TheDailyGold Free: Gold vs. Currencies, Commodities, Equities & Bonds

Published: Tue, 07/29/14

Sunday, July 27, 2014
Argonaut Gold Corvus Gold
Balmoral Resources


Here are some links for you to consider....

More Weakness Ahead for Miners?
We wrote this Thursday night. Friday's end of day ramp completely altered the weekly charts. Nevertheless, if Gold can't push higher from here then I doubt the mining stocks will breakout. 

Interview with Erik Townsend, Hedge Fund Manager
I'm intending to do a Friday interview from here on. Erik provides his near term outlook for Gold and what he thinks will drive it higher in the future. Take a listen. I think you will get value from Erik.   

Dan Norcini: Weak Chinese Demand Undercuts Gold
This was posted on Thursday, FYI. 

Chart Freak's Analysis of PMs
I've corresponded with this trader in the past and find him to be very good. He's traded PM shares since the start of the bull. He's definitely worth following. He thinks Silver will be key this week.  

Premium Snippets

At turning points and for Gold in particular, relative performance is quite important. When people buy Gold they are effectively passing on another investment or market. Hence, it is always important to check how Gold is performing against other markets. In the chart below from top to bottom we plot Gold against foreign currencies, commodities, equities and bonds. What is this chart telling you about Gold's relative performance?


Gold looks fine against foreign currencies, good against commodities but has yet to breakout against equities or bonds. We've noted that 0.75 is the important point for Gold/S&P 500. Gold appears close to breaking out against bonds. It could happen suddenly but the price action says its farther away. The action in gold and gold stocks relative to the stock market is something I will carefully watch this week. I think this is more important than the US$. As I showed you last week, correlation analysis shows no negative correlation, recently, between the US$ and Gold. I think at the present time the strength of the equity and bond market is more of a headwind for a sustained recovery in precious metals than a falling US$. Take a look at what happened during Gold's bottoms in 2001, 2005 and 2008. The US$ went up with Gold. The two can go up together.  

Overall, the short term trend is difficult to call. I believe the miners are still in consolidation or corrective mode but Friday's recovery puts that in doubt just a bit. I reduced long exposure a bit this week by trimming the weakest position and those which could have material downside. I also hedged a bit. If the stocks breakout then I can make a few trades and be fully long. If the sector continues to consolidate or correct then I will keep an eye on the relative strength of my positions. To repeat what I said last week:

We want to sell non-performers and reduce overweighted stocks which are not performing strong enough. The stocks that hold up best during this correction, if it materializes, should be the leaders during the next breakout. Meanwhile, stocks that are underperforming and acting poorly figure to lag in the future.

In addition to our technical expertise, we publish company reports and update them every quarter or so. Companies are starting to report Q2 production but financials won't be out for several more weeks. 
In the company reports we look at the company's valuation, margins, production potential and various metals prices in order to come up with a viable price target or range. Combine that with the company's chart and one can get an idea of the potential. Upon signup, you will be sent many reports. One is a 55-page file with reports on 12 producers.  

To my knowledge there is only one other newsletter that has a real money portfolio to follow and his service is more than 5x the cost of ours. We publish a weekly update (usually 25-30 pages) with the information you need to know and not the perma-bullshit that litters this space. We are the only editor of a newsletter that is a credentialed technical analyst and we spend ample time reviewing company fundamentals. We also hired a research associate who helps us research numerous companies in order to find the one's with the most potential upside. This is another value add for subscribers. 

In my opinion there is no other service which provides the volume of technical research that we do combined with a focus on company fundamentals. 
I appreciate my subscribers because their support allows me this labor of love. Click below to learn more about our service and watch the video for details.

Thanks for reading. I wish you all great health and prosperity in 2014 and beyond. 



Disclaimer: Sponsor Companies are paid sponsor companies of website and this free newsletter. Do not construe sponsorship with a recommendation. The author of this newsletter is not a registered investment advisor. This newsletter is intended for informational and educational purposes only and should not be considered personalized and individualized investment advice. Investment in the precious metals sector contains significant risks. You should consult with an investment advisor and due your own due diligence before making any investment decisions. This email may contain certain forward looking statements which are subject to risks, uncertainties and a multitude of factors that can cause results and outcomes to differ materially from those discussed herein. 

Argonaut Gold Corvus Gold
Balmoral Resources