I bought today:GG, NEM, AG, HL, SLW and AUY near their intraday lows. The gold/silver ratio got above 75 today, indicating silver under valued vs gold, silver stocks, at the margin a better buy than gold. Still, there is a game of "chicken" going on between the FED and the markets. The FED does not want to ease, but maybe forced to, to help the ECB and to forestall any slowdown of the US economy. If I have interpreted the FED's guidance correctly, they want to increase rates 6 times between now and the end of 2016-taking the FF rate to 1.5%. Should circumstances force them to only increase rates twice in the next 1.5 years, then that would constitute an "easing" relative to expectations.
As always, we will live into the answer-gold silver still may have one more big sell off, but after that sell off, gold/silver moving higher for years as the creation of fiat currency is 3-8X faster than the new supply of gold/silver.
Monday AM in the US and gold/silver not getting much of a bid-they did is overnight trading in Asia. In the short run, Greece PR news is "deflationary" as fear of contagion will have most investors wanting to hold more cash and take down debt. This process may take weeks, so I'm not a bottom fisher until:
1)ECB forced to increase their QE to stem contagion
2)The FED "forced" to loan money to the ECB. The ECB is into Greece for about 130 billion Euro-the mark to market "value" is about 65 billion. The ECB's capital is about 98 billion Euro. If the ECB takes a hit of 65 billion Euro, they will need a loan from the FED to maintain enough capital to continue to do QE.
So stocks, in my view, already over valued are still vulnerable. This is also why I'm bullish on gold/silver as central banks will have to "ease" to "fill" the valley of doubt caused by Greece, to accomodate the world's need to hold more cash before getting back to "normalcy".
Going to be a very interesting few days next week-given the news out of China and Greece on Saturday. As we know from the PBOC, when in doubt "ease". It is my view, to "smooth over" Greece's likely exit or default, the ECB will ease. Given that the "market" is net short silver and many players net short gold, both should have strong rallies-I'm looking for gold to rally to $1350 in coming weeks a 15% move-silver should move a greater %.
W/R to stocks, I'm still net/net bearish #$%$&P500 operating earnings peaked in the 3rd Q, share buybacks and dividends were 104% of profits in the 1st Q (not sustainable), vs 95% in the 4th Q and stock market cap as a % of GDP at a 2nd all time high-all with the FED in a "tightening mode". What could change the FED is if China weakened their currency and started exporting their "deflation" to the US. That would keep the FED from hiking rates no more that two times between now and the end of next year vs the expected 6 times. In effect the FED would be "easing" to counter China macro-econ weakness.
In my view the backdrop is getting better and better for gold/silver-all that was needed was a catalyst. We may have been handed "two" over this weekend. If gold/silver trade up early Monday, I'm a buyer of more as I think this rally can last for weeks before profit taking.
SMSI-profitable the last 2 Qs and cashflow positive the last 3 Qs. New product "Netwise" is getting traction-Comcast was big contributor to March Q revenue of $1.1 million. Although that will not repeat in the June Q (sales in later Qs possible) other large wins will be announced later in the year. Also CNSI will be reselling "Comsuite" especially to international customers. June Q should show a loss, but Sept and Dec Q's will reflect soon to be announced "wins". Given current price and $.30 cash/share, the PSR is about 1. Should Netwise and Comsuite gain further traction, along with other products, PSR should go to 2-a fair valuation for a software company-that gets the stock to $2.50.
W/R to NG, y/y production growth has slowed down from 8%+ to 5%+. However, until that y/y growth slows to 4%, then "supply" will still overwhelm demand. Ideally that may occur later in the year, just before winter demand kicks in. If so, and NG is around $2.50, then that is a backdrop where the odds become much more favorable-then I'm a buyer.
Did buy some AUY today at $3.04 just too cheap to pass up.
Still "waiting" on oil/gas-I'm in the Citi/GS camp that new lows may occur later this year. I have noticed that individual investors have moved away from some micro-cap tech. I have begun to follow closely again:SMSI, WSTL, MIFI, and ELON. Still long term bullish on: LTRX, PCTI and KTCC. Have not been a buyer of gold/silver.
Otherwise, macro-econ backdrop is marginally getting better in the 2nd Q-housing,autos leading the charge but much of the "good" data has warts. Such as today's spending number was up .9%-on face value a strong number. However, energy spending was up 4.7%-none of us really want to pay more for gas. Spending X energy was up 1.24% y/y-the lowest increase in 3 years. So, on balance, consumer and business spending is still soft.
As a consequence, the only stocks I'm comfortable owning are in businesses with long term secular growth trends:wireless, IofThings, mfging moving to Mexico from China for sales in the Americas.
Some "contrary" signs showing up for gold.
1)Assets of GLD are now about 704 tonnes-almost a 7 year low
2)Gold coin sales in 2015 is estimated will be down 12% vs 2014 a low since 2008
In summation, sentiment of investors is quite neutral to bearish. Who is left to capitulate are the gold newsletter writers. Their sentiment is -6.7%. Negative 50% would be a huge contrary bullish indicator. In my view, to happen sometime later this year.
I think there is one more major sell-off in gold and silver-perhaps both making new multi-year lows. I expect this to happen sometime between now and the end of the year. With that in mind, I have been holding off buying any new positions and trusting my view to be a buyer when both are selling off hard. W/R to HL, that sell-off, if I am correct, may take HL down to $2.50 or so. Therefore not locking myself in on a specific price range, but more of a selling climax event that may last a few days, perhaps a couple weeks, before becoming a buyer.
Analysis is consistently coming out that both gold and silver production in 2015 will be lower than 2014 as will be supplies from recycling. No reason not to think that 2016 production will be lower than 2015 and so on for years. So, as we pass through time new supply will be lower, with demand needing a catalyst to take prices higher. That catalyst could come from many different directions. In the meantime, gold and silver are under owned as an asset class, net shorted by financial markets and priced below average industry mining costs. It is just a matter of time. In my view a sustained bull market starts in less than 6 months after a selling climax.
W/R to May jobs, full-time jobs were way more than part-time-630,000 vs 350,000. However, in the household survey, self-employment jobs were up 370,000. So even though the economy generated a good net new jobs number, the "quality" of those jobs is suspect since self-employment jobs tend to generate inconsistent income and of course many times losses.
So until, the federal government accelerates "infrastructure" spending-latest construction report was up 3.3% for government construction spending-then spending by consumers will continue to be muted.
The FED, for the 6 indicators I look at weekly, has been "easing" the last 4 out of 5 weeks. This maybe why the $ index (DXY) has been net/net down since its high back in mid March-the FED is supplying the world with more $s. Even though I do not like the absolute level of stocks, should they continue to sell off, and current FED trends continue, I will be a buyer of partial positions. In recent days, did buy some KTCC in the $10.80s.
With a weak 1st Q GDP revision and expectations (Atlanta FED) for the 2nd Q to be .8%, there is a game of
"chicken" between the FED and the macro-economy. Will the economy continue to be weak, with jobs going negative some time later this year and taking stocks down with them or will the FED "ease" to reduce the risk the economy stalls?
The answer may take months, during that time a "valley of doubt" will creep into stocks-grinding them downward. The FED may have already started to "ease" as M2 has been up $27, $23 and $27 billion the last three weeks vs being flat the prior 9 weeks.
Still, I will look for "confirmation' in other FED measures such as: monetary base, balance sheet, reverse repo, free reserves, M1 velocity and a falling DXY as evidence the FED has "blinked".
One thing is for sure, should there be a negative shock to the economy, the FED would have to ease as it cannot afford for the economy to go into recession with so much leverage (worldwide) in the financial system.
Did buy some LTRX today at $1.54/55 as I had not noticed previously most recent insider activity. Also bought some KTCC at $11.31 as I think they are back on a sustained growth mode. June Q should come in around $120 million in sales with EPS at $.20 with sequential growth going out into FY 16. Ultimately looking for BHE to buy KTCC for $17-$18/share.
Within the KTCC conference call-minute 14-15, KTCC mgt talks about a long time customer introducing a new product that will be a "home run". From my research, I think that customer is SMT. So, for a speculation, SMT is a buy under $1.20.
Not yet-still waiting for a broad market sell off. From the dozens of series of data that come out of the FED each week the 6 that I follow closely suggest the FED has been tightening net/net since last August. One of the results has been $ strength and all its implications. Until the FED goes the other way-they can still raise interest rates but "ease" in other ways-I'm just biding my time playing small ball, but net/net doing very little.
On the other hand, inflationary expectations are rising in the Euro-zone and the US. This explains the bond market sell off. Implications:as long as oil grinds higher and the $ lower-bonds will sell off and commodities will rise.
As a predictive tool, I am getting "hints" the FED is "easing". Reverse repo balances are falling, excess reserves increasing, so the FED is setting up the conditions for M2, monetary base and FED balance sheet to consistently increase. If so, the $ will continue its decline with the factory sector gradually getting stronger-leading to wage growth-with the market looking to buy inflation hedges gold/silver will do well.
If the FED does actually ease in a policy change and Washington passes investment tax credits and/or infrastructure spending-the S&P 500 races to 2250.
Part-time jobs up 437,000, full-time jobs down 225,000 so all job growth was part-time jobs. Labor force was up 255,000, with 266,000 age 55 and older. Prime working age workforce 25-54 was down 19,000. Total jobs for the 25-54 age bracket still down 4 million from the 12/2007 high.
Total workers age 55 and older another all-time high of 33.38 million. The dynamic? Older folks have got to go back to work because they can't earn any interest on their CD's.
Current total mfging jobs about 12.3 million, at the end of 1999 it was about 17.3 million-so 5 million lost the last 15 years.
Bottom line, the jobs number was weak and I'm very disappointed at the talking heads for not pointing out the
the part-time/full-time dynamic and the age 55 and older dynamic. The "happy talk" folks are lying to the public. At some point in time, this continuing "fraud" will be exposed in a market that hits an "air pocket". Unless of course, the FED does QE4.
No! Other than trading HL several times, I have not sold any gold/silver stock positions. Although I think there is one more big sell off coming-perhaps because the $ starts to get stronger and/or there is a general sell off across all markets-a massive grab for liquidity-I am a net buyer of gold/silver stocks on weakness-holding for the big move where gold doubles and silver triples.
Other than HL, I don't want to over trade and perhaps miss upside moves. From all my reading gold and silver supply-from production and recycling-will be down in 2015 vs 2014. 2016 should be down from 2015, so with new supply falling and the market way under owns gold and silver, the demand/supply dynamics get better as 2015 progresses and into 2016.
Mgt sure is having trouble getting sales and earnings to grow consistently with last two acquisitions proving to have "trouble" not long after the deals closed. Institutions own 75-80% of the stock, so the only way they are getting out is if the company does put themselves up for sale. I was a little surprised that mgt was not "grilled" harder during the conference call. Perhaps there is some "activity" quietly going on-I do expect a 5%+ shareholder to try to put PCTI into play in the coming weeks
W/R to PCTI, I'm in no hurry to buy. Perhaps closer to $6.50 it gets interesting. In recent years, it is always "something" that keeps PCTI from stringing together a few good Qs. Due diligence for the last two acquisitions have been pitiful. As a result mgt now has credibility problems-time for a 5%+ shareholder to put pressure on mgt to put the company up for sale.
Expect June Q to be similar to March Q. Will look for insider buying before buy more myself. Otherwise, will be a buyer in Nov, Dec-during tax loss selling season.
For the most part, for all of 2015, have only been a net buyer of gold/silver stocks on gold/silver price weakness. Anything else, I've taken gains when I get them-let go of some KTCC when it got in the $12.30s. Still have some PCTI, when bought close to $7 on recent weakness.
Sorry, a little late in the response. Yes. Up until PCTI's recent missteps I thought there were 3 fundamentally cheap stocks where mgts were building good businesses: PCTI, KTCC and LTRX. KTCC is the 1st to start to perform. LTRX and PCTI may have to wait until the 2ndH of 2015-assuming the economy gets a little stronger.