PAAS* – The physical silver price popped big yesterday. It is the favored metal at this time. As one of the largest silver miners, Pan America’s price reacted accordingly. Note: we did buy shares in a related account yesterday. I would, money allowing, add to the position, especially on any price weakness. $17.00 dollars, plus or minus $0.20 cents would be our buy in target goal.

GORO* is breaking out. It has one of the best charts in the mining sector in my opinion. Gold Resource’s price has to get above $4.00 to confirm the breakout. The next targets are $4.50 and followed by $5.00. Two Wall Street firms put price targets of $6.50 and $7.25 on GORO. These could end up being conservative targets, if the miners get as hot as I think they will in coming months. Two company has started production in June 2019. The second half of 2019 is expected to have this additional production in the Q3 earnings report so expect good news. Higher silver prices would be on top of the expanded operating production. We like this company for its organic growth as well as physical metal’s added revenue. The price is already above all major moving averages.  The shorter term 20-day M.A. is above the 50-day M.A. This is also a positive signal in trend following perspective.

ASM* – Avino, Very nice price action this summer – $0.40 to $0.80 with a pull-back of 50% to just under $0.60 this September. $2.00 to $2.50 is a normal high price resistance area if one were to look at a longer-term chart. $2.50 would be our longer-term price goal

Physical SILVER Price chart:

Silver was up 3.65% yesterday with Gold only up, 0.32% – Action is in Silver

Silver is undervalued to gold. The Silver to Gold ratio is about 82.15. Believe the ratio will go to 60 to one ratio on this move. 60 to 1 is a more historic number. That projects to a price on silver of $25 an oz with gold at $1500 per oz.

Posted: Sept 23, 2019, Tom Linzmeier editor, LOTM

* An account related to LOTM holds a position in this security. Neither LOTM nor Tom Linzmeier is a Registered Investment Advisor.

Please refer to our web site for full disclosure at www.LivingOffTheMarket

ZTA Capital Group, Inc.

Attn: Thomas Linzmeier

339 Summit Ave, Suite 4,

Saint Paul, MN 55102

The U.S. Federal Reserve  has injected funds into the System for two days in a row. Very unusual and not seen unless there is potential for a liquidity crunch. So WHY?

Odds are it is from the strong reserve drop in Hong Kong and issues within China, at two banks.

This likely will result in a strong US dollar and a strong Gold and Silver market.

This too is not usual activity. Usual activity, is for the US$ to move in one direction and the Precious Metals to move in the opposite direction.

Expect a strong US dollar, a strong precious metals market, and Yes, if the “rubber band”, does not break…. A strong US Stock market. If the rubber band does not break the excess money will go somewhere. Odds are stocks, real estate or precious metal or all of the above. The real question is; “will the rubber band break”? While we wait to see, the only logical choice by people who know what is happening, is to buy Precious Metals. Loss of purchasing power for the US Dollar long term if we skate through this.

See the CNBC interview with Kyle Bass for additional explanation:

https://youtu.be/Mc2B4_XY6so

LOTM continues to suggest a mix of gold and silver miners as a position in your holdings. Maybe not today because of the pop in price but nibble and add to positions on price weakness.

Royal Nickel RNKLF* $0.56 is acting very well. This is a bit different than the other gold and silver miners. Most miner trade on technical and momentum signals. RNKLF is an evolving story about firming up estimates of reserve and a true growth story within the mining industry. What has been discovered so far has been called the biggest gold find in decades, perhaps of our life time. Now we are in the proving up stage of the initial discovery. Royal own 100% of a “patch” that is four kilometers long and four levels deep. Potentially huge in an era of harder to find and more costly to retrieve gold deposits. We are in an unknowable state as to what the total reserves look like but certainly have odds on the positive side from everything that has been found so far. This is also a very low cost to retrieve gold. So we have positive technical action on the shares. There is a lots of info on YouTube if you are interested. Do a “YouTube” search for “Royal Nickel”

Royal Nickel has not been picked up by Finviz site so not included in the chart of miners below. Reminder that the symbols are linked to charts, news, brokers ratings and insider buying.

The Energy Information Administration released its Short-Term Energy Outlook for February, and it shows that OECD oil inventories likely bottomed last June at 2.806 billion barrels. It estimated a 12 barrel gain for January to 2.875 billion, 10 million barrels higher than a year ago.

Throughout 2019, OECD inventories are generally expected to rise after June. At year-end, EIA projects ending the year with 2.957 million barrels, 94 million more than at the end of 2018.
For 2020, EIA projects that stocks will build another 105 million barrels to end the year at 3.062 billion. That would push stocks into glut territory.

Oil Price Implications

I used the model to assess WTI oil prices for the EIA forecast period through 2019 and 2020 and compared the regression equation forecast to actual NYMEX futures prices as of February 12th. The result is that oil futures prices are presently undervalued until June 2019.

From July 2019 and beyond, they are overvalued. In the latter part of 2019, oil prices would drop again below $50 if these inventories are realized. By mid-2020, oil prices would drop below $40.

Conclusions
Based purely on this model, the oil price crash in the fourth quarter was overdone. However, the market was shocked by the sudden oversupply since it was expecting an undersupply once sanctions went into effect.

Following the build in January, OECD oil inventories are not projected to build again until July. That, in addition to uncertainties around Venezuela and Iran, could keep prices in the $50s in the months ahead.

However, the NOPEC legislation – No Oil Producing and Exporting Cartels Act – in the U.S. Congress is progressing. The House Judiciary Committee approved the bill, and it will be considered by the full House. There is bipartisan support.

Given President Trump’s view of OPEC, he is likely to sign it, if given the opportunity. This development could throw a wrench into OPEC’s coordinated cutback. It has already discouraged Russia and other non-OPEC countries not to formalize their OPEC+ agreement, which OPEC has wanted to ‘institutionalize.’

Russian Energy Minister Alexander Novak said on December 28th that “(T)here is a consensus that there will be no such organization. That’s because it requires additional bureaucratic brouhaha in relation to financing, cartel, with the U.S. side.” He was reportedly referring to the potential to expose non-OPEC producers to U.S. sanctions if they joined with the cartel.

On Monday, OPEC Secretary General Barkindo said, “OPEC is neither a cartel nor involved in the business of fixing oil prices.”

However, in Article 2B of their Statute, it states, “The Organization shall devise ways and means of ensuring the stabilization of prices in international oil markets with a view to eliminating harmful and unnecessary fluctuations.”

The U.S. Supreme Court has explained, ‘[u]nder the Sherman Act, a combination formed for the purpose and with the effect of… stabilizing the price of a commodity in interstate or foreign commerce is illegal per se.’

If the NOPEC legislation is passed, Saudi Arabia would undoubtedly leave OPEC. The result would probably mean a production free-for-all and market crash.

Sourced: Robert Boslego