Free Editorial

Yep, It's a Train

From the November 2nd, 2014 HRA Journal: Issue 222 

My apologies if the graphic leading the editorial seems flippant.  That’s not the intent.  It just seemed to sum up the prevailing attitude of resource stock traders.   If bear market bottoms are supported by fear and disgust (and they are) I think its fair to say we should be very close to one now.  

Based on many recent conversations with friends, colleagues and traders I can tell you that the sentiment is 100% negative right now.   That isn’t good short term and doesn’t bode well for tax loss season that is about to be upon us but—medium term—it’s a positive sign.  We’re most definitely in the teeth of the bear and fear and loathing are the signposts to the exits in this sort of situation.

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American Tsunami

From the October 3rd, 2014 HRA Journal: Issue 221

Things went from bad to worse for commodities and resource stocks as we moved through the end of September.  The US Dollar went from strength to strength and simply mowed down everything in its path.   Traders on Wall St are gleeful now but a super strong currency has its own costs and those haven’t been felt yet.   I’ll go into that subject a bit more in the next issue.

For now we’re stuck in a market going in reverse.   It won’t last forever though it’s going to feel like forever while it’s happening.  The US Dollar is parabolic and that definitely won’t last forever.  Like the gold market the currency market is full of short term traders.  That sort of trader doesn’t like parabolic moves.   As I note in the editorial there is evidence that physical buying is picking up strongly in Asia.  That will have some influence eventually though commodities will have to unshackle themselves from the greenback first.  

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Greenback Über Alles

From the September 15, 2014 HRA Journal: Issue 220

Ok, maybe there is something to be said for paint drying.   The market got less boring as we moved into September but not in a good way.  The US Dollar’s ascension clobbered just about everything else including commodity prices in general and gold prices in particular.  

We’re coming up on another Fed meeting and a Scottish referendum. We could see more volatility ahead.  I think the Scots will vote to stay within the UK.  That could give both the Pound and gold prices a boost.  The Fed meeting is a tougher call.  Traders are convinced the start of rate increases will be moved up. That, combined with weak growth numbers from overseas is making traders in New York nervous.  I think Yellen doesn’t want to accelerate things for reasons detailed below but even a slight change in wording could have a big impact right now. 

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Economic Divergence is Back

From the August 24, 2014 HRA Journal: Issue 218-219

As we move through the third quarter of 2014 we are seeing a trend in the world economy that everyone hoped had been left behind in 2011; major divergence in growth rates across the world’s large trading blocks.

The US posted the best quarterly growth in years in Q2.  I noted just after that release that inventory build accounted for almost half the growth but it was still a big positive surprise.   It freaked out traders that read the number as an indication that rate increases in the US would come sooner than expected.  That may be true though it still doesn’t seem to faze bond traders.

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Disappointing Politicians

From the July 21, 2014 HRA Journal: Issue 217 

We’re half way through the dog days of summer and metals and juniors haven’t collapsed yet.  So far so good.   I don’t expect them to but this time of year the markets can generate big swings on even fairly minor news. 

Metals in general continue to perform well and gold is fighting its way back from a $60 smack down. As you know, I’ve never been one for conspiracy theories but even I was shocked at the scale and timing of the sells in the futures market that drove the bullion price down last week.  

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There's Something Happening Here

From the July 4, 2014 HRA Journal: Issue 216

Gold made the move I hoped for and predicted in the last issue.   It’s consolidating well above May price levels now.  Traders will want to see a couple of more steps up in price to really get on board but the tone of the market has definitely improved again since early June.

Significantly, base metals have also shown a lot of relative strength in the past few sessions.  It’s been a long time since we have seen the whole metals complex on the move.  That, even more than a lift in gold prices, signals changing perception by traders outside the resource space.  To get the sort of rally we really want after three years of pain it’s those outside traders we need.   I think the leading edge is starting to arrive.

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Summer Heat (?)

From the June 12, 2014 HRA Journal: Issue 215

Ok, it could be another head fake (there have been plenty) but the latest move in the gold stocks looks strong enough to be the real thing, even though its just begun.

If it is it will represent a very different outcome for the sector though the summer than most are expecting.  Of course that is the thing about markets.  They have a disconcerting habit of doing precisely what most traders don’t expect.

A couple of HRA list companies that released economic studies have gotten good reactions that don’t seem like one day wonders and a few companies that have released good drill results are also seeing traction that lasted.  That is a better outcome than anyone was seeing a month or two ago.  Nothing convinces management teams its time to get into the field again like seeing another company clocking big gains on exploration results.  The more of that we see the tougher it will be for companies to blame the weak market for their decision to hang back.

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Range Bound

From the May 21, 2014 HRA Journal: Issue 214

The song remains the same.  There have been plenty of triple digit days on the big markets lately but all the movement hasn’t amounted to much overall change in the level of the markets.   We’re heading into what is supposed to be the quiet time of year.  For that reason alone the bias is for slightly lower markets though I don’t see a compelling argument for either “up” or “down” as yet.

Gold has also gone basically nowhere.  That may be a good thing as the Ukraine seems to be off trader’s screens even though the situation seems to get more volatile each day.  Summer approaching argues for lower metal prices but here too things can go either way.

We’re finally starting to see more news flow and that trend at least should continue to improve.  Funding remains tight but companies that have laid out coherent exploration plans are getting placements done.  We’ll see a lot more news in the next 2-3 months and some of the deals I’m tracking should be ready to talk about sooner.  I’m hoping for a break to the upside by the juniors once news flow really picks up –assuming gold hasn’t been beaten down yet again.

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Bipolar Markets

From the April 29, 2014 HRA Journal: Issue 213

Another period of sideways, with a few sharp turns along the way to keep traders on their toes.   We basically stand where we were a month ago and we’re still waiting to see if we get a spring rally in resource stocks that lifts us above the March high for the Venture index. Admittedly, there isn’t a lot of “spring” left to work with and we all know how boring things can get as we exit May.

Like the last issue, I held this one for a few days hoping to see more news to report on and, like the last issue, not too much arrived.  Things are warming up (weather wise). Summer exploration is beginning in the northern hemisphere so news should pick up. For the record, I did add a new company at the SD level and you can expect to see some new choices in these pages soon. I am waiting on technical data for a couple of stories I like.  I need the data to cover them properly but I don’t expect it to change my basic opinion so odds are you see one of these in the next issue.

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Traders Resolve Tested

From the April 7, 2014 HRA Journal: Issue 212

Just when you thought it was safe to go back into the market the gold price and junior resource stocks drop and nervous traders declare the sky is falling yet again.

I’m not thrilled by the market action of the past two or three weeks but I also don’t think the basic narrative has changed.   The gold price has corrected but I don’t think its rolled over unless it gets quite a bit lower.  Likewise, the correction in the Venture Index is not large compared to some of its larger brethren and well within the bounds of what one would see as part of a larger bullish advance.

It’s still very quiet on the news front and this is one issue that needs repair before a strong bull run develops.  Most companies just raised money so it will take time for them to start reporting from the field.  That will help carry things forward and new discoveries and new ideas will help even more.

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