Gold & Precious Metals

The German government has been storing about half of its gold supply with the US FED, apparently in the NYC FED vaults. Germany decided to bring home all its gold, but the FED has said that isn’t possible to do, and it would need until 2020 to be able to accomplish the transfer.

…..read more HERE

Sinclair – Swiss Bank Just Refused To Give My Friend His Gold

Today legendary trader Jim Sinclair stunned King World News when he revealed that a dear friend of his who is very affluent just had a Swiss bank refuse to return his large hoard of gold when he asked for it out of an allocated account.  Below is what Sinclair, who was once called on by former Fed Chairman Paul Volcker to assist during a Wall Street crisis, had to say in this remarkable and candid interview.

…..read more HERE

 

MORE LOSSES COMING IN THE GOLD MARKET …

Millions of investors have been skinned alive in the gold market. They got married to their positions and failed to realize that gold is like any other market. What goes up, must also pullback.

Even some of the savviest investors in the world got killed in gold. Billionaire investor John Paulson lost as much as $600 million in last week’s gold rout and nearly $1.5 billion since gold peaked in 2011.

Another huge investor, David Einhorn also lost big. Ron Paul has lost big. So has billionaire hedge fund manager Kyle Bass. And more.

Even the central banks have been pounded by gold, losing an estimated $560 billion in last week’s gold rout.

That’s just the big investors. It doesn’t count the tens of billions of dollars lost by average investors all over the world.

Fortunately, those following my analysis are not among them. I have been consistently bearish gold for well over a year now, and anyone following my work either avoided huge losses …

Or even better, acted on the more specific advice I’ve given in my paid publications, went short via futures or inverse ETFs on gold, and cleaned up big time.

The Level of Disbelief in Gold’s Correction
Means More Losses Lay Ahead

When investors in any market are in denial about what’s happening, it’s virtually a sure fire sign that the current trend is going to continue.

Screen shot 2013-04-22 at 5.56.47 AMWhy? Because they’ve suspended all semblance of logic and they’ve become so irrational that they can’t see the forest for the trees.

For instance, in gold right now you have three types of investors …

1.  Those who believe gold was “ambushed” by big investors who wanted to trash the market and inflict losses on small investors.

But if that were true, then why did all the big investors I mention above lose so much money? Surely, they would have gotten wind of the ambush and been able to avoid a big portion of the actual losses they took, wouldn’t they?

Then there are …

2.  The gold investors who believe the gold market is “manipulated” by a combination of big investors, politicians, and central banks set on pushing the price of gold down to “keep a lid on inflation,” or at least the perception that inflation is out of hand.

But if that were true, then again, why did so many big investors take such big losses? And why did central banks lose as much as $560 billion?

Central bankers are not the smartest traders in the world, but they’re certainly not dumb and stupid.

3.  And then, there are the gold investors who refuse to believe that there are deflationary forces at work, and they claim that gold has lost touch with reality, and that the current decline in gold therefore represents the buying opportunity of a lifetime.

Again, that’s denial, plain and simple. It’s touted by analysts and investors who refuse to believe that a market can — and must — go down, even if it’s just setting the stage for the next bull leg higher.

Look, markets never go straight up year after year as if there’s nothing but blue skies ahead.

The fact of the matter is that the biggest, strongest bull markets are those that correct violently, shake out all the weak and even strong long positions and buyers …

And clear the air for new buyers to come back into the market.

So if you’re a real student of the markets and a real gold bug, then this violent correction that has occurred in the gold market should have been expected, and further, should be music to your ears!

For in the end it is about the best thing that could have happened in the gold market.

It will allow the gold market to refresh itself, to reenergize, and to set the stage for a massive new leg to the upside.

Right now, you should expect a bounce in gold. But as I said in my special Money and Markets column of April 15 …

Gold’s Historic Collapse Is NOT Over

Keep your eyes on the $1,412 and $1,458 levels. One of those two levels should cap any bounce in the gold market.

On the downside, I repeat the key support levels you should be watching:

 $1,298.70

 $1,244.90

 $1,160.90

 $1,028.40

 $   993.90

Each of the above levels should temporarily hold once they are hit. But based on my system models, I repeat my warning of my April 15 special column: Gold will likely not bottom until it hits major long-term support at $1,028.

If you’ve acted on any of my suggestions to purchase inverse ETFs such as theProShares UltraShort Gold (GLL) and the Direxion Daily Gold Miners Bear 3x Shares (DUST) … or even the ProShares UltraShort Silver (ZSL) for a play on silver’s downside …

Hold those positions!

And most important of all, do not be tempted to buy any gold, or silver, or mining shares, until I give you the all-clear!

Instead, let those who are in denial about gold’s correction continue to get their head handed to them.

When they finally realize that all their theories about gold market manipulation and ambushing, central bank shenanigans to depress the gold price, and more of such conspiracies …

Are nothing but gobbledygook, then gold will finally bottom!

Best wishes,

Larry

POSTED BY LARRY EDELSON

larry-edelsonThis investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com/.

 

 

 

“All I’m saying is that I think we’re going to have a major low in gold in within the next couple of weeks. Gold, as of today, you should actually buy as a trade. I think it can rebound in the next two days by $40.” – in Bloomberg

 

 An Earlier Comment Faber (click for comment)
 

Gold : We may go lower. I am not worried

“The Gold Flash Crash”

US DOLLAR LOST SOUL CHART

usd morris.gif

  • To gain perspective on a currency, it is necessary to consider the longer term point of view. The US dollar continues to be diluted, and the US economy cannot function without large amounts of liquidity.
  • The current QE program involves printing money at the astounding rate of $1 trillion dollars per year, and Fed governor Bullard said this week that he is in favor of increasing it.
  • When you look back 12 years, it’s clear that the dollar is gradually being debased. Note the Fibonacci retracement numbers that I’ve highlighted on this monthly chart.
  • Even if the dollar were to rally to the 100 area, it would not change the primary trend, which is down. The dollar is like a lost soul wandering across a desert. Austerity, not more QE, is the drink of water that my country’s fiat currency needs.

Gold Fibonacci Arc Chart

gold.gif

  • Any correction like the one that just happened in gold, is enough to shake even the staunchest bull’s confidence. Investors must think carefully about why they own physical metals.
  • There has been a party on Wall Street, driven by liquidity, not economic growth. The US economy is addicted to stimulus. More citizens are applying for government handouts. This is not how to build a strong currency. Gold ultimately moves in the opposite direction to the dollar. So, own gold. Physical gold.
  • I have identified Fibonacci support areas on this gold chart. $1302 is the 50% retracement line, and gold stopped declining at about $1320.
  • Also, RSI is very low. Although gold looks like it is bottoming here, I am watching the $1260 area carefully, which also offers very good support. This market seems very similar to 2008, where a V-type bottom was made, and prices quickly moved higher.

Gold Shakeout Chart

gold shakeout.gif

  • My $1350 “shakeout” target was acquired. From either the current $1320 area lows, or from $1250, I am projecting a slow grind higher, towards the $1500 resistance area.
  • Even large banks have said that this flash crash is “overdone”. The gold market is far from safe, but it does offer value.
  • Tonight’s COT report is critically important. It covers all the trading that took place during the flash crash, for both gold and silver. Send me an email to trading@superforcesignals.com and I’ll send you the multi-part video analysis I will be doing tonight. I believe that tonight’s COT report is the most important one, in the history of this bull market. It could show investors whether the gold bull has simply paused, or the bear has really taken over! Thank-you.

HUI Arc Chart

hui.gif

  • Several weeks ago, I mentioned the 250-300 support area on the HUI chart, as a possible target price. That target was acquired.
  • What I want to see now, on the upside, is a price advance on heavy volume. On the downside, the next area of support is the 175-150 area.
  • Compared to gold, most gold stocks are now cheaper than they were at the low of the 2008 market bottom.
  • Note how close the HUI is now, to the 3rd and largest Fibonacci arc, on this chart. Strong rallies can occur from this type of set-up.

GDX Filling The Gap Chart

gdxj.gif

  • Whether you are a bull or a bear, I think the next price objective for GDX is the top of the gap in the $32.50 area.
  • Bulls should buy now, with a $32.50 target, and bears could place some light short positions around $32-$33.
  • Note the massive panic volume. There’s a chance that an “ultimate low” is here, but the bottom callers (including me) have been wrong so many times, we look like a bear’s Swiss cheese sandwich.
  • Regardless, the use of proper money management techniques has allowed professional gold stock accumulators to continue to buy this carnage, with a reasonable degree of comfort. Never allocate large amounts of money to any single trade.

GDXJ Channel Backtest Chart

gdxj.gif

  • In this sector, unless you are an aggressive trader, this is a time to stand back and let the dust settle. If you are an accumulator, this type of weakness must be bought, but preferably only “after the dust settles”.
  • I’m looking for a rally back to the downtrend channel line, in the $13.50 area.
  • From there, I’ll be watching the volume patterns. Volume must start increasing, if junior stocks are going to put on a substantial rally.

Silver Support Zone Chart

silver.gif

  • This week, silver has come down, like many other assets. Having said that, none of the bars I own have gotten any smaller!
  • Perhaps the main lesson from this huge “flash crash” is that investors need to think carefully about how much leverage to use, when purchasing silver.
  • When the support at $26 failed, it was disappointing, but there is good support in the $19-$23 area.

 

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422 Richards Street

Vancouver, BC  V6B 2Z4

Canada

Apr 19, 2013 – Morris Hubbartt

 

Congrats to the gold bears and stock bulls! After being slaughtered for the majority of the last decade and more, they finally won a victory. Golf clap for you gentlemen. Now you can have your day in the sun once again. US stocks are at all-time highs and Gold sucks again! You won’t have to listen to your clients bitch and moan about how you ignored, avoided or were underweight the bull market of our time. Time to crow!

I awoke on Monday to a link from a subscriber. It was an editorial titled, “The Day that Gold Died.” The author cited the usual, clueless and baseless arguments both to why folks buy gold and why gold sucks as an investment. It is nothing more than a flimsy rant.  He also cited a “marvelous takedown” by Barry Ritholtz, a formerly humble and generally impartial commentator who is now enjoying mainstream notoriety.

The worst and most natural, instinctive error these chaps and all gold haters make is to immediately refer to gold is an end of the world investment. This would be the most bizarre and ridiculous argument for gold. If the world ends, then how do you collect on it? If society breaks down for a period of time, then what good will Gold do for you, ahead of a farm?

Do central banks buy Gold because they think the end of the world is coming? If Gold is an “end of the world” investment, then why the hell do western central banks own the vast majority of their reserves in Gold? And why are emerging central banks buying Gold?

It’s because Gold is money and has been the only form of money to last for thousands of years. Not too long ago it was legally part of the monetary system. Since that change in 1971, the S&P 500 has advanced from 88 to 1541 while Gold has moved from $35/oz to $1395/oz (as I pen this). Even with the latest slide in Gold, it has still crushed the S&P 500 by rising 40-fold compared to just 17.5 fold for the S&P 500.

Gold’s tremendous increase in value (since its removal from the monetary system) over a long period of time shows its value as a speculation but more importantly, a currency. Though it fluctuates greatly during each cycle, over the very long-term it is the strongest reserve asset. This is why central banks buy it, hold it and accumulate it. It’s a no-brainer. Jim Grant put it best when he said gold is a hedge against monetary disorder.

Now let me get back to this supposed “marvelous takedown” from Ritholtz.

First he cites that the US$ is at a 3-year high and that Gold rallied when the buck fell from 2001-2007. First, let me note what few analysts know. When it comes to important market moves, Gold usually leads the US$. Does Ritholtz know that the US$ bottomed in late 1978 while Gold soon advanced 400% until its top in early 1980? Does he know that each of Gold’s recent major bottoms (2000, 2005, 2008) occurred before the US$ topped? The US$ is at the same level it was in late 2004 when Gold was trading below $500/oz. So should Gold be at that level? Surely, a strong US$ is a negative for Gold. However, history shows us that Gold is far more than an anti-dollar bet.

Secondly, as usual we hear this utter nonsense that Gold is a “trade”. It’s a greater fool trade as Ritholtz says. According to Ritholtz, gold trades differently than equities (citing history) because it has no fundamentals (i.e. no earnings, cash flow, etc.). What detractors of Gold should say is, because it produces nothing and is hard to value, it is never an investment and always a speculation.

Getting back to his point, can we check the charts of the last 10-15 years? Which one is a trade and which is in a bull market? There is a difference between a trade and a secular trend (i.e. a bull market). The bull market is in Gold while equities with their 15-year zigzag, clearly should have been traded back and forth.

Ritholtz totally bungles this argument. He cites history but fails to mention that Gold and equities trade inversely over long cycles. Equities were in a secular bear from 1966 to 1982 while gold stocks were in a bull from 1960 to 1980 and gold in a bull from 1969 to 1980. Then precious metals experienced a vicious bear market in the 1980s and 1990s while equities performed fantastically. Since 2000 stocks have been in a bear market and precious metals in a bull.

There is a reason for this long-term cyclicality. Stocks begin a bear market at times of major economic excess. Naturally, the economy corrects the excesses while at the same time, government increases its spending and the Fed cuts rates to soften the impact of long-term recessionary forces. Furthermore, real interest rates are typically negative to ensure more money comes out of cash and fixed income. Stocks struggle through these periods and hard assets (especially precious metals) perform well. Ultimately, the private sector is able to work through the problems and high commodity prices induce greater supply, which quells future inflation and results in an extended bear market.

This entire argument between stock bulls and gold bugs ultimately comes down to one thing. Has the secular tide shifted? Was this the major top in Gold on par with 1980?

Let’s compare some performance numbers. In the previous bull market, Gold gained about 25-fold. In this one, its gained nearly 7.5-fold. In the final 12 months of the previous bull market, Gold gained 282%. The 12 months before the 2011 peak, Gold gained about 55%. The last three years of each? It’s 577% (1977-1980) and 156% (2008-2011).

Gold corrected about 45% after its peak at the end of 1974. In the 13 months leading up to that peak, Gold gained 116% versus 59% for this bull market. In the 24 months leading up to that top Gold gained about 200% versus about 100% for this bull market.

In terms of the numbers, the most recent top in Gold comes nowhere close to the bubble peak of 1980 nor is it close to the peak in 1974 which was followed by a 45% downturn. Calling Gold a bubble just proves you don’t know what you’re talking about.

Furthermore, we’ve noted that the Barron’s Gold Mining Index, which was in a bull market from 1960 to 1980, experienced two substantial downturns of 61% (1968-1969) and 68% (1972-1974) before rising about 7-fold from 1976 to 1980. The HUI Gold Bugs Index declined about 71% in 2008 and as of yesterday was down about 60% since its 2011 peak.

History argues that equities will remain in a secular bear market. The three previous secular bear markets lasted 20, 13 and 16 years. The shortest commodity bull market, the last one, is 13 years long. It is highly unlikely that the commodity bull market ended in 2011 at 12 years old. The shortest bull market is not likely to be followed by an even shorter one. Furthermore, its highly unlikely the bear market in equities ended at 9 years when the others range from 13 to 20 years.  Moreover, valuations at the 2009 bottom did not come close to where they were in 1921, 1942, 1946 or 1982.

Also, consider the Gold versus the S&P 500 ratio. It peaked in 1942 at 4.3 and in 1980 at 5.8. In 2011 it peaked at 1.7. Judging from history that was nowhere close to bubble territory.

Meanwhile, the macro backdrop remains extremely supportive of precious metals. Real interest rates are negative and will remain so for years as governments try to “QE” their way through the coming sovereign debt crisis. Do stock bulls honestly think governments will be able to continue to print money to buy their own bonds and stocks will go up 10% a year, there will be no inflation and commodities will decline? (Barry, isn’t this the recency effect you speak of?) This reminds me of the folk who denied the housing bubble or thought we weren’t in a recession in spring 2008. What happens when governments and central banks lose control of the bond markets and interest rates start rising? I’ll tell you what, they’ll print more and more to try to reverse it and rates will still go up.

This is why Kyle Bass and John Paulson aren’t selling. They made assloads of money betting against something that was inevitable and patiently waited. In the meantime, reporters and bloggers can poke fun at them saying the “trade” hasn’t worked or has gone wrong. These folks were never invested in precious metals to begin with and they either can’t see the world beyond a few days or fail to understand the bulletproof case for precious metals.

It’s true that many gold bugs deserve the recent ridicule. When you constantly promote wild conspiracy theories or blame manipulation for your large losses, you lose respect and credibility and you taint gold as an investment. It just makes us look worse.

The stock bulls and gold haters have won the battle but not the war. Sorry guys but your victory lap is premature. Next time you may want to do some real research before writing about Gold unless you just want to do a hit piece or take a victory lap. Precious metals are likely to strongly outperform stocks in the next three to four years. Both are nearing cyclical turning points. Once Gold goes parabolic, that is the signal to abandon ship and get back into stocks.

A sharp rally in the precious metals complex is days or hours away but look for a base building process to follow. Right now the complex is a strong buy. We’ve kept at least 40% cash over the past several months and have scaled in, albeit early. Now is the time to put money to work more aggressively than normal. If you’d be interested in professional guidance in uncovering the producers and explorers poised for big gains in the next few years then we invite you to learn more about our service.  

Good Luck!

Jordan Roy-Byrne, CMT

Jordan@TheDailyGold.com