Silver and Inflation

 

 

Trader Scott’s Market Blog

February 14, 2017

Click to sign up for Trader Scott’s Free Market Updates or e-mail [email protected]

 

 

Inflation is picking up around the globe, and it’s not “transitory” this time. Inflation on a secular basis bottomed last Spring. As we move thru the year, there will be more and more recognition of this. Commodities bottomed in January thru March 2016, the big trend is up. The Treasury yield market bottomed in 2011 on the short end and 2016 on the long end. In the big picture, the rising interest rates will help to continue pushing inflation higher in sort of a symbiotic relationship. The long term outlook for inflation is one of the reasons for my approach late last year to focus on buying silver, and not gold. Silver really enjoys the inflation. And food inflation and agriculture problems are going to be serious situations. The inflation is starting to show up around the world as 3 reports out today show it is spreading. In Germany where they still have memories of Weimar inflation, they are not happy with Mario Draghi, as wholesale prices  rose the most in 5 years in January. And Chinese inflation for producers picked up to more than 5 year highs. While in the US, the always trustworthy NY Fed came out with their inflation expectations survey, which showed inflation expectations at 20 month highs. Even after bottoming a year ago, this is still the early stages of the inflation. Mrs. Yellen thinks she can turn a few knobs, and adjust a few levers, so the inflation will just be “transistory”. Sorry Janet, not this time.

 

About

Trader ScottTrader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day. Scott returned to markets over fifteen years ago where he continues as an independent trader.

 

 

 

 

 

 



'Trader Scott’s Market Blog – Silver and Inflation – February 14, 2017' have 31 comments

  1. February 14, 2017 @ 3:07 am Easy Al

    German Xetra Gold ETF in last month added about 1.09 MOz (or 33.8 metric tons). Since the gold holding of GLD essentially did not change in January, the purchase by Xetra was very important in driving up the price of gold in January.

    Reply

  2. February 14, 2017 @ 5:42 am Larry

    Scott,
    What do you think about CGA and investing in China in general? I’ve been watching it for a few weeks and it seems to be getting interesting. I was thinking of pulling the trigger on it on a pullback but am weary of investing in China. It may be a bias but to me it seems like the wild west over there with a lot of corruption.
    Thanks

    Reply

    • February 14, 2017 @ 7:47 am traderscott

      We all need to reign back our biases in markets Larry. A good example is the people who fave believed the US$ is going to crash over the last 5 years, thus have invested accordingly. I’m extremely bullish on China long term, concerned short term, but if you’ve done your work, then just do it. I’m wary of the general global stock markets, but that has not stopped me from investing in certain beaten down sectors. CGA is certainly beaten down.

      Reply

    • February 14, 2017 @ 11:26 am Easy Al

      Larry,

      You will need to have high confidence in CGA’s accounting to invest it. I am not saying that its accounting is not trustworthy. The US investors seems to consider Chinese companies listed here differently. The market seems to treat the accounting of big Chinese companies listed in the US as reliable as that of the large US companies. It seems to discount slightly to the small companies headquartered in Canada or US but are doing most business in China. SVMLF and MISVF are examples of the second group. Unfortunately, the market appears apply a huge discount factor to small Chinese companies headquartered and doing business in China. CGA is a typical example of the third group. If you take a quick look at CGA’s balance sheet and income statements, you will find that its 12-month trailing eps is $0.77 and its 12-month sales per share is about $7.45. While it has $12.5 M debt, it also has $108 M cash. Its (cash-debt) per share is $2.54 per share and book value is about $10 per share. With stock price trades around $1.38, its market cap is only $52 M. If the numbers on its book is reliable and the management really cares about shareholders, it can easily take the company private by simply offering 40% premium to shareholders (which can easily be done by using cash on the book). Alternatively, the company can pay quarterly dividend of, say, 1 cents per share on quarterly basis. The dividend payout amounts about 5% of its last 12 month earning. Once the CGA made clear that the moderate dividend payment is going to be regular, it will drive up the stock price a few times and remove a lot of doubt on its accounting.

      I have followed SVMLF for many years. In the second half of 2011, some short sellers made very serious allegations on SVMLF’s mine properties, head grade of ores, cash in bank and accounting practice. The management of SVMLF fought back aggressively. The company was examined under microscope. Nearly all allegations by short sellers were proved to be false. However, SVMLF still suffers 20-30% (in my subjective view) discount in valuation when compared with other silver miners. Once again, I am not saying that the accounting of CGA is not reliable. However, the difference between the managements of CGA and SVMLF is that the latter really cares about shareholders and its stock price. Once the business turns around, SVMLF restarted dividend payment. Even though the semi-annual dividend is only Cad $0.01, it still says something.

      Reply

      • February 14, 2017 @ 1:44 pm Larry

        CGA settled a lawsuit in 2014 for 2.5 million$US that claimed the company misled its shareholders. That may not be helping it any.

        Reply

  3. February 14, 2017 @ 7:20 am David V

    Will silver need any help to rally thru the $18 level this week?

    Reply

    • February 14, 2017 @ 8:00 am traderscott

      Besides being a round number, 18 isn’t the problem , it’s 19. I still have my long position from Dec. 20th, but need to see a big backup before adding on. It would be great to see which would strengthen it to attack 19 with more power/strength, but the market could care less what I think. Gold had a decent pullback and “broke 1221 support” and went to 1219. “Breaking support” in an uptrend ALWAYS strengthens a market.

      Reply

  4. February 14, 2017 @ 8:05 am Larry

    I’m a New England Yankee, Scott. Biases and stubbornness are in the DNA (my idea of retiring to a different country was to go from Rhode Island to Maine) so this concept of patience and opening ones mind is pretty much new to me. However, I have already seen results and have a renewed outlook toward the markets as a whole. Thanks for your patience, helpful comments and teaching.

    Reply

    • February 14, 2017 @ 8:18 am traderscott

      It’s great to see when I tell people this thing about biases, how it allows one’s mind to be much more optimistic and passionate about finding opportunities in markets, ANY markets. And not stuck into believing the old, wrong theories. The only thing holding us back in markets is ourselves. Ignore all of the fancy talk and just work hard, and do as much work/research/analyzing as possible away from the computer, like that US$ worksheet I put up yesterday.

      Reply

  5. February 14, 2017 @ 11:31 am traderscott

    There is a live video and an update for NUGT at the blog home page. It’s good to see some fear coming back into PMs. Allegedly, PMs fell “because” of some stupid comment from Janet Yellen. I do not care what Janet Yellen, or anybody says about markets, GDX was at resistance this morning, and then it came back to support. That’s all I “know”. Gold is in an uptrend, some stupid comment from a Fed official will not alter the trend. It’s just about not getting emotional into the highs, but on a big picture, if the trend is up, then it’s the backups to buy into. Who cares what some

    Reply

    • February 14, 2017 @ 11:45 am traderscott

      Fed official says about ANYTHING? The love affair for these incompetent mortals has to stop. It’s disgusting. And anyone who listens to them, will get totally off track.

      Reply

      • February 14, 2017 @ 1:33 pm Larry

        I think NAK just blew a gasket.

        Reply

        • February 14, 2017 @ 2:28 pm Easy Al

          Oh, shot. I missed it. I went to postal office to mail some materials for my daughter. I wish I had picked some below $2.

          Reply

  6. February 14, 2017 @ 2:03 pm Larry

    “Shares of mining company Northern Dynasty Minerals (NYSEMKT:NAK) lost nearly 40% of their value this morning after Kerrisdale Capital Management published an article on Seeking Alpha explaining the merits of its short position.”

    Imagine that. A company published an article and the stock lost nearly %40 of its value. All in a matter of a few hours. How lucky can 1 Capital Management company get. And I was biased against China.

    Reply

    • February 14, 2017 @ 2:18 pm traderscott

      “….explaining the merits of its’ short position.” Why does anyone have to explain the “merits” of their short position or their long position. There are no “merits”, you just do it, and you make money or you lose money. This is the part of “my” business that’s disgusting. So they are so incompetent, and getting creamed on their short position, and can’t accept that they suck, so they use a little website to talk it down, and cover the short based on their crappy entry point. Well isn’t that special.

      Reply

      • February 14, 2017 @ 2:38 pm Easy Al

        Those guys did even more worse thing to SVMLF in the second half of 2011. The difference was that silver miner have already declined a lot since peaked in April 2011. Since the market sentiment of miners is total different this time, I am not sure how much long term impact it will have on NAK.

        Reply

  7. February 14, 2017 @ 5:31 pm David V

    That’s Kerrisdale’s MO, they liabled First Magestic last year. The SEC should shutter their short scam operation.

    Reply

    • February 16, 2017 @ 12:21 pm ManAboutDallas

      It gets even better ! Now all the stock-accident ambulance-chasing law firms are getting into the act :
      NAK LOSS NOTICE: Bronstein, Gewirtz & Grossman, LLC Notifies Investors of Class Action Against Northern Dynasty Minerals Ltd. & Lead Plaintiff Deadline: April 17, 2017
      EQUITY ALERT: Rosen Law Firm Files Securities Class Action Lawsuit Against Northern Dynasty Minerals Ltd. — NAK

      Think they weren’t “tipped” ? Har, de-har-har-har! ( and -HAR! )

      Reply

    • February 17, 2017 @ 11:55 am ManAboutDallas

      NAK comes out with all guns blazing :
      http://www.northerndynastyminerals.com/ndm/NewsReleases.asp?ReportID=778879

      Reply

  8. February 15, 2017 @ 8:48 am traderscott

    The prices in the US rose in January the most in four years. We’ve got some problems to deal with. Now the $ is at multi-week highs. So now the people who love to destroy their accounts with the emotional swings due to prices going up and then back down and then back up, blah blah,,,,now they’ll be bullish on the $ again? This is all we need to know – the $ back at resistance, and notice the stair step higher – click here.

    Reply

    • February 15, 2017 @ 9:12 am Fen

      Thank you for the chart; it helps me to understand your point on trading skills.

      Reply

      • February 15, 2017 @ 9:22 am traderscott

        So Fen, do you see what our discussion of that 99.40 area was and why I was pointing it out beforehand to watch, as it was sitting out there “like a sore thumb”? As people like yourself and myself, we actually trade, we aren’t useless analysts, so we need to be able to anticipate in advance. I kept repeating that the trading below 99.40, with ending action, was the first high probability spot to end the intermediate downtrend in the $. The character of the market totally changed. Is that the low, fullness of time will tell, but it’s about working hard and waiting for opportunities and then having the guts to step up and buy. What does a method have to do with the ability to step up and buy? It’s why people with real fancy methods can never pull the trigger. They’re always thinking/guessing/predicting. We have to avoid predicting and just trade. I personally love people who just trade, like a blue collar worker. We need to turn this business into a real job, and focus.

        Reply

        • February 15, 2017 @ 9:29 am traderscott

          And also, just calmly view the chart, and realize today we came right into resistance at 101.73, so there’s a spot for a potential opportunity also, dependent on time frame.

          Reply

          • February 15, 2017 @ 11:00 am Fen

            Thank you very much, Scott.
            Now, I do understand your explanation at a nuch deeper level.
            And yes, I see that “sore thumb”.

  9. February 16, 2017 @ 7:05 am PRice

    Reuters catches onto the obvious:
    http://finance.yahoo.com/news/silver-lining-weaker-peso-mexican-070001989.html

    Reply

    • February 16, 2017 @ 7:39 am traderscott

      Time to buy the Peso:

      While some say the worst of the currency’s slide may be over, the peso is expected to remain weak throughout this year, a Reuters poll showed this month.

      Reply

  10. February 16, 2017 @ 9:22 am Silver and Inflation

    […] Continue… […]

    Reply

  11. February 16, 2017 @ 10:09 am RobertHBurt

    I am a Texas Hill Country native myself too, so when I think of going to a foreign country I think of going to Dallas. So far God has been kind to me and I have not been there. But I agree that inflation is blowin’ in the wind, just like Alfred Nobel said –Or was it Shakespeare? Anyway you’re battin’ a thousand. Thanks.

    Reply


Would you like to share your thoughts?

Your email address will not be published.

©Copyright One Radio Network 2014 • All rights reserved. Site built by RedLotus AustinThe information on this website and talk shows is solely for informational and entertainment purposes. IT IS NOT INTENDED TO PROVIDE MEDICAL ADVICE. Neither the Editors, producers of One Radio Network, Patrick Timpone, their guests or web masters take responsibility for any possible consequences from any treatment, procedure, exercise, dietary modification, action or application of medication which results from reading or following the information contained on this website in written or audio form, live or podcasts. The publication of this information does not constitute the practice of medicine, and this information does not replace the advice of your physician or other health care provider. Before undertaking any course of treatment, the reader must seek the advice of their physician or other health care provider and take total responsibility for his or her actions at all times. Patrick Joseph of the family of Timpone, a man...All rights reserved, without recourse.