Last week we wrote that precious metals should see upside follow through but to be wary of the 200-day moving averages and February highs before becoming excited. The metals did follow through as Gold gained 1.5% and Silver gained 1.9% (for the week) but the miners disappointed. GDX gained only 1.1% while GDXJ finished in the red as did junior silver companies (SILJ). As spring beckons, the gold stocks are showing relative and internal weakness.
Two signs of weakness in the miners are visible in the weekly candle charts below. First, while Gold has already rallied back to its high the first week of February, GDX and GDXJ are down 11% and 15% respectively. The miners and the metals will not always be perfectly aligned but that is a rather stark divergence. Secondly, although Gold closed at the highs of the week in each of the past two weeks the miners failed to hold their gains. This is not exactly the type of price action that inspires more gains in the short term.
Gold stocks are also showing some internal weakness. In the chart below we plot the advance/decline (A/D) line for GDX and its bullish percentage index (BPI). Both are breadth indicators. The A/D line is the holy grail of leading indicators while I have found the BPI to be more of a confirmation or overbought/oversold indicator. At present, the A/D line is below both its 50 and 200-day moving averages which are flattening and soon to slope lower. That is ominous if the A/D line can’t regain those moving averages. Meanwhile, the BPI is only at 36%. This means it has room to move up but it also shows weakness as it has barely changed despite gains in recent weeks.
Part of the cause of weakness in the gold stocks (and relative strength in Gold) is the weakness in the stock market which is actually a welcome and positive development for precious metals. As we discussed in a recent video, precious metals are currently setup to benefit from weakness in the stock market as they were in the 1970s and early 2000s. Patience is needed though as stock market weakness is not necessarily an instant or immediate catalyst for the gold stocks.
The current weak technical action in the gold stocks is further evidence that precious metals are unlikely to see a blast off anytime soon. Gold could continue to rally on the back of stock market weakness but don’t expect that to pull miners much higher. I reiterate that at present it’s not wise to chase strength in the miners. Instead, traders and investors should be patient and wait for (presumably) lower prices and a better entry point. We continue to look for high quality juniors that we can buy on weakness and hold into 2018. For professional guidance in riding this new bull market, consider learning more about our premium service including our current favorite junior miners.
Jordan Roy-Byrne, CMT, MFTA
Earlier this week, GOP Congressman Devin Nunes poured new gasoline on the Trump Wiretap saga when he told the press that Donald Trump and his associates were subjected to “incidental” surveillance by the US government during the transition period.
In reality, it’s virtually certain that some of Trump’s and his team’s communications, just like communications from other Americans, were swept by the US intelligence agencies. This is basically the official US policy–as plainly reported in such obscure, fringe media outlets as The Washington Post and The Guardian in the UK. In the words of The Washington Post, the goal of the National Security Agency (NSA) is to ‘Collect it all‘–that is, all of the communications of Americans and foreigners alike.
Now, they probably–thankfully–do not quite succeed in this goal, and there appear to be some minor residual legal constraints that still limit what they can collect on US citizens. My understanding is that they can’t intentionally collect communications that are strictly between American citizens within the US. But if those communications ever pass outside of the country–as Internet traffic is likely to do routinely–then it would be subject to collection. Thus, as a practical matter, the NSA has the ability and the goal of sweeping up a substantial portion of the communications made by even regular Americans.
Trump and his team would be no exception to this general practice, so it should not be surprising that their communications would also be picked up. That is the default.
This has been publicly reported in very established sources ever since the summer of 2013, when whistleblower Edward Snowden released documents that illustrated this fact.
And yet, to Rep. Nunes–who is the Chair of House Permanent Select Committee on Intelligence (!)–this appears to be a major discovery.
As absurd as this sounds, I’m convinced he really didn’t understand how this works until now–and perhaps he still doesn’t. Because if he did know how this worked, then he (and other Republicans) could have used this explanation to substantiate / justify the Trump Wiretap story from the beginning. It’s not technically a wiretap, perhaps, but it’s consistent with how that phrase is used informally. (And President Trump is not known for his careful or precise use of language.)
While substantiating the ‘wiretap’ story would have been useless in terms of any particular policy goal, it would have been useful politically by quickly dominating headlines with an argument that bolstered the president. The fact that Nunes and others didn’t use this argument earlier would seem to suggest they hadn’t thought of it.
Thus, we are drawn to a preposterous but delightful possibility–that the GOP Chair of the House intelligence committee, after being a reliable apologist for the NSA for some time, just now figured out what it is the NSA actually does. And he was shocked that it might be turned against his team, even though it’s been turned against regular Americans for years.
The post GOP Chair of House Intel Committee Learns What the NSA Does appeared first on The Libertarian Institute.GOP Chair of House Intel Committee Learns What the NSA Does was first posted on March 24, 2017 at 10:46 pm.
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