I may live to regret this, but I’ve started augmenting my long (yes, long) positions in precious metals with long (yes, long – I already said that!) energy positions. A big reason for this is the belief that crude will bounce at these levels instead of breaking its mid-March low.
A reader pointed out to me that the ratio of the gold bugs index ($HUI in ProphetCharts) versus gold (GLD) had never been lower. I looked, and it actually had been lower back when gold was around $300 per ounce, but there’s no doubt that the chart is very, very stretched to the downside. I’m still counting on, and positioned for, a bounce in precious metals and the companies that mine them in the near-term.
Allow me to limber up while I pat myself on the back – – or at least pat technical analysis on the back – – because, earlier today, I was vaguely remembering I had written a post that said something like “oil producers are the new gold miners”. With oil producers plummeting so consistently, I wanted to dig it up. Well, it didn’t take long – here it is.
My energy bearishness has been oft-mentioned in the hallowed halls of Slope, and the way things are going, it seems like we should drag out the late 1990s terms of how the “new economy” (Netflix, Facebook, Google) is completely dwarfing the “old economy” (crude oil, gold, silver, and other assets you can actually hold in your hand).
Looking at crude’s slippery slide, one wonders if the mid-March lows will be taking out next week:
Just a quickie comment-cleaner as we await something more pithy from Springheel Jack……..
I remain bearish on energy and energy-related stocks. Crude has been stuck in a very tight range for the past seven trading sessions, following the big drop of July 6. The historic deal with Iran is obviously suppressing prices, since a tidal wave of oil from Iran in coming years will just add to the supply glut. As always, this is just background noise to the charts, though; keep an eye on a failure of Tuesday’s lows to get the tumbling resuming: