FWIW....a few thoughts As mentioned the FED/ CB's OVERTLY "manages" interest rates and FX. The CB of Japan (BOJ) OVERTLY "manages" interest rates, FX AND STOCKS. It is open BOJ policy to buy domestic stock indexes and ETF's. They publish their purchases each month. That's how bad things are in Japan. The only way to keep the nikkei up is to let the participants know the BOJ is there to support it. An aside.......Japan's debt /GDP is worse than Greece !!! So why would the FED not overtly state they "manage" stocks? Well, public confidence in the economy spurs spending and consumption. The american public believe a rising stock mkt portends a better economy ahead. If the Fed were to sever this assumption by stating that the reason stocks are rising is its intervention, then the intellectual link between economic growth and rising mkt could decouple and a rising mkt might not encourage the public to spend as they now understand things might not be "getting better". Therefore COVERT equity intervention by the FED is essential both to prop up confidence without severing the percieved link between mkt rise and economic growth. Bottom line, covert intervetion by the FED in equities is essential. If the FED sets this example then it gives license to it's direct subordinates, the banks to do the same. STOCK MKTS and individual stocks are manipulated, just like all other mkts. End of story. The entire global monetary system is based on manipulation. There are no free mkts., just policy tools !!
Another thought I want to share. Everyone knows that Gold the metal and the mining stocks have gone different directions. WHY? Even the brightest are scratching their head. I have a theory. Surplus nation CB's (china, russia etc.) are buying gold as fast as they can. No longer buying US treasuries or accumulating FIAT. The Eastern CB's are getting rid of fiat and buying hard assets as fast as they can without causing systemic problems. The printing presses in the US, Europe and Japan are running full speed. We all understand the the possibility of gold being remonitized to replace the fatally flawed $ system is growing. IMHO it is inevitable. Dont we all want the things we own to rise in value? Including the CB's? Of course. In fact a high enough gold price wipes away all govt debt as the asset side of the balance sheet grows in value thru their gold holdings !!! Govts are not trying to kill the price of gold. Just have it rise in an orderly fashion. If they wanted to kill the gold price it would not be $1665 now. No, Govts want to accumulate gold at lower prices until they are ready for the change from a unbacked flawed $ system.
What does this have to do with weak mining sector (senior and jr.) you ask. Answer....If gold takes it rightful place in the monetary system and based on the ave. price of gold relative to money supply over time, gold's price will be well over $10,000. Isn't this good for miners? NO, govts of the world will not allow private companies to own the asset that backs the new global monetary system. Mines will be nationalized. Miners will act as utilities, govts using the miners expertise to get the gold out of the ground and miners being paid a fair return but not being allowed to have the windfall gain associated with a much higher gold price. I believe this is what the mkt is telling us. The action of the miners tells me we WILL have a new gold backed monetary system and the miners will NOT share in that but be reduced to utilities, with their profits regulated by govts. Their land will essentially be siezed. They will not be allowed to own "money underground". In the very short term the miners could experience consolidation and benefit from rising gold price. But when the music stops be in the metal and not the miners !!! best, Mike