There is one potential counter-narrative... worth watching...
Gold and silver prices appear to be declining, in small part, only, as there is apparently some resolution occurring in the bottlenecks that have hamstrung production of gold and silver since February last year...
It seems there is some incremental increase in the flow of new supply coming to market now...
That doesn't explain or justify the recent beat down in the paper price [which has other drivers].. and, price performance still conflicts with the facts in supply demand fundamentals in real markets... where greater supply is only meeting a larger pre-existing demand... and driving the volume in the trade greatly higher...
Reading the reports from miners who've been whacked hardest since June 7... many of them, like BTG and JAGGF... reported lower earnings... on much lower production... only partially offset by higher prices. That production dropped again from their prior reports... is a big surprise, to many... The explanation is "ongoing problems with Covid" in the workforce... but, the earnings misses in particular are also quoted as being a function of the companies COSTS in the YOY comparisons... which are 20% higher than a year ago...
Covid is the driver of some of that cost... that also being not accounted for in others consideration of inflation... but, more of it was the escalations in fuel, wages, equipment... everything is higher...
But, the potential upside in the counter-narrative... is that even with the fraud in the beat down of the paper price... higher volumes of metals making it to the market, and finding willing buyers... should be driving the miners revenues higher, not lower... even with the prices of the metals being monkey-wrenched lower...
For now... many of the miners are still on sale. HL beat earnings expectations by 20%... and is still bumping the lows... as it had production issues, too, the production down a single digits in percentage points ?
Charts are saying... PM's are at / near the end of consolidation... dating back to August last year. The breakout in May... did prove the trend reversal out of the declining channel or the wedge that dominated with a steady decline since the January highs... but that first move higher out the decline failed to break out to hew highs... For now, gold and silver both, along with the shares... are bumping along the lower bounds of the bull market uptrend line that dates back to the lows of 2018, 2016... which is also where gold was at the bottom in March of 2020... right on that line. Silver broke through that trend-line in March 2020... but, that's silver for you... it doesn't mean much. Not only is the bull market in gold, silver, and shares intact ... it is nearing the end of consolidation after a year of trading sideways... not just lower. It looks well prepared for the next move up... the next leg higher making the old highs into the new lows in the next leg..
I won't worry about gold doing anything other than sustaining the pattern in consolidating, here at the lows... as long as it stays above 1680, and doesn't break decisively below that... but I don't expect to see it trade much below 1720...
The smack down just applied to gold... pure trading chicanery... totally disconnected from market reality... in which growth in demand for physical has NEVER BEEN HIGHER... The price "smash" into a decline... was met with a tripling in demand and sales of physical... clearly working against the purpose of those hoping the smash would enable a decline and a grab at new lows... from panicked sellers... and not an immediate influx of new buyers ?
When the market does finally figure out what it was that drove that smack down in gold ? :<) |
