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Stephan Bogner is mining analyst at Rockstone Research, he has independently analyzed capital markets and resource stocks for more than 11 years. He is also CEO at Elementum International AG of Switzerland trading precious metals and storing them in a high-security vaulting facility within the... More
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  • Mighty Correction In Popular Stock Markets On The Horizon?

    Publication Date: May 1, 2015

    Former Budget Director of the White House, David Stockman, ranted and raved as follows on April 22, 2015:

    "There are no markets left in any meaningful sense of the word - just a raging casino infected with the madness of the crowds and the central bank pied pipers who mesmerize them. Every day there are new confirmations of the mania. Last night, for instance, the Shanghai stock market closed up another 2.4%, meaning that it is now 114% above its level of just 9 months ago!"

    Not only the price movements of stocks and stock indexes run in 3 distinct phases:

    1) Sideways movements / consolidations, in which period not much can be done as price increases are not sustainable while prolonged corrections dominate.

    2) Strong upward trends / boom phases, in which the price increases strongly without major pullbacks reaching new highs in short times.

    3) Strong downward trends / bust phases, which occur mostly after strong upward trends or after negative fundamental developments.

    These 3 superior trends are visible especially with the NASDAQ index:

    Above chart (15 min. delayed): http://schrts.co/GPu6y6

    The DOW JONES index does not move as concise as the NASDAQ, but the 3 price phases (especially the sideways movement) become the more obvious in detail:

    Above chart (15 min. delayed): http://schrts.co/NWghQ5

    Between 1997-2011, the DOW moved sideways respectively consolidated within the limiting legs of the (red) triangle. At the end of the triangle, approximately 3 / 4 before the triangle`s apex, the price typically starts a so-called breakout, whereas classically a so-called pullback to the former resistance follows in order to test and potentially confirm it as new support (in order for a new and sustainable upward trend to start thereafter).

    Above chart (15 min. delayed): http://schrts.co/Wk1Obx

    As per above chart of the DOW, a breakout and pullback occurred between 2006-2009, whereas the pullback was not able to hold on the (red) triangle leg; hence the price turned into a breakout to the downside in late 2008 / early 2009. In retrospect, this breakout to the downside can be classified as a so-called fake breakout to the downside; as it only occurred for short time before rebounding back into the triangle. In 2011, new breakouts and pullbacks were attempted and finally completed successfully as the price started to thrust to the upside (after the apex was confirmed as support). As per definition, a thrust is the final movement out of a triangle: either a strong and fast upward trend or an appropriate downward trend. As the DOW has started to rise after reaching the apex in 2012, this movement can now be classified as a thrust. However, the question now is: How long does a thrust continue? As per definition, the goal of a thrust is to transform the resistive high of the previous triangle (incl. breakout; thus approximately 14,000 points) into new support - in order for a new and sustainable upward trend to start thereafter. Because no pullback occurred after the rise above the resistive 14,000 level, this level has not been tested and confirmed as new support. This probably means that the current upward trend has been built on sand and that a pullback to the 14,000 level must occur eventually. For such reasons, I value it as more probable the DOW heading for a correction soon in order to catch up for matters neglected in the past. Not only from a technical standpoint such a correction should be in the interest of a subsequent price resurgence as it would provide healthier characteristics in contrast to a skyrocketing price.

    The S&P500 succeeded in rising above the (grey) triangle leg at around 1,600 points, whereafter a fulminant breakout started. To make this price increase sustainable, a pullback to the 1,600 level appears to be crucial - in order to test and potentially confirm this decisive level as actual support. A longer termed sell signal is generated only when breaching this support.

    Above chart (15 min. delayed): http://schrts.co/Xipboh

    The German DAX looks healthier than its US peers, because the price is definitely thrusting to the upside after the completion of a successful breakout and pullback. However, the end of the thrust may be ending shortly, whereas short but sharp pullbacks during thrusts are also not uncommon. A more definite sell signal is generated only when breaching the green and red supports:

    Above chart (15 min. delayed): http://schrts.co/lRMX7q

    For around 20 years, the NIKKEI index consolidated within a downward sloping (red) triangle, out of which a thrust started in 2013 (after multiple breakouts and pullbacks). The goal of this thrust is to rise above the former highs (30,000-37,500 points), whereas short but sharp pullbacks during thrusts should not surprise but to be considered healthy. As the psychologically important 20,000 level has been reached most recently, a new buy signal is only given when rising above this resistance; thus an inferior (short- to mid-term) sell signal dominates at the very moment. The probabilities of a breather/correction at least to the (green) support at around 17,500 points are pervasive as long as the 20,000 level has not been conquered.

    Above chart (15 min. delayed): http://schrts.co/gd9YL4

    These technical forecasts are supported by the extraordinarily high levels of margin balances in stock markets like the NYSE, which historically occurred hand in hand with the burst of market and credit bubbles:

    (click to enlarge)

    "Along with the markets currently being more overbought now than at any other point in history, they are also more leveraged as well. Late last week the NYSE released its latest margin debt figures for March. Despite a rather sluggish market, investors piled on margin debt pushing levels to all-time highs as shown below. It is worth noting that when net credit balances have plunged very negative levels, it has been coincident with major mean reverting events in the market. "While this time could certainly be different," the reality is that leverage of this magnitude is "gasoline waiting on a match." When an event eventually occurs, that creates a rush to sell in the markets, the decline in prices will reach a point that triggers an initial round of margin calls. Since margin debt is a function of the value of the underlying "collateral," the forced sale of assets will reduce the value of the collateral further triggering further margin calls. Those margin calls will trigger more selling forcing more margin calls, so forth and so on. Notice in the chart above that margin debt reductions begins innocently enough before accelerating sharply to the downside." (Lance Roberts on April 29, 2015)

    Disclaimer: The above does not represent a recommendation to buy, sell or even hold any market, stock or the like. Kindly act on your own responsibility and due diligence. Please read the full disclaimer on rockstone-research.com

    May 18 8:16 AM | Link | Comment!
  • Stephan Bogner And The Rise Of A Euro-Sino-Russian Superpower

    Stephan Bogner, mining analyst with Rockstone Research and CEO of Elementum International, views the crisis in Crimea as the beginning of a larger global power shift east of the Atlantic. In this interview with The Mining Report, Bogner details what these shifting power dynamics will mean for the commodities market. And take heed-gold and silver may continue to make gains, but uranium, potash and rare earths are the true wave of the future.

    The Mining Report: In his recent interview with The Gold Report, Robert Cohen said that now that Crimea has joined Russia, the crisis in Ukraine has run its course, which is why the price of gold has dropped. As a European mining analyst, do you agree with Cohen's assertion?

    Stephan Bogner: In my view, high-level Wall Street players are orchestrating the gold price drop as a means of making people believe everything is in order again. They're attempting to convey that the crisis premium has been deducted from the gold price after its rise in the wake of the Crimea crisis, but I wouldn't bet on that.

    Remember when gold rose from $300/ounce ($300/oz) to almost $400/oz in 2002-2003 due to the widely propagated Iraq War premium? When the war was over in early 2003, the price fell back to $320/oz. People used the same argument then: the gold price is dropping because the crisis is over. In a few months, the price rose to $500/oz for no reason the experts could explain.

    Don't bet on TV experts and commentaries. Bet on your gut feeling, especially when it's getting quiet and experts are going silent.

    TMR: What is the general sentiment among the Germans regarding the situation in Ukraine?

    SB: According to large polls in Germany, most Germans think that not only Russia, but the Ukrainian government, the EU and the U.S. all have made mistakes and share the blame, and that the crisis is not our business and we shouldn't get too involved. One out of two Germans thinks that we should only use diplomatic measures and only every fourth German thinks that sanctions against Russia would be appropriate. That said, I doubt most Germans know what the full consequences that sanctions against Russia would bring us.

    TMR: It seems the west is unwilling to do much to help Ukraine, apart from sanctions against Russia. Is this emblematic of a power shift from west to east?

    SB: According to these polls, 75% of Germans distrust Putin and at the same time think that he is "clever and strong", but more than 60% of Germans doubt that Obama can solve this conflict. The traditional thinking that sees Russia as mainly negative and the U.S. as mainly positive is breaking apart. The NSA scandal and George W. Bush laid the foundation for the anti-American impulses that are on the sharp rise again. Vladimir Putin's power and influence have shifted the balance of power from west to east, although we are too proud to fully admit that.

    European politicians should know that sanctions against Russia would be useless and counterproductive, to say the least. Germany and especially other European countries are far too dependent on Russian gas supplies and other commodities to threaten Russia with sanctions. We must acknowledge our fault in deciding to abandon all nuclear power plants in Germany, as we are now paying the price for our energy dependence. Putin must be doubling over with laughter about the proposed sanctions, because he's smart enough to understand that the threat of sanctions is merely chest-beating, as we attempt to convince our own citizens that we still have some influence.

    Europe should try to get on the same page with Russia. I believe this can evolve to be a good thing, as Europe and Russia can become a happy new superpower, especially as we partner more with China. I rather want to see Europe team up with Russia and China to replace U.S. dollar-based transactions with what I envision as a gold-backed monetary system.

    Russia can benefit immensely being strategically positioned in the heart of both and sitting on vast amounts of natural resources that can be fed to Europe and China. Ultimately, I see Russian, European and Chinese economies flourishing, while the U.S. inflates itself and becomes dependent on this new superpower.

    I believe that Russia will successfully merge with Ukraine. I also believe that this crisis was the beginning of currency and commodity wars that may escalate. After years of depreciating commodity and gold prices, during which the smart accumulated as much as possible, the tide is turning and higher prices are on the forefront.

    TMR: How will an alliance of this magnitude and the prospect of currency and commodity wars impact the U.S. economy?

    To read the rest of the interview, please visit the following link:

    http://www.theaureport.com/pub/na/no-title-15924

    COMPANIES MENTIONED:

    CAMECO CORP. ([[CCJ]]) :COLUMBUS GOLD CORP. ([[OTCQX:CBGDF]]) : COMMERCE RESOURCES CORP. ([[OTCPK:CMRZF]]): DENISON MINES CORP. ([[DNN]]) :FISSION URANIUM CORP. ([[OTCQX:FCUUF]]) : GOLD STANDARD VENTURES CORP. ([[GSV]]) : GOLDEN ARROW RESOURCES CORP. ([[OTC:GARWF]]): IMPACT SILVER CORP. ([[OTCPK:ISVLF]]) : KAPUSKASING GOLD CORP. : KLONDEX MINES LTD. ([[OTCQX:KLNDF]]): LAKELAND RESOURCES INC. ([[OTCQX:LRESF]]) : NEWMONT MINING CORP. ([[NEM]]) :NOVAGOLD ([[NG]]): NOVX21 INC. ([[OTC:PORMF]]): PASINEX RESOURCES LTD. : SANTACRUZ SILVER MINING LTD. ([[OTCQX:SZSMF]]): WESTERN POTASH CORP. ([[OTC:WPSHF]]) : ZIMTU CAPITAL CORP. ([[OTC:ZTMUF]])

    Please read the disclaimer at the end of the interview.

    Disclosure: I am long CMRZF, WPSHF, ZTMUF, LRESF, PORMF.

    Apr 02 10:15 AM | Link | 1 Comment
  • Miners Should Launch A Gold Cartel
    Miners Should Launch a Gold Cartel or Risk Losing Everything, Advises Stephan Bogner

    It's no surprise that Stephan Bogner, analyst with Rockstone Research Ltd. and CEO of Elementum International - a precious metals trading and storage firm - advises investors to hold physical metals outside the banking system, but he also advocates mining companies keeping gold on their balance sheets and forming a cartel.

    In this interview with The Gold Report, Bogner discusses which exploration and development companies will be ready to produce when metals prices rise and shares his interest in the diamond, potash and uranium space.

    The interview can be viewed via the following link:

    http://www.theaureport.com/pub/na/miners-should-launch-a-gold-cartel-or-risk-losing-everything-advocates-stephan-bogner

    Companies mentioned:

    1. ARCTIC STAR EXPLORATION CORP.
    2. AURCANA CORPORATION
    3. BIG NORTH GRAPHITE CORP.
    4. COLUMBUS GOLD CORP.
    5. COMMERCE RESOURCES CORP.
    6. DOLLY VARDEN SILVER CORP.
    7. EQUITAS RESOURCES CORP.
    8. GOLD STANDARD VENTURES CORP.
    9. GOLDEN QUEEN MINING CO. LTD.
    10. IMPACT SILVER CORP.
    11. KLONDEX MINES LTD.
    12. LAKELAND RESOURCES INC.
    13. MAG SILVER CORP.
    14. MAWSON RESOURCES LTD.
    15. MIDAS GOLD CORP.
    16. MONUMENT MINING LTD.
    17. MUNDORO CAPITAL INC.
    18. NORD GOLD N.V.
    19. PACIFIC POTASH CORP.
    20. PASINEX RESOURCES LTD.
    21. PILOT GOLD INC.
    22. SAMA RESOURCES INC.
    23. SAN GOLD CORP.
    24. SUMATRA COPPER & GOLD PLC
    25. WESTERN POTASH CORP.
    26. ZIMTU CAPITAL CORP.

    Related Companies:

    1. COLOSSUS MINERALS INC.
    2. EXCELLON RESOURCES INC.
    3. ORVANA MINERALS CORP.
    4. PRIMERO MINING CORP.
    5. RICHMONT MINES INC.
    6. SANTACRUZ SILVER MINING LTD.
    7. ST ANDREW GOLDFIELDS LTD.
    8. TAHOE RESOURCES INC.


    Excerpts:

    People are increasingly looking for alternatives to banks. Independent vaults offer exactly that. Instead of holding your cash in a bank account, you can buy gold and silver and store it in an independent vault outside the banking system. My firm, Elementum International, stores precious metals in a high-security facility inside a mountain in central Switzerland. Our clients can sell the metals to us at any time if they need cash. That is banking backed by real values.

    ...

    I think China will back its currency with gold or somehow utilize gold as a monetary asset once gold prices have started to rise toward $2,000/ounce ($2,000/oz) and/or once there is nothing left to purchase from a dried-up physical market. Russia may very well do so, too. There is no other solution to the growing financial excesses but inflation, so investors have got to go for gold. Follow the smart/quiet money and not the dumb/noisy money.

    ...

    As soon as a company mines gold or silver, it sells it into the market and trades it for dollars. Instead, the company should use gold and silver as the functional currency for the industry. I'm certain that most companies would participate if such a system was in place. Companies should look for ways to bank their gold as cash assets or take out gold loans, not dollar loans. They should buy physical gold and silver and store it outside the banking system. When they require cash, they can sell part of their holdings.

    Many exploration, development and producing companies have millions of dollars of cash in the bank. If they all bought bullion and stored it in an independent vault facility outside the banking system, that would put upward pressure on the price, which would benefit the companies.

    Such a system is already in place and it is only a matter of time until mining companies will hold their cash in gold and silver. Shareholders will appreciate such prudent companies that know how to play a depressed market for the benefit of the shareholders. This also would bring a lot of credibility and investor confidence back into this dried-up market.

    There are oil and potash cartels; the gold industry should come up with something similar.

    ...

    To read the full interview visit the following link:

    http://www.theaureport.com/pub/na/miners-should-launch-a-gold-cartel-or-risk-losing-everything-advocates-stephan-bogner

    DISCLAIMER

    Please read the disclaimer at the bottom of the interview on The Gold Report and Rockstone Research.

    http://www.rockstone-research.com

    Dec 18 3:09 AM | Link | Comment!
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