ASK US ANYTHING ANSWERS: PART 1

Your questions – answered! Not sure how many blogs it will take to answer all of the questions we received last week – but suffice to say they cannot be answered all at once. I’d anticipate about 4 blogs to get to them all. So, if you don’t see your question answered here – fear not! Its coming. As always, when we see reoccurring themes in questions submitted by different people, we try to consolidate them into one answer. Lets get started!

I love gold, Mr. Powers!

Richard and Jo both ask about gold. What’s the target, and what’s the relationship to the USD?

If you’ve not seen the Austin Powers movie, Goldmember, you haven’t a clue what this title means. The movie is a play off of James Bond’s epic Goldfinger book/movie about a bad guy who loves gold. So – should we love gold, like Goldmember or Goldfinger?

To start, you might want to visit a video on the subject of gold I did not too long ago. Here’s the link. Essentially, my message in the video was that gold and the USD are quite predictably negatively correlated. One zigs, the other zags. My thoughts when I posted the video were that gold would find a resistance point at around $2000, and the USD would decline if as when gold rounds over from that point. In fact, I was concerned that the USD had already rolled over in 2022. As gold reached its $2000 target, the two could reverse. AKA you could see gold falter, and the USD rally. The chart below shows us that the USD (red line) may now be finding support, just as gold reaches the $2000-ish target. So – I for one will not be surprised if we see some weakness in gold, and subsequent strength in the USD over the short to mid-term horizon.

 

 

SPX target

Brian asks if prognosticators like those using EWT or Hurst analysis, let alone the screaming masses on fintwits, are right about a 3200 SPX target.

Look, nobody knows where the market will go. We can only follow a systematic process–aka that presented in my online TA course. Take the course if you haven’t. Is there an argument for 3200 on the SPX? Sure! I’ve presented the chart below, and others like it, many times on this blog. bottom line, the SPX could intersect with its long termed trendline that lands near an old resistance level of 3200.

But, we don’t predict. For now, its looking like it will consolidate in a range between 3800-4100. If that breaks, then we could see 3500 or even 3200. But that is to be seen. I think the main thing this chart shows us is that the majority of the correction / bear market is over. A normal expectation is for a consolidation up/down period that could last for months. Whether that consolidation sees a low near the trendline (aka 3200) or not is unknown. But it stands to reason that, after a period of up/down frustration, it will break out. And then move back to the longer termed uptrend -as markets tend to do.

 

Uranium

Anthony asks if I like uranium.

Well, from a fundamental perspective, we like it a lot. Nuclear power is the most viable alternative to fossil fuels. Wind and solar are a distant second to the pragmatic thinking world. We think for this reason that it’s got longer termed upside. But its choppy. at this point. We’ve traded a couple of the producer stocks for near termed moves. I’m sure that at some point it will be a good position for patient investors thinking long term.

The chart below is that of a physical uranium ETF–courtesy the Horizons HURA ETF. It looks like the producer charts, aka very correlated. You can see its been sideways and choppy. That’s why we’ve been trading, rather than investing, in this arena. Like all consolidations, they eventually break out (up or down). My guess is that it will break to the upside. Meanwhile, its got a great trading pattern. Buy near support, sell resistance. Wash, rinse, repeat.

4 Comments

  • oF the uranium stocks UUUUand UEC look like buys right now for range trades. The uranium ETFs look like they are currently in the middle of their ranges.

    Reply
  • Hi Keith,
    The Federal Budget just came out today and the Liberals’ 5-year projection is exploding with debt and deficits as expected. They’re not even bothering to try and balance the budget to show fiscal responsbility.
    With carbon taxes going up, gas going up 14c per litre, food and transportation costs going up etc, is there any hope of life getting more affordable in Canada? I just don’t see the Conservatives being able to win a majority Parliament when you have three major far-left parties in Canada (Liberals, NDP, and Bloc).
    I have friends leaving for the US, Hong Kong, and Singapore for jobs with lower income taxes. Everyone seems to be building their wealth in other countries and then coming back to Canada to retire and take advantage of programs then.

    Reply
    • Yes, its very disturbing. Fact: Canada has the highest emigration (out) since the 1970’s for the exact reasons you note. Meanwhile, places with reputations for low taxation, decent Medicare, and high levels of personal freedom (Florida, Texas, Costa Rica) are seeing record high immigration by productive skilled people leaving Canada.
      Its been interesting to see – I wrote a blog a few years ago outlining why Modern Monetary Theory cannot work. All of the left wing governments (UK, US, Canada) adopted this theory because, quite frankly, spending makes them look good. Free stuff for everyone! Problem is, the “economy take care of itself” per Tru-duh’s famous quote, doesn’t actually happen if you interfere with the economy by creating debt. It doesn’t magically balance itself, just as our personal budgets don’t. The only case excess government spending works is in a project with a positive ROI. So a government can spend on, say, boosting tourism – the expenditure should come back via increased revenue from the tourists. But spending on COVID Cq’s to prisoners, and giving free stuff away simply doesn’t generate ROI, thus it is a death spiral. The solution–as always–increase taxes – like the capital gains tax as always aimed towards the most productive memebers of soceity (which is repulsive). That, in turn, drives these people out of the country, hence emigration statistics. I spend some time in Florida. And I have met SO MANY Canadians who have changed permanent residential status to embrace the freedom and get away from Canadian Marxism.

      Reply
  • Trudeau and his Marxist policies are a disaster. him and his finance minister who has no training in accounting economics or anything business related. No wonder people are leaving Canada.

    Reply

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