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Corvus Gold Hits Yellow Jacket Higher Grade Feeder Zone, North Bullfrog Project, Nevada

Fri, 2012-03-23 04:15

March 22, 2012 – Vancouver, B.C., Corvus Gold Inc. (“Corvus” or the “Company”) – (TSX: KOR, OTCQX: CORVF) announces the initial results from select intervals in the first 3 holes of its phase I Feeder Zone exploration program at the Company’s 100% controlled North Bullfrog Project near Beatty, Nevada (Table 1).  These initial higher grade intervals are from holes about 400 metres to the northeast of the proposed Sierra Blanca pit and resource (as outlined in the just-released preliminary economic assessment (“PEA”) (NR12-07, February 28, 2012)) along 320 metres of strike and suggest continuity along the north-south trending zone, open in all directions (Figure 1).  The Yellow Jacket target is one of several targets in the North Bullfrog District that the Company will be exploring in 2012 and is closely related to the existing resource incorporated in the PEA.  The Company will follow-up on the encouraging results from step out holes to the west of Sierra Blanca (NR12-06, February 13, 2012), step out holes to the north of Jolly Jane (NR12-08, February 29, 2012) and these encouraging initial results from Yellow Jacket with a phase II program following the completion of its ongoing large diameter core phase.  The phase II program will look to improve confidence and increase the current resource size with a mix of exploration and infill drilling.

Jeff Pontius, Corvus CEO, stated:  “The discovery of the Yellow Jacket feeder zone is very significant for the North Bullfrog project and Corvus in general as it adds an entire new dimension to the deposit and its potential going forward.  We are excited about aggressively pursuing both the potential for a near-term mining operation and the expansion of this new and exciting discovery.”

See the Full Release Here


TDG Interviewed by Kerry Lutz 3/23

Fri, 2012-03-23 03:56

This interview was a roundtable discussion conducted with Kerry Lutz and Jeb Handwerger.

Click Here to Listen


TDG Interviewed by Tekoa Da Silva 3-21

Thu, 2012-03-22 22:18

We discuss the mining industry, the world of mining stocks, pitfalls, and other things pertaining to investing in gold and silver companies.


Corvus Gold 3-22

Thu, 2012-03-22 22:05

Here is our interview with founder and CEO of Corvus Gold, Jeff Pontius. Jeff discusses the recent drilling results as well as Corvus’ plans for North Bullfrog in 2012 and beyond.


Today’s Losers

Thu, 2012-03-22 17:37

Today was a down day for the Precious Metals Sector.

GDX declined by -2.03% while GDXJ declined by -2.28% and SIL  declined by -2.94%

 

Here are today’s worst performing Silver and Gold stocks:


China Contraction Sees Gold Fall Again, “Downtrend Continues” in Silver as G7 Weighs Emergency Action on Oil Price

Thu, 2012-03-22 17:04


BullionVault
Thurs 22 March, 09:15 EST

China Contraction Sees Gold Fall Again, “Downtrend Continues” in Silver as G7 Weighs Emergency Action on Oil Price

WHOLESALE bullion fell hard in early London trade on Thursday, with the gold price dipping to nearly its lowest level in 2012 as world stock markets and commodity prices also fell.

India’s jewelry sector remained on strike in protest at last week’s doubling of import duties, and “with physical demand not at full strength and waning investor enthusiasm, the potential for further downside in [the gold price] remains exposed,” says today’s note from Standard Bank.

Silver prices also dropped over 1% in London trade, touching their lowest level against the US Dollar since Jan. 25th at $31.70 per ounce.

Worse-than-expected European data was this morning preceded by news that China’s manufacturing activity has now contracted for five months running.

“Shrinking manufacturing activity in March signals slower demand for resources,” notes a column from Thomson-Reuters Breakingviews.

“Strong imports have heightened the risk of overstocking in precious metals.”

Late-January’s Chinese New Year – a peak season for consumers to buy gold – coincided with sharp falls in the volume of bullion being imported to China from Hong Kong, falls which followed an earlier surge in China’s gold imports during late 2011.

Albert Cheng of global market-development organization the World Gold Council said earlier in March that Beijing and Shanghai stores had reported “fantastic” sales over the Lunar New Year, “completely clear[ing] out the inventory they had built up.”

In the wholesale market, “A lot of people are on the sidelines at the moment,” said Yuichi Ikemizu, commodities chief in Tokyo for Standard Bank, to Reuters early on Thursday.

“We saw some bearish signs, but the [gold price] seems to be holding well. The upside at $1,800 is still looking quite heavy, and investors are waiting for a cue.”

“We feel that gold is consolidating and remains vulnerable to the next leg lower,” reckons Russell Browne at Scotia Mocatta, commenting shortly after Wednesday’s US close.

“Silver also continues to consolidate…[in] a daily downtrend providing near-term resistance around $32.60.”

The ratio of silver to gold prices yesterday hit a 1-month high at 51.6. The Gold/Silver Ratio rises when the gold price outperforms silver, and vice versa.

Last April the Gold/Silver Ratio hit a 32-year low, with each ounce of gold equivalent in price to just 30 ozs silver. It peaked near 85 in the wake of Lehman Brothers’ collapse in September 2008.

Early Thursday, “Speculation of reduced demand for raw materials from China has continued to weigh on risk sentiment,” says Swiss refinery and finance group MKS in a note.

“People are concerned about China’s economic growth,” Reuters quotes a Hong Kong bullion dealer.

“If growth slows down and inflation eases, people may choose not to buy gold.”

Following the Chinese news on Thursday, European economic figures also came in below analyst forecasts, with Germany’s manufacturing PMI contracting faster and Eurozone industrial orders falling 3.3% in January from 12 months before.

UK retail sales also undershot analysts’ predictions, shrinking 0.3% last month from January.

Crude oil prices meanwhile fell 1% Thursday morning, with Europe’ benchmark Brent price slipping to $122 per barrel after French industry minister Eric Besson said that major G7 governments are considering a co-ordinated release of emergency stockpiles to push prices down.

A Gallup poll this month found that 85% of US citizens think Washington “should take immediate actions to try to control the rising price of gas.”

Brent crude hit fresh all-time highs in mid-March for both Eurozone and UK oil consumers, peaking 3% above the previous all-time high of July ’08, reached two months before the global banking crisis accelerated with the Lehman Bros. collapse.

“We can reel off a whole load of airlines that are teetering on the brink or are really gone,” said Tim Clark, president of Emirates Airlines in Dubai, the world’s biggest international carrier, to Bloomberg on Wednesday.

Pointing to record oil prices and a slump in demand, “Roll this forward to Christmas, and we’re going to see [the airline] industry in serious trouble,” says Clark.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Please Note: This article is 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.


Risk vs. Reward (Au style)

Thu, 2012-03-22 15:14
The broad market, supported by the glorified boiler rooms on Wall Street, the glorified infomercials in the mainstream financial media and the glorified monetary clerks at the Fed, operates to its own set of rules and cycles.  For instance, now we have conventional investors who used make cracks about their 401k’s becoming 201k’s actually becoming hopeful that they will regain all of their lost value.  The wonders of inflationary monetary policy has brought this prospect tantalizingly close to becoming reality.  Close, but… Over in the gold sector however, where investment is actually a form of revolution (against inflationary fiat monetary systems), it is not so easy.  Investors simplymust be mindful of the risk vs. reward setups at all times because the same forces arrayed in support of the stock market are lined up against the barbarous relic.  I am not saying this is a conspiratorial cabal, but I am saying that macro manipulation (like the recent ‘reworking’ of US Treasury yield curves) is just the way it is, whether it is planned out in the shadows to the most minute details, or just the result of embedded ‘business as usual’ academic myopia in a fiat system.

Take today for instance; it is a fine day for precious metals investors who are prepared for it.  The caution signals were all there and it is now time to think like a capitalist… like a predator… like a revolutionary… like someone who avoided the worst of what the manipulative entities had to dish out and is now in evaluation mode as to how to proceed.  You are a precious metals player?  You are at war.  Win the friggin’ thing.

With that, we take a quick reading of two indicators NFTRH and its subscribers have been watching.

Bullish Percent Index on the GDM gold miner index can continue to decline to target.  Will this come with a final regurgitation and capitulation?  I don’t know, so that is why I am slowly picking off individual items as they come on sale.  We began watching this one when HUI/GDM failed to make a higher high at the equivalent of HUI 555 in February.

We have been watching for a projected double bottom in the leading HUI-Gold ratio for the better part of a year now, since it broke below an important moving average.  This has allowed NFTRH analysis to temper its enthusiasm despite wildly bullish bigger picture projections.  We are almost there folks, and I suspect a large portion of the gold ‘community’ wishes it had more cash reserves in the event this signal registers.

When you are at war, you do not personalize the enemy.  You plot, you analyze, you gain intelligence and you survive long enough to employ tactical countermeasures.

Given the sentiment backdrop, which we have also been keeping a close eye on, one wonders if the massive topping pattern on the weekly HUI (yes, we are factoring that as well) is little more than fodder for trend followers and gold perma bears to scare gold bugs with.

What the heck, let’s throw up (apt wording, isn’t it?) one more graph. Sentimentrader.com‘s Public Opinion data out just two days ago has finally taken a hard lurch down to where a precious metals bull with cash on hand would want to see it.  Unless the rules have changed, you never but never feel actionably bullish when the public is red lining bullish optimism and you never but never get bearish – as long as the secular bull remains intact – when it is green lined.

The working price target for Au is lower, but we are getting there and I am getting more bullish by the week because data points are starting to converge all over the place.  There is a level of concern about the technical pattern on HUI, GDM, etc., but in the precious metals, sentiment usually wins and it surely has the power to invalidate a chart pattern; neuter it if you will.  We shall certainly see soon enough.

You have got to love the markets.  You really have got to.

http://www.biiwii.blogspot.com
http://www.biiwii.com
http://www.biiwii.com/NFTRH/subscribe.htm


Gold “Remains Vulnerable” while “Silver Support Threatened” by Downtrend, UK Deficit “Surprises” Ahead of Budget

Thu, 2012-03-22 00:34


Wednesday 21 March 2012, 08:30 EDT

Gold “Remains Vulnerable” while “Silver Support Threatened” by Downtrend, UK Deficit “Surprises” Ahead of Budget

WHOLESALE MARKET gold prices rose to $1660 an ounce Wednesday morning London time – more or less where they ended last week – before easing ahead of US markets open, while stock, commodity and government bond prices held broadly steady following news that the UK government deficit rose sharply last year.

Silver prices meantime dipped below $32 per ounce around lunchtime – a 1.8% drop on the week so far.

“Silver is in a short-term downtrend and is likely to breach support…at $31.81,” says the latest technical analysis note from bullion bank Scotia Mocatta, who add that the next target would be $30.48.

Over in India, the strike by Gold Dealers in protest at last week’s gold import duty hike entered its fifth day Wednesday.

“We harbor little doubt that gold remains vulnerable,” says a note from UBS precious metals analyst Edel Tully.

“Upside drivers are lacking and physical markets have yet to show a convincing response to lower prices.”

Here in the UK, the latest Bank of England Monetary Policy Committee minutes published on Wednesday show that two of the nine MPC members voted in favor of expanding the Bank’s quantitative easing program by £25 billion when the MPC met earlier this month. The majority voted to maintain the size of the program at £325 billion.

The decision to leave interest rates at 0.5%, where they have been since March 2009, was unanimous.

The MPC minutes noted significant risks to economic activity that might result in inflation falling materially below the [MPC's 2%] target in the medium term”.

MPC member Spencer Dale however, who voted to six times for a rate increase in 2011 – said in a speech Tuesday that in his view “inflation is just as likely to be above as below the inflation target in the medium term”.

The UK government deficit meantime rose to £12.9 billion last month – more than double consensus estimates – figures published hours before Wednesday’s Budget show.

Lower tax receipts contributed to the deficit growth, the Financial Times reports, with HM Revenue & Customs data showing an 8% fall in self-assessment tax revenues compared to February last year.
The news “provides a very uncomfortable background for the budget,” says Investec economist Philip Shaw.

“The fact there has been a worsening on this scale is a big surprise.”

Britain is expected to issue the second largest amount of government debt – known as gilts – on record this coming fiscal year, according to a Bloomberg survey of primary bond dealers.

“The government has a tough balancing act,” says John Wraith, London-based fixed-income strategist at Bank of America Merrill Lynch.

“Growth is going to be at best anemic, and it’s going to take a long time to reduce gilt issuance. They need to reduce debt, but if they stick rigidly to their fiscal consolidation plan, they risk killing growth.”

The FT argued this week that UK policymakers are engaged in financial repression, holding interest rates below inflation and creating a captive market for government bonds in an effort to lower the real value of national debt.

Federal Reserve chairman Ben Bernanke will warn of the US financial system’s exposure to Europe when he appears before the House Oversight Committee today.

“US financial firms and money market funds have had time to adjust their exposures and hedge their risks to some degree as the European situation has evolved, but the risks of contagion remain a concern for both these institutions and their supervisors and regulators,” Bernanke will say, in prepared remarks published ahead of the testimony.

On Tuesday, Bernanke gave the first in a series of four college lectures on the Fed’s role in the economy, in which he described a gold standard as a “waste of resources” and a “far from perfect monetary system”.

“Since the gold standard determines the money supply, there is not much scope for the central bank to use monetary policy to stabilize the economy…Under a gold standard, typically the money supply goes up and interest rates go down in a period of strong economic activity—so that’s the reverse of what a central bank would normally do today.”

Congressman Ron Paul last year asked Bernanke if he though gold was money, to which the Fed chairman replied ‘No’. Last month, Paul held up a silver coin while questioning Bernanke, saying that it “is what the market has always said should be money”.

Russia’s central bank gold holdings 3.1 tonnes of gold last month, equivalent to 0.35% of its official reserves, data published Tuesday show.

Over in the US meantime, holdings in the world’s largest gold ETF, the SPDR Gold Trust (GLD), fell 3 tonnes to 1290.2 tonnes yesterday, having held steady for one week. Silver bullion holdings in the iShares Silver Trust (SLV), the world’s biggest silver ETF, remained steady at 9752.7 tonnes.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is 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.


Today’s Winners and Losers

Wed, 2012-03-21 20:28
 GDX fell by -0.20% while GDXJ fell  by  -1.01% and SIL fell by 0.88%

Here are today’s best performing Silver and Gold stocks:


Dahlman Rose & Co Report on Meadow Bay Gold

Wed, 2012-03-21 16:43

The company has a $4.67 price target on the shares.

Download the report here


Gold “Not Looking Great”, But Fundamentals “Still Solid” Despite Ongoing India Strike

Wed, 2012-03-21 01:15


BullionVault
Tuesday 20 March 2012, 09:00 EDT

Gold “Not Looking Great”, But Fundamentals “Still Solid” Despite Ongoing India Strike

U.S. DOLLAR gold bullion prices dropped to $1643 an ounce Tuesday lunchtime in London – 1.0% down on Friday’s close – as stock and commodity prices also fell and US Treasury bonds rose.

“[Gold] support is at $1625,” says the latest technical analysis from bullion bank Scotia Mocatta.

“A breach of this level opens up a full retracement to the $1522 December lows.”

Silver bullion fell to $32.07 per ounce – 1.6% down on the week so far.

On the currency markets, the Dollar rallied, gaining 0.4% against the Euro.

The strike by gold dealers in India entered its third day Tuesday. Gold dealers have shut their premises in protest at last week’s government decision to double gold import duties. India imported 969 tonnes of gold bullion in 2011, according to World Gold Council data.

“The import of gold of such magnitude strains balance of payments and affects the exchange rate of the Rupee through impacting the supply-demand balance of foreign exchange,” finance minister Pranab Mukherjee, who announced the duty hike, said earlier today.

“At the moment, it’s not looking great for gold,” reckons Nikos Kavalis, metals analyst at Royal Bank of Scotland.

“On the one hand you have the strengthening Dollar against the Euro hitting the market and you also don’t have that much support from the physical market…At the same time, we are still standing by our bullish call for the market. We think prices can, and will, go higher later in the year, so I would say at current prices, we would definitely be buyers.”

“Beyond the short term,” adds Anne-Laure Tremblay, London-based analyst at French bank BNP Paribas, “we remain positive on gold’s outlook as the fundamentals are still solid. These include high liquidity, low interest rates and sovereign debt concerns.”

Institutions that sold credit default swaps against a Greek sovereign default will have to pay out up to $2.5 billion, following an auction Monday to determine the recovery value of Greek bonds.

Earlier this month, the International Swaps and Derivatives Association, which adjudicates on whether CDS should pay out, agreed that a credit event has occurred in Greece.

In Italy meantime, prime minister Mario Monti was holding talks with unions Tuesday aimed at persuading them to go along with labor market reforms.

Elsewhere in Europe, the Netherlands “is confronted with the same problems as Italy and Spain”, according to Dutch government think tank CPB.

“Budget cuts are equally required in these countries in order to regain control of the government budget, whereas reforms must be implemented simultaneously in order to ensure economic growth.”

The Dutch government is expected to run a deficit this year equivalent to 4.6% of GDP and is trying to find around €9 billion in budget cuts. Last month it agreed to the Eurozone fiscal pact that deficits should be no bigger than 3% of GDP.

The Netherlands has been in recession since last July, Reuters reports, but is still rated AAA by all three major ratings agencies.

Here in the UK, inflation continued to fall last month. February’s consumer price index data published this morning show that annual inflation was 3.4%, down 3.6% in January and its lowest rate in two years.

The UK’s Office for Budget Responsibility meantime has raised its forecast for economic growth, the Financial Times reports. The OBR’s most recent forecasts were made last November.

The new more optimistic predictions are expected to be revealed in tomorrow’s Budget, and are “extremely close to those in the autumn statement” the FT writes, citing “government insiders”.

Saudi Arabia meantime has pledged to send oil tankers to the US in a bid to bring oil prices down to a “fair” level. US consumer price inflation saw its biggest monthly rise in nearly a year last month, with gasoline prices rising 6% in February.

Federal Reserve chairman Ben Bernanke is due to begin his so-called “PR offensive” later on Tuesday, when he delivers a lecture to undergraduates at George Washington University. Tuesday’s lecture is the first of four such appearances in which Bernanke will speak on the role of the central bank, ahead of the Fed’s centenary next year.

Steel production growth in China, the world’s second-biggest gold consumer, has “flattened”, according to Ian Ashby, president, iron ore at Australia-based miner BHP Billiton.

“[But] we still see positive growth out to the middle of the next decade.”

The daily volume of gold bullion transferred between parties by clearing members of the London Bullion Market Association fell 12.2% last month to 606.5 tonnes, according to LBMA figures published Tuesday. The fall follows a 1.0% monthly gain in January.

The daily volume of silver bullion transferred rose 7.2% to 4976 tonnes, following a 24.3% monthly drop in January.

Holdings of silver and gold bullion in the world’s two largest silver and gold ETFs– iShares Silver Trust (SLV) and the SPDR Gold Trust (GLD) – remained unchanged Monday. The SLV is unchanged since last Monday, while the GLD has not moved since last Tuesday.

ETFs meantime have been included on a list of “possible shadow banking entities” being examined by the European regulators.

The European Commission’s Financial Stability Board says it “has identified a possible mismatch between liquidity offered to ETF investors and less-liquid underlying assets”.

“The current regulatory debate,” continues the European Commission green paper on shadow banking, “focuses on possible liquidity disruptions; the quality of collateral provided in cases of securities lending and derivatives (swap) transactions between ETF providers and their counterparties; and, conflicts of interest where counterparties in these transactions belong to the same corporate group.”

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is 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.


Dark Clouds for Gold Seem to Have Been Dispersed

Wed, 2012-03-21 01:09


Based on the March 16th, 2012 Premium Update. Visit our archives for more gold & silver analysis.

According to a Bloomberg survey at a precious metals conference this week, gold is poised for a 21 percent gain in 2012, extending its bull market to 12 consecutive years. Bullion may rise to $1,897 an ounce in New York by Dec. 31 from $1,566.80 at the end of 2011.


They have plenty of reasons for optimism, despite the recent drops in price. Demand for gold has strengthened as Europe seeks to contain its debt crisis and China has displayed a growing appetite for gold. Governments have kept interest rates at all-time lows to shore up growth. Central banks have been net buyers for three straight years, the longest stretch since 1973, according to World Gold Council data.


They are not the only ones optimistic about gold. The specter of inflation is making some turn to the yellow metal.


“By the time inflation becomes evident,” says Paul Johnson of the $14 billion Paulson & Co. hedge funds, “gold will probably have moved, which implies that now is the time to build a position.”


And just recently the Islamic Republic News Agency reported that Iran would begin accepting payments from its trading partners in gold. This move further reinforces the universal currency and store of value aspects of the metal. Iran already allows its trade partners to pay in their native currencies. It has also accepted payment in the form of goods from both India and China. It will now take payment in gold. Fundamental situation is clearly bullish for the yellow metal.


Let’s turn to the technical portion with analysis of the gold to bond ratio. We will start with the long-term chart (charts courtesy by http://stockcharts.com.)

A look at the gold to bond ratio provides us with the proper long-term perspective in viewing gold’s decline last week. Analysis of this chart suggests that the bullish trend definitely remains in place, as no breakdown has been seen below the long-term support line.

In the long-term chart for gold (you can click the chart to enlarge it if you’re reading this essay at sunshineprofits.com), we see that the important support level mentioned in our essay on the possible rally in gold (March 14th, 2012) has been reached. Quoting from the abovementioned essay:


Last week saw several important developments as gold’s price decline approached the 50-week moving average while the RSI level remained slightly above the 50 level. This is a bit ambiguous with respect to what likely seemed to be needed for the final bottom to form.


In the past few days gold’s price moved slightly below the 50-week moving average and afterwards moved back above this level. In addition, the RSI moved below 50.


These two signs defined the bottom seen in early 2007 and it appears that the current bottom is already in at this time. Also, the possible correction appears to have happened already.

Taking a look at the chart from 2006-07, we see that the major bottom seen early in 2007 saw gold bottom half way between the 50% and 61.8% Fibonacci retracement levels. Huge volume levels also accompanied this local bottom. Furthermore, gold’s stock prices visibly declined at the same time and the RSI level moved close to but did not reach 30. Now let’s take a look at where we are today.

We now turn to the current short-term GLD ETF chart. Gold’s price has declined past the 50% Fibonacci retracement level but is still above the 61.8% level. In fact, on Wednesday, gold’s closing price was between the two and the bottom formed on significant volume. Also, the RSI level declined close to 30 and then moved back up. The situation is nearly identical to early 2007.

In our opinion, the striking similarities make our analysis this week quite reliable. Many factors are very much in tune and it is likely that this pattern will hold for the next couple of months. Keep in mind that it may take a week or so for the rally to really get underway.

Some might say that the bearish head-and-shoulders pattern is visible to some extent but a closer look reveals that this is not really the case. The shoulders are not really symmetrical. In early 2007, the pattern was even more visible and the target level based upon it was lower than the actual bottom that was formed. With the pattern less visible this time, and so many other factors aligned perfectly, it is likely that the bullish implications here will prevail.

In this week’s chart of gold from a non-USD perspective, we have a confirmation of the bullish outlook we have seen in the previous charts. Another move to the downside target area, which was reached last week, has been seen and it’s likely that a double bottom will form and the ratio will then move higher. The breakout above the declining resistance line (based on 2011 tops) has been well verified and it seems that now is the time for the rally to begin.

Summing up, the situation in gold remains very bullish for both the short term and long term based on this week’s charts.

To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It’s free and you may unsubscribe at any time.

Thank you for reading. Have a great and profitable week!

P. Radomski
Editor
www.SunshineProfits.com

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All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

By reading Mr. Radomski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


Gold “Could Correct to $1600″ with “Buyers Reluctant”, India Strike Sees Physical Activity “Slump”, 2013 Fed Rate Hike “Now Priced In”

Mon, 2012-03-19 20:09


Monday 19 March 2012, 09:30 EDT

Gold “Could Correct to $1600″ with “Buyers Reluctant”, India Strike Sees Physical Activity “Slump”, 2013 Fed Rate Hike “Now Priced In”

THE SPOT gold price held above $1650 per ounce Monday morning in London – staying within $10 of where it closed last week, but over 4% down on the month so far.

“The market feels a bit top-heavy, which may imply a further correction on the downside to $1600,” warns the latest note from Swiss precious metals refiner MKS.

The silver price fell as low as $32.34 per ounce during Monday morning’s London trade, but rallied back above $32.50 by lunchtime, while commodities were broadly flat on the day.

“Physical [bullion] market activity…has slumped,” says Standard Bank commodity strategist Marc Ground, citing the closure of Indian bullion markets as gold dealers held a three-day strike following the government’s announcement last Friday that it is doubling import duties on gold, as a percentage of the gold price, for the second time this year.

Over in China, the world’s second largest gold consumer after India, average property prices fell last month in 45 of 70 cities surveyed an official report published by the National Bureau of Statistics on Sunday finds.

European stock markets were broadly flat this morning ahead of news that Apple plans to pay a dividend of $2.65 a share and launch a stock buyback program, while US Treasury bonds gave up early gains.

Investment bank UBS cut its gold price forecasts on Monday. UBS’s one-month forecast was cut from $1775 per ounce to $1550, while the three-month forecast fell from $1950 to $1600.

“We see gold now in a challenging environment,” says UBS precious metals strategist Edel Tully, who won last year’s London Bullion Market Association gold forecast competition.

“In as much as higher US [Treasury bond] yields reflect an improvement in sentiment towards growth, rather than nervousness about sovereign credit or inflation, we think gold buyers will be reluctant.”

Economists at Barclays Capital meantime argue that recent falls in the US unemployment rate are in part down to people dropping out of the labor force, and that this could force the Federal Reserve to tighten monetary policy sooner than previously expected in order to combat inflation risks.

“If the goal became to restore the employment-to-population ratio to where it was prior to the recession, we’d need an unemployment rate of about 3%, and that would clearly lead to monetary policy being too easy for too long,” Dean Maki, Barclays chief US economist, tells newswire Bloomberg.

“We think this is a factor contributing to medium-term inflation risks.”

The Fed revealed back in January that most of its policymakers expect interest rates to remain near zero until at least late 2014.

Monthly US consumer price inflation meantime rose to its highest level in nearly a year last month, data published on Friday show.

“The market no longer believes that ‘late 2014′ is when rates will rise,” said M&G Investments’ Bond Vigilantes blog on Friday.

“The market is now pricing in a Fed rate hike in 2013.”

Here in the UK, the British government plans to take on the pension fund of the Royal Mail, subject to European Commission approval, in preparation for privatizing the state-owned postal service.

The move would guarantee postal workers’ retirement benefits, writing off around £1 billion of the Royal Mail’s debt and taking over an estimated £4.6 billion pension deficit, the Financial Times reports.

“The liabilities,” writes the FT’s Tony Jackson, “will vanish off the government’s balance sheet…that is, no doubt, fiscally imprudent.”

Jackson argues that the move is another example of financial repression by the British government.
“The government,” adds Philip Booth of think tank the Institute of Economic Affairs, “would not allow a private sector company to get away with such shoddy – indeed, underhand – accounting practices.”

On the gold futures and options markets, the difference between bullish and bearish contracts held by traders on the New York Comex – the so-called speculative net long – fell for the second week running in the week ended last Tuesday, dropping 5%, figures published by the Commodity Futures Trading Commission show.

“We expect that [even] more speculative length has been removed after last week’s sell-off,” says Standard Bank’s Ground.

The volume of gold bullion held to back shares in the SPDR Gold Trust (GLD ) – the world’s biggest gold ETF – dipped slightly last week to 1293.2 tonnes. Silver bullion holdings in the world’s largest silver ETF, the iShares Silver Trust (SLV), remained static at 9752.7 tonnes.

In emerging markets meantime, central banks have been buying gold in recent weeks to take advantage of falls in the gold price, the FT reports.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is 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.


Argonaut Gold Inc. Provides Notice of Fourth Quarter and Year End Financial Results on March 30, 2012

Mon, 2012-03-19 16:15

Argonaut Gold Inc. (TSX:AR) today announced that its fourth quarter and year end financials will be released before market open on March 30, 2012 followed by a conference call on March 30, 2012 at 9:00 a.m. ET.

Q4 and Year End Conference Call Information: Toll Free (North America): 1-866-226-1792 International: 1-416-340-2216 Webcast: www.argonautgoldinc.com Q4 and Year End Conference Call Replay: Toll Free Replay Call (North America): 1-800-408-3053 Replay Call: 1-905-694-9451 Passcode: 1634095

The conference call replay will be available from 12:30 p.m. ET on March 30, 2012 until April 6, 2012.

About Argonaut Gold

Argonaut is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets are the production-stage El Castillo Mine in the State of Durango, Mexico, the La Colorada Mine in the State of Sonora, Mexico, the advanced exploration stage San Antonio project in the State of Baja California Sur, Mexico, and several exploration stage projects, all of which are located in Mexico.

Creating Value Beyond Gold

Contact Information Argonaut Gold Inc.
Nichole Cowles
Investor Relations Manager
(775) 284-4422 x 101
nichole.cowles@argonautgoldinc.com
www.argonautgoldinc.com

 

 


Precious Metals are Decoupling from the Stock Market

Mon, 2012-03-19 01:01

Normally, decoupling from the stock market is a good thing. In recent turbulent times, many have wondered if emerging markets would decouple or if gold stocks would decouple. Its surprising to see gold stocks decouple from a strong stock market. Many wondered if the sector would decouple from a weak market. Yet, the decoupling now could be positive long-term provided the decoupling continues when the stock market peaks just below the 2007-2008 highs.

Below we plot the S&P 500 and the HUI Gold Bugs Index. At the bottom we show the 100-day correlation between the two markets. Note that the correlation has been trending down since the end of 2010. The broad stock market (S&P 500) appears to be headed for a test of major resistance at 1500 while the large cap gold stocks just closed at a 52-week low.

Although large cap gold stocks have closed at a new low, the rest of the sector has not followed suit. The chart below shows GDXJ, the CDNX (Canadian venture exchange) and SIL (silver stocks ETF). While the HUI has closed at a new low, the other markets remain well above their December lows. The CDNX and SIL are showing a strong divergence since October.

Should most of the precious metals sector hold its December lows then it will be very encouraging for the sector even with the large caps breaking to new lows. One can recall 2007-2008 when the speculative side of the sector fell to new lows well ahead of the metals and the large cap gold stocks. One should also keep the 1970s in mind. Large cap miners experienced significant gains at the start of the bull market but not at the end. Sure, the large caps performed well from 1974-1980 but it was the speculative side of the sector that captured the vast majority of the gains.

Presently, the precious metals sector has underperformed badly as the stock market has continued to move higher. We know that it is highly unlikely the S&P 500 is going to make new highs. In fact, in two of the previous three secular bear markets, the market in the second half of the bear rallied to within 5% of the all-time high before falling back into a mild 4-5 year bear market.  This happened in 1909 and 1976. Profit margins, the most mean reverting statistic in finance are already at record highs. Higher interest rates and higher inflation will cut into profit margins.

Everyone loves stocks now and the masses can forget about gold stocks. This is a perfect contrarian opportunity for precious metals investors. The S&P 500 is nearing resistance and the precious metals sector is testing its December low. A successful retest of the low in many markets (juniors, metals, silver stocks) should be a signal that the market has confirmed its bottom. Unless you feel the bull market in precious metals is over then you should use this opportunity to be a contrarian. We may not get another buying opportunity like this for a few years. We invite you to learn more about our service.

Good Luck!

Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com
TheDailyGold.com


Gold in Euros, Sterling Drops to 10-Week Low as India Raises Import Duties, US Inflation “Rears Its Head” as Gas Prices Surge

Fri, 2012-03-16 21:34

London Gold Market Report
from Ben Traynor
BullionVault
Friday 16 March 2012, 09:15 EDT

Gold in Euros, Sterling Drops to 10-Week Low as India Raises Import Duties, US Inflation “Rears Its Head” as Gas Prices Surge

THE SPOT MARKET gold price dropped to $1641 an ounce shortly after US market open – a 4.4% fall on the week – as stocks and commodities were broadly flat, with stock markets looking set for a weekly gain by Friday lunchtime in London.

On the currency markets, the Pound and Euro both rallied against the Dollar following the release of the latest US inflation data, while over in India the government announced it is to double its duty on gold imports as a percentage of the gold price.

Silver prices fell to $32.14 per ounce – a 6.3% loss for the week as we headed towards the weekend.

“Gold still appears to be taking a hit,” says a report from German refiner Heraeus.

“If it is to escape the downward trend in the short term, it will have to overcome the price resistance at $1726 per ounce…only then will it begin moving up again.”

“Near-term resistance ,” add technical analysts at bullion bank Scotia Mocatta, “is at the 200 day moving average, currently at $1682…key resistance is at $1716, last week’s high.”

The gold price in Euros fell to a 10-Week Low at €40,266 per kilo (€1252 per ounce) on Friday. Sterling gold prices also hit their lowest levels in 10 weeks, dropping to £1041 per ounce.

Both currencies jumped against the Dollar immediately following the release of US consumer price index inflation data. The seasonally-adjusted CPI rose 0.4% in February, its biggest rise for 10 months, while the unadjusted annual rate held at 2.9%, according to the Bureau of Labor Statistics.

“Inflation is rearing its head,” says Bill Gross, head of the world’s largest bond fund Pimco.

“We’re seeing that in oil prices and other commodities, and we’re seeing it in the numbers.”

The BLS says 80% of the monthly rise is accounted for by higher gasoline prices. Gas prices rose 6% last month, compared to 0.9% in January and the biggest jump since December 2010, following recent gains on the oil futures market.

Britain and the US meantime look set to co-operate on releasing strategic oil reserves, Reuters reports.

“This has to be discussed broadly,” Britain’s prime minister David Cameron, who has been on an official visit to the US this week, said on Thursday.

“It’s something worth looking at.”

The Brussels-headquartered Society for Worldwide Interbank Financial Telecommunication (SWIFT), the world’s major international messaging service for financial transactions, is to cut services to Iran’s financial institutions effective from tomorrow.

“Disconnecting banks is an extraordinary and unprecedented step for SWIFT,” said chief executive Lazaro Campos yesterday.

“It is a direct result of international and multilateral action to intensify financial sanctions against Iran.”

Over in India, the world’s largest gold consumer last year, the government announced Friday that it is doubling the import duty on gold from 2% to 4%. This follows a similar increase in India’s gold import duty back in January.

The duty hike “will reduce demand for gold significantly” reckons Bombay Bullion Association president  Prithviraj Kothari. Kothari forecasts that gold demand in India could drop by 30% this year, the Wall Street Journal reports.

“Today’s duty increase will dampen Indian demand,” agrees UBS precious metals strategist Edel Tully.

“The Indian market will wait for lower prices and there is also the risk that this duty hike will lead to increased smuggling.”

India set a record last year when it imported 969 tonnes of gold bullion.

“One of the primary drivers of the current account deficit has been the growth of almost 50% in imports of gold and other precious metals in the first three quarters of this year,” said Indian finance minister Pranab Mukherjee, who was announcing next year’s budget.

There are also potential signs that gold imports to China, the world’s second largest gold market, are starting to concern authorities.

China’s National Bureau of Statistics meantime has revealed that officials in the northern city of Hejin reported “seriously untrue” economic data last year, newswire Bloomberg reports.

Here in the UK, chancellor George Osborne is considering cutting the top rate of income tax from 50p to 45p in next week’s Budget, according to press reports.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is 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.


Today’s Winners and Losers

Fri, 2012-03-16 21:23
GDX fell by -0.42% while GDXJ fell  by -0.82% and SIL fell by -1.04%

Here are today’s best performing Silver and Gold stocks:


Gold Rollercoaster Likely to Go Up

Fri, 2012-03-16 20:25


Based on the March 16th, 2012 Premium Update. Visit our archives for more gold & silver analysis.

The roller coaster metaphor we used two weeks ago after the $90 flash crash in the price of gold seems appropriate this week as well. It must be tough out there for precious metals investors. Wednesday gold futures tumbled again. April-delivery gold fell $51.30, or three per cent, to settle at $1,642.90 an ounce, the lowest gold settlement price in more than eight weeks. The dollar strengthened and traders reacted to the U.S. Federal Reserve’s rate decision and policy statement in the previous session, which buried any hopes for now of more monetary easing in the short term. Investors have been hoping that the Fed would take action again to spur the economy. The last round of quantitative easing, known as QE2, weakened the US dollar and sent gold prices sharply higher. After the market closed Tuesday, the Fed’s upbeat comments about the US labor market dimmed hopes of further stimulus. Also Tuesday afternoon J.P. Morgan announced it had passed the government’s stress testing and was declaring a dividend as well as paying back a big chunk of government loans. Most of the largest U.S. banks passed their annual stress test, underscoring the recovery of the U.S. financial sector. The U.S. dollar index traded higher Wednesday, hitting a fresh seven-week high, also bearish for the precious metals markets. Year to date, gold is still up 5 percent.


Sunshine Profits subscribers should have a much less queasy stomach. A day before the flash crash we sent out a Market Alert to stay out of the speculative long-term positions saving them from the gut-wrenching drop. And when we sent out another Market Alert with a buy signal on March 6th it was with a caveat – to be prepared emotionally for the scenario in which metals move temporarily lower for a few days and then form a bottom. We believe the price action of the past few days could be that the final bottom for this decline has already been reached, or, is very, very close to it.

Gold’s sharp move lower will most likely spark demand from emerging markets such as India and China as buyers will come in lured by lower prices.

Interestingly, platinum out-performed gold and maintained a premium over gold for the first time since September, reverting back to the “norm” where historically (for the past 20 years) platinum trades higher than gold. Happily, we had previously suggested you to switch part of your holdings from gold to platinum.


To see if gold will be able to catch up, let’s move to the technical part of today’s essay. We start with the USD Index chart (charts courtesy by http://stockcharts.com.)


Our first chart this week is the very long-term USD Index chart. There have been some slight changes this week as the index level has touched the horizontal red line in our chart created by the early 2011 and 2012 highs. Prices then reversed and no breakout above this level was seen.

Concerning the long-term declining resistance line, prices have moved just above it but the breakout is not yet truly in. Prices would have to close the week and hold above this line for two more weeks for this breakout to be confirmed. Overall, the situation remains mixed here.

In the short-term USD Index chart, a correction is seen to the highest Fibonacci retracement level of the previous decline. It appears that a top is about to form. Prices could move a bit higher, though any significant increase seems unlikely, and the 2012 high will probably not be reached. Perhaps some sideways trading and then some declines will precede the next cyclical turning point, which is about two weeks away.

The Correlation Matrix is a tool, which we have developed to analyze the impact of the currency markets and the general stock market upon the precious metals sector. The correlation between the general stock market and precious metals now appears to be negative to neutral, and this is generally not the case, especially given the past three months.


The general stock market simply does not appear too important for gold, silver and the gold and silver mining stocks. However, it does seem to matter for platinum, which has performed relatively well compared to the other metals.


The strong negative correlations between the USD Index and the precious metals continue. The implications appear bullish for the medium term and somewhat unclear for the short term.


The medium term implications remain in line with our overall view on the precious metals sector as expressed in our essay on a possible rally in gold. We wrote then (March 14th, 2012):


(…) while it is not yet certain that the final bottom is in, it seems rather unimportant because gold’s price does not seem likely to decline much further and could actually move much higher very soon. The risk of being out of the market outweighs the risk of being in.


This week we have also received an interesting question from one of our Subscribers and would like to comment on it.


Q: Regardless of the self-similarity patterns [that we’re described in the previous essay] (which is not the most scientific tool out there), is there any chance that we currently see the beginning of the situation similar to what was seen in Sep-Dec 2011?

Additionally, what about the price seasonality? March-April is generally weak for the precious metals… Maybe the predicted rally will materialize so sooner than in April-May – during metal’s stronger months?

A: Naturally, self-similar patterns (just like any other chart pattern) are not scientific at all (but we are working on “making them scientific”, stay tuned) as they are not (as Karl Popper indicated) falsifiable. They are subjective and very much analyst-dependent and detecting these patterns is somewhere between art and science. However, that’s not the most important thing here. The most important thing in our view is simply that they work and are extremely useful as they provide both: price and time projections that – if previous patterns are really aligned – play out very well.

Is there any chance that gold will move even lower like in Dec 2011? Of course – there are no sure bets. However, at this time we view the chance of moving higher from here is much bigger than the chance of a continuation of the decline.

Seasonality – a picture can tell a thousand words, so let’s take a look.

Please focus on the shape of the red line vs. dates instead of the prices on the vertical axis’ legend (technical glitch).  While it is true that March is generally a weak month for metals, please note that the weakness is concentrated in the first half of the month and this impacts the whole March-April period. In fact, April is moderately favorable month.

The most interesting part is that according to the True Seasonal (taking into account options’ and futures’ expirations as well as simple seasonalities) pattern, the bottom was likely to be seen on March 14th… Precisely when gold appears to have reached the bottom. Please note that the quality of projection measure on the chart is quite high for this date, meaning that the probability of bottom being in close to this date is high.

Summing up, the situation in the USD Index is unclear for the short term and bearish for the medium term. This translates into a bullish environment for gold for the medium term and the True Seasonal patterns confirm that.


To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, we urge you to sign up for our free e-mail list. Gold & Silver Investors should definitely join us today and additionally get free, 7-day access to the Premium Sections on our website, including valuable tools and unique charts. It’s free and you may unsubscribe at any time.

Thank you for reading. Have a great and profitable week!

P. Radomski
Editor
www.SunshineProfits.com

* * * * *


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All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

By reading Mr. Radomski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


‘Management’ vs. Prediction

Fri, 2012-03-16 14:36
My ears start to bleed when I hear someone who has staked a claim to the mantle of guruhood definitively state something – especially in the realm of technical analysis – as if they have used esoteric and mystical methods in service to divination of answers yet to come, and then put it out there as if it is anything more than an educated guess.

It is not ‘the answer’.  It is just a guess based on the guru’s best methods.  His followers want to feel as if someone is in control and the guru is only too happy to provide this unattainable aspect of the asset markets… CONTROL.

The trick for our dear guru is when he is inevitably wrong and must backtrack.  Some just issue alarmingly bearish analysis and then when perceived to be on the wrong track, issue alarmingly bullish stuff, creating a bipolar sort of experience for whipsawed followers.

Others hold the line, expecting that their calls will be right one day if given enough time.  ‘Everybody’s losing money, after all’ was something that I heard throughout the ‘resource stock’ sector last year.

Well no, everybody was not losing money.  People managing markets in service to risk management (as opposed to ego) did just fine.

Anyway, this post goes up after I looked at my account and shook my head almost in disbelief that the speculative portfolio is still +7% for 2012.  This despite my continued bullishness on gold and yes the gold stock sector.  I almost feel that as a gold stock bull, I should be fearful and racked with pain instead of opportunistic as I do now.  But my own methods saved me from this ignominy.  I find control through knowing I do not have control and thus, effectively manage.

I have received emails from NFTRH subscribers saying things like “just sitting and waiting to…” and “I am 70% cash and looking to…” that let me know I am doing my simple job, which is to analyze the markets to the best of my ability, illustrate the risks and opportunities and manage week to week within a bigger picture framework.  I have had to make adjustments many times because I am just a human, who knows nothing more about what markets will do than the next human (well, the next human with extensive market experience, anyway) knows.

Nobody knows what is going to happen in the markets.  Nobody, especially those that make a handsome living pretending that they have some sort of secret contraption into which they peer to divine the answers.  It is all about grunt work and management.  Have a plan and plan to be right, but when risks increase that the course is wrong, GET RIGHT immediately.  No if’s, and’s or but’s.

‘Management’ wins, because it adjusts as needed.  Really, the way many people go about markets is pretty immature.  There is long tradition of ‘stock tips’ and lust for an inside scoop.  This ‘scoop’ generally does not exist however, unless you are a ‘too big (or too crooked) to fail bank’ being spoon fed by the Federal Reserve and the citizens of the USA.

Regular grunts need to do the grunt work.  Hard work and a sound psychological framework will allow you to manage through anything.  I’ll have to do a post on psychology sometime* as well, because having the psych element nailed down is key to the all-important taming of bias, which keeps people from adjusting as needed, which keeps people from effectively managing the markets.

You see?

* Reference this previous post, which ties in effective management with the effort to maintain a sound ‘psych’ profile in the face of dynamic events.

http://www.biiwii.blogspot.com
http://www.biiwii.com
http://www.biiwii.com/NFTRH/subscribe.htm


What’s next for gold?

Thu, 2012-03-15 23:30
What’s next for gold?

The past month or so has caused those who invest in gold bullion a small amount of concern. The gold price has dropped to below $1700, after some significant gains since January. Whilst the fundamentals for gold investment remain stronger than ever, Dominic Frisby has written a useful, and reassuring, analysis on the gold and silver price in the short term.

I’m not unduly worried about the gold price.

But when I saw it had dropped $40 yesterday from $1,700 an ounce to almost $1,660 in the space of just a few hours, I’ll admit a concerned eyebrow was raised.

So I suppose a bit of hand-holding is in order today – even if it’s only my own.

Gold may not see fresh highs for at least another year

Let me start by re-visiting my forecast of several months back. By my reckoning, we wouldn’t see new highs in gold for at least another year, ie not before autumn 2012, if not later.

I based this forecast on a simple, repeating pattern that gold makes when it gets ahead of itself. In the chart below, you can see gold’s action since 2001. It’s plotted on a logarithmic chart, as the pattern is clearer that way. (A logarithmic chart measures percentage gain on the y-axis as opposed to an arithmetic chart which measures price. So on a logarithmic chart, a move from 200 to 400 looks the same as 400 to 800 and so on).

You can see what a lovely consistent ascent it’s been.

But even within this steady uptrend there are times when it’s got a little ahead of itself and then pulled back, as I’ve indicated in yellow on the chart. One example is in early 2003, another is in May 2006, another February 2008, and of course the same thing happened again in September 2011.

Each time it’s done so, it’s had a nasty fall, followed by a period of consolidation and digestion. And the more it’s got ahead of itself, the bigger the fall and the longer the subsequent consolidation phase. I’m thinking in particular about the 18 months or so that followed the highs of May 2006 and February 2008.

On both occasions it was well over a year before gold made new highs. I believe we’re in just such a period now. The high gold made last September at $1,920 was a typical example of gold going too far too fast. Now we have the consequent period of digestion.

So that’s how I’m interpreting the big picture.

Gold measured in sterling is far less smooth

Out of interest, I present to you now the same chart, but of gold measured in pounds. The graceful ascendency is gone. This chart is hiccuping its way higher in steady, annual burps.

The inverse of this chart – which shows just how much the pound has fallen against gold – has the look of a geriatric stumbling blindly to his coffin.

The short-term outlook for gold

Now let’s zoom in and take a look at the nearer term. Here is a one-year chart of gold.

My famed 144-day moving average (blue line) has now become resistance, unfortunately. I see good support in the $1,550 zone, where I have drawn the light blue band. And I see resistance at $1,800 where I have drawn the red band.

These will be, I suspect, the two lines in the sand for the time being, probably until the autumn. Of course, these are just guesses – I know no more than you.

But again, staring at the chart and guessing, I suggest a retest of at least $1,600 looks to be on the cards before gold’s normal, upwardly-mobile business can resume. But such a re-test, should it occur, would give a nice symmetry to the chart and add to that decent-looking base at $1,550.

Could the miners finally start to outperform?

As for silver, I see a similar picture with strong support at $26, but resistance at $38. Silver does seem to be displaying some relative strength, which is positive.

Also on the positive side of things, I am seeing some buying coming in to the junior resource sector. This is probably because of broader stock market strength, but I’m hoping we’re in the early stages of one of those periods when the stocks outperform the metals. Not before time, that’s all I can say.

I’ve just come back from the PDAC in Toronto, which is the world’s biggest mining conference. I must have spoken to over a hundred different companies while I was there. I’ll be publishing my notes from the conference, as well as my pick of the PDAC in a new report, so watch this space.



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Hello. My name is Mike Swanson. I’m the best-selling author of the book Strategic Stock Trading. In a former life I used to run a hedge fund from 2003 to 2006 that generated a return of over 78% during that time frame. In fact it was ranked in the top 35 out of 5,000 hedge funds in 2005.

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