Summary
➡ The article discusses the potential impact of Powell’s shift from a dovish to a hawkish stance on the market, predicting a possible downturn in stocks. It also highlights China’s de-dollarization efforts, which could lead to companies like Apple earning more yuan than dollars. The article also mentions potential market movements, including the possibility of gold prices rising after a dip. Lastly, it mentions Fortuna Mining’s recent successful drill results.
➡ A video was recently posted about the drill results from Fortuna, providing a quick overview. However, it’s important to remember that this video is only for information and doesn’t offer legal or financial advice. For any financial queries, you should reach out to your credit card at Fortuna.com.
Transcript
We’ll be touching on a little bit of today and hope to speak with him next week. We’ll also be talking, we have a lot on our plate here, so let’s try and move it quickly. And in premium we have ING has a measure report on commodities discussing mining and Morgan Stanley is discussing Fed policy. Markets 10-year yields 454 down 2, $1.0815 down 2070, SP500 down 55, that’s a big overnight move. At 5819, the VIX 2511 up 1, that’s big. Gold 2603 up 9, very big, it’s only $9 but everything else is falling out of bed again.
Silver 2090 down 12 to be expected, it’s an economic matter, we’ll talk about that a little bit. Copper 404 unchanged bid WTI 6945 down 15, natural gas 343 very strong up three cents today. Bitcoin continues to crater 938 down 3500, Ethereum 3200 down 183, Palladium 908, 907 up to platinum 929 up 5, gold silver 90, that’s a sale very soon, I don’t know when but we’re looking at it. Grades are up, soy, corn, and wheat all look very good today. Okay, home page, Powell’s inflation flip-flop was political, that’s what we said yesterday, we put out a post yesterday, later in the day, breaking down the BRICS physical behavior, Central Bank’s double down on gold, we did a breakdown of a Goldman report, we have another one, the other one we’ll be coming out with this weekend, the pushback report, that’s the one that I think we care the most about, personally.
Anyway, we’ll talk about that. And then special founders rating, which remains anonymous. Discussion, all right, we have several things, I’ll work through a couple of them and we’ll get to the main events, all right. So Indonesia’s mining cuts, Indonesia is considering implementing deep cuts to the nickel mining quota, primarily to support the falling prices of the battery metal. In Zinc, market reports suggest that Toho Zinc company located in Japan will shut down its unprofitable Zinc smelting business by the year end. Okay, you can read the rest of that. That means there is less silver concentrate.
If you’re not mining Zinc, if you’re not mining nickel, if you’re not processing those, because we’re going to kind of slow down that respect, well, that means there’s less silver in concentrate form. And having spoken with a refiner and mentor, raw silver is going up in price right now, as of this month. So you’re seeing the effect of base metals gearing down, and the effect of China paying for concentrate in increasing supply. So we have that fall analysis at the bottom, most of it is focused on energy and the Fed rate cut.
Next, Hartnett’s report is coming out this week, he’s going to go on vacation. So Hartnett, we mentioned yesterday market breadth, this is tying into gold. So work with us here. Market breadth is dire. There is a widening gap between S&P 500 market cap, and the S&P 500 X to Magnificent 7 market cap. The S&P 500 is up 23%. The S&P 500 without the top 12 stocks is only up 8%. Now, it’s even lower than that, because once you take out the leaders, the other stocks drop when you lower the tide, all the boats sink, and some of them equity breadth remain dire, winners must keep winning to keep stealth correction under the hood.
Stealth correction, he’s saying that we are in a stealth correction, and that several stocks are being held up for whatever reason by whatever entity, and that’s keeping the bottom from falling out, and we’re close to the bottom falling out. And there’s a chart to that effect. I’ll click on it for you. And it doesn’t get any bigger. Well, you’ll have to just look at the picture in the post. Real rates above 2.5% and the S&P trailing PE show 25 times, above 25 times. This ain’t a great time for the Fed and US government to lose control of the bond market.
So I’ve been all about breadth, looking at the stock market, last couple of days, and going back and looking at a couple of things that were written by other people. Michael Oliver actually ties it into what we’re talking about today. So let’s get to that. MSA excerpt, secular trends of stocks and commodities. Now, it’s an eight-page report. There’s a lot in there, heavily focused on stocks and why we could be at a turning point. And I think we’re getting close to it. And he compares them to other markets. And zooming out, he had a little section there on gold versus stocks.
And well, I remember every one of these timeframes. Let’s read what he has first. So this is gold versus the stock market. So the S&P 500 versus gold is a chart that I used. So going back to, that’s 1961 on the left. And that’s 2025, which is where we are now. And you have the up slope, that’s gold going up in value relative to stocks, gold going down in value relative to stocks. And for the last five years or so, we’ve been in a sideways range. Jordan, from the daily gold that I talk about that frequently, that’s one of his pet peeves, if you think about it.
OK, so we’ll come back to that chart in a second. Here are the ranges that he talks about. Between 1972 and 1980, we were in a stock market bear. And then came the wasteland for price while gold soared in net price. The spread exploded. Oh, I wish I could have, I can have them both up, can I? I can. 1980, by the way, 1970 to 1980, I remember that little kid bought first piece of jewelry ever bought for someone then in gold because gold could never go down. I remember that. It was like 1980.
All right. 1980 to 2000, 1981 to 2000, give or take. The stock market advanced the net price to the dot com peak while gold declined. The spread collapsed. So there’s your slope downward to there. We’ll 2001 to 2011, the stock bear began and then came the wasteland. Gold gained massively in net price. The spread advanced fivefold from yearly close to close. That’s this area here from low to high there. I remember this basically started with the Y2K, Ashanti Cambiore in gold and ended with the stock market collapse and ended with Grexit and the government stepping in to keep a little in the price of gold and silver.
2011, 2015, that’s this area here. Gold’s net bear trend occurred as did a collapse in the spread from down from top to bottom here. The spread then basically went lateral soon after gold’s bear trend lows in December 15, meaning gold was actually on par with the S&P in its net performance trend in recent years, though very few investors realized that. The point he’s making is that whether you bought stocks or gold for the last several years, six years, they’ve performed equally well. That’s a long time for that to be in a range.
It’s very frustrating for people looking for gold to break out higher, while gold’s going to break out higher. It’s going to break out higher with stocks dropping, I think, this time. All right, let’s take a look at the chart to describe the errors he’s talking about. There’s 1972 to 1980. It goes from here to here, 1980 to 2000. Stocks rally against gold, 2000.com bubble breaks. People start buying gold and selling stocks again. 2011, 2011, gregs it happens. Europe gets its shit together. The US intervenes. Gold gets under control along with silver and stopped down and now here we are sideways.
That’s where we’ve been. This is where we are. Now, here’s what he says about currently. Now, break the S&P 500’s major net trends now, beginning with our long-term quarterly momentum metrics in the report. While gold merely holds or advances a bit and this spread will start a new upturn out of a multi-year steady range favoring gold, vastly again. Key factor in timing that is defining the breakage of the I think we’re both drawn to the same thing from a gold perspective from different points of view. When I start to see stocks break, I want to look at gold and I see the gold is relatively stable.
There’s too many longs, but we’re okay. Now, I’m looking at the metrics in the stock market because if the stock market breaks the first leg down, you expect gold to go with it. And then if it’s a secular move as Michael is alluding to, then what will happen is after liquidity pukers get out of their gold so they can cover their stock margin calls. Well, then stocks keep going and gold runs out of sellers and then it just continues to go up. Now, that’s his backdrop. I mean, that’s his call. My backdrop is how it goes down at turns.
The bigger picture is Powell. See, Powell just pivoted from dove to hawk overnight. And if he does that, you’re going to see stocks crap out first. And then a year down the road, he’s going to have to flood the market to get things back to where they were. So I think the Powell error in inflation, going back to the transitionary statement is a bullwhip. And he’s about to make the same mistake the other way, right? He stayed too easy for too long. Now he tightened for a little too long and then he eased too quickly.
He snapped out of it too quickly for political reasons, as I said, and he’s going to he doesn’t want to flip flop too much more and he’s going to I think he’s going to hurt the market. OK, so there you go. Oh, we’ll put the link for his full report as well in there. We also have Morgan Stanley’s comment on the Fed. They think the Fed’s going to cut less and cut further back in the year. News and analysis, BRICS central banks doubled down on gold in October. We just alluded to that.
Powell’s inflation flip flop was political special offenders rating. We mentioned that already. Market news, China’s de-dollarization in action. I’m going to do a whole piece on this because I think it’s worth noting. People talk about de-dollarization and they talk about it. They say, what’s the dollar doing? What’s gold doing? What’s the dollar doing? What’s gold doing? What are treasuries doing? Oh, they’re selling treasuries. They’re buying gold. They’re doing that, right? And everyone’s wondering, why isn’t the dollar dropping? Well, the dollar is not dropping. Well, it is. It is dropping. It’s dropping relative to gold.
It’s dropping relative to every currency in the world, even more so than the dollar. Just the dollars, you know, the cleanest dirty shirt out of all the fiats. So where does the de-dollarization come from next? Well, it comes from the bricks and China specifically flexing. If you want to do business in our country, you have to follow our rules, which eventually means companies like Apple will be earning less dollars and earning more yuan. And there’s a whole process that we’re going to go through over the years. But the bottom line is China’s customer base is a natural resource.
And if you want access to them, you have to set up shop in China, you have to abide by their rules, and you’re going to have to hold yuan. So let me just read this. And I’ll do the whole piece on that later on. Apple is in talks with Tencent and TikTok owner ByteDance about integrating their artificial intelligence models into iPhone sold in China, which is forcing Apple to seek local partners for its AI features at a time its market share in the country is declining. Do you want to sell iPhones in our country? Then you must use some of our vendors to put their product in your iPhone.
You must set up set up shop here and you’re going to get paid and you won. What are you going to do with those? You want to convert them into dollars to run your business to pay everyone on the current swift payment chain. But down the road, we’re going to say, wait a minute, hold on to your one. We’ll give you some government bonds. Ours are pretty stable. We’ll give you some currency backed with gold. That’s pretty stable, right? We’ll give you good deals to build factories here. And little by little American companies that wish to do business in China to get access to their natural resources.
And I’m referring to their client base. I’m referring to their customers. They’re going to have to start holding you want. Anyway, and that is Mercantilism. Well, that’s actually protectionism. But the fact that they’re throwing gold in there, or at least I think they will, is Mercantilism. You can read the rest. All right. I want to play this for you yesterday. Chris Marcus at Arcadia sent me a link. Pal basically is challenging the US to a duel. I think I hooked up the sound on this. Let me turn it on so you can hear it first.
Okay, I hope that played at least you could read it if you could not hear it. He’s basically challenging the US to a duel. That’s his terminology. But the reality of it is he’s saying, listen, you guys are bullies. I think that’s him talking. I think you guys are bullies. And I think you talk a good story. Put up or shut up. Let’s find a testing field kind of like white sands in Ukraine, and we’ll fire a rocket. It’ll be a dud, whatever. We’ll find like an empty field. Let’s see if you can shoot it down.
Now the US is going to ignore this. They should. Because anything else. And while we risk losing in the public eye. Anyway, so this is ostensibly an attack on the US. Well, what he’s really doing is, in my opinion, he’s looking at Europe and saying, and Europe is now saying, oh, shit, maybe we aren’t safe. Maybe we need to sue for peace. He’s getting ready to negotiate for peace, I think. Anyway, there you go. It’s pretty, it’s pretty serious stuff. All right. So on that note, there were seven strong explosions heard in the Ukrainian capital Kiev.
According to Sky News, Arabia, you create air defense repelling an attack on Kiev, according to officials cited by Reuters. Russia fired a series of, I’m going to try to say, Kinjal hypersonic missiles in the capital Kiev. According to Sky News, Arabia, you can read the rest. PCE is today. It’s Friday. And there’s the ING analysis for you, as well as the Morgan Stanley commentary. Let’s check on the markets one more time. There’s the bond market, by the way. I’m looking at the bond market. If bond yields get high enough, then people are going to take their money out of stocks and mess and put them into bonds.
And that’s going to craft the market out. And then I’m going to look to buy gold on the dip. Because the cycle is up, down, up, down, sideways. And then up is next. Can’t go much lower, not goldwood. All right. Gold is right at the 100 day. Don’t be too concerned with it above or below the 100 day here. Let me put up the, those moving averages are important right now. They’re not going to be important forever, but they’re important right now. And we’re going to be above it and below it in this area.
And there’s probably going to be buying between here all the way down to this area here. What’s underneath here? I don’t know. But if we get back above the 100 day moving average and this doesn’t turn, then this market could rally. Here’s what I think’s going to happen. Starting with copper, both are below the moving average. Everyone’s going to start selling copper if they’re selling stocks. Okay. CTAs are going to sell copper all the way down to zero. Remember when they did in 22, when they started raising rates, copper sold off, silver sold off, gold sold off.
Right? So copper’s moving averages have crossed. That’s a signal for CTAs to start selling. Let’s go to silver. Silver is below both moving averages, but they haven’t crossed yet. However, however, the 50 days now turning lower. So if copper gets sold, silver will be weak in sympathy, but strong because gold isn’t being sold off as much. Okay. So they’re going to start selling silver. So its stocks are down, sell copper, sell silver. Maybe I’m not going to get short gold, but I’m not going to buy it anymore. So the buyers of gold will lower their bit.
Central banks will be catching it at lower prices. And that’s fine. Now, if the Fed does what I think they’re going to do, and I’m very flexible on this, they’re not going to raise. And as long as the stock market doesn’t crap out, they’re going to not ease, right? As long as they can and let the market kind of catch up. And you’ll probably build up a nice cohort of shorts in silver and copper, which will be the fuel for gold. Gold will hold its own. Silver will rally after it could be months.
Silver will rally and then gold will take off again. In the meantime, stocks will go nowhere in that turnaround. Anyway, just predicting the future. I don’t know. Vince, have a great day. Well, thank you to Vince. And thanks to everyone watching at home. Sure. Hope you enjoyed the show and we appreciate you being here. And before we wrap up, I’d also like to thank Fortuna Mining, who kindly brought us today’s show. And Fortuna did have some drill results out from their Seguela Mine on Monday, where they extended their Kingfisher deposit with a drill intersect of 4.1 grams per ton gold over 15.3 meters.
And they also averaged 3.3 grams per ton gold, 150 meters further along strike. And to find out a bit more about the drill results from Fortuna, well, we have a video we posted yesterday. It gives a brief recap of that and that one is coming your way now. Please note that this video is not intended as legal, licensed financial trading advice and is to be used for informational purposes only. Please contact your financial credit card at Fortuna.com. [tr:trw].