Once again the COT report from last Tuesday has revealed continued
pressure on the already taut firing pins of the gold and silver markets with
more shorts added by the Large Spec algobots and more longs/fewer shorts
reported by the Commercials largely represented by the bullion banks. If it
is the gold cartel that has capped rallies in the $1,350-1,375 range since
August 2016, it is that same gold cartel that are actually positioned for a
rally today and where the market is baffling everyone is the failure of the
Crimex Criminals to launch the rally. The answer lies in the ascent of the
machines in dictating direction in any and all markets. Whereas the algos
have been focused on all things non-metal in recent years, they have taken to
the gold and silver markets lately and are displaying phenomenal power and
control in thwarting the intentions of the bullion bank cartel.
My new line of speculation has at its core the notion that the intervention
"end-game" for the big players in the gold arena may involve
developing an algorithm of their own to combat the power of the banks in
controlling price. To be more specific, if the algos can take the market down
and force capitulation amongst the bullion banks, who are now long gold for
the first time since 2001, it would be somewhat of a pyrrhic victory of
sorts. To achieve victory over the always-right bullion bank behemoths by
taking price DOWN may be the ideal set-up for the inevitable rally that we all
expect is long overdue. Perhaps in breaking the stranglehold of the
Commercial Cretins on the downside, they will clear the path to $1,400-plus
by way of burning the invisible hands of intervention and searing the memory
of blistering financial pain in the same way that the cat avoids the stovetop
in ancient folklore.
Before you all ask the point in the week where the locks came of the booze
box and medicine chest, I must confess that self-medication and auto-sedative
behaviors have reached the point of necessity in this logic-starved
environment for precious metals investing. To wit, this has been a BRUTAL
year for gold speculators and worse than 2015 in many respects despite prices
being higher than that point in time.
Sure, the COT structure looks terrific as sentiment continues at extremes
not seen since the late 1990s but what traders want to see is a trend that
lasts longer than a few hours (or minutes) and that is something that has
been largely non-existent for the better part of the year. Unlike 2016, when
gold experienced a vicious reversal just below $1,050 based upon the whims of
the Commercials, gold absolutely refuses to yield to them in this go-around
and my position is that until I can see evidence that the have either won
control or have capitulated, I remain sidelined in terms of the Gold Miner
ETFs or further options or futures positioning.
The Novo
Resources Corp. (NVO:TSX.V; NSRPF:OTCQX) story, which I wrote about at
$7.00 a few months back, has now joined Garibaldi
Resources Corp. (GGI:TSX.V) as the new "Scam of the Month"
member as the Denver Gold Show presentation underwhelmed audiences, the bulk
of whom were obviously NVO shareholder in need of some hand-holding. GGI was
hit with a large dose of assay result reality after a really dubious series
of delays and once the company reported results that were less than half as
impressive in term of grade and even feebler in terms of width as the
discovery hole that sent the shares to over $5 in 2017, the share price
crashed, closing at $1.77 after getting slammed down to $1.34. Both of these
issues have been heavily promoted by a number of very capable and
conscientious newsletter writers and one very prominent gold-centric
billionaire (during his weekly interviews) but no matter what the story, the
new, much-younger wave of investing techno-geeks will have none if it and
mercilessly trashed the two former explorco jewels of the Canadian mining
scene. Such is the current landscape in the junior exploration world and
rightly or wrongly so, it is the "new reality."
I think that the new investor generation is far more willing to gamble on
eccentric geniuses like Elon Musk, whose Tesla
Inc. (TSLA:NASDAQ) is looking more like a John DeLorean Story than a
Henry Ford Story. These fuzzy-cheeked, high-IQ'd money managers will chase
and pile on and overweight absurd stories like TSLA until they all
collectively and simultaneously crash and burn and that's all "no
problem" because they can all have a Facebook or Instagram party and cry
together when it all comes blazing down.
You will note that I have purposely avoided the uranium-vanadium space
thus far in this missive but with vanadium pentoxide hitting $22.90/lb in the
past week, the last of the battery metals has now absolutely snatched
investor interest from the headlocks held previously by cobalt, graphite and
lithium. I have written three articles on Western
Uranium & Vanadium Corp. (WUC:CSE; WSTRF:OTCQX) since August after I
sent out an email in mid-June inviting everyone to join me in buying into the
$0.68 per unit financing that is now ahead 266% since the August 9 closing.
If you add the half-warrant at $1.15, the unit is up 460% and that is worthy
of mention, especially since the last few gold and silver deals I have played
have been unexciting at best.
With WUC now sporting an RSI above 70, a few of the followers have asked
if it due for a correction but I would point to two earlier RSI spikes that
happened in August at $1.60 and two weeks ago at $2.00, which resulted in the
blast-off last week to the multi-year high at $2.77. What you have to
remember is that we have an underlying commodity-price reversal after over 10
years of pain, particularly in uranium, which makes this the embryonic stages
of the new bull market in uranium, and since China's lawmakers have forced
new minimums for the hardness of steel in their construction business, China
is now a net importer rather than exporter of vanadium pentoxide. To say that
vanadium has now entered into a "tight market" is an
understatement, which puts WUC's 35 million pounds located within the U.S.
continental mainland into a new league.
The silver market had a good week versus as did the miners so I would hope
gold and the entire complex will catch a bid shortly and as I have chortled
animatedly for the last year, when it finally happens, silver and gold
investors will finally be able to crawl out if their hiding places to replace
the Tesla-dytes and offer them their warm and cuddly crawl spaces.
…just sayin'.
[NLINSERT]
Charts courtesy of Michael Ballanger.
Michael Ballanger Disclaimer:
This letter makes no guarantee or warranty on the accuracy or completeness of
the data provided. Nothing contained herein is intended or shall be deemed to
be investment advice, implied or otherwise. This letter represents my views
and replicates trades that I am making but nothing more than that. Always
consult your registered advisor to assist you with your investments. I accept
no liability for any loss arising from the use of the data contained on this
letter. Options and junior mining stocks contain a high level of risk that
may result in the loss of part or all invested capital and therefore are
suitable for experienced and professional investors and traders only. One
should be familiar with the risks involved in junior mining and options
trading and we recommend consulting a financial adviser if you feel you do
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