Timing & trends
1. SILVER GREEN ALERT – One of the Best Buying Opportunities in Years…
by Clive Maund
There will be no equivocating, fence sitting or any kind of hedging or expression of doubt in what is written in this update. Let me be absolutely clear: – we are now at the threshold of a barnburner rally in the Precious Metals sector, and silver is set to scream higher driven by a massive short covering panic, because short positions in it have ballooned in recent weeks to levels way above what we saw in December 2015, when silver hit its final bearmarket bottom, before the big sector rally during the 1st half of 2016.
2, Our Doom Index Is Heating Up…
by Bill Bonner
The Dow rose another 100 points yesterday. Can anything stop this bull market?
At least we know the answer to that question: Yes.
When?
Longtime Diary sufferers know better than to trust our market timing advice. So rather than rely on our instincts, the Bonner & Partners research department has developed a Doom Index to guide us.
What is it saying now?
3. A Victory? Petronas cancels $36B LNG Project
By Michael Campbell
As B.C. jacked up demands Petronas has decided to pull out of a great industrial project with good high paying jobs and tax revenue to fund social programs. The construction phase was supposed to create 4,500 jobs alone. Also what does the recent run up in the Loonie mean for interest rates. Higher? Lower?
Here are today’s videos and charts (double click to enlarge):
SFS Key Tactics & Video Update
SF60 Key Tactics & Video Update
SF Juniors Key Tactics & Video Analysis
SF Trader Time Key Tactics & Video Analysis
Morris
The Work and pensions secretary David Gauke have revealed that parliament proposes to raise the pension age to 68. The pension crisis that is brewing throughout Western culture reflects the insanity of lowering interest rates to try to “stimulate” the economy. This policy has set the stage for the next great crisis brewing, which will expose the postwar Socialism is just a total failure.
The rise in government on average to about 40% of GDP means that this is consuming the wealth of every nation and suppressing the economic growth. This is forcing people to work longer to survive and hence they do not retire quickly into the sunset holding on to jobs that then in turn cause higher unemployment in the next two generations. There is not much we can do about this because politicians will never act to prevent a crisis, they perfect to act only when a crisis emerges. Consequently, the Pension Crisis is simply unavoidable.
…also from Martin:
What do they like best? Highflying growth stocks such as Netflix, Facebook and Amazon
We are now officially in a “kids market.” Invest accordingly.
The concept of a “kids market” was introduced by Adam Smith, the pseudonymous author, in his classic book from the late 1960s entitled “The Money Game.” He used that phrase to refer to an investment environment in which the advisers and traders making the most money are those too young to remember the last bear market.
That would certainly appear to be the case today. The 2007-2009 financial crisis and bear market is now more than eight years in the past. Anyone younger than in their mid-30s probably wasn’t even out of college or graduate school during that bear market, and therefore has little or no direct investment experience of a severe bear market. Their attitudes toward downside risk are entirely different from those of us who lived through that crisis, the bursting of the internet bubble, or other bloodbaths of investment history.
These “kids” are often the ones making the most money in stock market right now, handily beating the S&P 500 SPX, -0.27%
While the number of drilled but uncompleted wells (DUCs) in the U.S. oil patch is growing as producers wait for higher oil prices, the shale gas plays have seen the number of DUCs decline as drillers take advantage of higher natural gas prices this year compared to last year’s lows.
Expectations of additional takeaway capacity coming online—as well as the rebound in natural gas prices—are making drillers more confident that they will be able to sell their production at higher prices. The companies are still cautious after the downturn, but the economics of drilling an oil well and a gas well have diverged since the 2015-2016 price rout. Gas prices have almost doubled since March 2016, and drillers are hoping that a bull market is coming, analysts reckon.
However, higher production could also depress natural gas prices once again.
The Henry Hub natural gas spot price averaged US$2.98 per million British thermal units (MMBtu) in June. This compares to US$1.73/MMBtu in March 2016, which was the lowest monthly average price since December 1998. For 2016, the average natural gas spot price of US$2.49/MMBtu was the lowest annual average price since 1999.
Natural gas front-month futures contract averaged US$2.994/MMBtu in June 2017, as compared to US$1.812/MMBtu in March 2016.
Drillers in the biggest U.S. shale gas play – the Marcellus – are increasing production and finishing wells, expecting that prices will be high.
They are “putting a down payment on a bull market that companies hope is coming,” John Kilduff, a partner at commodities hedge fund Again Capital LLC, told Bloomberg.
The number of DUCs in the Marcellus dropped by 20 in June over May, to 643, according to EIA’s latest Drilling Productivity Report. The only other area out of the seven most prolific shale plays that saw the number of DUCs decline last month was another gas play in the northeast, Utica. The number of DUCs in the Marcellus was 831 as of July 2015.
Gas production, on the other hand, is expected to rise across all seven shale plays next month, with Marcellus output increasing the most, by 201 million cubic feet/day in August over July, to 19.752 billion cu ft/day.
Not only the oil patch has lowered breakevens since the oil prices collapsed—gas producers have also become leaner and meaner, according to analysts.
Producers in the Appalachian region currently have their breakevens at below US$3/MMBtu, having improved breakeven economics by 15 percent over the past year, James Williams, an Arkansas-based economist for WTRG Economics, told Bloomberg.
However, a new boom could bring natural gas prices lower again. In addition, new pipeline capacity in the northeast has faced recent setbacks, potentially pushing additional takeaway capacity further in time.
Energy Transfer Partners’ US$4.2-billion Rover pipeline project currently under construction is planned to connect Marcellus and Utica Shale supplies to markets in the Midwest, Northeast, East Coast, Great Lakes, and Gulf Coast regions of the United States, as well as Canada.
But last week, West Virginia environmental regulators ordered the project to cease and desist some land development activities in West Virginia over violations of state environmental regulations, until it fully complies with all rules.
Additional pipeline capacity would ease takeaway constraints and motivate higher production. But increased production could result in a new rout in U.S. natural gas prices.
By Tsvetana Paraskova for Oilprice.com
…also from Oilprice.com:
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