As Daily Cut editor Chris Lowe mentioned in yesterday’s essay, commodities are the best-performing asset class so far this year… by a wide margin.
That left our Daily Cut inbox jammed with emails about metals.
But before we get to that, Wall Street insider and Palm Beach Trader editor Jason Bodner has some great insight for all the readers who wrote in with worries about the stock market’s wild ride this week…
Jason’s comments: There was plenty of fearmongering early in the week. So it’s hard to stand as the lone bull, feeling the pressure of everyone talking doom and gloom.
But the thing is… Now that everyone is asking me if I am still bullish, that means more and more people are bearish.
And when everyone’s a bear, we only have one way to go.
With the China trade smoothing out and former Fed chair Janet Yellen’s dovish statements, this market will keep going up.
And now for those emails about metals…
First up, a handful of questions about gold and copper for our resident master trader, Jeff Clark…
Reader question: Jeff, what do you see happening with gold and mining stocks now? The dollar is moving higher again; stocks are bouncing into a year-end rally, possibly even into a melt-up top, etc. And the charts look to be negating a bull move now.
– Ryan R. (Legacy Research member)
Reader question: Jeff, could you give us an update on where you honestly think the prices of gold and the gold miners are headed?
I would love to see a true gold rally kick off and price surges for both the miners and gold. However, the last four months or so have been miserable. I am aware of the seasonal trends for gold, but with the downtrend that gold cannot seem to break out of, a rally just doesn’t seem realistic at this time.
– Joe M. (Legacy Research member)
Reader question: Dear Jeff, would you send us your updated overviews on gold stocks?
– William P. (Legacy Research member)
Reader question: Dear Mr. Clark, it has been several days since you’ve commented about the direction of gold and gold stocks. What are your thoughts?
– Doug J. (Legacy Research member)
Reader question: Jeff, been with you for a long time – lifetime subscription.
Can you address your feelings for the next four weeks in the copper market, plus the reason gold and silver are going up and copper is going down?
– Mike A. (Legacy Research member)
Jeff’s answer: Copper is now trading just slightly above its 50-day moving average (MA). All the moving averages are coming together and building energy for the next move. And most of the technical indicators have drifted back to neutral territory. So I like this setup for a sharp pop higher in the price of copper over the next week or two.
It may or may not play out this way, of course. But the setup looks bullish to me.
Investor sentiment towards copper also seems to have soured enough to be a good contrary indicator. Most analysts are bearish on the price trend in copper. And the handful of trader friends I’ve mentioned this to seem ambivalent at best towards the idea of buying copper.
So I like my odds on this bet. And, if it’s going to play out bullishly, then copper should start a new move higher within the next two weeks.
And as for gold…
For the past three weeks, gold stocks have struggled. The VanEck Vectors Gold Miners ETF (GDX) closed Wednesday at its lowest level since early October. And, based on the emails I’ve been receiving this week, that action has a lot of traders wondering if the recent breakout in the gold sector is really a “fake out.”
I don’t think so.
After bottoming in early September, GDX has put together a series of higher lows and higher highs. That is the definition of an uptrend.
While the sell-off over the past week has been tough for gold bugs to endure, the low of this move is still above the low from three weeks ago. So the uptrend remains intact.
This is where traders should buy gold stocks.
But it wasn’t all high-profile metals, like gold and copper…
When one reader asked about a more obscure metal, we turned to our in-house geologist – and International Speculator editor – Dave Forest for an answer…
Reader question: Do you have any input/thoughts about palladium values?
– Ras R. (Legacy Research member)
Dave’s answer: We’re very positive on the platinum group of metals, which includes both palladium and platinum.
Our proprietary Casey Cost Curve analysis – as well as recent industry reports – suggests that 50% of global production is uneconomic right now. That means we could see a potential supply disruption and price rise.
We’re slightly more positive on platinum than palladium, only because platinum currently trades at around a $250/ounce discount to palladium, whereas, historically, platinum has tended to trade higher than palladium.
But given that the two metals are generally produced from the same mines, we’re positive on both platinum and palladium projects.
I’d like to end this week’s Friday mailbag with a bonus for you and your fellow Daily Cut readers…
During the final panel discussion at our Legacy Investment Summit, one of the questions that managing partner Amber Mason asked all the panelists was… “What book would you recommend to everyone here today?”
Here’s what our experts on the panel said…
- The Bill Bonner Letter co-author Dan Denning
◦ The Dark Valley: A Panorama of the 1930s, by Piers Brendon
- International Speculator editor Dave Forest
◦ The Enchiridion, by Epictetus
- Strategic Investor editor E.B. Tucker
◦ My Adventures With Your Money: George Graham Rice and the Golden Age of the Con Artist, by T.D. Thornton
- Delta Report editor Jeff Clark
◦ Zen and the Art of Motorcycle Maintenance: An Inquiry Into Values, by Robert Pirsig
◦ Beyond Biocentrism: Rethinking Time, Space, Consciousness, and the Illusion of Death, by Robert Lanza with Bob Berman
- Palm Beach Trader editor Jason Bodner
◦ Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay
- The Palm Beach Letter editor Teeka Tiwari
◦ Reminiscences of a Stock Operator, by Edwin Lefèvre
- The Casey Report editor Nick Giambruno
◦ The Bitcoin Standard: The Decentralized Alternative to Central Banking, by Saifedean Ammous
- Disruptive Profits editor Marco Wutzer
◦ How I Found Freedom in an Unfree World: A Handbook for Personal Liberty, by Harry Browne
Happy reading.
Regards,
 |
James Wells
Director
P.S. If you attended the Legacy Investment Summit in person or via the livestream, you can access your complimentary recordings of all the presentations and panel discussions right here. Just use your Summit username and password to log in.