A Melman Minute
| By | Leonard Melman |
|---|
NOTE: It has been a distinct honour to have received an invitation to address the Financial Conference at the giant PDAC convention, the world's largest annual mining gathering, scheduled for March 2-5 in Toronto. My time slot is set for 9:30 AM, Sunday, March 2. We certainly invite all convention attendees or other readers residing in the Greater Toronto Area (GTA) to attend.
Due to pressing publication deadlines this will be a sharply abbreviated Melman Minute today. However, there are two important charts to study, both of which appear to have potentially bullish implications for precious metals prices.
The first is Crude Oil where prices have just broken above an intermediate top formed near $100.80 per barrel in late December, 2013. A rising price for this ultra-important commodity item has obvious implications for Retail Inflation rates going forward.
Our second chart is for gold itself and in our opinion this chart provides the basis for even more positive price projections as two bullish developments appear to have occurred. First, gold, like Crude Oil, has just exceeded a previous peak, itself a bullish development. In gold's case, that peak was the $1,280 level achieved in late January, 2014. Second, the trading pattern since late November, 2013 has taken on the appearance of a "rounded bottom" formation which can easily be interpreted as a pattern reflecting a gradually accelerating accumulation of precious metals positions.
Combined, I believe that both charts carry positive implications for future upward price moves for both gold and silver. Gold's next technical 'task' will be to exceed the previous intermediate peak near $1,360 established in late October, 2013.
JUST HOW STRONG IS THIS "RECOVERY?"
If the economies are recovering as strongly as we are constantly assured, how can it make sense that one of the world's largest mining operations is closing production at an important iron mine and reversing expansion plans at another, yet that is precisely the actions just announced by Cliffs Natural Resources for their properties in Quebec and Newfoundland/Labrador.
Something obviously doesn't 'add up' and I plan to look at this seeming contradiction Friday.
As of 7:45 AM PST, financial markets in Canada and the USA are mixed with the Dow Industrials off by about 35 points while Canada's TSX Index, perhaps reflecting those higher crude and metals prices, has gained over 50. Gold has now rallied past the $1,295 level while silver has added 11 cents to $20.35. Base metals have advanced by an average of about one percent but mining share indexes somewhat surprisingly are little changed.
In other markets, the US$ Index is up by 10 basis points to 80.81; Crude Oil remains higher with a present gain of $1.13 to $101.07 per barrel while the TYX Index of rates on US Treasury 30-year bonds has gained 30 basis points to 3.715%.
All quotes US$ unless otherwise indicated.
Next Melman Minute scheduled for Friday, February 14. Perhaps the markets can deliver a Valentine's Day present.