the 17305 level will be key going forward. If prices are able to break through 1730, there is very little resistance until well into the 1800's. Failure to break through 1730 could result in consolidation or a correction.
<< <i>I have never seen a single company report that mining costs are $1400/oz. All of the biggies pull it out of the ground for less than $700. NEM is "printing" money. >>
Of course you haven't as such a number never shows up in a quarterly report. Mining companies only report operational/cash costs to give investors a prettier and more
comparable number to look it. Bottom line is while it's pretty, it's not accurate, and certainly not comparable. The "cash" costs don't include a pile of things which is
covered in that article I linked. Cash costs are approx 50-60% of the "all in" cost to mine. True way to get "all in" costs is to divide real profits by ounces delivered. This the only
way to determine true profitability and comparability. That's why none of them do it. If the miners like Newmont were truly raking in the money, their share prices
wouldn't have gotten clobbered the past 1-2 years. Bottom line is that cash costs rose sharply as well as the "all - in" costs. Barrick learned this lesson the best with its
Pascua Lama project (straddles Chile and Argentina). They've sunk a ton of money into this project, most of which doesn't show up in cash costs. A mine that was supposed to
cost several billion to build is now double that. It's also been delayed numerous times. None of this will show up in cash costs....just the share price.
I love ya, RR, but really? Is there anything in which you do not see conspiracy or manipulation?
Knowledge is the enemy of fear
Liberty: Parent of Science & Industry
<< <i>Of course you haven't as such a number never shows up in a quarterly report
I love ya, RR, but really? Is there anything in which you do not see conspiracy or manipulation? >>
What conspiracy or manipulation with Newmont? You said that cash costs are $700/oz and that they are raking in the money. That's not quite the case. And the
primary reason is that cash costs aren't remotely close to their total costs. NEM's $200 MILL in profits on $10 BILL in sales isn't a whole lot (2%). Their P/E is >100.
Their debt/equity is .46....fairly high for a large/intermediate miner. There are some miners that are doing very well such as AUY....but not NEM. But, they will eventually
make the appropriate corrections and get things back on track.
Considering that most of what we talk about around here is related to economics, PMs, govt reports/stats, and financial markets....then there is relatively little that isn't
manipulated or even worse, conspiratorial. Colonel Nathan R. Jessup and I are after the truth, and enjoy going outside to find it.
As far as finding something not manipulated in the above areas, I can't think of anything off hand.
If I go out and buy a truck for $50K and use it for work which generates $50K in profit for me, then I did in fact make $50k, not 0. Capital costs are much different from operating costs.
A couple more days of chop, then the big move.
Knowledge is the enemy of fear
When I read something like this article, I think that it could get mighty choppy, might fast:
What happens after the default x-date?
I knew it would happen.
Zero Hedge link
Authorized Purchasers, The United States Mint has temporarily sold out of 2013 American Eagle Silver Bullion coins. As a result, sales are suspended until we can build up an inventory of these coins. Sales will resume on or about the week of January 28, 2013, via the allocation process. Please feel free to call us if you have any questions. Regards, Jack A. Szczerban Branch Chief, Precious Metals Group Department of the Treasury United States Mint
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<< <i>US Mint out of Silver, suspends ASE sales.
Zero Hedge link
Authorized Purchasers, The United States Mint has temporarily sold out of 2013 American Eagle Silver Bullion coins. As a result, sales are suspended until we can build up an inventory of these coins. Sales will resume on or about the week of January 28, 2013, via the allocation process. Please feel free to call us if you have any questions. Regards, Jack A. Szczerban Branch Chief, Precious Metals Group Department of the Treasury United States Mint >>
says they're out of silver coins, not silver. They can make plenty more silver coins provided they have silver.
Keep an open mind, or get financially repressed -Zoltan Pozsar
<< <i>
<< <i>US Mint out of Silver, suspends ASE sales.
Zero Hedge link
Authorized Purchasers, The United States Mint has temporarily sold out of 2013 American Eagle Silver Bullion coins. As a result, sales are suspended until we can build up an inventory of these coins. Sales will resume on or about the week of January 28, 2013, via the allocation process. Please feel free to call us if you have any questions. Regards, Jack A. Szczerban Branch Chief, Precious Metals Group Department of the Treasury United States Mint >>
says they're out of silver coins, not silver. They can make plenty more silver coins provided they have silver. >>
If you really believe that nuance, I have a bridge to sell you in Brooklyn.
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<< <i>I'm just now reading Jim Willie's letter published in late December. He doesn't feel good about gold stocks. >>
Where was he a year ago. JW sounds like a good fade.
<< <i>
<< <i>
<< <i>US Mint out of Silver, suspends ASE sales.
Zero Hedge link
Authorized Purchasers, The United States Mint has temporarily sold out of 2013 American Eagle Silver Bullion coins. As a result, sales are suspended until we can build up an inventory of these coins. Sales will resume on or about the week of January 28, 2013, via the allocation process. Please feel free to call us if you have any questions. Regards, Jack A. Szczerban Branch Chief, Precious Metals Group Department of the Treasury United States Mint >>
says they're out of silver coins, not silver. They can make plenty more silver coins provided they have silver. >>
If you really believe that nuance, I have a bridge to sell you in Brooklyn. >>
Per the Mint: "Sales will resume on or about the week of January 28, 2013."
sounds to me like they're not out of silver, just coins. Most likely their procurement and production process was temporarily overwhelmed by initial demand.
Reason I don't have a bridge to sell is I don't buy them.
Keep an open mind, or get financially repressed -Zoltan Pozsar
Hey, that rhymes. LOL
Knowledge is the enemy of fear
Keep an open mind, or get financially repressed -Zoltan Pozsar
<< <i>PE on NEM is about 12.
If I go out and buy a truck for $50K and use it for work which generates $50K in profit for me, then I did in fact make $50k, not 0. Capital costs are much different from operating costs. .
The difference being is that the big miners have been investing huge sums of money that is not yet generating revenue for them or may never generate revenue for them. Look at Kinross. They acquired the Tasiast Project when they acquired Red Back mining for something like $7 BILL. A year or two later and they've written down 50% of the project due to overestimating the resource base and underestimating the difficulty in building the mine. Barrick has added Billions in costs and delays >1 yr into its Pascua Lama project. Road blocks continue to be put in front of this project. The final one will be the act of mining efficiently at 17,000 ft altitude in the Andes mountains. Barrick is a 50% partner in Nova Gold's huge Donlin Creek project. But they decided not to spend any additional dollars on that until the winds of change return to the sector. AngloGoldAshanti is a 50% partner in Northern Dynasty's huge Pebble project, the world's largest gold/copper deposit yet to be mined. AngloGold is not dumping much more money into that hole until the environmentalists start losing their momentum. That project may never be built. All this has been typical of the sector, that is, spending big money on below ground reserves and then finding out there are many new issues with getting the mine started/permitted. Donlin and Pebble are at best 4-7 years away, if they ever get built. Pascua Lama was projected for 2012, then 2013, and now 2014. It would not surprise to see it slip further in 2015. If building a mine were as easy as spending $50K on a truck Barrick would have spent the $3 BILL on Pascua Lama in 2009 and started her up. Unfortunately, permitting and building a mine has little in common with buying trucks. Newmont's PE is listed as 206 on yahoo finance and 111 on finviz. Maybe you're looking at foward/wishlist PE which is 9 on finviz. Capital costs are much different from operating costs. But both subtract from the bottom line. Building "mines to nowhere" is
capital intensive but production senseless. Fortunately, the seniors have finally figured this out.
I'm going to have to remember that one. I'm still miffed that I didn't get ANY bailout or stimulus dollars.
You might wanna take a fairly close look at Jim Sinclair's comments today. I'm beginning to see how he sets his price targets for gold. I think he bases alot on the Treasury Bond scheduling, in addition to his knowledge of the markets involved. He's a heckofa resource.
I knew it would happen.
<< <i>Anyone else think a big plunge is coming in stocks? Today or early next week... Of course there could be a big market surprise to the upside, but I'm not so sure. >>
I don't like the big drop in the VIX today. Maybe just options related, but given that stocks are at a minimum overbought and the NASDAQ has a big gap, I'm not playing the long side.
Knowledge is the enemy of fear
<< <i>
<< <i>Anyone else think a big plunge is coming in stocks? Today or early next week... Of course there could be a big market surprise to the upside, but I'm not so sure. >>
I don't like the big drop in the VIX today. Maybe just options related, but given that stocks are at a minimum overbought and the NASDAQ has a big gap, I'm not playing the long side. >>
I think that just happened because the markets broke 5 year highs on Friday.