EXK Strong Junior Silver Miner - Post Recession
As we are entering a max market cycle with recession indicators growing, expect EXK to be a strong performer at the very beginning of a recession as well as post recession. Central Bank policy will weaken the dollar and inject trillions of Dollars into the economy with an expansion of its balance sheet and increasing inflation would only ignite the price of gold and silver.
EXK is a strong growth stock because it's fundamentals are weaker in terms of its earnings. This meaning that the earning will increase even more rapidly with the growth of the price of gold and silver. I believe if the next financial crisis is just as bad as the last one, we can reasonably expect new highs for the price compared to 2011. Silver is sitting at a very weak ratio with gold, currently at 83.96, in the event of a recession with silver being the "poor mans gold", it sees much greater price increases as history has shown a strong correction to its weak ratio once we have greater demand for safe haven assets. In the short term, interest rate cuts will determine the price of silver thus, shifting positive growth onto silver and gold miners. We may not have hit a current bottom in pricing so there may be better entry points until we have more surety towards zero bound interest rates and below. Until the United States sees more weakness in our economy like the rest of the world, we will see more capital inflows to equities and a delay in a larger breakout from silver and gold. A strong dollar will be crucial to hold up this scenario, a weakening dollar will be necessary for a breakout.
(November 2008) Peak 2008 Silver/Gold Ratio = 79.89
(June 2019) Latest Peak Silver/Gold Ratio = 92.23
(October 2019) Silver to Gold Ratio = 83.96
Watch the ratio closely, in the midst of recession and declining unemployment, we will see a sharp decline in the ratio. In 2008, the ratio stagnated because gold and silver plummeted as well with other equities during the worst part of of the 2008 market decline. Due to this history, we can expect the same pattern, that is, a sharp decline in the ratio, followed by stagnation of the ratio, followed by another sharp decline in the ratio where silver will see its greatest performance. Follow the resistance points closely whenever we swing to the upside. EXK will be a fantastic choice in the event of financial crisis.
Be sure to watch yields in the market and it is reasonable to expect Silver prices in the $25 to $33 range in the midterm. I plan on holding multiple stops within those regions. We know that the financial problems from the last 30 years have not gone away, they are waiting for the next perfect storm. We will see new, unprecedented actions from the Federal Reserve as well due to their lack of ammunition for the next downturn.
Will we see Negative Interest Rates? Longer period of Q.E.? 50 or perhaps even 100 year bond sales? I'll be on the lookout for the new hat tricks.
Other Strong Silver and Gold Miners to Watch
SSRM - BCEKF (Exploration / Mine Development) - AUY - KL - SVM - DRDGF - SILV
Recession Indicators'
1.) Yield curve - 10 Year / 2 Year Spread fred.stlouisfed.org/series/T10Y2Y/
2.) Federal Tax Receipts fred.stlouisfed.org/series/FYFRGDA188S
3.) Stock Buybacks www.yardeni.com/pub/buybackdiv.pdf
4.) Increase in cross commodities correlation
5.) Federal Reserve Basis Points Cuts
Cheers,
AC
EXK is a strong growth stock because it's fundamentals are weaker in terms of its earnings. This meaning that the earning will increase even more rapidly with the growth of the price of gold and silver. I believe if the next financial crisis is just as bad as the last one, we can reasonably expect new highs for the price compared to 2011. Silver is sitting at a very weak ratio with gold, currently at 83.96, in the event of a recession with silver being the "poor mans gold", it sees much greater price increases as history has shown a strong correction to its weak ratio once we have greater demand for safe haven assets. In the short term, interest rate cuts will determine the price of silver thus, shifting positive growth onto silver and gold miners. We may not have hit a current bottom in pricing so there may be better entry points until we have more surety towards zero bound interest rates and below. Until the United States sees more weakness in our economy like the rest of the world, we will see more capital inflows to equities and a delay in a larger breakout from silver and gold. A strong dollar will be crucial to hold up this scenario, a weakening dollar will be necessary for a breakout.
(November 2008) Peak 2008 Silver/Gold Ratio = 79.89
(June 2019) Latest Peak Silver/Gold Ratio = 92.23
(October 2019) Silver to Gold Ratio = 83.96
Watch the ratio closely, in the midst of recession and declining unemployment, we will see a sharp decline in the ratio. In 2008, the ratio stagnated because gold and silver plummeted as well with other equities during the worst part of of the 2008 market decline. Due to this history, we can expect the same pattern, that is, a sharp decline in the ratio, followed by stagnation of the ratio, followed by another sharp decline in the ratio where silver will see its greatest performance. Follow the resistance points closely whenever we swing to the upside. EXK will be a fantastic choice in the event of financial crisis.
Be sure to watch yields in the market and it is reasonable to expect Silver prices in the $25 to $33 range in the midterm. I plan on holding multiple stops within those regions. We know that the financial problems from the last 30 years have not gone away, they are waiting for the next perfect storm. We will see new, unprecedented actions from the Federal Reserve as well due to their lack of ammunition for the next downturn.
Will we see Negative Interest Rates? Longer period of Q.E.? 50 or perhaps even 100 year bond sales? I'll be on the lookout for the new hat tricks.
Other Strong Silver and Gold Miners to Watch
SSRM - BCEKF (Exploration / Mine Development) - AUY - KL - SVM - DRDGF - SILV
Recession Indicators'
1.) Yield curve - 10 Year / 2 Year Spread fred.stlouisfed.org/series/T10Y2Y/
2.) Federal Tax Receipts fred.stlouisfed.org/series/FYFRGDA188S
3.) Stock Buybacks www.yardeni.com/pub/buybackdiv.pdf
4.) Increase in cross commodities correlation
5.) Federal Reserve Basis Points Cuts
Cheers,
AC