Copper Breakout

Copper is above $3.47 at the moment.

Suzhou Planning Digital RMB Airdrop

Suzhou will be the first city after Shenzhen to test the digital renminbi with a lotto airdrop. Second digital yuan lottery to launch in Suzhou: report 36kr: 继深圳之后 苏州数字人民币红包也来了 数字货币进程加速

According to the person familiar with the matter, many businesses in the relevant urban area of ​​Suzhou have installed NFC ( Near Field Communication) QR codes, but the payment carrier is still in the hands of testers. At present, testers have experienced digital renminbi payment and can use "offline" And the "touch" function. This is the difference from Shenzhen, where the “offline” and “touch” functions could not be used in the Shenzhen pilot. In fact, this is one of the biggest differences between the digital renminbi and Alipay and WeChat payment. The digital currency project initiated by the central bank is also called "DC/EP", which means digital currency and electronic payment tools. It is a digital form of the paper renminbi, and the price is linked to the renminbi and has high currency stability. Prior to this, Shenzhen launched a digital RMB pilot program, and the central bank distributed 10 million red envelopes in cash. On the evening of October 8th, the Shenzhen branch of the Central Bank and the Shenzhen branch of the four major banks of China Construction Industry and Agriculture Corporation issued the "Lixiang Luohu" promotion activity through WeChat public account. The digital renminbi was formally used for pilot projects in consumer coupon scenarios.　　

The currency will be launched on the "Double 12" shopping holiday (a sequel to the "Double 11" online shopping holiday), December 12.

Copper In Striking Distance With USD on the Brink

Looking at the extended charts in natural resources, steel, rare earths, solar and more, my bearish nature says they look ripe for pullbacks.

The U.S. Dollar Index is threatening a new 52-week low though. If it breaks, a quick drop to 88.50 is likely, which should result in blow-off extensions in various rallies. A reversal now or off that 88.50 area is likely. A reversal now could threaten the dollar bear thesis, whereas 88.50 is the last stop before the dollar begins a plunge that might last until late 2022 or early 2023.

Pennsylvania Going After Election Fraud

This is live at the moment I'm posting, but a recoding should be avaiable after the hearing completes. It sounds like there's enough evidence to flip the result in Pennsylvania and it sounds like the Republican legislature is considering action if the courts do not fairly adjudicate various claims of fraud.

Gold Miners Fill Gap and Reverse

Not bullish for the short-term.

Coiled Platinum Spring

Platinum has based relative to gold. It's outperformance is bullish for the whole PM complex. Look at that price action vs monthly volume. Pressure is building.

Election Fraud Still Being Pursued

It seems like the odds of an election dispute are falling, but there is still growing evidence of widespread fraud. Very likely there will be major election reforms that make it much more difficult to vote in the coming years, but the short-term risk of a political shock are fading. It isn't yet zero yet with potential Supreme Court cases looming.

Taco Ready

More on Chinese SOE Defaults

Caixin: Cash-Strapped Mining SOE Sweetens Repayment Offer to Avoid More Defaults

Yongcheng Coal told bondholders on Sunday that it can repay 50% of the principal if they accept a 270-day extension for paying back the rest, sources close to the matter told Caixin. The bond was due on Nov. 10.

Over the past few days, the debt-ridden SOE has gradually raised its extension offer, the sources said. In its first proposal, it asked for the 270-day delay without immediate repayment on any of the principal. After that was rejected, it offered to repay 5% in exchange for the delay, then 30%. The offer now stands at 50%, or 500 million yuan, the sources said.

Credit guarantees are still a problem:

If Yongcheng Coal and its creditors don’t reach an agreement by Tuesday, cross defaults will be triggered on 15 billion yuan of Yongcheng Coal bonds and 11.5 billion yuan of debt issued by its parent company, Henan Energy and Chemical Industry Group Co. Ltd., as it would activate a cross-protection clause in the bond prospectus. Any proposal for an extension requires unanimous approval from bondholders.

Way back in 2014, there was an entire city worried about a single default taking down the whole economy: Rumored Mass Death of Companies in Xiaoshan District of Hangzhou If Banks Collect on Debts; Government Tells Banks to Sit Tight or Leave. That China is allowing some defaults indicates the government isn't worried about systemic risk. If a commodities boom cycle is underway, coal producers will see rising cash flow that alleviates credit risk. The main risk for China and the world is that all the assumed inflation doesn't arrive.

The Most Important Breakout from Last Week, Maybe

Copper. The base isn't complete yet, but it broke resistance. $3.30 is the next resistance, and then the big one at $3.47, call it $3.50. Once that is gone, the all-time high is in play. I bought jr copper miners/exploers on Friday based on the breakout. However, big warning here: until copper goes through $3.50, it's very possible this move is a repeat of the 2015-2018 move. The global economy is in bad shape. A lot of inflation has been assumed, the dollar bear market has been assumed.

The broader market is experiencing extreme positive sentiment while failing at long-term resitance. I went short utilities last week and my Nasdaq short is still positive, still below the November 8 overnight high in the futures market. It's also hasn't exceeded the September all-time high.

What I'm not sure of today is whether a top in the market will be inflation driven or deflation driven. If inflation, it's possible short Nasdaq and long copper miners will produce two winners. If deflation, copper miners will reverse. If the "goldilocks" of Fed printing amid a depression keeps working, copper works and bearish trades fail.

On the fundamentals, inflation arguments have failed for 9 years. It has been a bear market for commodities. The death of dollar has been happening for the past 20 years. I've always maintained those arguments will be proven correct eventually, but there are only hints of it happening right now, not reality. Almost all the people arguing for inflation are making the same argument they've made before, while the real economy is stuck in the same trap. Credit growth is not rising outside of government. Supply disruptions are not inflationary in the long-term unless there is money creation backing it up. Without money creation "monetizing" the price increase, it causes deflation. The potential change is politics. If the governments of the world continue running up fiscal deficits that are monetized via the central bank, then there may be inflation moving forward. Private credit growth will turn higher with inflation or governments will run ever rising deficits as the economy collapses amid currency devaluation. Forecasters of high inflation are putting the cart before the horse though. In the U.S., the Republican Senate is back on an austerity kick now that deficits aren't funding defense and tax cuts. Any negative hit from "austerity" will hurt Biden and because voters tend to vote straight tickets more than before, if voters want to punish Biden in 2022, they'll give control of the House back to the GOP.

The other piece of the puzzle is the most important chart in the world, the U.S. dollar. A breakdown in the greenback will fuel price increases whether they're fundamentally warranted or not.

Commander Extending Breakout on Heavy Volume

16 cents at the moment

Platinum Rising

Socionomics Alert: Two Oregon Counties Vote to Join Idaho

KTVB: 2 Oregon counties continue push to join Idaho

Epoch Times (archived): Feeling Disenchanted With Left-wing Politics, Two Oregon Counties Vote to Begin Process of Joining Idaho

KTVB: Movement to form 'Greater Idaho' gains steam as two rural Oregon counties vote to consider joining Idaho

With a Democratic supermajority in the Oregon legislature and increasingly left-leaning urban areas, conservative rural Oregonians have long felt left out of state politics.

Some of these conservative Oregonians are trying to leave the state all together to preserve their values. But they don’t plan to physically move anywhere — it’s Oregon’s borders they want to move to form a “Greater Idaho” (the movement's slogan, not a suggested name).

Move Oregon's Borders aims to adjust the state borders so 22 eastern Oregon counties, and several northern California counties, become a part of Idaho. The movement’s leaders say that Idaho, with a Republican majority, will be a better fit for conservative residents in eastern Oregon and Northern California.

Wallbridge Monster Gold Strike

With miners in a correction, this news might be buried by the market if you're lucky: C$650 million market cap Wallbridge (WM.TO) hit 5g/ton Au over 100 meters. That's the kind of strike that could send a $10m company to a $50m or $100m valuation. For Wallbridge, it confirms what many shareholders expected. Wallbridge Intersects 5.07 g/t Au over 100.6 metres, including 29.03 g/t Au over 7.30 metres in the Tabasco-Cayenne Zones

Unless the gold miners sector gets hammered, I would not expect Wallbridge to fall much further. I have support about 10 percent away at 73 cents. I would be an aggressive buyer if it fell to those levels. Current price will look cheap 5 years from now. I already have a position.

Bearish Short-Term Outlook for Miners, Utilities

GDX has more room to drop as does gold, and that would break support for GDXJ. Some miners with nice charts such as 1911 are also developing short-term topping patterns and breaking some support. Long-term the outlook is still very bullish. The broader market sentiment is at euphoria levels though, and downturns in teh broader market typically whack precious metals at the start.

Real yields are on the rise. The utilities sector has bearish potential. A spike in rates could be the trigger for a broad market sell-off because it would signal the Fed losing control over the market or that bond vigilantes returned from the gulag.

Village Farms Breakout

Cannabis grower

Stuck in Deflation

Barron's: China’s Lopsided Economic Recovery Continues. Expect Widening Global Trade Gaps.

That wasn’t an accident, but a necessary consequence of China’s political and economic model, which systematically transfers spending power from the vast majority of the Chinese people to Communist Party elites and politically connected businesses. Thus, despite the apparent commitment of top Chinese officials to rebalance the economy, their unwillingness to alter the fundamental characteristics of that model has prevented meaningful changes to the composition of economic activity.

I have been keeping tabs on the Chinese economy, but not posting much about it because it's the same cycle. Economy slows, pump up real estate and commodity production, boost trade surplus, capital controls. Repeat after it results in a new downturn, global commodities crash and new multi-year high for USDCNY. I see no evidence that the global economy is escaping from this trap. The only shift is a possible monetary debasement via fiscal stimulus, led by a policy shift in the USA, but the markets have put the cart before the horse.

XME Another Look

Threw down a hoirzontal at $29.28. A dip towards former resistance around $25 or support at $23 would not invalidate the potential inverse head-and-shoulders pattern.

Market Exit Signal Says No Worries

Energy has rebounded strongly in recent weeks, helping push yield spreads lower. Many shale producers have issued junk bonds in recent years. Any topping behavior in the broader market is probably short-term action unless the high-yield spread reverses higher.

Emerging Markets Reversal at Top, SPY Fails Again, XME Looking Shortable Soon

Last week I posted the failures in major indexes. I missed emerging markets, the EEM fund also reversed lower after breaking its old high intraday. SPY has failed again. More interesting is XME because if it fails around $30 it will signal the inflation narrative is taking damage. Copper is also a failed breakout at the moment. Of the major indexes, I'm mostly short the Nasdaq, specifically the NDX via QQQ, with a small short in the Russell 2000.

Checking In on Recent Charts

SGZ I'd be happy to buy around 100 if it gets there. I mentioned banks for rising rates here, take profits on that one. RSX discussed in Russia on the Edge bounced right off support. MDL broke out, but quickly failed. JLP has done very well despite no help from the platinume price. Still waiting on breakouts for most gold and silver miners, still time for buying.