"Diamond" Pattern Pushed Gold To Sky Vs. Silver

I appreciate active readers of the Blog for leaving valuable comments on Gold and Silver posts. Recently, there have been a lot of thoughts shared not only about the metals itself but also about its relationship reflected in the dynamics of the Gold/Silver ratio. I think it’s time to talk about it in this post. Please feel free to enrich this piece with your valuable thoughts in the comments section.

Back in December 2014, I shared only the third post here on the Blog. The title was more appropriate for a science fiction novel as it promised the “journey to the Moon” for the Gold/Silver ratio as it was going to hit the 109 ounces. Below is that very chart from the distant 2014 to refresh the memory.

gold silver

The idea was based on the “Diamond” pattern spotted on the monthly chart (blue). The target was reached more than five years later on the 16th of March this year. The total gain is equal to 109 - 72 = 37 troy ounces of silver per troy ounce of gold or 51% in five years.

Let’s see in the weekly chart below the ratio dynamics after that post. Continue reading ""Diamond" Pattern Pushed Gold To Sky Vs. Silver"

U.S. Crude Oil Production Fell Sharply In April

The Energy Information Administration reported that April crude oil production averaged 12.061 million barrels per day (mmbd), down 669,000 b/d from March. Reductions were largest in Texas (234,000) and North Dakota (195,000).

Crude Oil

Given the large reduction in April, crude oil production dropped by 62,000 b/d over the past 12 months. This number only includes crude oil. Other supplies (liquids) that are part of the petroleum supply fell by an additional 560,000 b/d from a year ago. Continue reading "U.S. Crude Oil Production Fell Sharply In April"

Facebook Boycott: Here We Go Again

If the Cambridge Analytica fiasco, one mishandled public relations incident after another and numerous earnings calls that went down as some of the biggest blunders in history wasn’t enough, now enter an international advertising boycott. Here we go again, Facebook (FB) investors have been through a lot over the past two years. Now another challenge is confronting the company via an advertising boycott that’s growing into the hundreds of multinational companies. This challenge may weigh heavier on the company since this boycott will directly impact revenue as expenses swell. The magnitude of this boycott will inevitably influence the stock price as this movement grows in numbers and duration. If Facebook can appease advertisers in a timely fashion, then this may be a temporary challenge. However, as advertising spending is abandoned indefinitely due to this boycott and overall spend slows due to COVID-19, this culmination could cast uncertainty around its stock valuation. Thus far, over 400-plus brands have fled Facebook.

Boycott Growing In Numbers and Duration

International household names such as Adidas, Best Buy (BBY), Clorox (CLX), Ford (F), HP (HPQ), Starbucks (SBUX), Coca-Cola (KO), and Verizon (VZ) have joined the advertising boycott across Facebook and its platforms. Companies are jumping on the bandwagon daily, including a significant recent addition of Microsoft (MSFT). Total advertisers that have abandoned Facebook and its Instagram properties have now ballooned to over 400 organizations. With an undefined timeframe of how long these advertisers will stay away from Facebook may dampen revenue expectations. Another complexity that may arise is the ability to appease the collective group of advertisers in order to bring all of these companies back to the platform. Continue reading "Facebook Boycott: Here We Go Again"

The Fed Is Buying These ETFs - Part 2

In part one of this piece, I pointed out what ETFs the Federal Reserve had purchased as of May 19th. Since then, the Fed has purchased more of these ETFs and began buying corporate bonds directly, not through an ETF.

In this piece, we will look at whether or not you should follow the Fed's footsteps and buy these funds or other bond ETFs, or whether you should find your own path and buy non-bond ETFs in the days, weeks, and months to come.

The first issue with the Fed buying bond ETFs is that the demand for said ETFs likely rose when the Fed was buying. This is simply a supply and demand issue, especially when the bond ETFs wasn't able to issue new shares. Issuing new shares can only be done when the fund was able to purchase more bonds to bundle into its ETF. And since the Fed was dumping large amounts of money into the market in a rather short period of time, the likelihood that these funds where all able to increase their asset bases are not high.

So, the Fed has probably already pushed the price of these ETFs higher than where they would typically be trading. This is not good for new investors. Continue reading "The Fed Is Buying These ETFs - Part 2"

Following The Gold Stocks Leaders As The Fed Prints

Gold stocks have led the market for a year, and with economic deceleration and Fed policy response that leadership looks to continue [edit: today’s ‘in the bag’ bounce-back Jobs report does little to alter the economic deceleration theme]

We have been on a bullish gold mining view for over a year now. Over that time there have been three interruptions, the downward-biased consolidation from August to November 2019, the flash crash (and very constructive gap-filling mission) in March and most recently the pullback that logically began in May as broad stock market relief started to fan out to more and more momentum chasers who’d finally gotten the hint that the Fed means to devalue the US currency (in competition to a degree with its global counterparts seeking to do the same), making cash a non-viable investment position (other than for risk management to the bullish asset market atmosphere).

The daily chart of HUI shows a successful support test, purely up trending moving averages, all gaps filled but the breakaway gap (a ‘breakaway’ does not need to fill any time soon as it changes or reasserts a trend; there is also an old gap from 2016 near 100 that we need not worry at this time), RSI now positive and trending up above its EMA 20, MACD triggered up and positive and neither of them showing overbought readings. Ah, the beauty of a routine correction within an uptrend. All systems on this daily chart are technically ‘go’.

Gold Stocks - HUI

What’s more, the HUI/SPX ratio is now on an uninterrupted 1-year uptrend. With the come-lately players (institutions, hedge funds, black boxes, Ma ‘n Pa and knee-jerking herds of all stripes) having moved on to perceived greener pastures due to the broad stock market’s May-June outperformance the gold miners are again taking leadership. Continue reading "Following The Gold Stocks Leaders As The Fed Prints"