Save your cookie preferences

We use cookies to remember your site preferences, record your referrer and improve the performance of our site. For more information, see our cookie policy.

Please select an option below and 'Save' your preferences.

Save

You can update your cookie preferences at any time from the 'Cookies' link in the footer.

We use cookies (including third-party cookies such as Google) to remember your site preferences and to help us understand how visitors use our sites so we can improve them. To learn more, please see our privacy policy and our cookie policy.

To agree to our use of cookies, click 'Accept' or choose 'Options' to set your preferences by cookie type.

Options Accept

  • English
  • Deutsch
  • Español
  • Français
  • Italiano
  • Polski
  • 日本語
  • 简体中文
  • 繁體中文
  • Daily audit
  • Help
  • Contact
  • Deposit
  • Login
  • Open account
  • ABOUT US
    • About BullionVault
    • In the press
    • Reviews
    BUY/SELL BULLION
    • Live order board
    • Daily Price
    • Regular Investing
    INVESTMENT GUIDE
    • Guide to gold
    • -How to buy gold
    • -Gold investment
    • -Gold investment plan
    • -Investment insurance
    • -Compare asset performance
    • Guide to silver
    • -How to buy silver
    • Guide to platinum
    • -How to buy platinum
    GOLD NEWS
    • Gold news front page
    • -Gold price news
    • -Opinion & analysis
    • -Market fundamentals
    • -Gold/Silver Investor Index
    • -Infographics
    CHARTS
    • Gold price
    • Silver price
    • Platinum price
    • Price alerts
  • Login
  • Open account
  • BUY/SELL BULLION
  • Live order board
  • Daily Price
  • Regular Investing
  • INVESTMENT GUIDE
  • Guide to gold
    • ⤷
    • How to buy gold
    • Gold investment
    • Gold investment plan
    • Investment insurance
    • Compare asset performance
  • Guide to silver
    • ⤷
    • How to buy silver
  • Guide to platinum
    • ⤷
    • How to buy platinum
  • GOLD NEWS
  • Gold news front page
    • ⤷
    • Gold price news
    • Opinion & analysis
    • Market fundamentals
    • Gold/Silver Investor Index
    • Infographics
  • CHARTS
  • Gold price
  • Silver price
  • Platinum price
  • Price alerts
  • ABOUT US
  • About BullionVault
  • In the press
  • Reviews
  • Help
  • Contact
  • Daily audit
    • English
    • Deutsch
    • Español
    • Français
    • Italiano
    • Polski
    • 日本語
    • 简体中文
    • 繁體中文

Gold News

Live support

NEED HELP? ASK US NOW

Search form

Gold News front page

Gold Price News

Gold Prices Ex-US Dollar Break Above $1450 as Italy's 'Brexit' Talk Hits Euro

More...

Gold Investing In Depth

Learn about gold bullion bars

Learn about gold bullion coins (and costs)

Gold investment: Why & how?

Gold Investment Analysis

  • Latest Gold Investor Index
  • Diversification: Gold as investment insurance
  • 40-year Asset Performance Comparison Table

Gold Articles

Opinion & Analysis

Gold Price News

Investment News

Gold in History

Gold Books

Gold Investor Index

Gold Infographics

Archive

  • February 2019 (20)
  • January 2019 (33)
  • December 2018 (28)
  • November 2018 (39)
  • October 2018 (38)
More...

List of authors

Trump's Big Boost to Coal

Sunday, 10/15/2017 09:01

Think you can trade political headlines...?

The TRUMP TRADE is back on track! cheers Greg Guenther in Addison Wiggin's Daily Reckoning.

At least that's what the so-called smart money is saying...

While the White House can't boast about any major political wins related to tax cuts or infrastructure spending yet, investors are once again bidding up the stocks and sectors that follow Trump's growth-focused agenda.

The materials and finance sectors are both resting near year-to-date highs after enjoying strong September rallies. But another one of these rising Trump trades is headed for disaster in the years ahead. Regulation rollbacks, subsidies or other hair-baked political schemes can't save it from a painful demise.

But that doesn't mean we can't book short-term gains as a dead cat bounce lifts the coal industry from its lows.

"The EPA and no federal agency should ever use its authority to say to you we are going to declare war on any sector of our economy," EPA head Scott Pruitt told a crowd in Kentucky yesterday.

The war on coal is over, Pruitt said. But if this administration thinks it can permanently revive the dying coal industry by cutting some regulations, they're in for a surprise.

Even in developing nations, coal is losing its appeal as a cheap power source. In fact, world coal production just endured its biggest drop of all time earlier this year. Coal demand in the US dropped by more than 33 million tons last year, Bloomberg reports, while global coal consumption dropped 1.7%, falling in every continent except Africa.

Across the globe, the coal industry is dying. The industry is teetering on the brink as most of the developed world moves on to cleaner energy sources. And in an age of cheap and plentiful natural gas, coal would have trouble staying in play even if we tossed every regulation out the window.

But Trump is still trying to flip the script.

In late March, Trump signed an executive order aimed at rolling back Obama-era rules curbing carbon emissions. Specifically, Trump's order requires the EPA to repeal the Clean Power Plan, a hefty set of rules imposed on coal power plants.

The White House framed the executive order as a move to bolster the country's energy independence and restore coal mining jobs. The news even provided a temporary boost to coal mining shares.

Trump has helped juice the VanEck Vectors Coal ETF (NYSE:KOL) not once but twice on so-called bullish news. The first peak materialized when Trump was elected. And the most recent climax materialized after the Clean Power Plant repeal back in April. The coal ETF's spring slide gave even produced a quick 15% correction.

But coal started sneaking higher once again over the summer. By August, KOL had pushed to prices not seen since late 2014. After consolidating these gains over the past several weeks, coal looks ready to make and fourth-quarter run.

The stock market's biggest moves rarely play out as perfectly as the stories we read in the finance pages.

Remember, the day of Trump's victory was the exact top of coal's 2016 rally.

That's right – coal made its big move before Trump took the White House. The big energy winner of 2016 wasn't oil, gas, or solar. It was coal. The sooty stuff finished the year with a gain of 98%. That's almost a clean double from one of the world's dirtiest energy sources. And the rally started months before anyone was seriously talking about Trump winning the White House.

Once again, counterintuitive market moves stump traders who think they can trade political headlines. Investors knew Trump campaigned in favor of coal jobs and deregulation. But that didn't change the fact that the coal rally needed a break.

Coal has badly burned the headline traders over the past 12 months. But if you follow price, you stand a fighting chance at walking away with substantial gains.

We've enjoyed some success playing coal's crazy moves recently. We took profits on a short-term coal play back in December 2016 for a 40% gain. Then we attempted to play the March breakout to new highs (the market immediately stopped us out when it reversed).

Now coal is setting up for a big move again. We want to take another run at this play and grab the gains while we still can.

In the grand scheme of the markets, coal's comeback move is probably nothing more than a dead cat bounce. But we're more than happy to take the ride if it can hand us double-digit gains. That's a distinct possibility if KOL can push above its September highs.

Trump can't save coal. No one can. But that doesn't mean we can't profit from a quick trade...

  • Reddit logo
  • Facebook logo
  • Twitter logo
  • Google logo
  • Yahoo logo
  • LinkedIn logo
  • Digg logo
  • StumbleUpon logo
  • Technorati logo
  • del.icio.us logo

Publisher of Agora Financial, Addison Wiggin is also editorial director of The Daily Reckoning. He is the author, with Bill Bonner, of the international bestsellers Financial Reckoning Day and Empire of Debt, and best-selling author of The Demise of the Dollar.

Addison Wiggin articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News, RSS links are shown there.

Follow Us

Facebook Youtube Twitter LinkedIn

 

Mobile apps

 - live trading 24/7

 - buy & sell instantly

 - up-to-the-second charts

 

 

 

Daily news email
Go to 'communications settings' 

Get the latest daily gold price news free by email

Latest gold news by email

 

 

 

Gold Investor Index
5 February 2019

Gold Investor Index

Gold up, investing up!

 

 

 

CNBC TV-18
3 January 2019

CNBC TV-18

Gold jumps into New Year

 

 

 

Portfolio Adviser
19 October 2018

Vaulted large bar gold. Source: BullionVault

Beyond gold 'chatter'

 

 

 

Money Observer
6 August 2018

Bitcoin ain't gold

No, Bitcoin isn't "new" gold

 

 

 

  •  Email us

Market Fundamentals

  • Gold 'Set to Drive' Silver Price Gains in 2019
  • LBMA Gold Price Forecasts See Tight Range in 2019
  • Gold Mining M&A Now 'Easier' Than New Exploration
More...
  • Cost calculator
  • Cookies
  • Terms & conditions

©BullionVault Ltd 2005-

  • Twitter
  • Facebook
  • Google Plus
  • LinkedIn
  • YouTube