Today’s videos and charts (double click to enlarge):

SFS Key Charts & Video Update

SF60 Key Charts & Video Update

SF Juniors Key Charts & Video Analysis

SF Trader Time Key Charts & Video Analysis

Thanks,

Morris

The SuperForce Proprietary SURGE index SIGNALS:

25 Surge Index Buy or 25 Surge Index Sell: Solid Power.
50 Surge Index Buy or 50 Surge Index Sell: Stronger Power.
75 Surge Index Buy or 75 Surge Index Sell: Maximum Power.
100 Surge Index Buy or 100 Surge Index Sell: “Over The Top” Power.

Stay alert for our surge signals, sent by email to subscribers, for both the daily charts on Super Force Signals at www.superforcesignals.com and for the 60 minute charts at www.superforce60.com

About Super Force Signals:
Our Surge Index Signals are created thru our proprietary blend of the highest quality technical analysis and many years of successful business building. We are two business owners with excellent synergy. We understand risk and reward. Our subscribers are generally successfully business owners, people like yourself with speculative funds, looking for serious management of your risk and reward in the market.

Frank Johnson: Executive Editor, Macro Risk Manager.
Morris Hubbartt: Chief Market Analyst, Trading Risk Specialist.

website: www.superforcesignals.com
email: trading@superforcesignals.com
email: trading@superforce60.com

Despite the insistence of some, precious metals have not been in a bull market. After a big pop at the start of 2016, the sector has trended lower. Sure, Gold has traded up towards a major breakout but Silver and the gold stocks have trended lower. When the US Dollar corrected significantly, the stock market outperformed precious metals. Does that sound like a Gold bull market to you? The moribund performance has left us wondering what could turn the tide. A quick study of Fed history with the context of current conditions is very instructive as to when Gold could begin a true bull market.

Fundamentally speaking, we know that Gold performs best when real rates are declining or will soon begin declining. That usually entails either accelerating inflation (surpassing the increase in nominal rates) or falling rates amid stable inflation. At this juncture we are leaning towards the latter as the eventual catalyst for Gold.  

We were curious how Fed policy and policy changes impacted precious metals so we decided to plot the Fed Funds rate (above) along with gold stocks (middle) and Gold (bottom). We used the gold stocks (Barron’s Gold Mining Index) because they have a longer history than Gold. The vertical lines in blue mark lows in the BGMI that coincided with peaks in the Fed Funds rate (FFR) while the vertical lines in red mark lows in the BGMI that coincided with a bottom in the FFR.

Outside of the highly inflationary 1970s, the best bull markets in gold stocks began around the time the Fed Funds rate peaked (or in other words when the Fed ended its rate hikes). Lows in 1993, 1999 and 2016 coincided with the start of a new hiking cycle. However, unlike the lows in 1972 and 1976, inflation did not accelerate enough to drive more than a rebound.  

Does that signal that gold stocks (and precious metals at large) need an end to the rate hikes?

The period from 1999 to 2001 is very instructive as there are several similarities between 1999-2000 and 2016-2017.

Like 1999, 2016 followed a nasty bear market in Gold and hard assets.

Also, the 1999 bottom in precious metals and commodities occurred around the time the Fed began a new cycle of rate hikes. Sound familiar to 2016?

As the Fed continued to hike into 2000, Gold and gold stocks trailed off but commodities were able to make higher highs until the very end of 2000. Commodities have not been quite as strong this time but they have outperformed precious metals which have trailed off since the initial rebound.

Gold and gold stocks ultimately bottomed and began spectacular rebounds around the time the Fed moved from a pause in rate hikes to rate cuts at the very start of 2001.

Unless there is an acceleration in inflation, the turning point for precious metals figures to be around the time the Fed ends its rate hikes. That would likely coincide with Gold regaining outperformance against the stock market, which we have noted as Gold’s missing link (from an intermarket perspective). Weakness in the economy and stock market would lead to an end to the rate hikes and then rate cuts. That would be the time Gold and gold stocks begin a major move higher. In the meantime we continue to focus on and accumulate the juniors that have 300% to 500% return potential.

Jordan Roy-Byrne CMT, MFTA

Kirkland Lake Gold is by far the best up-and coming gold miner that the publisher of MiningStocks.com is aware of. Kirkland’s Chairman Eric Sprott knows the Gold business extremely well and won’t be satisfied until he makes Kirkland the preeminent gold mining company in the world.R Zurrer for Money Talks. 

Novo Resources CEO Dr. Quinton Hennigh, who knows Kirkland’s Chairman Eric Sprott as well as anyone in the mining industry, told me Eric won’t be satisfied until he makes Kirkland the preeminent gold mining company in the world. I think Sprott can actually achieve that goal, in part because like another successful executive named Rob McEwen who launched Goldcorp into its status as one of the largest gold mining companies in the world, Eric understands the product he produces and sells. Like McEwen, Eric understands that gold is money, which was a refrain Rob was constantly reminding his shareholders of when he was at the Goldcorp helm. If anything, as a strong supporter of the Gold Anti Trust Action Committee, Sprott understands gold even better than McEwen does. Whether or not that is true, Sprott is thinking very big and he is entering into various strategic investments that have the potential to launch Kirkland into the gold mining company big leagues in fairly short order from its current very profitable earnings base. 

In 2017 Kirkland earned $132.4 million, or $0.64 per share, and its operating cash flow totaled $309.8 million on production of 596,405 ounces of gold. At the end of Q1 2018 the company earned another $53.8 million and increased its cash on its balance sheet to $275.3 million. Production is currently coming from three mines in Ontario and one in Australia. But the aggressive big picture acquisition and strategic investment strategy of Eric Sprott since he took the helm at Kirkland combined with strong operating performance of Kirkland is really the story. 

The first bold move was to acquire Newmarket Gold in 2016 that brought the phenomenal Foster Mine in Australia. But under the radar are a couple of other moves Eric has made that I think can catapult this company to another level.

Of course, subscribers to this letter are well aware that both Eric Sprott and Kirkland have invested a lot of money into Novo Resources. This past week, Novo’s shares rallied on the news that Kirkland acquired another 4 million shares of Novo. Previously it purchased 14 million shares for $56 million. Upon closing of its recent purchase, it will reportedly own 29,830,268 or roughly 18.86% of Novo. 

Clearly, Eric Sprott, who has used Quinton Hennigh as a geological consultant, has considerable confidence and belief that Dr. Hennigh may well be into a Witwatersrand-like discovery. Bulk sample assays from Comet Well are expected to be reported by the end of this month. Stay tuned! 

But Novo isn’t the only strategic project Sprott and Kirkland have in their sights. Both Sprott and Kirkland have made very sizeable investments in Bonterra, which is developing the Gladiator Gold Project in Quebec’s Urban-Barry Camp and they will soon be coming out with a high-grade underground gold resource that will be massively larger than the initial gold resource. Thinking strategically, Sprott and Kirkland also have made a sizeable investment in Metanor Resources, which is a very strategic decision for two reasons. First and most significant, Metanor’s operating mill is the only operating mill in the Urban-Barry Camp, which gives it a huge competitive advantage. In addition, Metanor is enjoying some very significant exploration success, as explained in my recommendation of Metanor in this issue. 

See how these pieces might come together? In his quest to put together the premier gold mining company in the world, Sprott is thinking big and he is thinking strategically and he is shaping share structures in a way to merge some elephant-sized companies into something even more interesting.

An exclusive for our MoneyTalks audience. Click on the image below. ~ Editor