Thursday, September 22, 2016 1:00:06 AM
1 Ams All The Marbles News Zone
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Breaking News And Best Of The Web
September 21, 2016
Fed leaves rate unchanged, implies (once again) that rates will rise next time. Bank of Japan overhauls its inflation-generating strategy, markets cheer. US inflation a bit higher than expected. Retail sales and factory output fall more than expected as auto loan bubble loses air. Bond yields rising. Junk bond defaults and China’s debt both soar. Several real estate markets doing notable things. Multiple terrorist attacks in US, main suspect in custody. Trump and Clinton close in latest polls.
Best Of The Web
Why the EU is doomed – Mises Institute
Essence of decision – Salient Partners
The central bankers’ experiment: the great bust – Best Minds, Inc.
Jim Grant rejects Rogoff’s “curse of cash” – Zero Hedge
Weekly commentary: reversals – Credit Bubble Bulletin
If everything’s doing so great, how come I’m not? – Peak Prosperity
The (160 to 1) gold-silver ratio every investor needs to know about – SRSrocco Report
Negative interest rates and the war on cash (4) – Automatic Earth
Negative interest rates and the war on cash (3) – Automatic Earth
Deadpool – StockResearch
The matrix exposed – First Rebuttal
Magical thinking – Financial Sense
Negative interest rates and the war on cash (2) – Automatic Earth
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Breaking News
The Economy
9/21 Fed inaction sparks buying in bonds, stocks, gold, oil as VIX tanks – Zero Hedge
9/21 Fed leaves rates unchanged – CNBC
9/21 Japan August exports fall 9.6 percent on-year – CNBC
9/21 Oil jumps on chance of another U.S. draw, Norway strike supports – Reuters
9/21 Get ready for the mother of all stock market corrections – Telegraph
9/21 A note on Deutsche Bank – Golem XIV
9/21 “Deutsche Bank may ultimately need a state bailout” – Zero Hedge
9/21 What the BOJ just did is “recipe for disaster” – Zero Hedge
9/21 Bank of Japan changes strategy, will focus on yield curve – CNBC
9/21 Deutsche Bank’s low capital makes it no. 1 for risk in study – Bloomberg
9/21 Warren says Wells Fargo’s Stumpf should resign – Bloomberg
9/21 World’s liquidity trap will not yield ‘surprise’ monetary reversals – Daily Bell
9/21 Microsoft announces $40BN share buyback – Zero Hedge
9/21 US Federal debt is expanding at the fastest rate since the crisis – Zero Hedge
9/21 Average US household has saved $2,500 for retirement – Zero Hedge
9/20 Italy PM tells Bundesbank chief to fix Germany’s bank problems – Reuters
9/20 Why the Bank of Japan may overshadow the Federal Reserve – CNBC
9/20 Slowly, then all at once – Kunstler
9/20 Is Deutsche Bank cooking its derivatives book to hide huge losses? – Mish
9/20 Grand ascension or great collapse? – Deviant Investor
9/20 Credit Suisse exec warns of longer-term negative rate impact – Reuters
Precious Metals
9/21 Storage cost argument against gold now applies to cash – GATA
9/21 Do you know where those gold maples have been? – GATA
9/21 4 shining silver mining stocks with solid momentum – Yahoo!
9/21 This gold level could be ‘easily broken’ if the Fed hikes rates – Business Insider
9/21 Japan’s monetary reboot good for gold; Fed now on deck – Kitco
9/21 Central Bank of Russia adds 700k oz of gold to reserves in Aug. – Smaulgld
9/21 Rate hike: implications for gold stocks & Dow – 321Gold
9/21 Swiss gold exports down 7% on year to 160 metric tonnes in August – GATA
9/21 US Mint telegraphs major market move – Daily Reckoning
9/21 Silver returns to its historic role – Daily Reckoning
9/21 Is this the most undervalued commodity in the world? – Motley Fool
9/20 Central banks boost gold reserves as low interest rates bite – Guardian
9/20 The war on cash is still good for gold – Seeking Alpha
9/20 Central banks think gold bugs are on to something – GoldCore
9/20 5 more gold exploration stocks put on your radar now – Seeking Alpha
9/20 Gold – the final countdown – Seeking Alpha
9/20 First Majestic Silver becomes royal pain (AG, AGQ) – Investopedia
9/20 Seven ages of gold – OMFIF
9/19 Gold’s safe-haven rally appears to have run its course – CNBC
9/19 Funds dump gold at fastest pace since May as Fed outlook shifts – GATA
9/19 World’s gold miners stick close to home in hunt for more metal – Reuters
Inflation, Deflation, Currency War, Cryptocurrencies
9/21 Dollar hits lowest in a month versus yen after BOJ move – MarketWatch
9/21 The Keynesian deflation humbug – a reality check – David Stockman
9/21 Merkel is ‘lying to public’ Italian PM in furious attack – Express
9/21 Japan’s negative interest rates explained – New York Times
9/21 Germany’s Schaeuble: zero interest rates make no sense – Reuters
9/21 Signs are building that the BOJ is reaching its ‘endgame’ – Bloomberg
9/21 Cash is a curse for crime fighters and central bankers – St. Louis Post-Dispatch
9/21 Inflation data throws a wrench in dovish Fed hopes – Seeking Alpha
9/21 Obamacare and EpiPens are causing an inflation problem – Business Insider
9/20 All eyes are on BOJ as negative rates are expected to make a comeback – CNBC
Real Estate Bubble
9/21 Why Canadians are being offered cash to abandon their homes – Bloomberg
9/21 Mortgage applications tank amid rising rates – CNBC
9/21 Housing starts down 5.4% – Forbes
9/21 China’s home prices rise most in six years as sales gain – Bloomberg
9/20 US housing starts total 1.14M in Aug vs. 1.19M expected – CNBC
DollarCollapse Podcasts
9/13 Markets explain facts of life to Fed
8/16 A tough time to manage money
7/27 Random violence and political instability: the new normal
7/21 It’s not the event but the response to the event that matters
7/01 Brexit was just the beginning
6/25 The deeper meaning of Brexit
6/08 Gold Will Soar, Marijuana Will Be Legal
5/23 Hard times for obsolete entities
5/14 Chaos spreads to US retailers and Italian banks
5/04 Easy money has failed; what’s next?
Politics
9/21 Money laundering scheme exposed – Zero Hedge
9/21 The Bloomberg politics poll decoder – Bloomberg
9/21 Deutsche Bank breaks down Clinton-vs.-Trump stock-trading plan – MarketWatch
9/21 Chance of president Trump starting to hit Canada’s currency – Bloomberg
9/21 Hillary’s broken trust is a media catastrophe – Daily Bell
9/21 Is Trump really behind in Colorado? – Mish
9/21 Donald Trump, the unsinkable candidate – New York Times
9/21 Trump doesn’t see much downside in assumption of terrorism – Washington Post
9/21 Hillary Clinton prepares for unpredictable Donald Trump at debate – CNN
9/21 Why Hillary lost: a premature orbit – Huffington Post
9/20 Clinton much less a sure bet than last month – CNBC
Offshore Investing
9/14 4 totally legal reasons to use an offshore structure – Nestmann
7/20 Costa Rica: Central America’s hidden gem – Sovereign Investor
7/08 Time to adjust your wealth plan – Mountain Vision
7/08 We pulled the ripcord on daily life and moved to Costa Rica – International Living
Clean Tech
9/20 SunEdison’s yieldcos exploring strategic options, including sale – Reuters
9/20 Cheapest solar on record offered – Bloomberg
9/19 Why solar developers unhappy with desert renewable energy plan – Fortune
9/19 First Solar’s plan to deal with plunging panel prices – Bloomberg
9/19 Canada will impose nationwide carbon price: minister – Reuters
9/19 Solar power in India: roofs of growth – Brink Asia
9/19 Electric car boom is in jeopardy – Daily Sheeple
9/16 Solar rooftop revolution fizzles in US on utility pushback – Bloomberg
9/16 Tesla tackles California energy woes with massive energy-storage deal – CNBC
Art of the Collapse
9/14 Book review of Dave Stockman’s “Trumped!” – Mish
9/08 Daily Show dissects Trump’s attempts to win black votes – Huffington Post
9/03 Why you should enroll in the chartered central bank watcher – Zero Hedge
8/17 The hardest job in the world: Donald Trump’s campaign surrogates – Daily Show
8/09 How you got screwed – a user’s guide to a rigged system – Zero Hedge
War, Civil Unrest, Privacy, Creeping Fascism, Police State
9/21 Protest erupts after police kill black man in North Carolina – Reuters
9/21 US charges NY bombing suspect, cites views in his notebook – Wall Street Journal
9/21 ‘Suspicious’ duffel bag prompts LA bomb squad – LA Times
9/21 Empty suitcase shuts down 42nd Street at rush hour – NBC New York
9/20 North Korea says it successfully tested new rocket engine – Wall Street Journal
9/20 Oklahoma police release video of officer shooting unarmed black man – Reuters
9/20 Erik Townsend: “A global war is coming” – Capitalist Exploits
9/20 Your money or your life – Future of Freedom Foundation
Self-sufficiency, Food Security, Survival
9/19 These six plant extracts could delay aging – Kurzweil
9/19 The ultimate collection of kickass survival ideas – Survival Sullivan
9/16 The changing paradigm on drugs – Dr. Sircus
9/10 Objective information about financial planning and retirement – Telegraph
9/10 50 items to keep handy for an evacuation – Survival Sullivan
9/08 Exercise can cancel out the booze, says study – CNN
CyberWar, CyberTerrorism, CyberCrime
9/21 Chinese company hacks Tesla car remotely – CNBC
9/17 The Cold War is over. The cyber war has begun – Washington Post
9/14 Cyber bombs reshape US battle against terrorism – NPR
Off-Topic But Brilliant/Challenging/Infuriating
9/21 DOT embraces self driving vehicles – Mish
9/21 Angelina Jolie files for divorce from Brad Pitt – Bloomberg
9/20 Your sex toy may be collecting information about you – MarketWatch
9/20 Thieves helped crack the Chelsea bombing case – DNA Info
9/20 Guess how much that anti-LGBTQ law is costing NC – Wired
9/17 Solid gold toilet ‘symbolising the greedy 1%’ is open for public use – Mirror
9/17 Here’s what it’s like to ride in Uber’s self-driving car – Wired
9/16 Paralyzed man regains use of arms after experimental stem cell therapy – Kurzweil
9/16 The mystery of Thomas Heatherwick’s top-secret Hudson yards project – Vanity Fair
9/16 Zika is here, and America has no plan to fight it! – Bloomberg
9/15 Self-driving vehicle revolution to wipe out 4 million jobs – Wolf Street
All Above Links Found Here http://dollarcollapse.com/breaking-news/breaking-news/
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Trending Hot Tonight
Are Gold Bulls Still Prevalent in the Market?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
The biggie investors
The sentiment that laymen investors have toward precious metals can be significantly influenced by what biggie investors and prominent names on Wall Street think. Billionaire bond fund manager Bill Gross, for example, has stated that right now there are few choices beyond gold and real estate, given current bond yields, thus confirming the haven appeal of gold. Other big pockets including Paul Singer, David Einhorn, and Stan Druckenmiller have expressed similar concerns.
According to Diego Parrilla of Old Mutual Global Investors, gold could soar to record highs within five years as asset bubbles burst in everything from bonds to credit and equities. The store-of-value feature of gold could once again come into play here. Parrilla mentioned that the upside for gold is much higher than the few hundred dollars of downside.
Are Gold Bulls Still Prevalent in the Market?
Volatility and gold
The above graph represents the fluctuations we’ve seen in gold prices with respect to the overall volatility in the market. Volatility in the market is measured by the VIX (volatility) index. The instability spiked in June and July as the UK’s Brexit referendum took hold of the world economy.
Funds that closely track the performance of gold include the SPDR Gold Shares (GLD) and the iShaers Gold Trust (IAU), which have risen 23.6% and 23.9%, respectively, YTD (year-to-date) following gains in precious metals. These funds have slipped, however, during the past month as markets stabilized and investors fled from gold.
Notably, mining shares that suffered for the same reason include Harmony Gold (HMY), IamGold (IAG), Alacer Gold (ASR), and Eldorado Gold (EGO). These four mining companies together make up about 7% of the Vaneck Vectors Gold Miners Fund (GDX).
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Volatility and gold
The above graph represents the fluctuations we’ve seen in gold prices with respect to the overall volatility in the market. Volatility in the market is measured by the VIX (volatility) index. The instability spiked in June and July as the UK’s Brexit referendum took hold of the world economy.
Funds that closely track the performance of gold include the SPDR Gold Shares (GLD) and the iShaers Gold Trust (IAU), which have risen 23.6% and 23.9%, respectively, YTD (year-to-date) following gains in precious metals. These funds have slipped, however, during the past month as markets stabilized and investors fled from gold.
Notably, mining shares that suffered for the same reason include Harmony Gold (HMY), IamGold (IAG), Alacer Gold (ASR), and Eldorado Gold (EGO). These four mining companies together make up about 7% of the Vaneck Vectors Gold Miners Fund (GDX).
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MUX * Why Is McEwen so Optimistic about Gold?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
McEwen on gold
Robert McEwen, Candian businessman and Founder and former Chairman of GoldCorp (GG), serves as CEO of McEwen Mining and Chairman of Lexam VG Gold. McEwen foresees that gold will increase to about 44% by the end of 2016 and confirms a possible price range of $1,700–$1,900 per ounce.
McEwen has become increasingly optimistic on gold as global uncertainty continues surrounding sovereign debt and currencies. The upcoming US election could give further impetus to gold. McEwen even allows that in the next five years, gold could reach $5,000 per ounce, though he gave a similar outlook in 2009 and 2011.
Notably, gold futures have maintained YTD (year-to-date) gains of 23.5%, but silver has outperformed gold, rising a whopping 37.6% YTD.
Leveraged funds and mining companies
The UK’s recent Brexit vote also played a significant role in the rally of these metals. Mining-based leveraged funds like the Direxion Daily Gold Miners (NUGT) and ProShares Ultra Silver (AGQ) have risen 280% and 80%, respectively, YTD.
Mining shares that have seen the highest YTD gains include First Majestic Silver (AG), Coeur Mining (CDE), Harmony Gold (HMY), and Cia De Minas Buenaventura (BVN). These four equities have risen 254%, 407%, 262%, and 229%, respectively, YTD. Notably, AG, CDE, HMY, and BVN together make up about 6% of Market Vectors Gold Miners ETF (GDX).
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How Did the Bank of Japan’s Decision Play on Gold?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
Japanese verdict
Investors have been closely eyeing the most recent move by the Bank of Japan to see how it could impact precious metals. On Wednesday, the Bank of Japan decided to adopt a target for long-term interest rates in an overhaul of its massive stimulus program.
Gold remained in the neutral range of $1,313–$1,319 per ounce as the bank gave its verdict, keeping the benchmark interest rate unchanged at -0.1%. If the government had reduced the rate of interest, it could have been beneficial for gold and the other precious metals because these are non-yield bearers that rise with any fall in the yields of related products.
How Did the Bank of Japan’s Decision Play on Gold?
Gold, silver, platinum, and palladium have been declining for the past month on fears that the US Federal Reserve will increase interest rates, falling 2.4%, 1.3%, 7.8%, and 4%, respectively, on a YTD (year-to-date) basis.
RSI level
As precious metals have been drowning, their RSI levels have also fallen considerably. Gold, silver, platinum, and palladium now have RSIs (relative strength indicators) of 40, 46, 34, and 49, respectively, as of September 20. Remember, an RSI level above 70 indicates that a stock has been overbought and could fall, while an RSI level below 30 indicates that a stock has been oversold and could rise.
Meanwhile, the Global X Silver Miners Fund (SIL) and Sprott Gold Miners Fund (SGDM) have fallen in the past 30 days by 13.7% and 13.5%, respectively.
Mining shares also fell in the past one month, including GoldCorp (GG), Newmont Mining (NEM), New Gold (NGD), and Aurico Gold (AUQ), which fell 14.2%, 13.6%, 20%, and 18.1%, respectively. Notably, these four mining companies together make up 15.9% of the Vaneck Vectors Gold Miners Fund (GDX).
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How Much Has the US Dollar Aided Gold’s Losses?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
DXY on a surge
The fall in precious metals during the past month was driven by the Fed’s sentiment as well as the increasing strength of the US dollar. The dollar index, which measures the greenback against six major currencies, rose on Wednesday. Notably, the dollar usually rises with the possibility of an interest rate hike increases and falls with the possibility of a rate hike delay.
The DXY index has increased about 1.9% on a 30-day trailing basis, while precious metals have fallen drastically. Overall economic sentiment also plays well on the US dollar, and positive economic news takes the dollar higher, while negative sentiment sets it reeling.
How Much Has the US Dollar Aided Gold’s Losses?
In this sense, the relationship between the dollar and dollar-denominated precious metals is inverse—the higher the price of the dollar, the lower the demand for dollar-denominated assets.
What else is playing the US dollar?
The correlation between gold and the DXY index is -0.36. The correlation determines that about 36% of the time, gold moves in the opposite direction of gold. The relationship of the DXY with silver is -0.32.
The weakness in the US dollar is also a boon for dollar-pegged assets, making them relatively cheaper for buyers of other currencies. The rise in the dollar works the opposite way.
Precious metal-based funds such as the SPDR S&P Metals and Mining ETF (XME) and the iShares MSCI Global Gold Min (RING) have seen negative returns in the past month. Mining companies like Alamos Gold (AGI), B2Gold (BTG), Primero Mining (PPP), and RandGold Resources (GOLD) have also experienced negative returns during the past month.
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Gold-based funds like the Physical Swiss Gold Shares ETF (SGOL) and the leveraged Direxion Daily Junior Bull Gold 3X (JNUG) have seen their returns fall during the past few months. These two funds, in particular, saw 30-day-trailing falls of 2% and 37.2%, respectively, though their YTD (year-to-date) gains continue to be positive.
Let’s look now at the implied volatilities of mining companies and their RSI (relative strength indicator) levels after the carnage among precious metal prices. We’ll look specifically at Silver Wheaton (SLW), Yamana Gold (AUY), Pan American Silver (PAAS), and Coeur Mining (CDE).
Understanding the Volatility in Mining Stocks
Implied volatility
Call implied volatility takes into account the changes in the price of an asset with respect to variations in the price of the call option. Remember, during times of global and economic turbulence, volatility is higher than during a stagnant economy.
The volatilities of SLW, AUY, PAAS, and CDE were 45.3%, 61.3%, 54.5%, and 66.3%, respectively, on September 20, which was much lower than the overall volatility during the previous few months.
RSI indicator
The RSIs (relative strength indicators) of these four mining giants all fell due to the fall in their prices, despite the losses in precious metals. Specifically, SLW, AUY, PAAS, and CDE saw RSI levels of 45.7, 42.9, 41.9, and 41.3, respectively.
Notably, an RSI level above 70 indicates that a stock has been overbought and could fall. An RSI level below 30 indicates that a stock has been oversold and could rise. The 30-day trailing returns of these mining companies were also negative due to diminishing haven appeals.
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Precious metal mining companies suffered in 2015 due to losses in precious metals. In 2015, precious metals took much of their fluctuations from the US Federal Reserve meetings, which determined whether or not to hike the interest rate. On average, mining companies followed the direction of gold prices about 50% of the time.
Meanwhile, the UK’s Brexit vote in June substantially affected mining companies and precious metals. Gold and silver rose to two-year highs due to safe-haven bids in the wake of this game-changing global event, and now, another possibility of a rate hike in the US has started to play on these metals.
How Closely Are Mining Companies Following Gold?
Notably, Cia De Minas Buenaventura (BVN), AngloGold Ashanti (AU), Hecla Mining (HL), and Kinross Gold (KGC) have seen YTD (year-to-date) rises of 229.7%, 112.8%, 200%, and 129.1%, respectively. The VanEck Vectors Junior Gold Miners ETF (GDXJ) has also seen a substantial YTD rise of 131.5%. But these YTD returns have also seen sharp falls during the past few months, causing mining companies to react.
Technical indicators
Most mining companies are now trading closer to their 100-day moving averages. Remember, a substantial premium over a trading price suggests a possible fall in price, and a discount could indicate a rise. However, the target prices for all the above four mining companies (except Cia De Minas) are significantly above their current prices, suggesting a positive outlook.
That said, RSI (relative strength indicator) readings of mining companies are falling, as are the RSIs of precious metals. On September 20, 2016, the RSI for the VanEck Vectors Junior Gold Miners ETF (GDXJ) was close to 45, and these very low RSI levels (below 30) suggest a possible pullback in prices.
In the next and final part of this series, we’ll discuss the correlation of mining companies to gold.
The precious metals market has skyrocketed in 2016. Despite this trend, it’s important to know which mining stocks are overperforming and which ones are underperforming precious metals. Lately, precious metal prices have been declining slowly, and as a result, mining stocks have fallen.
Mining companies that have high correlations with gold include First Majestic Silver (AG), B2Gold (BTG), Royal Gold (RGLD), and GoldCorp (GG). On a YTD (year-to-date) basis, these stocks have risen 254%, 180.4%, 113%, and 36.1%, respectively. Mining companies are often known to amplify the returns of precious metals.
Inside the Correlation of Mining Stocks to Gold
The substantial returns of most mining companies have come about due to safe-haven bids that boosted gold and other precious metals. However, demand for these mining companies seems to be in danger due to the recent fall in precious metal prices.
Correlation trends
As you can see in the table, GoldCorp is the most correlated with gold on a YTD basis among the four stocks mentioned above. Royal Gold is the least correlated with gold.
GoldCorp and B2Gold have seen their correlations with gold rise. But B2Gold’s correlation has increased from a ~0.51 three-year correlation to a ~0.55 one-year correlation. A correlation of ~0.55 suggests that about 55% of the time, B2Gold has moved in the same direction as gold in the past year.
Remember, a fall in gold leads to falls in the prices of mining stocks, while a rise in gold leads to increases in the prices of mining stocks. The relationships of the other two mining companies with gold may not be stable because their correlations have seen upward and downward movements.
Together, these four stocks make up 11% of the VanEck Vectors Gold Miners ETF (GDX).
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How Did the Bank of Japan’s Decision Play on Gold?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
Japanese verdict
Investors have been closely eyeing the most recent move by the Bank of Japan to see how it could impact precious metals. On Wednesday, the Bank of Japan decided to adopt a target for long-term interest rates in an overhaul of its massive stimulus program.
Gold remained in the neutral range of $1,313–$1,319 per ounce as the bank gave its verdict, keeping the benchmark interest rate unchanged at -0.1%. If the government had reduced the rate of interest, it could have been beneficial for gold and the other precious metals because these are non-yield bearers that rise with any fall in the yields of related products.
How Did the Bank of Japan’s Decision Play on Gold?
Gold, silver, platinum, and palladium have been declining for the past month on fears that the US Federal Reserve will increase interest rates, falling 2.4%, 1.3%, 7.8%, and 4%, respectively, on a YTD (year-to-date) basis.
RSI level
As precious metals have been drowning, their RSI levels have also fallen considerably. Gold, silver, platinum, and palladium now have RSIs (relative strength indicators) of 40, 46, 34, and 49, respectively, as of September 20. Remember, an RSI level above 70 indicates that a stock has been overbought and could fall, while an RSI level below 30 indicates that a stock has been oversold and could rise.
Meanwhile, the Global X Silver Miners Fund (SIL) and Sprott Gold Miners Fund (SGDM) have fallen in the past 30 days by 13.7% and 13.5%, respectively.
Mining shares also fell in the past one month, including GoldCorp (GG), Newmont Mining (NEM), New Gold (NGD), and Aurico Gold (AUQ), which fell 14.2%, 13.6%, 20%, and 18.1%, respectively. Notably, these four mining companies together make up 15.9% of the Vaneck Vectors Gold Miners Fund (GDX).
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How Much Has the US Dollar Aided Gold’s Losses?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
DXY on a surge
The fall in precious metals during the past month was driven by the Fed’s sentiment as well as the increasing strength of the US dollar. The dollar index, which measures the greenback against six major currencies, rose on Wednesday. Notably, the dollar usually rises with the possibility of an interest rate hike increases and falls with the possibility of a rate hike delay.
The DXY index has increased about 1.9% on a 30-day trailing basis, while precious metals have fallen drastically. Overall economic sentiment also plays well on the US dollar, and positive economic news takes the dollar higher, while negative sentiment sets it reeling.
How Much Has the US Dollar Aided Gold’s Losses?
In this sense, the relationship between the dollar and dollar-denominated precious metals is inverse—the higher the price of the dollar, the lower the demand for dollar-denominated assets.
What else is playing the US dollar?
The correlation between gold and the DXY index is -0.36. The correlation determines that about 36% of the time, gold moves in the opposite direction of gold. The relationship of the DXY with silver is -0.32.
The weakness in the US dollar is also a boon for dollar-pegged assets, making them relatively cheaper for buyers of other currencies. The rise in the dollar works the opposite way.
Precious metal-based funds such as the SPDR S&P Metals and Mining ETF (XME) and the iShares MSCI Global Gold Min (RING) have seen negative returns in the past month. Mining companies like Alamos Gold (AGI), B2Gold (BTG), Primero Mining (PPP), and RandGold Resources (GOLD) have also experienced negative returns during the past month.
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Understanding the Volatility in Mining Stocks
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
Precious metal funds
Gold-based funds like the Physical Swiss Gold Shares ETF (SGOL) and the leveraged Direxion Daily Junior Bull Gold 3X (JNUG) have seen their returns fall during the past few months. These two funds, in particular, saw 30-day-trailing falls of 2% and 37.2%, respectively, though their YTD (year-to-date) gains continue to be positive.
Let’s look now at the implied volatilities of mining companies and their RSI (relative strength indicator) levels after the carnage among precious metal prices. We’ll look specifically at Silver Wheaton (SLW), Yamana Gold (AUY), Pan American Silver (PAAS), and Coeur Mining (CDE).
Understanding the Volatility in Mining Stocks
Implied volatility
Call implied volatility takes into account the changes in the price of an asset with respect to variations in the price of the call option. Remember, during times of global and economic turbulence, volatility is higher than during a stagnant economy.
The volatilities of SLW, AUY, PAAS, and CDE were 45.3%, 61.3%, 54.5%, and 66.3%, respectively, on September 20, which was much lower than the overall volatility during the previous few months.
RSI indicator
The RSIs (relative strength indicators) of these four mining giants all fell due to the fall in their prices, despite the losses in precious metals. Specifically, SLW, AUY, PAAS, and CDE saw RSI levels of 45.7, 42.9, 41.9, and 41.3, respectively.
Notably, an RSI level above 70 indicates that a stock has been overbought and could fall. An RSI level below 30 indicates that a stock has been oversold and could rise. The 30-day trailing returns of these mining companies were also negative due to diminishing haven appeals.
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How Closely Are Mining Companies Following Gold?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
Reaction of mining companies
Precious metal mining companies suffered in 2015 due to losses in precious metals. In 2015, precious metals took much of their fluctuations from the US Federal Reserve meetings, which determined whether or not to hike the interest rate. On average, mining companies followed the direction of gold prices about 50% of the time.
Meanwhile, the UK’s Brexit vote in June substantially affected mining companies and precious metals. Gold and silver rose to two-year highs due to safe-haven bids in the wake of this game-changing global event, and now, another possibility of a rate hike in the US has started to play on these metals.
How Closely Are Mining Companies Following Gold?
Notably, Cia De Minas Buenaventura (BVN), AngloGold Ashanti (AU), Hecla Mining (HL), and Kinross Gold (KGC) have seen YTD (year-to-date) rises of 229.7%, 112.8%, 200%, and 129.1%, respectively. The VanEck Vectors Junior Gold Miners ETF (GDXJ) has also seen a substantial YTD rise of 131.5%. But these YTD returns have also seen sharp falls during the past few months, causing mining companies to react.
Technical indicators
Most mining companies are now trading closer to their 100-day moving averages. Remember, a substantial premium over a trading price suggests a possible fall in price, and a discount could indicate a rise. However, the target prices for all the above four mining companies (except Cia De Minas) are significantly above their current prices, suggesting a positive outlook.
That said, RSI (relative strength indicator) readings of mining companies are falling, as are the RSIs of precious metals. On September 20, 2016, the RSI for the VanEck Vectors Junior Gold Miners ETF (GDXJ) was close to 45, and these very low RSI levels (below 30) suggest a possible pullback in prices.
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Inside the Correlation of Mining Stocks to Gold
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
Mining companies and gold
The precious metals market has skyrocketed in 2016. Despite this trend, it’s important to know which mining stocks are overperforming and which ones are underperforming precious metals. Lately, precious metal prices have been declining slowly, and as a result, mining stocks have fallen.
Mining companies that have high correlations with gold include First Majestic Silver (AG), B2Gold (BTG), Royal Gold (RGLD), and GoldCorp (GG). On a YTD (year-to-date) basis, these stocks have risen 254%, 180.4%, 113%, and 36.1%, respectively. Mining companies are often known to amplify the returns of precious metals.
Inside the Correlation of Mining Stocks to Gold
The substantial returns of most mining companies have come about due to safe-haven bids that boosted gold and other precious metals. However, demand for these mining companies seems to be in danger due to the recent fall in precious metal prices.
Correlation trends
As you can see in the table, GoldCorp is the most correlated with gold on a YTD basis among the four stocks mentioned above. Royal Gold is the least correlated with gold.
GoldCorp and B2Gold have seen their correlations with gold rise. But B2Gold’s correlation has increased from a ~0.51 three-year correlation to a ~0.55 one-year correlation. A correlation of ~0.55 suggests that about 55% of the time, B2Gold has moved in the same direction as gold in the past year.
Remember, a fall in gold leads to falls in the prices of mining stocks, while a rise in gold leads to increases in the prices of mining stocks. The relationships of the other two mining companies with gold may not be stable because their correlations have seen upward and downward movements.
Together, these four stocks make up 11% of the VanEck Vectors Gold Miners ETF (GDX).
All Above Reads Found Here http://marketrealist.com/2016/09/are-gold-bulls-still-prevalent-in-the-market/
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MMgys
Pic A Marble !
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Breaking News And Best Of The Web
September 21, 2016
Fed leaves rate unchanged, implies (once again) that rates will rise next time. Bank of Japan overhauls its inflation-generating strategy, markets cheer. US inflation a bit higher than expected. Retail sales and factory output fall more than expected as auto loan bubble loses air. Bond yields rising. Junk bond defaults and China’s debt both soar. Several real estate markets doing notable things. Multiple terrorist attacks in US, main suspect in custody. Trump and Clinton close in latest polls.
Best Of The Web
Why the EU is doomed – Mises Institute
Essence of decision – Salient Partners
The central bankers’ experiment: the great bust – Best Minds, Inc.
Jim Grant rejects Rogoff’s “curse of cash” – Zero Hedge
Weekly commentary: reversals – Credit Bubble Bulletin
If everything’s doing so great, how come I’m not? – Peak Prosperity
The (160 to 1) gold-silver ratio every investor needs to know about – SRSrocco Report
Negative interest rates and the war on cash (4) – Automatic Earth
Negative interest rates and the war on cash (3) – Automatic Earth
Deadpool – StockResearch
The matrix exposed – First Rebuttal
Magical thinking – Financial Sense
Negative interest rates and the war on cash (2) – Automatic Earth
—————————————————————–
Breaking News
The Economy
9/21 Fed inaction sparks buying in bonds, stocks, gold, oil as VIX tanks – Zero Hedge
9/21 Fed leaves rates unchanged – CNBC
9/21 Japan August exports fall 9.6 percent on-year – CNBC
9/21 Oil jumps on chance of another U.S. draw, Norway strike supports – Reuters
9/21 Get ready for the mother of all stock market corrections – Telegraph
9/21 A note on Deutsche Bank – Golem XIV
9/21 “Deutsche Bank may ultimately need a state bailout” – Zero Hedge
9/21 What the BOJ just did is “recipe for disaster” – Zero Hedge
9/21 Bank of Japan changes strategy, will focus on yield curve – CNBC
9/21 Deutsche Bank’s low capital makes it no. 1 for risk in study – Bloomberg
9/21 Warren says Wells Fargo’s Stumpf should resign – Bloomberg
9/21 World’s liquidity trap will not yield ‘surprise’ monetary reversals – Daily Bell
9/21 Microsoft announces $40BN share buyback – Zero Hedge
9/21 US Federal debt is expanding at the fastest rate since the crisis – Zero Hedge
9/21 Average US household has saved $2,500 for retirement – Zero Hedge
9/20 Italy PM tells Bundesbank chief to fix Germany’s bank problems – Reuters
9/20 Why the Bank of Japan may overshadow the Federal Reserve – CNBC
9/20 Slowly, then all at once – Kunstler
9/20 Is Deutsche Bank cooking its derivatives book to hide huge losses? – Mish
9/20 Grand ascension or great collapse? – Deviant Investor
9/20 Credit Suisse exec warns of longer-term negative rate impact – Reuters
Precious Metals
9/21 Storage cost argument against gold now applies to cash – GATA
9/21 Do you know where those gold maples have been? – GATA
9/21 4 shining silver mining stocks with solid momentum – Yahoo!
9/21 This gold level could be ‘easily broken’ if the Fed hikes rates – Business Insider
9/21 Japan’s monetary reboot good for gold; Fed now on deck – Kitco
9/21 Central Bank of Russia adds 700k oz of gold to reserves in Aug. – Smaulgld
9/21 Rate hike: implications for gold stocks & Dow – 321Gold
9/21 Swiss gold exports down 7% on year to 160 metric tonnes in August – GATA
9/21 US Mint telegraphs major market move – Daily Reckoning
9/21 Silver returns to its historic role – Daily Reckoning
9/21 Is this the most undervalued commodity in the world? – Motley Fool
9/20 Central banks boost gold reserves as low interest rates bite – Guardian
9/20 The war on cash is still good for gold – Seeking Alpha
9/20 Central banks think gold bugs are on to something – GoldCore
9/20 5 more gold exploration stocks put on your radar now – Seeking Alpha
9/20 Gold – the final countdown – Seeking Alpha
9/20 First Majestic Silver becomes royal pain (AG, AGQ) – Investopedia
9/20 Seven ages of gold – OMFIF
9/19 Gold’s safe-haven rally appears to have run its course – CNBC
9/19 Funds dump gold at fastest pace since May as Fed outlook shifts – GATA
9/19 World’s gold miners stick close to home in hunt for more metal – Reuters
Inflation, Deflation, Currency War, Cryptocurrencies
9/21 Dollar hits lowest in a month versus yen after BOJ move – MarketWatch
9/21 The Keynesian deflation humbug – a reality check – David Stockman
9/21 Merkel is ‘lying to public’ Italian PM in furious attack – Express
9/21 Japan’s negative interest rates explained – New York Times
9/21 Germany’s Schaeuble: zero interest rates make no sense – Reuters
9/21 Signs are building that the BOJ is reaching its ‘endgame’ – Bloomberg
9/21 Cash is a curse for crime fighters and central bankers – St. Louis Post-Dispatch
9/21 Inflation data throws a wrench in dovish Fed hopes – Seeking Alpha
9/21 Obamacare and EpiPens are causing an inflation problem – Business Insider
9/20 All eyes are on BOJ as negative rates are expected to make a comeback – CNBC
Real Estate Bubble
9/21 Why Canadians are being offered cash to abandon their homes – Bloomberg
9/21 Mortgage applications tank amid rising rates – CNBC
9/21 Housing starts down 5.4% – Forbes
9/21 China’s home prices rise most in six years as sales gain – Bloomberg
9/20 US housing starts total 1.14M in Aug vs. 1.19M expected – CNBC
DollarCollapse Podcasts
9/13 Markets explain facts of life to Fed
8/16 A tough time to manage money
7/27 Random violence and political instability: the new normal
7/21 It’s not the event but the response to the event that matters
7/01 Brexit was just the beginning
6/25 The deeper meaning of Brexit
6/08 Gold Will Soar, Marijuana Will Be Legal
5/23 Hard times for obsolete entities
5/14 Chaos spreads to US retailers and Italian banks
5/04 Easy money has failed; what’s next?
Politics
9/21 Money laundering scheme exposed – Zero Hedge
9/21 The Bloomberg politics poll decoder – Bloomberg
9/21 Deutsche Bank breaks down Clinton-vs.-Trump stock-trading plan – MarketWatch
9/21 Chance of president Trump starting to hit Canada’s currency – Bloomberg
9/21 Hillary’s broken trust is a media catastrophe – Daily Bell
9/21 Is Trump really behind in Colorado? – Mish
9/21 Donald Trump, the unsinkable candidate – New York Times
9/21 Trump doesn’t see much downside in assumption of terrorism – Washington Post
9/21 Hillary Clinton prepares for unpredictable Donald Trump at debate – CNN
9/21 Why Hillary lost: a premature orbit – Huffington Post
9/20 Clinton much less a sure bet than last month – CNBC
Offshore Investing
9/14 4 totally legal reasons to use an offshore structure – Nestmann
7/20 Costa Rica: Central America’s hidden gem – Sovereign Investor
7/08 Time to adjust your wealth plan – Mountain Vision
7/08 We pulled the ripcord on daily life and moved to Costa Rica – International Living
Clean Tech
9/20 SunEdison’s yieldcos exploring strategic options, including sale – Reuters
9/20 Cheapest solar on record offered – Bloomberg
9/19 Why solar developers unhappy with desert renewable energy plan – Fortune
9/19 First Solar’s plan to deal with plunging panel prices – Bloomberg
9/19 Canada will impose nationwide carbon price: minister – Reuters
9/19 Solar power in India: roofs of growth – Brink Asia
9/19 Electric car boom is in jeopardy – Daily Sheeple
9/16 Solar rooftop revolution fizzles in US on utility pushback – Bloomberg
9/16 Tesla tackles California energy woes with massive energy-storage deal – CNBC
Art of the Collapse
9/14 Book review of Dave Stockman’s “Trumped!” – Mish
9/08 Daily Show dissects Trump’s attempts to win black votes – Huffington Post
9/03 Why you should enroll in the chartered central bank watcher – Zero Hedge
8/17 The hardest job in the world: Donald Trump’s campaign surrogates – Daily Show
8/09 How you got screwed – a user’s guide to a rigged system – Zero Hedge
War, Civil Unrest, Privacy, Creeping Fascism, Police State
9/21 Protest erupts after police kill black man in North Carolina – Reuters
9/21 US charges NY bombing suspect, cites views in his notebook – Wall Street Journal
9/21 ‘Suspicious’ duffel bag prompts LA bomb squad – LA Times
9/21 Empty suitcase shuts down 42nd Street at rush hour – NBC New York
9/20 North Korea says it successfully tested new rocket engine – Wall Street Journal
9/20 Oklahoma police release video of officer shooting unarmed black man – Reuters
9/20 Erik Townsend: “A global war is coming” – Capitalist Exploits
9/20 Your money or your life – Future of Freedom Foundation
Self-sufficiency, Food Security, Survival
9/19 These six plant extracts could delay aging – Kurzweil
9/19 The ultimate collection of kickass survival ideas – Survival Sullivan
9/16 The changing paradigm on drugs – Dr. Sircus
9/10 Objective information about financial planning and retirement – Telegraph
9/10 50 items to keep handy for an evacuation – Survival Sullivan
9/08 Exercise can cancel out the booze, says study – CNN
CyberWar, CyberTerrorism, CyberCrime
9/21 Chinese company hacks Tesla car remotely – CNBC
9/17 The Cold War is over. The cyber war has begun – Washington Post
9/14 Cyber bombs reshape US battle against terrorism – NPR
Off-Topic But Brilliant/Challenging/Infuriating
9/21 DOT embraces self driving vehicles – Mish
9/21 Angelina Jolie files for divorce from Brad Pitt – Bloomberg
9/20 Your sex toy may be collecting information about you – MarketWatch
9/20 Thieves helped crack the Chelsea bombing case – DNA Info
9/20 Guess how much that anti-LGBTQ law is costing NC – Wired
9/17 Solid gold toilet ‘symbolising the greedy 1%’ is open for public use – Mirror
9/17 Here’s what it’s like to ride in Uber’s self-driving car – Wired
9/16 Paralyzed man regains use of arms after experimental stem cell therapy – Kurzweil
9/16 The mystery of Thomas Heatherwick’s top-secret Hudson yards project – Vanity Fair
9/16 Zika is here, and America has no plan to fight it! – Bloomberg
9/15 Self-driving vehicle revolution to wipe out 4 million jobs – Wolf Street
All Above Links Found Here http://dollarcollapse.com/breaking-news/breaking-news/
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Trending Hot Tonight
Are Gold Bulls Still Prevalent in the Market?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
The biggie investors
The sentiment that laymen investors have toward precious metals can be significantly influenced by what biggie investors and prominent names on Wall Street think. Billionaire bond fund manager Bill Gross, for example, has stated that right now there are few choices beyond gold and real estate, given current bond yields, thus confirming the haven appeal of gold. Other big pockets including Paul Singer, David Einhorn, and Stan Druckenmiller have expressed similar concerns.
According to Diego Parrilla of Old Mutual Global Investors, gold could soar to record highs within five years as asset bubbles burst in everything from bonds to credit and equities. The store-of-value feature of gold could once again come into play here. Parrilla mentioned that the upside for gold is much higher than the few hundred dollars of downside.
Are Gold Bulls Still Prevalent in the Market?
Volatility and gold
The above graph represents the fluctuations we’ve seen in gold prices with respect to the overall volatility in the market. Volatility in the market is measured by the VIX (volatility) index. The instability spiked in June and July as the UK’s Brexit referendum took hold of the world economy.
Funds that closely track the performance of gold include the SPDR Gold Shares (GLD) and the iShaers Gold Trust (IAU), which have risen 23.6% and 23.9%, respectively, YTD (year-to-date) following gains in precious metals. These funds have slipped, however, during the past month as markets stabilized and investors fled from gold.
Notably, mining shares that suffered for the same reason include Harmony Gold (HMY), IamGold (IAG), Alacer Gold (ASR), and Eldorado Gold (EGO). These four mining companies together make up about 7% of the Vaneck Vectors Gold Miners Fund (GDX).
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Volatility and gold
The above graph represents the fluctuations we’ve seen in gold prices with respect to the overall volatility in the market. Volatility in the market is measured by the VIX (volatility) index. The instability spiked in June and July as the UK’s Brexit referendum took hold of the world economy.
Funds that closely track the performance of gold include the SPDR Gold Shares (GLD) and the iShaers Gold Trust (IAU), which have risen 23.6% and 23.9%, respectively, YTD (year-to-date) following gains in precious metals. These funds have slipped, however, during the past month as markets stabilized and investors fled from gold.
Notably, mining shares that suffered for the same reason include Harmony Gold (HMY), IamGold (IAG), Alacer Gold (ASR), and Eldorado Gold (EGO). These four mining companies together make up about 7% of the Vaneck Vectors Gold Miners Fund (GDX).
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MUX * Why Is McEwen so Optimistic about Gold?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
McEwen on gold
Robert McEwen, Candian businessman and Founder and former Chairman of GoldCorp (GG), serves as CEO of McEwen Mining and Chairman of Lexam VG Gold. McEwen foresees that gold will increase to about 44% by the end of 2016 and confirms a possible price range of $1,700–$1,900 per ounce.
McEwen has become increasingly optimistic on gold as global uncertainty continues surrounding sovereign debt and currencies. The upcoming US election could give further impetus to gold. McEwen even allows that in the next five years, gold could reach $5,000 per ounce, though he gave a similar outlook in 2009 and 2011.
Notably, gold futures have maintained YTD (year-to-date) gains of 23.5%, but silver has outperformed gold, rising a whopping 37.6% YTD.
Leveraged funds and mining companies
The UK’s recent Brexit vote also played a significant role in the rally of these metals. Mining-based leveraged funds like the Direxion Daily Gold Miners (NUGT) and ProShares Ultra Silver (AGQ) have risen 280% and 80%, respectively, YTD.
Mining shares that have seen the highest YTD gains include First Majestic Silver (AG), Coeur Mining (CDE), Harmony Gold (HMY), and Cia De Minas Buenaventura (BVN). These four equities have risen 254%, 407%, 262%, and 229%, respectively, YTD. Notably, AG, CDE, HMY, and BVN together make up about 6% of Market Vectors Gold Miners ETF (GDX).
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How Did the Bank of Japan’s Decision Play on Gold?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
Japanese verdict
Investors have been closely eyeing the most recent move by the Bank of Japan to see how it could impact precious metals. On Wednesday, the Bank of Japan decided to adopt a target for long-term interest rates in an overhaul of its massive stimulus program.
Gold remained in the neutral range of $1,313–$1,319 per ounce as the bank gave its verdict, keeping the benchmark interest rate unchanged at -0.1%. If the government had reduced the rate of interest, it could have been beneficial for gold and the other precious metals because these are non-yield bearers that rise with any fall in the yields of related products.
How Did the Bank of Japan’s Decision Play on Gold?
Gold, silver, platinum, and palladium have been declining for the past month on fears that the US Federal Reserve will increase interest rates, falling 2.4%, 1.3%, 7.8%, and 4%, respectively, on a YTD (year-to-date) basis.
RSI level
As precious metals have been drowning, their RSI levels have also fallen considerably. Gold, silver, platinum, and palladium now have RSIs (relative strength indicators) of 40, 46, 34, and 49, respectively, as of September 20. Remember, an RSI level above 70 indicates that a stock has been overbought and could fall, while an RSI level below 30 indicates that a stock has been oversold and could rise.
Meanwhile, the Global X Silver Miners Fund (SIL) and Sprott Gold Miners Fund (SGDM) have fallen in the past 30 days by 13.7% and 13.5%, respectively.
Mining shares also fell in the past one month, including GoldCorp (GG), Newmont Mining (NEM), New Gold (NGD), and Aurico Gold (AUQ), which fell 14.2%, 13.6%, 20%, and 18.1%, respectively. Notably, these four mining companies together make up 15.9% of the Vaneck Vectors Gold Miners Fund (GDX).
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How Much Has the US Dollar Aided Gold’s Losses?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
DXY on a surge
The fall in precious metals during the past month was driven by the Fed’s sentiment as well as the increasing strength of the US dollar. The dollar index, which measures the greenback against six major currencies, rose on Wednesday. Notably, the dollar usually rises with the possibility of an interest rate hike increases and falls with the possibility of a rate hike delay.
The DXY index has increased about 1.9% on a 30-day trailing basis, while precious metals have fallen drastically. Overall economic sentiment also plays well on the US dollar, and positive economic news takes the dollar higher, while negative sentiment sets it reeling.
How Much Has the US Dollar Aided Gold’s Losses?
In this sense, the relationship between the dollar and dollar-denominated precious metals is inverse—the higher the price of the dollar, the lower the demand for dollar-denominated assets.
What else is playing the US dollar?
The correlation between gold and the DXY index is -0.36. The correlation determines that about 36% of the time, gold moves in the opposite direction of gold. The relationship of the DXY with silver is -0.32.
The weakness in the US dollar is also a boon for dollar-pegged assets, making them relatively cheaper for buyers of other currencies. The rise in the dollar works the opposite way.
Precious metal-based funds such as the SPDR S&P Metals and Mining ETF (XME) and the iShares MSCI Global Gold Min (RING) have seen negative returns in the past month. Mining companies like Alamos Gold (AGI), B2Gold (BTG), Primero Mining (PPP), and RandGold Resources (GOLD) have also experienced negative returns during the past month.
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Gold-based funds like the Physical Swiss Gold Shares ETF (SGOL) and the leveraged Direxion Daily Junior Bull Gold 3X (JNUG) have seen their returns fall during the past few months. These two funds, in particular, saw 30-day-trailing falls of 2% and 37.2%, respectively, though their YTD (year-to-date) gains continue to be positive.
Let’s look now at the implied volatilities of mining companies and their RSI (relative strength indicator) levels after the carnage among precious metal prices. We’ll look specifically at Silver Wheaton (SLW), Yamana Gold (AUY), Pan American Silver (PAAS), and Coeur Mining (CDE).
Understanding the Volatility in Mining Stocks
Implied volatility
Call implied volatility takes into account the changes in the price of an asset with respect to variations in the price of the call option. Remember, during times of global and economic turbulence, volatility is higher than during a stagnant economy.
The volatilities of SLW, AUY, PAAS, and CDE were 45.3%, 61.3%, 54.5%, and 66.3%, respectively, on September 20, which was much lower than the overall volatility during the previous few months.
RSI indicator
The RSIs (relative strength indicators) of these four mining giants all fell due to the fall in their prices, despite the losses in precious metals. Specifically, SLW, AUY, PAAS, and CDE saw RSI levels of 45.7, 42.9, 41.9, and 41.3, respectively.
Notably, an RSI level above 70 indicates that a stock has been overbought and could fall. An RSI level below 30 indicates that a stock has been oversold and could rise. The 30-day trailing returns of these mining companies were also negative due to diminishing haven appeals.
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Precious metal mining companies suffered in 2015 due to losses in precious metals. In 2015, precious metals took much of their fluctuations from the US Federal Reserve meetings, which determined whether or not to hike the interest rate. On average, mining companies followed the direction of gold prices about 50% of the time.
Meanwhile, the UK’s Brexit vote in June substantially affected mining companies and precious metals. Gold and silver rose to two-year highs due to safe-haven bids in the wake of this game-changing global event, and now, another possibility of a rate hike in the US has started to play on these metals.
How Closely Are Mining Companies Following Gold?
Notably, Cia De Minas Buenaventura (BVN), AngloGold Ashanti (AU), Hecla Mining (HL), and Kinross Gold (KGC) have seen YTD (year-to-date) rises of 229.7%, 112.8%, 200%, and 129.1%, respectively. The VanEck Vectors Junior Gold Miners ETF (GDXJ) has also seen a substantial YTD rise of 131.5%. But these YTD returns have also seen sharp falls during the past few months, causing mining companies to react.
Technical indicators
Most mining companies are now trading closer to their 100-day moving averages. Remember, a substantial premium over a trading price suggests a possible fall in price, and a discount could indicate a rise. However, the target prices for all the above four mining companies (except Cia De Minas) are significantly above their current prices, suggesting a positive outlook.
That said, RSI (relative strength indicator) readings of mining companies are falling, as are the RSIs of precious metals. On September 20, 2016, the RSI for the VanEck Vectors Junior Gold Miners ETF (GDXJ) was close to 45, and these very low RSI levels (below 30) suggest a possible pullback in prices.
In the next and final part of this series, we’ll discuss the correlation of mining companies to gold.
The precious metals market has skyrocketed in 2016. Despite this trend, it’s important to know which mining stocks are overperforming and which ones are underperforming precious metals. Lately, precious metal prices have been declining slowly, and as a result, mining stocks have fallen.
Mining companies that have high correlations with gold include First Majestic Silver (AG), B2Gold (BTG), Royal Gold (RGLD), and GoldCorp (GG). On a YTD (year-to-date) basis, these stocks have risen 254%, 180.4%, 113%, and 36.1%, respectively. Mining companies are often known to amplify the returns of precious metals.
Inside the Correlation of Mining Stocks to Gold
The substantial returns of most mining companies have come about due to safe-haven bids that boosted gold and other precious metals. However, demand for these mining companies seems to be in danger due to the recent fall in precious metal prices.
Correlation trends
As you can see in the table, GoldCorp is the most correlated with gold on a YTD basis among the four stocks mentioned above. Royal Gold is the least correlated with gold.
GoldCorp and B2Gold have seen their correlations with gold rise. But B2Gold’s correlation has increased from a ~0.51 three-year correlation to a ~0.55 one-year correlation. A correlation of ~0.55 suggests that about 55% of the time, B2Gold has moved in the same direction as gold in the past year.
Remember, a fall in gold leads to falls in the prices of mining stocks, while a rise in gold leads to increases in the prices of mining stocks. The relationships of the other two mining companies with gold may not be stable because their correlations have seen upward and downward movements.
Together, these four stocks make up 11% of the VanEck Vectors Gold Miners ETF (GDX).
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How Did the Bank of Japan’s Decision Play on Gold?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
Japanese verdict
Investors have been closely eyeing the most recent move by the Bank of Japan to see how it could impact precious metals. On Wednesday, the Bank of Japan decided to adopt a target for long-term interest rates in an overhaul of its massive stimulus program.
Gold remained in the neutral range of $1,313–$1,319 per ounce as the bank gave its verdict, keeping the benchmark interest rate unchanged at -0.1%. If the government had reduced the rate of interest, it could have been beneficial for gold and the other precious metals because these are non-yield bearers that rise with any fall in the yields of related products.
How Did the Bank of Japan’s Decision Play on Gold?
Gold, silver, platinum, and palladium have been declining for the past month on fears that the US Federal Reserve will increase interest rates, falling 2.4%, 1.3%, 7.8%, and 4%, respectively, on a YTD (year-to-date) basis.
RSI level
As precious metals have been drowning, their RSI levels have also fallen considerably. Gold, silver, platinum, and palladium now have RSIs (relative strength indicators) of 40, 46, 34, and 49, respectively, as of September 20. Remember, an RSI level above 70 indicates that a stock has been overbought and could fall, while an RSI level below 30 indicates that a stock has been oversold and could rise.
Meanwhile, the Global X Silver Miners Fund (SIL) and Sprott Gold Miners Fund (SGDM) have fallen in the past 30 days by 13.7% and 13.5%, respectively.
Mining shares also fell in the past one month, including GoldCorp (GG), Newmont Mining (NEM), New Gold (NGD), and Aurico Gold (AUQ), which fell 14.2%, 13.6%, 20%, and 18.1%, respectively. Notably, these four mining companies together make up 15.9% of the Vaneck Vectors Gold Miners Fund (GDX).
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How Much Has the US Dollar Aided Gold’s Losses?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
DXY on a surge
The fall in precious metals during the past month was driven by the Fed’s sentiment as well as the increasing strength of the US dollar. The dollar index, which measures the greenback against six major currencies, rose on Wednesday. Notably, the dollar usually rises with the possibility of an interest rate hike increases and falls with the possibility of a rate hike delay.
The DXY index has increased about 1.9% on a 30-day trailing basis, while precious metals have fallen drastically. Overall economic sentiment also plays well on the US dollar, and positive economic news takes the dollar higher, while negative sentiment sets it reeling.
How Much Has the US Dollar Aided Gold’s Losses?
In this sense, the relationship between the dollar and dollar-denominated precious metals is inverse—the higher the price of the dollar, the lower the demand for dollar-denominated assets.
What else is playing the US dollar?
The correlation between gold and the DXY index is -0.36. The correlation determines that about 36% of the time, gold moves in the opposite direction of gold. The relationship of the DXY with silver is -0.32.
The weakness in the US dollar is also a boon for dollar-pegged assets, making them relatively cheaper for buyers of other currencies. The rise in the dollar works the opposite way.
Precious metal-based funds such as the SPDR S&P Metals and Mining ETF (XME) and the iShares MSCI Global Gold Min (RING) have seen negative returns in the past month. Mining companies like Alamos Gold (AGI), B2Gold (BTG), Primero Mining (PPP), and RandGold Resources (GOLD) have also experienced negative returns during the past month.
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Understanding the Volatility in Mining Stocks
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
Precious metal funds
Gold-based funds like the Physical Swiss Gold Shares ETF (SGOL) and the leveraged Direxion Daily Junior Bull Gold 3X (JNUG) have seen their returns fall during the past few months. These two funds, in particular, saw 30-day-trailing falls of 2% and 37.2%, respectively, though their YTD (year-to-date) gains continue to be positive.
Let’s look now at the implied volatilities of mining companies and their RSI (relative strength indicator) levels after the carnage among precious metal prices. We’ll look specifically at Silver Wheaton (SLW), Yamana Gold (AUY), Pan American Silver (PAAS), and Coeur Mining (CDE).
Understanding the Volatility in Mining Stocks
Implied volatility
Call implied volatility takes into account the changes in the price of an asset with respect to variations in the price of the call option. Remember, during times of global and economic turbulence, volatility is higher than during a stagnant economy.
The volatilities of SLW, AUY, PAAS, and CDE were 45.3%, 61.3%, 54.5%, and 66.3%, respectively, on September 20, which was much lower than the overall volatility during the previous few months.
RSI indicator
The RSIs (relative strength indicators) of these four mining giants all fell due to the fall in their prices, despite the losses in precious metals. Specifically, SLW, AUY, PAAS, and CDE saw RSI levels of 45.7, 42.9, 41.9, and 41.3, respectively.
Notably, an RSI level above 70 indicates that a stock has been overbought and could fall. An RSI level below 30 indicates that a stock has been oversold and could rise. The 30-day trailing returns of these mining companies were also negative due to diminishing haven appeals.
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How Closely Are Mining Companies Following Gold?
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
Reaction of mining companies
Precious metal mining companies suffered in 2015 due to losses in precious metals. In 2015, precious metals took much of their fluctuations from the US Federal Reserve meetings, which determined whether or not to hike the interest rate. On average, mining companies followed the direction of gold prices about 50% of the time.
Meanwhile, the UK’s Brexit vote in June substantially affected mining companies and precious metals. Gold and silver rose to two-year highs due to safe-haven bids in the wake of this game-changing global event, and now, another possibility of a rate hike in the US has started to play on these metals.
How Closely Are Mining Companies Following Gold?
Notably, Cia De Minas Buenaventura (BVN), AngloGold Ashanti (AU), Hecla Mining (HL), and Kinross Gold (KGC) have seen YTD (year-to-date) rises of 229.7%, 112.8%, 200%, and 129.1%, respectively. The VanEck Vectors Junior Gold Miners ETF (GDXJ) has also seen a substantial YTD rise of 131.5%. But these YTD returns have also seen sharp falls during the past few months, causing mining companies to react.
Technical indicators
Most mining companies are now trading closer to their 100-day moving averages. Remember, a substantial premium over a trading price suggests a possible fall in price, and a discount could indicate a rise. However, the target prices for all the above four mining companies (except Cia De Minas) are significantly above their current prices, suggesting a positive outlook.
That said, RSI (relative strength indicator) readings of mining companies are falling, as are the RSIs of precious metals. On September 20, 2016, the RSI for the VanEck Vectors Junior Gold Miners ETF (GDXJ) was close to 45, and these very low RSI levels (below 30) suggest a possible pullback in prices.
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Inside the Correlation of Mining Stocks to Gold
By Meera Shawn | Sep 21, 2016 5:22 pm EDT
Mining companies and gold
The precious metals market has skyrocketed in 2016. Despite this trend, it’s important to know which mining stocks are overperforming and which ones are underperforming precious metals. Lately, precious metal prices have been declining slowly, and as a result, mining stocks have fallen.
Mining companies that have high correlations with gold include First Majestic Silver (AG), B2Gold (BTG), Royal Gold (RGLD), and GoldCorp (GG). On a YTD (year-to-date) basis, these stocks have risen 254%, 180.4%, 113%, and 36.1%, respectively. Mining companies are often known to amplify the returns of precious metals.
Inside the Correlation of Mining Stocks to Gold
The substantial returns of most mining companies have come about due to safe-haven bids that boosted gold and other precious metals. However, demand for these mining companies seems to be in danger due to the recent fall in precious metal prices.
Correlation trends
As you can see in the table, GoldCorp is the most correlated with gold on a YTD basis among the four stocks mentioned above. Royal Gold is the least correlated with gold.
GoldCorp and B2Gold have seen their correlations with gold rise. But B2Gold’s correlation has increased from a ~0.51 three-year correlation to a ~0.55 one-year correlation. A correlation of ~0.55 suggests that about 55% of the time, B2Gold has moved in the same direction as gold in the past year.
Remember, a fall in gold leads to falls in the prices of mining stocks, while a rise in gold leads to increases in the prices of mining stocks. The relationships of the other two mining companies with gold may not be stable because their correlations have seen upward and downward movements.
Together, these four stocks make up 11% of the VanEck Vectors Gold Miners ETF (GDX).
All Above Reads Found Here http://marketrealist.com/2016/09/are-gold-bulls-still-prevalent-in-the-market/
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