23 thoughts on “EURO YEARLY CYCLE LOW

  1. duckwhorocks1

    I think that Euro and British Pound should move up nicely against the dollar validating your call.
    But the JPY will decline and that will keep pressure on Gold.
    $1,260 proved to be a nice cap today and COT report still shows specs in Nosebleed territory.
    The small speculator couldn’t care less about the big decline and did not reduce his/her positions.
    $1,220 looks like the best chance for bulls to mount a counter offensive.

    1. AmantedeTeclas

      Thanks for Your comment Duck.

      When people talk about gold, they are in many cases implicitly talking about the other precious metals.

      To me the other precious metals are very different.

      So when You are writing about gold, do You at the same time see very different dynamics for the PGMs and silver or just slightly different ones?

      1. duckwhorocks1

        Between 2001-2008 they moved more or less in sync but now they seem to be different markets.
        Honestly, in my opinion only a total idiot would buy Physical Gold for High Inflation/Hyperinflation protection when they could buy Platinum. But I don’t set the market.

        1) Platinium is $200 cheaper. Historically it has been more expensive.
        2) Platinium has never been confiscated (forcefully exchanged) and it is too small a market to be confiscated.
        3) Platinum Miners make a $300-$600 loss an ounce currently. Most Gold miners are profitable at current prices.
        4) Annually we mine less than 1/10th Platinum as we do Gold.
        5) There is less than 6 million ounces of Platinum above ground versus 6 Billion for Gold.
        6) “You cheap skate you got me a Platinum ring instead of a Gold ring” said no woman ever 🙂

        1. Pedestrian

          Thanks Duck. That is very informative. Any platinum miners in particular you would recommend? I mean if losses per ounce are that big then a few must be on the ropes. So maybe wait till the smoke clears?

          1. duckwhorocks1

            I prefer the physical metal or etfs.
            Most platinum mining is in South Africa. Not my favourite place to invest.

        2. AmantedeTeclas

          Well on top of that we shouldn’t forget that without the technology that cleans up exhaust fumes in catalytic converters we would breathe the same bad air that people breath in Bogotá or maybe even in Beyjing. This technology requires the PGMs.

          Adding those PGMs to a car makes it’s production just 200 $ more expensive, but the utility is so immense for society that this cost is practically neglible.

          I am still scratching my head as to how it could fall so low during this correction but I bought right here this week. I also would never buy gold.

          The only producer to buy would be “Stillwater Mining” but it has had a hell of a party this year already. I actually don’t like individual stocks. This week I bought one but am already regretting it although I am just 0,3 % in the red (if You neglect the spread).

    2. Pedestrian

      Maybe over the short term Duck. I would agree that a Euro reversal higher is a distinct possibility but on the long term charts there is a very clear and compelling pattern that tells us a Euro collapse is in the offing and it should begin before 2016 is finished. That should do untold damage to gold and miners so be cautious.

      1. duckwhorocks1

        I have to disagree with that. The biggest driver of the exchange rate is the interest rate differential in the long bonds of both currencies. So while I think both long term interest rates will move up, Euro rates will move up more in % terms (they have to considering how low they are).

        I see massive inflationary pressures in the Eurozone beginning to seep through. They have 10 year mortgages for 1.5% and commercial rents in Germany are up 7% YOY. That gap needs to close.

        Time will tell.

        1. Pedestrian

          What? Exchange rates and interest rate differentials? I was talking about the euro relative value in dollar terms. More precisely, the euro/usd has fallen from a high of 1.60 in 2008 to its current low of 1.09 and that cannot be explained by rate differentials so maybe post a chart of what you mean. As a second example the euro has fallen 7% since May but rates have not budged. We might be having a different conversation from each other.

        2. Pedestrian

          I wrote you an answer about the massive inflationary pressures you see coming for Europe but it vanished as I posted it. Weird. Anyway, to sum up, you can not and I repeat cannot, get inflation via ECB printing of money as long as the euro remains one of the worlds reserve currencies. Every euro printed is theoretically as good as gold and they have proven they have the ability to create billions upon billions of them without budging inflation one iota. Maybe explain where the inflation will come from for me and we can discuss that instead.

          1. Pedestrian

            That goes for the US dollar too of course. It is why Maloney and Schiff are both wrong that hyperinflation is coming one fine day. Don’t you just wonder why the inflation trend has been down since the late 80’s even as M2 has exploded higher?

            No answer? Well its because of reserve status. That one single idea explains every bit of why we will never see a hyperinflation in any major economy that sports the ability to produce money that is good enough to buy gold.

            And if the money is good for gold you factually cannot hyperinflate.

            It really is that simple. Think about it.

          2. duckwhorocks1

            Interest rate differentials and currencies,…..
            That is biggest correlation….ever
            Here are some examples.




    1. duckwhorocks1

      I’d give that a 90% chance.
      Although the single BEST calendar year return for HUI was 2002 where we were up120% for the year. For GDX to close the year at $26 ( I know that is not what you were asking) would require a 85% rally for 2016 which would be the second highest calendar year % gain ever. Just keep that in mind.

      1. Robert

        Hmm thanks Duck. Just need a rally doesn’t have to close the year up there. I’m underwater in options

      1. Robert

        I like Ur optimism Gary. That might be hard because buyers will probably hold out until rate hike announcement just like last year

        1. rupp

          Tend to agree about buyers not coming back strong enough this year to get to 30. I’ll be pleasantly surprised if GDX makes it to 28 this year. I’ll take profit for sure. More likely it peters out on a failed rally, then gets slammed deeper, down to 19.80 early 2017.

  2. Gary Post author


    I kind of doubt we will get hyperinflation but we’ve already experienced multiple bouts of high inflation over the last 16 years.

    First it was inflation in the stock market that created a tech bubble. The next round of inflation went into the real estate market causing another bubble.

    When that bubble popped the inflation moved into the commodity markets, focusing most aggressively in the energy market. And like every other time in history when the price of oil has spiked 100% or more in a year or less, it was a massive shock to the economy and tipped the world into recession.

    This time the inflation is focusing in the stock and bond market. So to say we haven’t had any inflation is absurd. All we’ve had for the last 18 years has been inflation as it moves from one asset to the next.

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