Jay’s Weekly Summary

With gold declining for the fourth week in a row, it’s not surprising the misery index for junior gold exploration investors continued to climb this week. When in the world will this end?

Believing that it will end soon, this past week I purchased some GDX October $23 calls @ $0.22 and some KL October $25 calls @ $1.05. Purchases were funded with a partial sale of Calibe given ongoing political turmoil in Nicaragua. With gold trading down this week, both are already down  Also this week I took a position in Irving Resources, a company with prospects in Japan with Dr. Quinton Hennigh as the chief geologist. I have begun covering this company this week. A review of my comments may help you understand why I’m excited about the very unique story. 

But getting back to the big question regarding when will this funk end for gold and gold shares, Michael Oliver has maintained for some time that we will likely need to see a real loss of confidence finally in the equity markets first. Aside from the current equity market about to break a record for duration, the strong correlation between two commodities (copper and oil) and the S&P 500 suggests equities could be in trouble, as Michael reported about midday on August 10.

As Michael noted, “These two stock market-linked commodi­ties produced the largest per­cent gains in the commodity sector since the early 2016 lows, which coincided with the S&P500’s low. In fact, oil and copper’s percentage gains have handily beaten the S&P500 since early 2016.

Michael’s work suggests that both copper and WTI Crude are in a sharp counter trend decline, such that if the correlation holds up, we should start seeing stocks head south. In addition, Michael’s work shows the T-Bonds poised for a rally, which normally happens these days as money flows from stocks looking for safety in U.S. Treasury operations.

If just a small percentage of money coming out of stocks flow to gold and gold shares, happier days could be ahead for those of us who own gold shares. But the real question we should be asking is how much longer will the U.S. dollar Treasuries be seen as a safety hedge? With the Federal Government’s interest expense rising to new highs even as short-term rates remain at around 2%, and with growing trade wars and a very real and growing potential for currency wars, the future of U.S. dollar hegemony appears to be in doubt which have enormous bullish implications for gold, at least longer term. Obviously, it is such an event that we gold bugs believe is coming. We don’t cheer for such an unfortunate happening, but history says it’s inevitable.  As for the prospects for gold, I would urge you to read John Rubino’s article titled “Spectacular Gold COT Report: Prepare For A Huge Six Months!” It appears in this weekly issue and you can read that and all of John’s insightful articles at www.DollarCollapse.com

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.