It appears that I missed my call for a low in gold by $25 and a few days. For months I have been calling for a low in the June/July timeframe with the DSI below 10. Gold dropped to $1204 and change on the 2nd of August well below my belief that we saw the low at $1240 a few weeks back.
So I didn't get a bull's eye; I was off on the price of gold by 3% but I did hit the target near the center. And I'm perfectly comfortable crawling out on a limb and saying the worst is behind us for gold with the DSI hitting 6 on the 2nd. The worse sentiment gets, the greater the springboard higher as the speculators get creamed once more.
The permabulls will be whining about how the Bullion Banks have stolen from the speculators once again. However if the price of gold is going down and speculators are selling to cover their long positions or to go short, it is the speculators driving the market, not the commercials buying contracts.
Anyone using the term Bullion Banks is blowing smoke anyway in an effort to confuse. If Bullion Banks really were trading, which they aren't, they would be classified as large speculators.
The commercials are mining companies and consumers of gold such as jewelry manufacturers who overall have an overall natural bias to be sellers. Mining companies are eager sellers at high prices and jewelry manufacturers are eager buyers at low prices. Commercials tend to buy at bottoms and sell at tops. Speculators sell at bottoms and buy at tops.
We "should" have a rally into September for the metals and resource shares based on both sentiment and seasonality. A DSI of 6 means people were really negative on gold. And a simple glance at your favorite shares will show while the temperature may be hot outside, the markets have been colder than a well digger's ass. That should change. When the DSI gets above 90, think about taking some money off the table. If it gets to 94, dump everything.
I'm going to expand on some comments I made a month ago in an interview on Energy and Gold where I said we would see the crash of the century sometime in the September/October timeframe.
Anyone with an IQ over room temperature who spends any time thinking about money and the economy is well aware that the Central Banks around the world have been pumping money into the economy for ten years. The financial system actually died in September of 2008. The money has done nothing but pump up a corpse. It looks alive but take my word, it is rotten to the core. And anyone with a lick of cents knows the shit is going to hit the fan someday because you can't spend your way to prosperity or borrow to become rich.
I made my comment before Netflix and Facebook plunged by over 20% in July. The four FANG stocks account for 50% overall of the volume in trading on Wall Street. That's what you will see just before a market crashes. I could be 100% wrong and the market could climb to infinity but some day people are going to sober up and sell. In 1929 the market topped the first week of September and crashed at the end of October. I suspect Facebook and Netflix are telling us the play is just about over and the fat lady is gearing up for her solo.
Those who love throwing rocks at me can fairly say that I'm wrong because both "Bitcon" and Tesla have shot higher but both "investments" are a form of a negative test for Mensa. You have to be in the lowest 2% of the population to be buying either. If you are buying both, you qualify as brain dead. They are both scams designed to take money from idiots and do a wonderful job.
Given that what I think is no more than my gut feel and I am no more an "Expert or Guru" than any of the other fools around, you might want to do or change nothing at all. But times are dangerous and if the general markets crash, investors are going to sell everything they can get a bid on including resource shares. So at the very least, have a game plan just in case this blind squirrel stumbles across an acorn. Either sit on some cash ready to pluck the low hanging fruit or plan on sitting it out no matter how dismal prices get.
When the dust settles, commodities and resources will be king for many years and the used toilet paper Wall Street and governments have been peddling will be revealed by its scent just what it is really worth.
I have been saying for at least three months that there are a variety of good junior resource companies that would be cheap in a decline. We have had the decline, at least for now and speculators have bred a counter trend rally good for the near future. Eskay Mining Corp. (ESK:TSX.V) is one of the interesting companies I have invested in.
Eskay Mining has 52,000 ha of various projects in the heart of the Golden Triangle in northern British Columbia. In early 2017 the company did a deal with SSRM where for a total investment of $11.7 million in the SIB project of Eskay, SSRM could earn a 60% interest in 12,000 acres of the project. As of now, Eskay owns 80% of SIB and Kirkland Lake the remaining 20%.
Last year as part of their earn in, SSRM spent $3.7 million drilling just over 9,000 meters of core in search of Eskay II. The company has budgeted $4 million this year for an additional 7,000 to 9,000 meters of drilling.
The original Eskay Creek Mine was the world's highest grade VMS gold mine and produced 3.3 million ounces of gold and 159 million ounces of silver from opening in 1994 until closure in 2008.
Should SSRM elect to complete the $11.7 million in exploration to earn their 60% of the SIB project from Eskay Mining next year, the agreement calls for Kirkland Lake to belly up to the bar and contribute $2.5 million to maintain their 20% interest.
All of that is interesting. Certainly drilling up to 9,000 meters this year right next door to Garibaldi's E&L project could lead to much higher prices for ESK on either solid drill results from SSRM or a spillover effect from solid drill results from Garibaldi. Last year GGI shot up from about $0.15 a share to $5.27 based on nothing more than some pretty rock. I happen to share the opinion of Brent Cook on GGI that they have a nothing burger but it wouldn't be either the first time or the last time I have been wrong.
Eskay announced what might be a giant game changer on the 27th of July. While conducting a high-resolution airborne electromagnetic survey of the SIP property for a VMS deposit, the survey revealed a significant conductor in the unexplored southern part of the project. Expect that SSRM will do everything possible to add it to their current summer drill program at SIB.
John Kaiser says, ". . .the arrival of this new anomaly in an unexplored part of the SIB option and the need for a hold #109 style stepout makes Eskay Mining Corp a considerably more urgent bottom-fish accumulation target."
Eskay Mining will need to raise money this year so a hit would change their fortunes in a major way quickly. VMS deposits tend to occur in clusters so the presence of Eskay Creek I pretty much assures us that there is an Eskay Creek II hiding somewhere out there. Eskay Mining has a commanding land position and might just be sitting on it.
Eskay Mining is an advertiser. I participated in the last PP so I am biased. Do your own due diligence.
Eskay Mining Corp
ESK-V $0.25 (Aug 03, 2018)
ESKYF OTCBB 110.3 million shares
Eskay Mining website.
Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.
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They were both done by the same man.