Miner In Possession?

Of the more encouraging signs since the first of the year has been the UPtick in the HUI and most of the mining stocks. Is this just a blip or are we in the early stages of a reversal and rally? And if we have found The Bottom in the shares, which ones should we consider possessing as the rally continues? C'mon in. Let's take a look.

First, some history and a reminder. Through all of 2013, I was NOT a fan of the mining stocks. I wrote this post in early January of last year:

http://www.tfmetalsreport.com/blog/4424/miner-case-depression

That column concluded with this "warning":

"So, what's the point of all this? Why even jack around with these damn things? Just buy physical metal, take delivery and forget about it. And don't tell me about your IRA. There are plenty of companies out there that can help you to buy bullion within that thing, too.

Stack, stack, stack and BTFD. Your only winning move."

Back then, the HUI was near 450. By December, it had bottomed(?) near 190. YIKES!

But, below 200, I thought that the HUI was starting to look interesting. I posted the chart below back on December 2 and noted that the index was approaching levels last seen in 2008 and 2004!

So, with this index having fallen to its lowest level in ten years, things began to look interesting. Were we seeing a washout? Was "tax-loss selling" in December the key to the final washout? The price action in early January should tell the tale and perhaps it has. Since late December, the HUI has rallied over 10% and, on Friday, convincingly broke through and closed above its 50-day moving average. This is another bullish, short-term signal and likely sets up an extension toward the 100-day near 220 and the 200-day near 240.

A run to the 200-day would mean another 10% from here so there's still time to make a little fiat for those willing to "jack around with these damn things". So, below are updated charts for 13 of the miners that we have followed since this site began over three years ago.

Interestingly, six of these have rallied considerably and, in doing so, have already broken through their own, individual 200-day moving averages. This is very bullish signal for these stocks. NOT so bullish that you sell metal and buy them or plow all of your remaining fiat into them...BUT...bullish enough that, on weakness and dips, you may be able to accumulate a little at a time and, eventually, make some fiat currency which you can convert into physical metal at a later date.

Let's break these into groups. These first three broke through their 200-days a couple of weeks ago and have continued to rally. For StevenBHorse, let's start with SSRI. If it can break through and close above $8.40, it looks to be headed to $10 before pausing and consolidating:

Looking similar is PAAS, which looks almost certain to be headed to $14:

And then there's NG, which looks like $3.50 BUT beware of the false breakout, like it had back in late August:

The next three look quite bullish, too, but they only just broke through their 200-day MAs back on Friday. This means they are subject to a pullback which could drop them back below the 200-day, at least for a short time. Watch these three closely as the may merit the best short-term opportunity should a dip develop.

Let's start with EXK, which looks like it could easily rally another 25-35%, toward $5.25 or even $5.50:

Then there's HL, which looks to head from $3.25 to $3.50 to $4.00:

And AEM, which looks like $32 and maybe $34:

OK. It's halftime. For your halftime festivities, I give you SLW. Why? Well, it's not really a miner per se. It's really more like a proxy for the price of silver. Note that it's share price is often very close to the cost of silver by the ounce. It got way ahead of itself back during the rally of late last summer when it reached all the way to $29. Is it getting ahead now? Maybe. Perhaps, instead, at $22+ it is signaling a further rally in silver to come. Let's hope so.

Now back to the action with our second group of six charts. First, here's EGO, which is about to run into some stout resistance near $7:

Poor, old SVM...the victim of malicious hedge fund selling...is about to have some trouble near $2.90:

And AUY, which has the potential to move toward $12 but has to get through considerable resistance around $10 first:

Finally, here are the final three. All of them are still considerably below their 200-day MAs so I would avoid them for now. But keep an eye on them, though. There may still come a time for accumulation.

First, here's GG, the only "major" that I follow. Like the other larger-cap miners, it may continue to struggle as it adds/buys other juniors and exploration companies. This dilutes the share base and tends to keep a lid on price, at least in the near-term:

GOLD has long been a nice proxy for the price of gold and you can see it in this chart. Let's keep an eye on it, much like we do SLW:

And, finally, here's Santa's company, TRX. It has been savagely beaten by folks seemingly determined to disparage both him and his company. As you might imagine, this doesn't surprise or bother me in the least and I continue to own it, if only for the quarterly reports and the annual invitation to the shareholder meeting which, one of these days, I'm going to attend:

OK, that's it. I close with a word of caution...

All I've done here is give you some charts. Before buying ANY of these, you must do your own due diligence including a look at each companies cash situation, its book value, its debt level, etc. And, if you decide to buy one or two, be prepared for extreme volatility which may require you to do some dollar-cost averaging. That said, it does appear that we may have finally found The Bottom in this drawn out and painful decline. Invest accordingly.

TF

132 Comments

Turd Ferguson's picture

And I should add...

MODERATOR

DO NOT BE SURPRISED by a pullback in the HUI and all of these stocks on Tuesday and/or Wednesday.

The HUI shot through its 50-day back on Friday and will likely test it as support early this week. The same goes for the individual miners which just broke through their 200-days on Friday. Watch for a pullback and see if the MA, which was resistance, can now hold as support.

Your best short-term buying opportunity may come as these pullbacks happen. Keep your eyes peeled!

ag1969's picture

First

Just wanted to let everyone know I have started a new forum about healthy food and healthy living.  My lovely wife will be joining us there as well, although she is having trouble getting signed up and can't comment.

http://www.tfmetalsreport.com/forum/5410/healthy-food-and-healthy-living

mike97's picture

Second

Don't forget the silver miners - First Majestic, MAG Silver and Silvercrest.

Turd Ferguson's picture

By all means

MODERATOR

Please feel free to make suggestions and add your own charts.

Response to: Second
wildstylechef's picture

turd

Turd what's your take on the ridiculous VIX in the options market where it sits at sub 14% and as gold moves up so does the Vix. Not that this is doing anything new.

why do I even bother's picture

Is this an Urban Myth, or evidence of complete bullshit?

In trying to research the collapse of the London Gold Pool in 1968 I have come across multiple references to emergency trans-Atlantic airlifts of Gold during the second week of March; presumably, these were organised at fairly short notice and, given that the Pool had lost over 1,000 tons the previous week, in significant volume

see e.g. http://www.anglofareast.com/archive/0139.html and http://www.time.com/time/magazine/article/0,9171,828523-1,00.html and http://www.mauldineconomics.com/ttmygh/twisted-by-the-pool

Maybe these are just rumours, maybe they actually happened (does anyone have any reliable information?), but either way the repeated changes in the ongoing story of German gold repatriation and the lame-ass excuses about why only 5 tons made it back in 2013 are hardly credible.

Similarly, looking at that photo of the odd-sized and misshapen bars allegedly returned to Germany, and then comparing that to the neatly-stacked and sequentially-numbered bars in the video really takes the Bundesbank's recent statement beyond the bounds of plausibility. Maybe they really didn't think we are that stupid - maybe they just don't care what we think

Anyhow, the one wry remark which I thought was especially amusing - and, who knows, maybe even to some extent true - was that the reason Germany only got 5 tons when it was expecting 40 from the Feds was that, when the 40 tons were smelted down into LGD bars, that's all the Gold there was left - the other 35 tons was probably Tungsten! Stranger things have happened (and Zerohedge recently republished the secret Memo from the Bank of England agreeing with the Feds "not to mention ze War" - oops! - not to mention that the bars supplied previously were sub-standard)

Frankly, I think we all know this stinks, and the Feds simply haven't got any Gold - German or otherwise. The whole smelting/logistics farce is just the Fat Lady singing - the charade entered its final act the minute the German Federal Court of Auditors decided to call the Feds' bluff and demand their Gold back; they knew damned well it wasn't there, that's why they asked for it back. In years to come this will be seen as the tipping point (or watershed) in the Western financial and monetary system, and that fact that the Chinese are now strolling onto the battlefield after the event and opportunistically bayonetting the fallen is little more than background music. I don't sense an international conspiracy and fiendish collusion between East and West, I suspect good old-fashioned theft, plain & simple. Don't expect anyone to be held to account any time soon; in fact, Bonuses & Cushy Jobs All Round!

Gamble's picture

Detour gold

Up 7.77% today and over 30% when I bought it end of dec

$6.66 but has a 52 week high of  24.08?

SteveW's picture

Sprott silver trust

is ahead 5.45% right now in Toronto, PHS.U-T on the TSE. The silver companion to CEF namely SBT.UN-T is also ahead 4% while spot silver is basically unchanged. Sprott reported a 1.7% premium on Friday while SBT was at 10% discount!

Trading is very thin but if this holds the premium on Sprott will be enough for another offering.

The move this past two weeks in both the silver and gold miners in my retirement portfolio, that are badly underwater, has been very encouraging.

EDIT: Sprott now ahead 0.5%, so it was simply someone who got shafted in a thin market.

tmosley's picture

Miners

No thanks.  Too much risk.  Silver is below the cost of production, meaning everyone is going out of business.  Silver may be declared a strategic asset, and the mines nationalized (or just get nationalized because f*** you capitalist swine).  Energy is most likely going to keep rising, even if the metals don't.  Etc etc.

No, better to stay in the physical PMs, which are already levered god knows how much by now (certainly more than the previously cited 100x).  Trying to get more leverage than that is just greedy and not fearful enough given all this risk.

It might be good for Vegas money, but that is a concept that is long gone for many of us.

Avoid the siren song, even if the HUI falls to $1.  Bankruptcy or government seizure of the whole complex is just too likely, especially in the even of a COMEX failure, where they will briefly have huge profits before butthurt pols and central bankers send in the thugs.

StevenBHorse's picture

Thanks for the shout-out boss.

Even the ass clowns are starting to show some life.

Full disclosure:  I hate the management of this country more than owners of glue factories.  By extension I have no interest in GDX because ABX is the largest component.

ABX CEO:  I have a wonderful idea, let's build a fucking mine at an elevation 12,000 ft. on top of a glacier. 

ABX BoD:  BRILLIANT!!!

The point being here is that sentiment has finally bottomed, and even this piece of shit is finding willing buyers of the glacier mine.  I like SLW, but I fear their exposure to ABX via the glacier mine.  I would feel loads better if SLW put some of their cash to work in better projects.  They should be out there stealing production from cash starved mid tiers.

rnrjimmy's picture

Thanks for the Miners Turd...

I'm with

PVG,EGO,SIL,NUGT,GDXJ, BRI.V

and of course I took out a little fiat and grabbed a stack, and a little gold piece.

Let's go Miners!

lakedweller2's picture

Good Words Turd

Something to remember is that if you invest in miners and actually make some fiat, part of the thinking is to roll the earnings into physical.  What good is it to earn a bunch of fiat and convert it into the first USA Zimbabwe One Million dollar bill and go to Kroger and get half a loaf of bread.

I do have some miners and am watching closely.  I haven't given up yet.

(Forgot:  Here are my miners: EXK, RIOM, TGD, GPL, NOVO, BRIZF, SLW, NGD, RGLD, MUX and some losers)

Gamble's picture

Explain nationalize

The country in question takes over all mines ?

what happens to shares and shares of the

residents of that country ? 

Thanks 

Turd Ferguson's picture

This is definitely worth the 30 minutes

MODERATOR

lakedweller2's picture

Nationalize Clarified

Government steals private property.

realitybiter's picture

SHOT show

Last week was SHOT show in Vegas.  It is a pretty interesting show as it is pretty much a trade show for everything that has a trigger attached to it.  Mainly caters to folks involved with the industry-side of these products: weapons makers and weapons buyers...lots of former spec-ops as those guys are experts on the product and after serving they still need to work.  Hence, they become buyers or sellers...US spec ops personnel are awesome folks, in general.  If you want to find people that will defend the constitution, to the death, there you have it.  This makes sense.  Why else would you endure what they have to?

A number of "gun friendly" celebrities were there.  "Gunny" Lee Ermey, Ted Nugent, among others.  Brad Thor was there.  He released a book last Summer, "Hidden Order."  It is a great read to introduce the sheeple to the nefarious aspect of the Fed.  Now, this book was released last Summer.  The year before, he released "Blacklist".  This was a book about the nefarious nature of the NSA and the surveillance state....  Snowden blew up the NSA on June 5, 2013, almost a year after Blacklist was released....Huh.....I guess first half of 2014 should be about right for the Fed to get some light shone on it.

Seeing the way the Germans are behaving, the Chinese are hoarding, the Comex imploding...it all seems to be lining up.

And Kudos to Thor for having a pair, and not toeing the line of propaganda BS, but attempting to educate Americans and waking them up.

Oh, and my own worthless two cents on the miners is that there are two things worth noting.  1)  On a twenty year chart, the only time it was ever this cheap was back in 2000.  Do a monthly chart of hui to oil.  The hui went straight up over the next year, rising nearly 4x, unabated.  Good luck trading in and out.  2)  The odds of this being THE moment (next few months), I think are quite high.  Meaning that it would not surprise me if this is not tradable.  SHTF, Markets will be closed, then re-opened with new pricing.  It is the big one wheezie.  bwtfdik?  If the hoarders force the hand of the Comex, I guarantee you it will close, new laws written, new paradigm, new pricing.  It will not be tradable.  If you sold the high, to buy the dip, you may be really disappointed.  Buy it now and hold on for dear life is your only option in this scenario.  

Oh, and when I asked the spec ops crowd about the scary nature of the DHS and their billions of rounds of ammo, they laughed and mumbled something  about  a very short lived "turkey shoot."  I felt much safer.  Stay thirsty, my friends.

Peace.

AIJ's picture

All, I don't know if anyone

All,

I don't know if anyone follows Robert McHugh, but he has a scenario of one more washout of the PM's soon before the big rise to about 3,000 for gold and 50 for silver using Elliott wave analysis.  Here is a quote from last night:

"A possible downside price target is 1,100. Silver also seems to need another decline to reach its long-term bottom, possibly as low as 16ish"

I find this scenario very remote and unlikely but he is adamant.  Any thoughts? 

GLP

meegoreng1's picture

Buying PM stocks....

is like giving the EE a vote of confidence that we are willing to play in their casino despite of years of manipulation.  

The EE controls the mining stocks as majority shares owners through their affiliates. EVERYONE of these major miners is compromised and manipulated. That's why you don't even hear a peep from the executives on the manipulation of their products.

If we in the Gold and Silver community really believe that physical stacking is the only way to protect ourselves, encouraging others to play in the casino defeats our adage!

I say stop placing your bets in the casino and only STACK!

SilverRunNW's picture

Matterhorn Interview: Lars Shall and Jim Rickards

Awesome interview.  I really like how Lars jumps right into the interview.  No bullshit, right to the point.  Jim presents his information very simplistically for all to understand.  That, in itself, is a great skill.  Well worth the 30 minutes.

unwired's picture

Urban Myth / London Gold Pool

There is a lot of detailed information on it in this book. Great history.

http://www.fame.org/pdf/Gold%20Wars%200-9710380-0-7%20%20-%2001.21.02.pdf

Gamble's picture

Gary wagner

Check out gary wagner 's Elliot wave analysis on kitco

G-Rod's picture

London Gold Pool Flights

James Rickards in his book Currency Wars, references the emergency gold flights, and his book is well researched.

The flights didn't last very long, if I remember correctly, a matter of weeks, and they were the final act of desperation by the FEDs, before the London Gold Pool collapsed.

SilverSurfers's picture

Yo 11

"I say stop placing your bets in the casino and only STACK!"

==

What you want to do is protect yourself, and the best way is to stack, but deep storage in shares, works the same, and saves you from burying it yourself. Nothing wrong with stacking shares. And in the event of an over extended rally, selling 1/3 into strength is fine as well, but they dont come often. HFT and stacking are inconsistent. It those who do TRADE frequently who are the gamblers.

Human Mushroom's picture

@greglp

Statements like "one more washout" have made me numb. I'm sure if you go back over the last 10 years, you'd be able to fill a book by quoting "the experts" that have said "just one more take down, then it's off to the races."

Seems like every time there's any sort of rise, or mini-rally in gold, there will be a number of experts coming out stating they expect one final washout before gold rallies to a gazillion dollars.

Someday, one of them will be correct, and he/she will become famous, the one that called it.

I'm personally in the Mr. Fix camp. When the fiat financial system totally fails, then gold and silver will become precious again and desired by all. Until then, TPTB are in control.

Marchas45's picture

I'm Against Mining Stocks

BUT then again my insides are telling me to buy. So for the past 3 months I have been doing Due Diligence on the mining stocks and my favorites are NGD , NG and USA.

What are your thoughts on ShareBuilder as I am new to this game and a Stacker.

Mickey's picture

Mchugh

He has been wrong for years calling for a big crash in spx for several years,

its going to happen but his timing is way off.

he has been right and wrong on pm and miners. Trouble is if you are a market timer the odds are against you.

esp when markets are games sometimes using ta and sometimes not.

Mickey's picture

Abx nem and gdx

Try going long gdx and shorting abx. Solves the problem.

as miners recover the first to head up are abx and nem as they are the big names and most investors incl brokers and money managers do not do homework.

jnug as a trading vehicle, gdxj as a hold or better if you are capable of doing  the work (stevenhorse does the work) is to own your own junior names.

AIJ's picture

McHugh

I agree with you.  He also changes his mind and hedges his bets to always leave an open door. ( Interestingly though not in this case; however,  if the metals rally from here, he'll just say, " we now have a bullish signal" or something like that ).  That"s why I like TF metals,  Turd has the courage to go out on a limb. 

unwired's picture

Rickards

10-4..... good solid stuff.... well reasoned and well presented... and he's no tin foil hatter.

The points made are fundamental to understanding the physical market and the fact that its the 'floating' supply out there that is being depleted.... and that supply is underneath a much larger fractional reserve paper system. The system could blow up literally on a moments notice. Yeah its frustrating to listen to idiots outside the camp who have a chart and technical analysis... but no thought whatsoever for the fundamentals and history and the true nature of the financial make believe world we live in. Its also frustrating to listen to over enthusiastic idiots inside the camp.... who grasp at every little detail with gold colored glasses. I can't really say I blame any of the zealous gold bugs. We've all endured this crazy counter-intuitive, nonsensical BS for so long, its just time for some relief.

All I care about is trying to assess whether this turn is the real thing. Bring on all the exposure of market BS and all the speculation about what the hell is going on behind the doors. The louder it gets.... the more uncomfortable its going to be for shorts to hang on.

silver2013's picture

So now we are buying stock

So now we are buying stock and keeping the banket going? I thought physical gold and silver was the way to change the system. I guess i feel bad for those that cashed in 401k to buy physical. When now we know miner stocks are the way to go. Keep the system going. Like i said before...everyone will sell metal and go back to paper. Just like the bankers like it. Sad.sad.sad.

Syndicate contentComments for "Miner In Possession?"