Escape Velocity
While the US dollar continues to sink and Treasury yields edged higher, precious metals miners put on a banner display on Monday
It’s not every day that US$60 billion market cap Newmont (NYSE:NEM) tacks on another $3 billion worth of market cap:
NEM (Daily)
Today’s volume in mid-tier producers and even developers was impressive, with many stocks trading 5x average daily volume:
GOEX (Daily)
It was just yesterday that I was writing about British Columbia gold developer Artemis Gold (TSX-V:ARTG, OTC: ARGTF). Well, today Artemis rose another 14.3%:
ARTG.V (Daily)
And the best part is that we are now in June, historically one of the worst months of the year for gold and junior gold miners.
Today felt like escape velocity was achieved. There is no way that Newmont adds $3 billion in market cap and Artemis rises 14% in a single session without generalist funds flowing into the gold sector.
The US dollar bulls had their day in the sun back in January/February, but since then it has been revealed that the Emperor has no clothes. DOGE was a farce, there is no fiscal restraint in Washington. There never was.
Meanwhile, Trump 2.0 will do what every other administration has done for the last 50 years; the spending cuts will come in 5-10 years, but not now…. never now.
We need to Make America Great Again, and the only way to MAGA is to do what is truly American, spend more. Everything will be bigger and better, especially the debt and spending.
Toss in an administration that has made it abundantly clear that it desires a weaker USD, and you have a downtrend that will continue trending lower:
US Dollar Index (Daily)
Dedollarization continues apace and gold finds itself to be an increasingly desirable asset, for central banks and high net-worth investors alike:
Gold (Daily)
Yesterday, Federal Reserve Governor Waller gave a strong indication that rate cuts are coming in September:
“In conclusion, given my belief that any tariff-induced inflation will not be persistent and that inflation expectations are anchored, I support looking through any tariff effects on near term-inflation when setting the policy rate. Fortunately, the strong labor market and progress on inflation through April gives me additional time to see how trade negotiations play out and the economy evolves. Assuming that the effective tariff rate settles close to my lower tariff scenario, that underlying inflation continues to make progress to our 2 percent goal, and that the labor market remains solid, I would be supporting "good news" rate cuts later this year.”
Waller is essentially stating that barring some very low probability unforeseen economic scenario, he will be supporting at minimum two rate cuts later this year (likely September and December). Meanwhile, what if the labor market begins to show more cracks?
That will probably motivate the Fed to cut more, more often.
I would be remiss if I didn’t mention silver’s breakout performance today:
Silver (Daily)
A 5%+ single-day gain in silver is a sight for sore eyes. However, without a breakout above $35 it is nothing more than an impressive single-day gain within a broader trading range.
Today’s move sets up another test of the $35 resistance level, this next test of $35 stands to be nothing short of huge:
Silver (Monthly - 20 Year)
Above $35, there is some resistance near $42-$43 followed by the all-important $49-$50 all-time high area. A decisive breakout above $35 should serve to send the couple dozen or so publicly-listed silver mining stocks into orbit. Vizsla Silver appears to already be well on its way…
VZLA (Daily)
Escape velocity feels good, it feels damn good.
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