Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Big Rally for Gold Junior Miners in January 2015 After Tax Loss Selling

Commodities / Gold and Silver 2015 Dec 23, 2014 - 07:01 AM GMT

By: Jeb_Handwerger

Commodities

The Holiday Season is here and a volatile 2014 is coming to a close. Be prepared to pick up quality situations during tax loss selling season and benefit off of a powerful January Effect rally.

Recently we heard the comments from Fed Chairwoman Yellen which appeared to be dovish.

Crashing oil prices and a rising US dollar will put a halt to any interest rate increases from the Fed. Weak Holiday sales and increasing unemployment in 2015 are a possibility especially as I expect layoffs in the once booming fracking sector.


Divergence Between TSX Venture and S&P500 Not Seen Since Dot Com Bubble

Equities are rallying and following tax loss selling season the TSX Venture which is hitting decade lows may experience a major bounce due to the January Effect. The January Effect often benefits small cap beaten down situations as large investors reposition for 2014.

The divergence between the S&P500 and the TSX Venture and XAU has not been seen since the late nineties. At that time similar to today no one wanted to touch gold miners or natural resources and favored the US large caps and tech names. That was a big mistake because after the dot com crash, the junior miners outperformed the large equities for about seven years until the credit crisis hit the world.

At that time in 2008, Central Banks and Governments printed money like crazy to solve the bad debts and save the big banks. This led to a concurrent rally in equities and commodities from 2009 -2011.

In the middle of 2011, the US cut back on QE while Japan and Europe accelerated currency debasement. This led to a flight of capital to the US dollar and equities and out of commodities especially copper, oil and precious metals. So from 2011 until today we have seen a decoupling of a rising US dollar and equity market with a declining natural resource market. This has not been seen since the late nineties.

Could QE4 Be a Possibility in 2015?

Similar to the late nineties, negative sentiment for the miners is at an all time high as investors are panic selling shares in order to chase the high flying equity markets. The global economy is not as strong as investors believe and this rising dollar and collapsing oil price could drive the US back into recession. QE 4 may be the next option or negative interest rates right here in the US.

It was interesting to see the reaction after the Fed Meeting going into tax loss selling season. Investors are beginning to once again realize that zero or negative interest rate policies are here to stay in the West. Notice the Swiss instituted a negative rate policy to deter capital flight from Russia.

Meanwhile, the Russian Ruble is in freefall as the Central Banks raise interest rates to over 20%. Russians are buying gold as they realize that the US dollar rally could fizzle out soon should the Fed propose QE4.

Remember Powerful January Effect for Junior Miners

This down period in the resource sector in prior years was followed by a very powerful first quarter. Late December buying has provided some excellent trading opportunities in the resource sector in the past.

As we close out the year and tax loss selling season, we must not ignore the historic situation we are in right now with recent black swan events with Russia which has driven the US dollar and large US equities to nosebleed valuations and crashing the commodities market to historic lows.

It is my opinion that investors sitting on US dollars are approaching a huge buying opportunity during this tax loss selling season when junior resource stocks are beaten down to a historic pulp.

Smart investors should be placing stink bids now before they leave for the holidays. Buys in late December and sells around March have proven to be good trading strategies for the resource sector in prior years.

Game Changers in 2nd Half of 2013

  1. I believe recent turmoil in the financial markets are economic efforts to keep Russia in check following the annexation of Crimea. This recent foreign exchange volatility has caused a collapse in the Russian Ruble and Euro and a massive run in the US dollar. Remember wars can be fought without bullets utilizing foreign exchange and financial market manipulations.

  2. Concurrently, the Saudi's boosted oil output cutting the price to below $60 a barrel. This could've been payback for Russia's support of Assad's regime in Syria.

  3. US Central Bankers have been cutting back on QE allowing the dollar to rise. A rising dollar and low oil prices is devastating to many emerging resource rich nations such as Russia, Nigeria, Venezuela and even the US and Canadian Oilshale boom.

  4. Banks sit on a lot of energy loans and defaults could increase. A potential bond default affecting a major bank is possible leading to further volatility.

Outlook for 2015:

Remember that historians show that financial volatility and hyperinflation like what we are seeing in the resource rich emerging nations could usher in extreme radical political parties, regime changes and geopolitical instability.

Gold is hitting record highs in Russia, yet is hitting new lows in dollar terms. Some compare 1933 Germany to today's Russia. Only time will tell.

Incredibly, gold has held in versus a rapidly declining oil price and the gold to oil ratio is hitting new three year highs. This could be a boom to large tonnage and open pit gold producers where a large portion of their cash costs are based on the oil price. I expect some of the major miners to outperform in the new year factoring the cheaper energy prices.

This could benefit the high quality junior miners with economic assets that could fuel low cost production.

Watch Safe Haven Demand Return to Precious Metals in 2015

Safe haven demand should increase for gold and junior miners in 2015 as the US dollar rally fizzles out due to a Fed reluctant to raise rates. We expect some of the gold resource funds to see inflows of capital in the new year as negative or zero interest rates are prevalent in the West.

Even though the Venture has free fallen on what I call the Putin Put on Commodities. I expect savvy investors to come in and finance high quality junior mining opportunities where we could see outsized gains. I follow price volume action during seasonally weak periods to identify savvy accumulation by institutions.

By Jeb Handwerger

Disclosure: Author owns no stocks mentioned.

http://goldstocktrades.com

© 2014 Copyright Jeb Handwerger - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules