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The Modern Gold Rush: These Three Stocks Could Benefit

Posted on November 6, 2017 by Aibek Burabayev

History repeats again and again as human beings don’t change; they only change on the surface. There is a good lesson learned from the Gold Rush in the 19th century – there were some lucky diggers, who made a fortune, at the same time many merchants who were selling equipment and jeans became rich. But many adventurers left broke.

These days we have the Crypto-Mining Gold Rush led by Bitcoin with a market share of more than 60% and market capitalization over $124 billion. This coin is worth as much as the Hungarian GDP and exceeded the market cap of NVIDIA Corporation (NASDAQ:NVDA) – one of those “merchants” selling “shovels” to modern “diggers” aka miners.

Today, as long ago, the competition gives an advantage to cooperated mining pools with the most advanced equipment, lowest electricity, and labor costs. That’s why there is no surprise that the top mining pools are located in China (70% of the Bitcoin hashrate).

There are two main types of suppliers to the crypto mining industry: electricity suppliers (up to 70% of all mining costs) and equipment suppliers. The massive demand for mining equipment attracts nimble middlemen, for instance, they resell the ASICs (application-specific integrated circuits, microchips) for 2x-3x of the original price tag, making relatively risk-free money on modern “diggers” that risk a lot. Continue reading "The Modern Gold Rush: These Three Stocks Could Benefit" →

HUI Is Testing Support, XAU Is Yet To Try

Posted on October 30, 2017 by Aibek Burabayev

Much to my dismay, I’ve never covered these hot indices in my posts. I detected some interesting chart patterns as well as significant price actions and thought if it might be interesting to cover and discuss.

These indices have a long trading history as well as great companies that are tracked by each index. The NYSE Arca Gold BUGS Index (HUI) and Philadelphia Gold and Silver Index (XAU) are the two most watched gold indices on the market. The main difference between them is that the HUI Index’s components are only gold producers (17 companies) whereas the XAU Index includes both gold and silver miners (30 names). Below is the table of listings for comparison.

Table 1. Current Composition of Indices

XAU and HUI Index Listings

I highlighted the matching companies in green so you can easily see the difference between the indices. It is evident that the HUI index almost entirely sits in the XAU index (15 out of 17 names are in), the latter in its turn covers broader the precious metals market. Let us see in the charts below their dynamics and possible price action. Continue reading "HUI Is Testing Support, XAU Is Yet To Try" →

Gold Update: Triangular Consolidation

Posted on October 9, 2017 by Aibek Burabayev

In the previous Gold & Silver update I warned you about the possible correction ahead. Indeed, both top metals showed weakness, but I didn’t think it would be that severe as we quickly reached seemingly distant supports both in gold and silver. Later I shared with you my concerns about golds outlook as the Fed starts cutting its massive balance sheet this month. This could be a real game changer as market wizards call for another perfect storm for the financial markets. In the charts below I try to model this change for you.

I would like to start with the U.S. 10-year Treasury notes (UST) chart as this instrument has a strong relationship with gold, which I already showed you in August.

Chart 1. U.S. 10-year Treasury Notes Daily: Bear Flag Works Out

Chart courtesy of tradingview.com

Above is an updated and zoomed in chart from my last post. I chose a daily time frame to focus on the tactical move to see how the chart structure of the instrument develops over the time. Continue reading "Gold Update: Triangular Consolidation" →

Fed Takes On Gold Unintentionally

Posted on September 25, 2017September 25, 2017 by Aibek Burabayev

In my previous Gold & Silver post published earlier this month, I promised to update a long-term chart of Gold as I observed some interesting price behavior in a related instrument. But before I do that, let me speak about the Fed’s decision last Wednesday and that “related to gold” instrument first.

The positive dynamics of the US economy underpinned the Fed’s decision to finally start to trim its huge balance sheet next month, besides that there is a big chance of another rate hike this December. It wasn’t a shock to the market, and some big players already started their game weeks before the Fed moved from rhetoric to action.

The Fed’s decision could have a double impact on US interest rates as falling US Treasury notes increase the yields, and the impending rate hike could secure that situation. I was writing about the high possibility of this almost a month ago and last Wednesday we received a first-hand confirmation from the Fed. Continue reading "Fed Takes On Gold Unintentionally" →

A Tumbling Copper Could Hit The Floor

Posted on September 19, 2017September 19, 2017 by Aibek Burabayev

Greed is one of the strongest human motivators. It is easy to get greedy, but it is hard to push it down after it gets extreme. The main point of my previous update in August was to focus your attention on the price action in the $3 area as the price could hit this psychological level and then retreat. My advice was to book profits and wait to see what would happen next.

I hope that you heeded my advice and didn’t get greedy as copper was pushed down below the $3 level very quickly.

In the same post, I thought that this upside move in the metal that had started last year could just be a consolidation before another drop down. In the chart below I go into more details about it.

Chart 1. Copper Monthly

Chart courtesy of tradingview.com
Continue reading "A Tumbling Copper Could Hit The Floor" →

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