Royalty’s Ups and Downs (FNV.WT.A,UNG,GDXJ,NVDA)

Royalty’s Ups and Downs (FNV.WT.A,UNG,GDXJ,NVDA)

A quick digression.


We were quite surprised that CNBC’s political reporter, John Harwood, would risk knowing what Americans really thought about the issue of Russian spies (a truth already clear to us little people) by Tweeting out the following challenge to his followers –

In the eyes of the American public, Junior wanted know who was more trustworthy: Wikileaks or the intelligence community.  The above results arrived near the beginning of his campaign, but by the end, well… suffice to say that a funny thing happened on the way to the mainstream media disillusion slap-fest.




You can be sure that Mr. Harwood didn’t expect the answer he got, being himself a purveyor of a failed agenda and a life lived completely out of touch with Main Street America.


The final tally on his survey looked like this –

And that was that.


We reproduce it here for you, dear reader, to make two very simple points.


First, an encouraging one: that only one in six Americans can be taken for fools.


And second, that with a sample of better than 80,000 participants, you can be fairly certain that a manifest majority of the population is about ready to chuck the entire mainstream narrative that daily issues from these elitist hucksters.


Mr. John J. Harwood, consider this a summary rejection of your establishment values, education, and overall disconnected, royal existence.  And once you’ve finished rationalizing or otherwise dismissing your poll results – as you must, to remain sane – we hope you fall into a deep, abiding depression.


A Message to All Normandy Beach-Stormers!


The lesson for us has always been and steadfastly remains to shun and ignore the mainstream media.  You will learn precisely nothing from this cohort, who act according to an agenda that’s removed from all reality and reflects nothing more than the thinking of their peers in the mainstream media itself!


We, on the other hand, would like to think of ourselves as a source of genuine, creative and realistic information on markets and reality, and we know that you, too, regard us as such, or you wouldn’t tune in so regularly.


To conclude, we’re heartened to see that we’re not alone.  Mr. Harwood’s impromptu survey reveals to us that the nation is, in the end, a rather sensible lot.

Right on, brother Horton.


Our first trade on the table comes from our December 27th letter called It’s All Good.  There, we recommended a commodities bet, suggesting you buy the UNG January (2018) 9 PUT for $1.48 and sell the GDXJ January 20 PUT for $1.45.  Total debit on the trade was $0.03.


And now?


The UNG PUTs trade for $1.80 and the GDXJs for $1.05.  Sell the former and buy back the latter, and you come away with $0.72 net on $0.03 spent.  That’s 2400% in two freaking weeks and a whole lotta butter in your bucket, Gemini!


Next up is our trade from last week featuring Nvidia (NASDAQ:NVDA).  The letter was called Normandy Brass Indicted for Deep Sea Slave Ring!, and we introduced the trade with the following rationale –


Our first initiative of 2017 is a straightforward affair based on a theme we’re calling the ‘overbought, looking for a cool-down’ trade. NVDA can’t keep [climbing] forever, and we say the jig is up.  After an overbought RSI reading last week was followed by a crystal-clear, bearish engulfing pattern, we say the time has come.  We look for it to unfold in the coming days.


And exactly a week later our genius has once again been proved.

The original trade had you sell the NVDA January 27th 120 CALL for $1.79 and buy the NVDA January 27th 95 PUT for $1.83.  Total debit on the affair was $0.04.


And now?


The 120 CALL trades for $0.55 and the 95 PUT for $1.44.  Buy back the former and sell the latter and you net $0.85 on a four cent outlay.  That amounts to 2125% for a week’s work, and looked at objectively, that’s one, well-oiled porpoise you hear a’slapping.


Go get him, Huey!


Our trade for the week requires a little bit of background, so pay close attention.


We start with the following.


We believe there’s a good chance we’ll see a bounce in the precious metals in the near term.  Whether it carries through to become an intermediate term rally is beyond our purview at the moment, but we rather doubt it.


In the meantime gold and silver appear to be oversold and ready to move.


The question is how best to play it.


And for this, we turn once again to our favorite of all gold stocks, Franco Nevada (NYSE:FNV).


We won’t delve into all the details, except to say that this is not your typical gold miner.  It’s rather a gold royalty company that’s run by the smartest minds in the precious metals world and has a record of performance that dwarfs nearly every other investment in the gold and silver universe for the last few decades.


Here’s a chart comparing FNV (the Canadian listing) with the SPDR Gold Trust (NYSE:GLD), a proxy for the metal, for the last five years –

Despite a five year bear market for the metal, Franco Nevada has managed to climb some 90% over that period.


Take a look now at some of the company’s recent action.  This is the last six months charted –

As you can see, FNV has retreated appreciably, but has just bounced off the long term (yellow) moving average, generally considered a strong line of support.


The last day’s trade also saw her MACD indicator (in green) punch above her waterline, confirming a similar move by RSI some two weeks back.


This is a bullish sign, and we say it’s time to act on it.


But not with FNV shares.  Rather, we’re recommending you buy the company’s tradable warrants, listed on the Toronto exchange under the ticker FNV.WT.A.

They’re now going for $12.03 CDN.

- Content protected for Normandy Executive Lounge, Wall Street Elite, Executive Lounge members only]

The warrants are active until June.


With kind regards,


Hugh L. O’Haynew

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