Good numbers & hard data in this interview: <Bob Moriarty: A Major Low In Precious Metals Is Imminent
9/5/22
The last time we caught up with 321gold founder Bob Moriarty on July 25th he said that silver was near a bottom but gold could have further to fall. As it turned out both gold and silver turned higher in the final days of July and rallied into early August. However, those gains have since evaporated and silver is plumbing new 52-week lows below $18/oz while gold is struggling to hold above the $1700 level. Naturally, mining stocks have also increasingly moved out of favor among investors and just when it seems like sentiment in the sector can’t get any worse, it does.
In this month’s conversation with Bob we broach a wide variety of topics including precious metals sentiment, Russia/Ukraine, the European/global energy crisis, China/Taiwan, and we conclude by discussing a little known junior exploration company that has just commenced an intriguing drill program at a gold/silver project in Nevada. Without further ado, Energy & Gold’s August 2022 conversation with Bob Moriarty…
Goldfinger:
Bob, It’s an eventful time to be a human being on Planet Earth and it’s a pleasure to speak with you again. Let’s begin with precious metals and the really negative sentiment we’re seeing. Normally towards the end of August gold, silver and mining stocks get a bit of a lift. That is definitely not the case this year. And actually for the last three years, it’s not been the case. The last three years since 2020, the end of August has not been good for precious metals. What are you seeing out there in terms of sentiment in gold and silver Bob?
Bob Moriarty:
Well, as you are well aware I track a variety of things that measure sentiment. But the one that I give the most credibility to, and your timing on this is perfect. We’re doing this conversation on Wednesday and as of Tuesday, the DSI for gold was 11, and it was 9 for silver. Silver’s down about 2% today. Gold’s down a few dollars. So certainly the DSI for silver will go lower and it could go lower for gold. Anything below 10 tends to, it will always mark a major bottom. Now, if it went down to say 6 or 7, that would just be a screaming opportunity. So I happen to believe we’re days or minutes away from a major low.
Goldfinger:
What time frame are you talking about? A couple weeks or a couple days?
Bob Moriarty:
It literally could be today or it could be within the next week. I don’t see it going much beyond that.
Goldfinger:
This is a really interesting situation because it is exceptionally rare to see the DSI for both gold and silver fall below 10 simultaneously. There are so many indicators lining up simultaneously that are pointing to an overbearish sentiment extreme. I want to mention a few things that add some weight to the idea a low in precious metals could be imminent. The futures commitment of traders data, the CoTs, as of last Tuesday, shows that commercial traders have covered almost their entire net short position in silver futures. And then looking at the open interest in precious metals futures, it has fallen significantly. The open interest has fallen substantially in the last several months.
Source: InsiderWeek
So, that is typically indicative of getting near a low in price. The COT is certainly not an exact market timing tool, however, when commercials have covered all their shorts it is a very strong sign that a bottom is very close, let’s say within a few weeks. When you see these sorts of extremes in the futures data with the commercials covering almost their entire short position in silver, that’s a pretty good sign that the bottom is pretty close. And then add that to what you just said about the sentiment data, including a post by Tom McClellan pointing out the extreme discount in the Sprott Physical Gold Trust.
Things are lining up here and silver is floundering around just under $18 an ounce as we speak. There is a layer of major long term support/resistance here in the $17-$18 area in silver.
Silver (Monthly – 20 Year)
But obviously everybody is worried about the Fed, more rate hikes coming, and tough talk from Powell last Friday including his use of the word “pain”. If the Fed continues hiking to above 4% on Fed Funds it could literally blow everything up, including precious metals. I know you’re not a big fan of following the Fed, but does it matter at all that they’re saying they’re going to keep hiking rates?
Bob Moriarty:
Let’s go back to DSI for a minute. Do you remember when the last major bottom was? Now, ignore 2020, because that was an aberration because of COVID. But when was the last time there was a major bottom in gold and silver?
Goldfinger:
Well, there are two inflection points that stand out to me: September 2018 and January 2016.
Bob Moriarty:
The really big one was December 2015/January 2016. There was about a 600% advance in the gold indexes from January 2016 to August 2016. Now, I’m sitting looking at the DSI data going back there. And if you go back to December 10th of 2015, we had virtually the same DSI numbers that we’ve got today. And it came back and it retested those lows about five weeks later. But from mid January of 2016, until August of 2016 went 600% increase in the indexes. There were a lot of stocks that were up tenfold. That’s going to happen again. Now, we had what I called a tradable low, and I wrote about on July 7th. I think this is the retest of that low. And I think we’re going to have a major advance from here.
GDXJ (November 2015 – August 2016)
But now what I can predict, and I totally ignore the Fed, the Fed is so clueless. I can give you a good analogy. It’s like talking to a priest about sex. What do they know about it? And the Fed’s utterly clueless. I think there’s a really good chance they will increase interest rates at the end of September. And I am terrified for the next three or four months. We’re going to have the crash of a lifetime. We do want to discuss Europe. Europe’s totally screwed. And I mean, screwed like nobody’s ever dreamed of. There are going to be countries in revolution by December in Europe due to the cost of fuel and a lack of fuel.
Goldfinger:
It’s interesting. I just made a tweet. Let me read it to you: “It’s interesting for me to notice that many of the same guys who profess to be contrarians are also the same ones who are saying that Europe is heading into a depression and saying to short the Euro and European stocks.” However, the headlines, everywhere I look, whether it’s on Bloomberg, it’s on CNBC, it’s on ZeroHedge, It’s on 321gold, it’s everywhere. Everyone is talking about this European energy crisis and how Europe is screwed and the eurozone won’t make it through the winter. So how is being bearish on Europe a contrarian call here?
Bob Moriarty:
The interesting thing is understanding the difference between a subjective argument and an objective argument. The price of gold is subjective. Do you agree?
Goldfinger:
Subjective? There’s a market price. That’s it, there’s one price.
Bob Moriarty:
Yeah, but here’s the deal, that’s objective because you’re talking about the price today. But if you’re talking about the price of gold tomorrow, it’s your opinion, that’s subjective.
Goldfinger:
Well, that’s a forecast, yeah. Well yeah, that’s a forecast. So a forecast is an opinion. It’s a speculation.
Bob Moriarty:
Exactly, when you’re talking about something like Europe being short of gas and energy and coal, that’s actually objective. That’s not a subjective point of view. That’s absolutely objective. The Russians shut down Nord Stream today. And that means Germany that gets 55% of their energy from Russia in natural gas, and Europe that gets 40% of their natural gas from Russia, they’re screwed.
Now, here’s an important concept that very few people understand. I’m a pilot, so I tend to think in pilot terms. When you’re in a jet aircraft and you’re going to take off from a particular runway, you have a go/no-go point. And that go/no-go point is something that every pilot, every commercial pilot has to know. You get to a certain point and you are absolutely committed to take off because you can no longer stop the airplane. I believe the go/no-go point for Germany is September 1st. If they don’t have natural gas locked up and in storage by September 1st, they’re screwed. They are going to be shutting down factories. The price of electricity and natural gas in the UK and France and Germany is up a thousand percent in the last year.
Now, that’s not subjective. It’s not my opinion that it’s gone up. That is a fact. And you can look it up just like you look up today’s price of gold. How many countries can afford a thousand percent increase in the price of fuel? And I’m going to tell you none, nobody. So there ‘s going to be a crisis like we’ve never had before, very soon. I mean, Americans are complaining because the price of gasoline doubled. In the UK, the UK government, it’s already said the price of electricity goes up at 80%, October 1st. And I’m sorry, that it’s not subjective. It’s not my opinion. That’s objective and that’s enough to destroy their economy.
Goldfinger:
So, you’ve been around a while to say the least, and I’m starting to feel like an old gray beard myself lately.
Bob Moriarty:
You’re being very kind. I’m an old fart.
Goldfinger:
I’m starting to feel like an old gray beard as well. I feel like everything is happening at hyper speed in the last few years and one year in today’s market is like a decade in the market of 30-40 years ago. We hear about crises every year now it seems, there’s some new potential crisis brewing. Usually they don’t turn out to be an actual crisis. I mean, you name it, there was an ebola crisis supposedly in 2014. There was a eurozone financial meltdown in 2011. We had a VIX armageddon in 2018. Every few years there’s a new crisis to worry about. Only one or two times in my market experience did it actually prove to be a real crisis. 2008 is the one that stands out. And that was a crisis that started slowly and gradually, we knew there was a housing problem for two years prior to Lehman. And it was a slowly evolving crisis then finally evolved into a violent full-blown meltdown.
But most of the time, the crisis that everyone is talking about doesn’t actually turn out to be a crisis. It’s the one that nobody sees coming that you have to really worry about. COVID interestingly enough was a major crisis for a few months, but as it turned out some of the government ‘solutions’ turned out to be worse than the actual disease. In February/March 2020, everybody was scared to death. And as it turned out that was actually a great time to buy stocks, and precious metals.
So with the Eurozone energy crisis, what’s to say that they won’t find some way to fix this? They’ll find a way to harness other forms of energy such as coal, LNG, nuclear etc. Maybe they’ll buy natural gas from somewhere else. I just read an article on ZeroHedge saying that the Chinese are buying Russian gas, converting it to LNG and shipping it to Europe. So what’s to say that they won’t figure out a way around this?
Bob Moriarty:
Oh, that’s an excellent, excellent question. And let me explain something that your readers will understand right away. You essentially have two different narratives. You’ve got the narrative from the World Economic Forum, from NATO, from the United States, from the governments. And then you’ve got the narrative from the independent people on the web. Now, yes, in March of 2020, the narrative from the governments was 100% a lie. The 15 days to flatten the curve was a lie. The lockdowns were a lie. The masks were a lie. Fauci had five different definitions of mask. You don’t need a mask. You do need a mask. You need a mask and a face shield. No, you need two masks or three masks because more is better. Or no, you only need one mask. So basically, “follow the science” in government terms means everything the government tells you, everything the media tells you is an absolute lie.
Now, two years ago, I was saying there would never be an effective vaccine for a very simple reason. Viruses mutate. You cannot have a virus like the common cold, which is a COVID. There’s no vaccine against it because it changes. This year’s cold it’s not the same as last year’s cold. Now, ordinary people are writing about it and saying the masks don’t work. And now the CDC admits the masks don’t work. The PCR test didn’t work. And now the CDC says the PCR test didn’t work. And today, do you know what the NIH had to say about Ivermectin?
Goldfinger:
No, I didn’t see that.
Bob Moriarty:
It’s on their approved list.
Goldfinger:
That’s surprising, even though I saw a study that concluded ivermectin is effective in preventing severe disease in covid patients.
Bob Moriarty:
So the guys who were taking the counter party to the government narrative and the counter party to the mainstream media were absolutely correct. And the mainstream media and the governments were absolutely wrong. Now, let me read a title for you. “ The US, EU and NATO Just Committed Suicide.” Do you have any idea of who wrote that and when that’s written?
Goldfinger:
You wrote it last year.
Bob Moriarty:
I wrote it March 1st of 2022. And I believe I was the first person in the world to write about Europe committing suicide. And the strange thing is lots of people now recognize Europe has committed suicide. Now, some of these things, what happens with natural gas is the peak usage is in wintertime. And by springtime, they’re at the lowest in storage facilities. And then they fill up from March or April until September. And they’re at their peak in November. And the natural gas isn’t there today. But here’s the key. I’m saying Germany is going to collapse. Now, can you recognize how obvious it is that there are two different ways you can collapse with natural gas?
One way that you can collapse is if natural gas is required for 55% of your usage and you do not have any natural gas.
The other way is when it costs a lot more. How about 10 times as much? Are you familiar with the term Hobson’s choice?
Goldfinger:
I’ve heard you mention it before, but why don’t you refresh our memory?
Bob Moriarty:
Okay. Hobson was an innkeeper in Cambridge in the early 17th century. And of course Cambridge was a university, and the kids going to university had money and wanted to visit mom in London. So they would rent horses from Hobson. And Hobson realized that a quarter of his horses were being overused and three-quarters of his horses, there wasn’t very much demand for. So he said, “Okay, screw this. When you show up and you want a horse, you get the horse nearest the door.” So Hobson’s choice is a choice between two bad alternatives. One is, you get a plow horse when you want to run a race. And the other is you don’t get a horse at all.
So literally Germany has Hobson’s choice and their choice is, do they starve to death this year because of the cost of natural gas or they freeze to death because there isn’t any natural gas available? But it’s not my opinion that they have Hobson’s choice. There’s absolutely no bones about it. And even the example that you showed, I mean, it goes without saying if Russia ships natural gas to China, and China liquifies it, and sends it to Europe, the price is going to be a hell of a lot higher. And in fact, if you go to the forward contracts on natural gas in Europe, it is 10 times higher than what it was two years ago. And that is a catastrophe. There is no country in Europe that can handle that.>
(extended excerpt from...
energyandgold.com
Article goes on to stress importance of nuclear combined with NG, Oil & Coal as the solution. Not Green Energy. We know the hard left obsession with that has created a large part - perhaps most - of this crisis!!
Isopatch |
