Rage On

Source: Michael Ballanger  (4/17/23)

Michael Ballanger of GGM Advisory Inc. takes a look at the current state of the market and the gold and silver sector to tell you where he believes it is all headed. 

VanEck Gold Miners ETF (GDX:NYSEARCA:)

I have ample exposure to gold and silver through physical ownership and by way of the junior portfolios.

But it has been almost three tears since I exited the VanEck Gold Miners ETF (GDX:NYSEARCA:) after making one of the best calls in my career on March 16, 2020, at the exact days the precious metals all bottomed.

I exited the positions in August 2020, with GDX approaching US$44 per share.

Thirty months later, we have the perfect set-up for precious metals, and up til the recent decision to cut output by the producer nations, energy was moving in the miner’s favorite direction — down.

VanEck Junior Gold Miner ETF (GDXJ:NYSEArca), 

Today’s little hiccup was all profit-taking as silver’s RSI touched 79 briefly before closing out the week back below 70. Within the complex, silver needs to cool off for a few days, during which I will be buying back my GDX position, hopefully in the US$32-33 range, into an early-week pullback.

I will also be teeing up the VanEck Junior Gold Miner ETF (GDXJ:NYSEArca), and while it may appear “late,” it really isn’t on a fundamental basis.

The miners are all dirt cheap, but once we achieve escape velocity for gold above US$2,100, I see a doubling of both Senior and Junior Gold ETFs by Q1/2024.

That should hit home pretty hard because I have avoided these ETFs for what feels like a lifetime. (Subscribers will receive notifications next week as to price and strategy.)

Stocks

I get no fewer than twenty-five emails a day from services offering to help me “Navigate the Upcoming CRASH!” followed by pictures of some bombed-out war zone or children wandering in the night.

The entire world is preoccupied to the point of obsession with this pending Armageddon that is lurking somewhere just above the tree line, but for me, I cannot buy it. There are really bad places on this earth to call “HOME,” but unless you had the bad fortune of being born there, you could always leave.

I met an ultra-sound technician today that emigrated from northeast mainland China over ten years ago with his wife and mother, who gave up a general practitioner “M.D.” license to take a secondary profession in Canada.

I asked how he liked the move, and he said it was the best decision he had ever made despite the 50-hour work weeks helping out in off hours his wife’s laundry business. He was undoubtedly the most over-qualified medical technician in the history of the North Durham Medical Centre, and I walked away after a handshake and a smile, feeling pretty happy for the chap.

Oddly enough, that is how I feel about the SPX these days.

Bob Farrell Rule #9: “When all the experts and forecasts agree — something else is going to happen.”

On the topic of consensus, what is the most heavily-debated topic in a Wall Street boardroom these days? It is “When will the Fed pivot?” Thousands of guesses and thousands of theories camouflage the least debated topic, which is “Will there be a recession?”

Bob Farrell Rule #9: “When all the experts and forecasts agree — something else is going to happen.”

No one agrees on the “Fed Pivot” thing, but they all agree that there will be a recession and a really nasty one, so the only thing to banty about should be “How Bad?”

Well, Bob Farrell was a pretty good investor with a long, battle-tested track record, and I will go with his Rule #9, which would have me take the absolute unanimity of agreement over the pending recession, which falls into the category of “foregone conclusion,” verging upon “no-brainer” verging upon “Take it to the bank” and assume that a) there will be NO recession or b) there will be a recession, but stocks go UP, not DOWN, or c) the recession is not enough to cool off inflation and the old adage that I should “Never underestimate the replacement power of equities within an inflationary spiral” rings true.

Every CNBC Guest commentator, every podcast guru, and every armchair “investment strategist” is calling for new lows, and they all can cite technical and fundamental reasons for that event to occur.

And I say, “No way.”

Stocks just went through a month that had huge volumes of “smart money” exiting the bank stocks (Uncle Warren, too!), with commentators drawing comparisons to 2008 and 2001 and all boasting from the rooftops that they were positioned with “record cash” or adequately hedged” as March not only did not whimper into April, it rumbled into April knocking tables over and stopping traffic.

It is within earshot of the February highs, just under 4,200, and just out of the M4 range for the August highs at 4,325. We have the positive buy signal of the January Barometer, giving me not a guarantee of an up year but a historical probability of one. And I’ll take that, any day, all day.

Stocks are climbing that very annoying “Wall of Worry” like 1982 and 1988 and 2009 and 2020, where prognosticators gnash and gnarl their incisors, crying in despair as margin calls swarm their inboxes.

I learned after many years and hundreds of thousands of lost dollars that stocks to whatever the hell they choose to, and there is no preordained rule that says that the number of hours you spend on “due diligence” will ensure a favorable outcome. Stocks have a personality, and they have memory muscles far more hardened than anything you or I possess, so when they go against you, learn to respect the mortal danger inherent in the wounded animal.

Stocks gave us a little “growl” in March; make damn sure you are on the right side of the “roar” in April.

Michael Ballanger Disclaimer:

This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.

Disclosures:

1) Michael J. Ballanger: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None.

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