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Watch the Asian markets (ie China). They're doing everything they can to prop up their stock market and it's not working (market was down 2-3% overnight). China has a huge debt problem and a huge RE bubble. I'm expecting a lot more downside soon. Also, Trump is in a Catch 22 with the Khashoggi murder. Defending the MbS only weakens his position domestically, but he does not want to punish them because of their money and influence in the region. The facts leave no doubt about the brutality of the murder and that the order came from MbS.
I bought WTHVF a couple of months ago after reading a recommendation from another poster on the stockhouse billboards.
As for the shredding art, I think some wealthy people are very wasteful with their money. They are too wealthy to appreciate the value of money. But then again I just see no value in most of the modern art (including Andy Worhall and Picasso). I like impressionist and realist art.
EU Slams Italy's "Unprecedented" Budget Deviation, Euro Tumbles : https://www.zerohedge.com/news/2018-10-18/euro-tumbles-after-eu-blasts-italys-unprecedented-budget-deviation
My comment: Italy and Khashoggi will not go away. They will both dominate the news for some time. Then there's the trade tariffs with China.
Westhaven Drills 17.77 Metres of 24.50 g/t Gold, Including 6.78m of 50.76 g/t Gold at Shovelnose
Read more at http://www.stockhouse.com/news/press-releases/2018/10/17/westhaven-drills-17-77-metres-of-24-50-g-t-gold-including-6-78m-of-50-76-g-t#U6OSmUB0V2CAgHcG.99
My comment: WTHVF is trading at $0.6144, up $0.3302 (116%) today based on drill results.
Disclosure: I own 20K shares of WTHVF which I bought at $0.11
Forced Buy-Ins Spark "Liquidity Crisis" In China's 'Nasdaq' : https://www.zerohedge.com/news/2018-10-16/forced-buy-ins-spark-liquidity-crisis-chinas-nasdaq
My comment : It's not just the US market that you have to watch for possible collapse.
Excerpts:
Marking the worst year since 2008, China's tech-heavy (Nasdaq-equivalent) Shenzhen Composite index is down a shocking 35% year-to-date, and it's starting to become a self-feeding vicious circle...
Share pledges, where company founders and other major investors put up stock as collateral, have emerged as a pressure point in China’s debt-laden economy, especially as the stock market tumbles.
“There’s a liquidity crisis in the stock market, and pledged shares are again starting to sound the alarm,” said Yang Hai, analyst at Kaiyuan Securities Co.
"Stocks in Shenzhen typically bear the brunt of loss of confidence in the stock market because of their higher valuations.”
Bloomberg additionally notes that this attempt to slow the impact of this crisis has been ongoing all summer...
China in June told brokerages to seek approval before selling large chunks of stock that have been pledged as collateral for loans, according to people familiar with the matter...
while the top financial regulator in August warned the industry that it’s closely watching corporate stock pledges.
And quite clearly, has failed... with two-thirds of Shenzhen Composite stocks now at 52-week lows or worse...
"Concerned" Bank Of England Raises Alarm About Growth Of High-Risk Loans : https://www.zerohedge.com/news/2018-10-16/concerned-bank-england-raises-alarm-about-growth-high-risk-loans
My comment: It's the debt stupid. And it will bring the financial system to it's knees.
Excerpt:
In terms of magnitude, the US and EU “leveraged loan” market combined now exceeds $1.3 trillion, up from $50 billion at the turn of the century.
A “leveraged loan” is a loan that is extended to junk-rated (BB+ or lower), over-indebted companies. These loans are considered too risky for banks to keep on their books. Instead, banks sell them to loan funds, or they package them into highly rated Collateralized Loan Obligations (CLOs) and sell them to CLO funds and other institutional investors. In the UK, over £38 billion ($50 billion) of these loans were issued in 2017 — more double the amount in 2016 — and a further £30 billion ($39 billion) has already been issued in 2018.
You ain't seen nothin' yet. Deficits are projected to expand to over $1Trillion next year and once the economy enters a recession, I'm expecting $2Trillion annual deficits. The Fed will have to buy up a lot of government debt.
Saudi Arabia To Admit Khashoggi Killed During "Botched Interrogation" : https://www.zerohedge.com/news/2018-10-15/saudi-admit-khashoggi-killed-during-botched-interrogation-stocks-slump
My comment: So, does this mean all is well with the Saudi regime ? Not really. They were trying to force him back to Saudia Arabia against his will and they killed him. Looks like murder to me.
Excerpts:
If you anticipated that Saudi Crown Prince Mohammad bin Salman - having been backed into a corner by Turkish spooks who had bugged the kingdom's Istanbul consulate - would swiftly seek to blame the death of regime insider-turned-critic Jamal Khashoggi on some unfortunate underling, then congratulations. You were right.
CNN is reporting that the kingdom is planning to announce that Khashoggi's death was "an accident" and that he died during an interrogation at the consulate as Saudi officials had been attempting to rendition him back to Saudi Arabia.
I'm expecting a lot more downside near term. That kind of prediction is what you call sticking your neck out, but there are just too many trigger points. Watch the Saudii/US dispute. I don't think the US public will let Congress and Trump off the hook on this one. And I don't think any progress will made on trade with China since neither side will be willing to yield...it will only escalate. Likewise the Fed is behind the curve and they need ammo for the next financial crisis so I don't expect the Fed to recant on interest rates until the stock market drops a lot further. Italy is also resistant to any demands from Brussels even as Italian rates rise...there is a day of reckoning.
Violence, Public Anger Erupts In China As Home Prices Slide : https://www.zerohedge.com/news/2018-10-13/violence-public-anger-erupts-china-home-prices-slide
My comment: And the price drop is only beginning. There could be a lot more desperate home buyers in China taking their anger out for lower RE prices.
The mining shares have been impressive during the stock market decline. I think it's only the beginning. The cryptocurrencies are fading and that also helps the PMs and PM shares. But most importantly is the unstable global economies propped up by debt and low interest rates. Higher rates are removing some of that support and that will expose a lot of leveraged debt, not the least of which is sovereign debt. The political backdrop is also not helpful to stocks with the Saudiis involvement in the disappearance of the US reporter and trade tariffs with China. There are so many weak links : Emerging Markets, Italy, China, Japan.
The World Is Due Another Financial Crisis. It Could Start in Italy : http://www.msn.com/en-us/money/markets/the-world-is-due-another-financial-crisis-it-could-start-in-italy/ar-BBOizxv?ocid=ientp_edu
My comment: And Italy has some of the weakest banks.
Excerpt:
But in contrast to the financial crisis that began in 2008, central banks may not be able to come to the rescue this time, said Richard Portes, a professor of economics at London Business School. They used up much of their resources coping with the last meltdown.
“It would be very difficult for Mario Draghi to think of another way to get out of the mess,” Mr. Portes said, referring to the president of the European Central Bank.
That is why investors are so worried about Italy. The eurozone is still recovering from a debt crisis that began in Greece in 2010. Italy, the currency bloc’s third-largest economy, accounts for 11 percent of the European Union’s gross domestic product — 10 times as much as Greece — and has the potential to create far more damage.
Many of the country’s problems are longstanding, such as the unusually high number of problem loans on its banks’ balance sheets and chronically slow growth. Italy’s economy has still not made up the ground it lost after the 2008 financial crisis. The new element is Italy’s populist government, which to the horror of European Union officials and bond markets is pledging money it doesn’t have to fulfill campaign promises.
Under eurozone rules, Italy must submit its budget for European Commission scrutiny by Monday. The proposed spending plan calls for a deficit equal to 2.4 percent of G.D.P., a figure considered way too high for a country whose total government debt equals 131 percent of G.D.P., more than double the eurozone limit.
Autos will also be very vulnerable. Homebuilders and high tech as well. Then there's Elon Musk's Tesla which could go bankrupt.
Here's Why The Next Recession Will Spiral Into A Depression : https://www.zerohedge.com/news/2018-10-12/heres-why-next-recession-will-spiral-depression
But the Fed does not control global markets (e.g. Italy and China)
ECB Hands Italy An Ultimatum: 'Obey EU Budget Rules Or We Won't Save You' : https://www.zerohedge.com/news/2018-10-11/ecb-blackmails-italy-obey-eu-budget-rules-or-we-wont-save-you
My comment: It's a game of chicken. I doubt the Italians will give in and the consequences will hurt the EU just as much as it will hurt Italy. China can also cannot give in on trade without losing face. It begins to get very interesting.
Excerpt:
investors have apparently overlooked the latest ominous headlines out of Italy. To wit, Reuters reported that the ECB won't come to Italy's rescue if its government or banks run out of cash unless the Italian government first secures a bailout from the European Union. Of course, this would almost certainly require that the populist coalition end its ongoing game of fiscal chicken with Brussels and abandon its dreams of lowering the retirement age and extending a basic income to the Italian people - policies that would effectively secure a political future for M5S and the League.
In effect, the ECB's latest trial balloon is tantamount to blackmail: Either the Italians agree to fall back in line and obey European budgetary guidelines, or the central bank will sit back and watch as bond yields surge, providing the ratings agencies even more ammunition to cut Italian debt to junk - effectively guaranteeing a Greece-style banking crisis as the liquidity taps are turned off.
I think the key is when do some of the highly leveraged positions (including sovereign debt) cave. It could be like dominoes falling. ETFs, derivatives, stocks, real estate, low grade corporate debt, etc. etc.
Gold held today, which is a positive sign for the PMs. Safe haven appeal should take affect, not to mention inflation gauges are moving up. Inflation will not be the problem once the markets see a recession on the horizon.
So, China, Japan, and Italy on deck overnight. Very close to some real selloffs. Will the Fed capitulate ?
Louis Gave on Corporate Debt and the Next Liquidity Crisis : https://www.financialsense.com/fs-staff/louis-gave-bond-liquidity-new-leverage
My comment: I fully expect rates to rise in the next recession as the deficits explode higher. The only thing to prevent that would be massive Fed liquidity to buy up government debt. But there will be so many debt holes for the Fed to plug: corporate debt, consumer debt, state and local debt, and sovereign debt.
Excerpt:
“Given the potential illiquidity of the bond markets, I look at this rise in yields and it frightens me,” Gave said. “There are two options. One is, we enter a recession, budget deficits go through the roof, and we basically go down the Greek path. But this is completely unfeasible in the U.S. … The second option will be that the Fed will just have to monetize an enormous amount of U.S. debt … if and when that comes, the U.S. dollar I think will plummet.”
Some small miners are doing very well -
My positions in 1) Wallbridge (WLBMF), 2) Evrin (EMRRF), and 3) Aben (ABNAF) have appreciated substantially since I bought. I bought WLBMF for $0.05 and it traded as high as $0.25 today. Still waiting on Condor (CNRIF) to make a big find.
Kavanaugh Will Never Get A Fair Hearing: The Federalist: https://www.zerohedge.com/news/2018-09-18/kavanaugh-will-never-get-fair-hearing-federalist
My comment: So reminiscent of divorce court. Men are so frequently accused of being sexual deviants without any basis in divorce court. As for the recent deluge of accusations against men, you'd think that every man alive or dead is a sexual predator. It really is beyond belief, but all it takes is an unproven accusation to destroy men. Politics has gotten very very ugly, but this goes way beyond politics.
Excerpt:
Thanks to an unprovable allegation of sexual assault, Supreme Court nominee Brett Kavanaugh will "never get a fair hearing," according to The Federalist's David Harsanyi, who writes: "If you’re a man, a single uncorroborated account that dates back to 1982 is all your political critics need to accuse you of attempted rape," adding "There is also no possible outcome in which Democrats will concede Kavanaugh’s innocence, or even concede that we can’t really know what transpired on that night 36 years ago."
Parsley, Sage, and Rosemary
So, when will problems at the periphery spread to the core ? It will take a big one to topple the markets.
From John Mauldin : http://www.mauldineconomics.com/frontlinethoughts/the-growing-economic-sandpile
My comment: The longer it takes, the worse the consequences
Excerpts:
“How did you go bankrupt?”
“Two ways. Gradually, then suddenly.”
―Ernest Hemingway, The Sun Also Rises
Yesterday, I did an interview with the extraordinarily astute Howard Gold of MarketWatch. We discussed the connectedness of so many global markets and how the debt crisis, unfunded pension liabilities, and government promises all over the world seemingly keep mounting, yet markets go up more.
I think the mother of all Minsky moments is building. It will not be an instant sandpile collapse, but instead take years because we have $500 trillion of debt to work through. Remember, that debt just can’t be pooped away. It is both money somebody owes and an asset on somebody else’s balance sheet. If you are retired, your pension and healthcare benefits are part of your net worth. They are assets on your balance sheet that you count on to cover future spending. We can’t just take that away without huge consequences to culture and society.
But the fingers of instability, the total credit system, are seemingly growing with more red sand dots every month. All are inextricably linked. One day, another Thailand or Russia or something else (it makes no difference which) will start the cascade.
The efforts by regulators and central bankers to create stable systems and prevent small losses actually create the large fingers of instability that bring down whole systems and spark global recessions. And increasingly, it is the unfunded liability of government promises that will be the most massively unstable finger.
In that crisis, things that should be totally unrelated all of a sudden become intertwined. The correlations of formerly unrelated asset classes all go to one at the absolute wrong time. Panic ensues, losses are taken. Government steps in trying to stem the tide, perhaps appropriately so, but eventually the markets have to clear.
Remember, very astute people saw the subprime crisis and made a lot of money shorting that market. I saw it coming but didn’t know how to trade it. I guarantee you, I’m paying attention now to who can profit from the next credit crisis. Maybe I’ll be successful and maybe I won’t, but just once, I would like to be on the right side of a crisis.
Wallbridge continues to intersect high grade mineralization with 49.06 g/t gold over 10.13 metres
Read more at http://www.stockhouse.com/news/press-releases/2018/08/28/wallbridge-continues-to-intersect-high-grade-mineralization-with-49-06-g-t-gold#LV3MLq8ARi1WdzXW.99
Evrim Resources Welcomes Strategic Investment from Newmont Mining Corporation
Read more at http://www.stockhouse.com/news/press-releases/2018/08/28/evrim-resources-welcomes-strategic-investment-from-newmont-mining-corporation#eCcSWt454Mmbdk3L.99
Excerpt:
Newmont has agreed to purchase 4,848,401 shares of the Company at a price of $1.50 per share for gross proceeds of $7,272,601.50
Disclosure: I own shares of WLBMF and EMRRF
I think we need to see what the PMs do when the stock market next corrects. Meanwhile, I'll be adding Condor (CNRIF) and perhaps Aben (ABNAF). Great Bear (GTBDF/v.GBR) has really made a move.
What me worry ?
Why Continental Gold Rejected More Funds From Newmont In 2017 : https://seekingalpha.com/article/4201053-continental-gold-rejected-funds-newmont-2017?dr=1
Disclosure : I own shares of Continental Gold (t.CNL/CGOOF)
Excerpts:
In the context of the international gold mining sector, Buritica stands out with its size and costs. It's the eighth largest gold find in the past decade with resources standing at more than nine million ounces of gold across all categories and its all-in sustaining costs (AISC) are just $489 per ounce:
In 2017, Continental Gold rejected additional funding from Newmont at a 46% premium to the share price since the company believes there is amazing exploration potential at its Buritica project in Colombia which should be reflected when an acquisition offer comes. I agree with Continental and given the nature of the deposit and the 2016 and 2017 trial mining results, I think it's very likely for Buritica's proven and probable reserves to easily surpass five million ounces of gold and total resources to go over 12 million ounces.
Newmont currently has a 19.9% stake in Continental and is heavily involved with Buritica - the company participates in the exploration, technical (construction) and sustainability committees, and it also has a seat on the board. Considering this, I think that Newmont is the most likely candidate to acquire Continental in the future after the resource estimate for Buritica is updated in the first half of 2019. It's very unlikely for such a valuable project like Buritica to remain in the hands of an intermediate gold miner.
I'm bearish and have been for some time. But timing is everything and I think it will take some time before Turkey and China hit a wall. Venezuela and Brazil have already hit the wall. Italy is close to hitting the wall. But it will take a big failure to cause the markets to correct. Everyone has been conditioned to believe the CBs have everything under control. That mindset is hard to change, especially when the CBs stand ready to try to prevent something serious, either real or perceived.
Turkey and Trade with China will take some time to resolve, but both will have a big impact.
Also, it looks like the large cap miners are getting hit harder than the small cap miners. Miners with share price less than $1 have not been hurt, but miner like GG & AEM have been hammered.
The miners are getting hit much harder than the PMs. But, I just keep buying. I added another 10K CNRIF today to increase my position to 580K shares. Where does it all end ? I think things will look better in September.
16 Billion Reasons Why Turkey's Currency Crisis Will Become A Debt Crisis : https://www.zerohedge.com/news/2018-08-15/16-billion-reasons-why-turkeys-currency-crisis-will-become-debt-crisis
Excerpt:
According to Bloomberg calculations, major Turkish companies, financial institutions and the government are facing a "bond wall" of at least $16 billion in bonds denominated in foreign currency that are due by the end of next year.
The amount due by the end of next year is mostly composed of debt issued by Turkish financial institutions, and includes conventional bonds and Islamic sukuk bonds valued at a minimum of $100 million at the time of issuance.
Investors will be closely watching if banks and corporations - not to mention the government - will be able to maintain access to the foreign funding they need not only to keep economic activity humming as the country’s currency plunges, but rollover maturity debt. The alternative would mean mass defaults for the companies that make up the core of Turkey's economy.
"So far, a currency crisis has not turned into a debt crisis," analysts at Exotix Partners wrote in a report, although that is largely due to the lack of imminent debt maturities: the longer the crisis plays out and the lower the lira drops, the greater the likelihood of a catastrophic outcome. Meanwhile, the country’s low public debt, at 28% of GDP, "might be some comfort, and the country has ammunition in the form of $98 billion in official reserves," they wrote, although here too the bigger wildcard is how the country will be able to maintain the critical inflow of foreign capital to keep its current account funded.
DEBT - The global economy's Achilles heel -
My comment: Just waiting for the next recession to really hit hard. All forms of debt (corporate, sovereign, household) are all extremely vulnerable.
US Household Debt Hits Record $13.3 Trillion : https://www.zerohedge.com/news/2018-08-14/us-household-debt-hits-record-133-trillion
ABEN (ABNAF) up another 31% today
Finally - Pucamayo work starting -
Condor Initiates Geophysics Program at Pucamayo East
Read more at http://www.stockhouse.com/news/press-releases/2018/08/08/condor-initiates-geophysics-program-at-pucamayo-east#FIe7T31fwDIiAxqB.99
Yeah and Turkey could be the catalyst.
ABEN (ABNAF) up 55% on drill results -
My comment : Great news. Now I just need Wallbridge (WLBMF) and Condor Resources (CNRIF) to follow suite.
Aben’s First Drill Hole Discovers Multiple High-Grade Zones Including 62.4 g/t Gold over 6.0m within 38.7 g/t Gold over 10.0m at Forrest Kerr Project in BC’s Golden Triangle
Read more at http://www.stockhouse.com/news/press-releases/2018/08/09/abens-first-drill-hole-discovers-multiple-high-grade-zones-including-62-4-g-t#1z6OHKOMKRrrDG46.99
Watch China for stress