Where are Natural Gas prices headed?
What Is Going to Be Next for Gold? [Details]
Silver has a BIG rally but the real test lies ahead
What the Silver-Gold Ratio Nearing the Modern-Day High Means For Investors
Can Gold Replace The USD As Reserve Currency?
One of the stories gold bulls like to tell is the decline of the US Dollar as the world reserve currency. This story usually runs along the following lines: The US is overspending massively, thus the US is a debtor nation. Debtor nations don't last forever, thus the US is heading for collapse. When countries collapse, their currency becomes worthless. Since gold has never been worthless in the history of modern civilization, trade Dollars for gold now so you'll preserve value heading into that uncertain future.
That's it in a nutshell, isn't it? When the cow excrement hits the rotating blades you want to hold on to the value you've created in the past. And you want whatever the best form of money is. And because gold has always preserved its value well during such crises, you should choose gold. Simple. Gold will protect you against the collapse of your country.
The modern reality is more complex than that. In today's world, there is more than one country, and countries don't all collapse at once. When one country collapses there are other countries still standing, and that provides a framework of support that can be used to set your country up again. New deals can be signed, loans can be made with international money, banks can be restarted and linked into the world banking network - it's pretty amazing. We'll see with Venezuela how quickly this can happen, once the question of who's in charge there is settled.
Plus there's the inconvenient fact that gold is difficult to fractionalize. That means a hunk of gold is often worth more than you need for a purchase. Imagine wanting to buy a single shopping bag of food in a time when the local currency is worthless, and you are holding your bar of gold. How do you shave off "the right amount" for your purchase? Even a dime-sized gold coin is worth hundreds of dollars today, much more than your typical food purchase.
So the reality is that gold is indeed a great store of value, but there are still issues with using it directly as currency. What we really need is currency we can both fractionalize and trust - thus the idea of gold-backed currency. Or, as it's better known, a gold standard.
Your Gold Enthusiast is not saying this is the best answer, however. It is possible to be a gold bug AND realize there is a better solution than going to 100% gold-backed currency. What we are looking for is currency whose value we can trust, and it doesn't have to be 100% gold backed. All that's needed is a good percentage of gold backing. Whether that's 25% or 50% or even 10% we don't know, we'll leave that to others to debate while we spin some numbers and do some pondering.
What we do know is that the US is heading deeper down the rabbit hole of debt. That's not good. And especially it's not good that two of the other superpowers in the world - China and Russia - are digging themselves slowly out of their own debt rabbit holes, AND accumulating gold. They are putting their currencies in positions of superior economic strength compared to the US Dollar.
And the rest of the world is watching.
Both countries are also forming trading alliances with other countries that are not based in US Dollars. China has both their own gold- and petro-dollar based trading contracts. Russia has been trading natural gas with other countries for years as well. And let's not forget the EU, which has the purpose of making trade between member countries possible without relying on external currencies or markets.
This is all leading to a new multi-polar world, where there are several large superpowers (if you will). Just 10 years ago the US could say it was the world's biggest superpower. Now China is a viable contender for the crown, and while Russia is much smaller than the US or China it has positioned itself as a rising economic superpower.
While the EU is currently caught up in the Brexit battle with England it is also not out of the discussion - just distracted at the moment.
Your Gold Enthusiast is watching all this happen and is fascinated by the idea of a multi-polar world. It is a step closer in evolution to everyone getting along, so that is good. There are still borders and differences, but wars are increasing being fought with sanctions and tariffs rather than shooting, and that's a step in the right direction.
Right now the US Dollar is still the #1 currency in world transactions. It's dominance is shrinking however, and we may yet see the day when gold prices shoot up in US Dollar terms as it already has in many other world currencies.
Another writer wrote this very good article about this possible multi-polar world, looking at whether it could be backed by gold. You'll have to read it to discover his answers, and his discussion is well worth understanding. Because of all the variables I don't think anyone can make exact predictions; what we're after is the direction things are likely to go, and where the decision points are that tell us if we're right or not.
Why does all this matter? Because as time passes the future has a way of becoming the present - and then we're living in it.
Signed,
The Gold Enthusiast
DISCLAIMER: No specific securities were mentioned in this article. The author is long the gold sector via small positions in NUGT, JNUG, a few junior miners, and covered calls on part of the NUGT position. He has no plans to trade the shares in the next 24 hours.
About the Author
For 30-plus years, Mike Hammer has been an ardent follower, and often-times trader, of gold and silver. With his own money, he began trading in ‘86 and has seen the market at its highest highs and lowest lows, which includes the Black Monday Crash in ‘87, the Crash of ‘08, and the Flash Crash of 2010. Throughout all of this, he’s been on the great side of winning, and sometimes, the hard side of losing. For the past eight years, he’s mentored others about the fine art of trading stocks and ETFs at the Adam Mesh Trading Group.
Will Canntrust (CTST) pull off a miraculous recovery this week?
Right now Canntrust is down, but are they out?
There is no denying that Canntrust's value has been decimated in a matter of days after the news that health Canada would be putting the company under investigation for growing cannabis in rooms prior to obtaining their license to grow. In a short week the stock declined consecutively every single day since the announcement to close the week down almost 50%. Its astonishing how fast a company who carried a strong reputation in the high growth cannabis sector can be demolished and have their reputation tarnished overnight. Now as serious as the news really is, there are always two sides to a story, and most of the time someone's loss is another one's fortune. The question remains on many of our minds, will this be the case for canntrust once the dust settles. This week is going to be a very crucial week for canntrust and their shareholders for a few reasons.
The Fate Lies in Health Canada's Hands
This is going to be a big week for Canntrust and I can see the stock having more volatility than last week. More than likely a large amount of short interest has accumulated on Canntrust after last week's news, and I wouldn't be surprised if we see a short squeeze in the trading sessions to come. There is a perfect catalyst coming up this week that could cause a massive bounce in shares of Canntrust. The company has until July 18th to respond to health Canada'sregulator'ss report. At that point Health Canada will determine if the company receives a fine of up to a million dollars Canadian or a suspension/cancellation of their federal license. In my opinion if health Canada eases back at all hinting at a possible fine and allows Canntrust to pick up the pieces of their broken reputation, shares will rally immensely. Often times when things look like they could not get any worse and there is no hope are the times that you need to think logically, weigh the pros and cons and see through the darkness. Its human nature to join the crowd and rain down negativity on Canntrust as many investors within the community have done so. I truly believe "this too shall pass" but let's talk about the worst-case scenario. If Canntrust was to lose their federal license than the company would indeed be in big trouble, at that point I think they would have to be bought out, rebranded and dismantled. Brands and reputation definitely carry value especially in the cannabis sector so Canntrust has taken a big hit.
How Far Will Health Canada take it?
In my opinion Health Canada is making an example of Canntrust and they came in guns blazing. On Friday we felt the waves of fear ripple through the cannabis sector with a broad selloff from large caps to small caps. Selling quality cannabis grown in licensed facilities should be on the top of their list, but completely destroying a company for breaking the rules once is another story. It would make more sense to even increase the size of fines for non-compliance in the future to deter companies from breaking the rules, but a suspension or complete withdrawal of one's license seems a little overboard. This would also look bad for the Canadian government allowing the destruction of so many jobs. We will be waiting on the edges of our seat this week to see the final verdict from health Canada but I wouldn't be surprised if we see more volatility than last week. At this point buying the dip in shares of Canntrust is very risky business but for a high-risk investor, there is lots of potential for returns. Buckle your seatbelts if you are on the Canntrust coaster, we could be in for a wild ride!
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About the Author Aaron Missere is the CEO and founder of financial media company Departures Capital Inc. He is an avid and experienced investor, with a primary focus on the cannabis industry. In addition to being a featured contributor to StockNews.com and ETFDailyNews.com, he is an author for SmarterAnalyst.com. Aaron also currently hosts a weekly show on YouTube that recaps and explains the movement in the stock market, with a heavy emphasis on marijuana stocks.CannTrust Holdings Inc. (CTST) was trading at $2.81 per share on Wednesday morning, up $0.06 (+2.18%). Year-to-date, CTST has declined %, versus a 12.77% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of StockNews.
Why is There Weakness In The Brent-WTI Spread, Despite Tension With Iran
- Brent-WTI moved lower even though the price of oil climbed
- The risk is on the upside in the spread
- BNO and USO are the ETFs that reflect the short-term price action in the two benchmarks
Source: CQG
The chart of the price of nearby WTI futures minus Brent futures highlights that before 2009, the range in the spread was from a $6.33 premium for WTI to a $3.24 premium for Brent. Since gasoline is the world’s leading oil product, the WTI tended to trade at a premium to Brent. However, the world changed with the political changes in the Middle East, and since 2009, the range has been from a $2.68 premium for WTI to a $27.64 premium for Brent. The Brent premium has typically moved higher when the price of oil rallies. In February 2016, when crude oil fell below $30 per barrel on both benchmarks, WTI briefly returned to a premium.
In early June, the price of nearby WTI futures fell to a low at $50.60. As the price was falling in late May, the Brent premium moved to $11.59 per barrel, the highest level since 2015. Since then, the price of oil recovered, but the Brent premium moved to around the $6.45 per barrel as of last Friday.
Four consecutive weeks of inventory declines in the US as reported by the API and EIA led to gains in the price of WTI futures which gained on Brent.
The risk is on the upside in the spread
Meanwhile, the other reason for higher oil prices over recent weeks has been the rising tension in the Middle East. The Trump administration slapped sanctions on Iran and put an end to exemptions that allowed the theocracy to sell petroleum to customers around the world. Iran retaliated with attacks on oil tankers near the Straits of Hormuz, the downing of a US drone, and missile attacks on Saudi sovereign territory. Just last week, an attempt to hijack a British oil tanker only failed because of the increased military presence in the region. Iran has also begun to enrich uranium, which could lead to even more hostilities over the coming days, weeks, and months. As the political temperature rises in the Middle East, supply concerns will increase, leading to gains in the price of oil. Since Brent is the benchmark for oil from the area, we could see price spikes in the Brent-WTI spread.
BNO and USO are the ETFs that reflect the short-term price action in the two benchmarks
In the ETF market, the United States Oil Fund, LP (USO) is the ETF that replicates the price action in WTI crude oil on a short-term basis. The United States Brent Oil Fund, LP (BNO) is the ETF that follows the price of the Brent benchmark. A long position in BNO and short position in USO is one way to synthesize the Brent-WTI spread without venturing into the futures markets.
The Brent-WTI spread declined from $11.59 in late May to the $6.45 per barrel level as of Friday, July 12. The spread is a barometer of political risk, and the potential for a spike back to the recent high or even higher is likely to increase with hostilities in the Middle East.
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About the Author
Andy Hecht is a sought-after commodity and futures trader, an options expert and analyst. He is a top ranked author on Seeking Alpha in various categories. Andy spent nearly 35 years on Wall Street, including two decades on the trading desk of Phillip Brothers, which became Salomon Brothers and ultimately part of Citigroup. Over the past decades, he has researched, structured and executed some of the largest trades ever made, involving massive quantities of precious metals and bulk commodities. Aside from contributing to a variety of sites, Andy is the Editor-in-Chief at Option Hotline. Gold: What Is Sentiment Telling Us
So what else can this chart of Daily Sentiment Index tell us?
As we can see from the red line on the chart, which is a sentiment moving average, gold is trending higher and above its vital sentiment moving average. This is a positive sign as it shows that more bulls are entering the market on an intermediate-term basis. When more bulls enter a market after a period of disinterest, this typically leads to any sharp dips being bought up quickly. This moving average is also nowhere near overbought at current levels near 60% bulls. As long as this moving average can stay away from the 80% bulls level, the gold bulls don't have anything to worry about here from an exuberance standpoint.
Based on this new multi-year high in bullish sentiment that accompanied the recent $1,365/oz breakout, I would expect the most likely scenario is for gold to build a new base between $1,350/oz and $1,450/oz. Breakouts from multi-year bases typically either correct through time or price, and thus far it's looking like gold might end up correcting through time. This would be the best-case scenario as it would allow the metal to build a new launchpad above its prior multi-year resistance.I would consider any pullbacks down to the $1,370/oz area to be buying opportunities, especially if these dips are coupled with bullish sentiment falling below the 50% bulls level. As long as gold defends the $1,325/oz on a weekly close, I would consider any pullbacks to be buying opportunities. The next real resistance for gold doesn't come in until $1,560/oz.
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About the Author
Taylor Dart has over 10 years of experience in active & passive investing specializing in mid-cap growth stocks, as well as the precious metals sector. He has been writing on Seeking Alpha for four years, and managing his own portfolios since 2008. His main focus is on growth stocks outperforming the market and their peers. In addition to looking at the fundamentals, he uses different timing models for industry groups, and scans upwards of 2000 stocks daily to identify the best fundamental opportunities with the timeliest technical setups. Taylor is a huge proponent of Trend Following and the "Turtles" who enjoyed compound annual growth rates of over 50 percent per year.
Is Aphria (APHA) the ‘hidden gem’ that everyone forgot about?
What is going on?
For many that follow us and know our investment strategy in the cannabis sector post legalization has been heavily focused on holding our largest positions within the large cap cannabis stocks. We feel that these companies carry the least amount of risk as opposed to so many of the small cap stocks that have sold off immensely. The large cap stocks have seen their fair share of shakeups and volatility but we still feel that investing in large caps, especially when the market pulls back like it has, is going to be the key to maximizing returns within the cannabis sector. With many cannabis stocks feeling the growing pains of any new industry, experiencing wild price swings, there are so many stocks right now sitting close to their yearly lows. Knowing when to start buying these stocks is crucial to success with it comes to investing and even more so, knowing how to determine if you are buying a great company at a good price or a value trap.
Aphria should not be forgotten
One company that comes to mind is Aphria. This stock has seen its fair share of volatility due to a short seller attack over their latin american assets this year that shaved off over 50% of their market cap within days only to bounce right back up after the dust settled. We saw the stock go on to more than triple off of its lows after the attack and has now been steadily declining after hitting $14 per share in April. At current levels the company still has a market cap of over 2 billion dollars (cad) and a 52 week high of $22 (cad).
Aphria is not to be forgotten for many reasons and it starts with the canadian cannabis market. The company has supply agreements with all of the canadian provinces and the yukon territories. After digesting Aphria’s latest earnings report we were very pleased to see that the company grew revenues over 600% year over year and over 200% from the previous quarter. We highly value increasing revenue numbers as a key driver to success in the short term, and as the company matures, then we will focus on the bottom line more closely including profitability. Compared to its counterparts and other large cap cannabis stocks, aphria lost just over $100,000 last quarter which is very minimal compared to a company like canopy which lost over $300,000,000, yes 300 Million. We feel that aphria is very close to profitability, and despite the lackluster numbers coming out of the canadian cannabis market, aphria has a secret weapon that will propel them back up to new highs in the coming months.
Aphria’s Secret Weapon
Aphria is already thinking like an industry leader, setting up operations globally in latin america, south africa and more importantly europe. Aphria has put a lot of emphasis on germany which is most likely going to be the largest cannabis market outside of north america. The company is one of three companies to hold a german cannabis license, the other two being aurora and ICC International Cannabis/Wayland. This is a huge advantage next to over cannabis companies in our opinion as the market in europe grows, aphria will have first mover advantage compared to other companies. On top of this Aphria acquired CC Pharma which serves over 13,000 pharmacies across germany.
Despite the shake up in the stock earlier this year, the company still holds licenses in Jamaica, Colombia and Argentina, which we feel will be a high growth sector as well. These markets have a long way to go, but should prove to be more and more profitable as the global push for legalization continues and the world opens up to cannabis.
The opportunity lies ahead
At current levels we feel that aphria is not only undervalued compared to some of its competitors, but we feel that you are getting a lot of bang for your buck if you are betting on international expansion. We really like that the company is growing revenues at such a fast pace, while minimizing losses, as we feel that is going to be crucial over the next few years. What we would like to see from the company is a solid mix of diversified revenue coming from the canadian market and international market to reinforce aphria as a play on international growth. Aphria is on the top of our watchlist and should probably be on yours as well.
(Disclosure : We do not own Aphria) ________________________________________________________________________________________________
About the Author
Aaron Missere is the CEO and founder of financial media company Departures Capital Inc. He is an avid and experienced investor, with a primary focus on the cannabis industry. In addition to being a featured contributor to StockNews.com and ETFDailyNews.com, he is an author for SmarterAnalyst.com. Aaron also currently hosts a weekly show on YouTube that recaps and explains the movement in the stock market, with a heavy emphasis on marijuana stocks.
How did hurricane Barry affect natural gas?
Is Gold Retail Demand Faltering?
Is Silver Really a Better Buy Than Gold?
Natural Gas – The important support level that’s now resistance
Is Gold Destined for Summer Doldrums in 2019?
As you can see the recent gold rally is no joke. It almost looks more like a Bitcoin rally in miniature -- haha. (Longtime readers will know The Gold Enthusiast is not a true Bitcoin fan.)
But first let's examine this whole mythological summer doldrums idea. The summer doldrums are called that because all the big retail news about gold happens in other times of the year. In the Fall it's India buying gold preparing for marriage season. In the Winter and Spring it's marriage season itself, along with Christmas and New Year holidays in the West. Then in Spring there's gold gifting season in India and parts of the Middle East. And for some reason Russia always seems to be buying gold for their central bank reserves in December. Then in January there's a burst of New Year optimism, with manufacturers projecting their gold use for the year.
But in summer there's - just not much. Not much news, other than July earnings season in US markets, which is a snore-fest by US earnings season standards. That's where the idea of summer doldrums comes from. It is a thing - it's when the gold market kinda goes news-cold. Not that nothing's going on, just that relatively there's not much to put gold on the front page. On a known, repeating basis.
Which brings us to this year. This year we have some geopolitics! And as we all know, geopolitical uncertainty is a big driver of gold prices. The 1-year chart of gold above shows a dip from July through August, then a slow gradual sideways move until December. That was owning to a lack of good news from the retail markets as well as a lack of uncertainty in geopolitical terms.
Then came December when the picture for gold brighted up. A lot.
Now as we head into this summer we have quite a bit of uncertainty. Yes, it looks like we have a truce in the US-China trade war. But in the meantime, Iran rattled a few modern sabers, with some actual missile firing and ship-attacking. And the US responding more with words and economics than with shooting. So while this-all gets sorted out we have - geopolitical instability.
And we're into summer this year from a much higher price level. Which either adds to the upside potential, or to the size of the downside slump, depending on which way you want to call it from here.
So the answers to our original questions were Yes and No. Yes, the summer doldrums in gold are a real thing. And No, it doesn't look like we'll have those this year.
Signed,
The Gold Enthusiast
DISCLAIMER: The author is long the gold sector via small positions in NUGT, JNUG, a few junior miners, and covered calls on part of the NUGT position. He has no plans to trade these in the next 24 hours.
Gold flashes a warning signal for currency markets
