-- Posted Monday, 15 April 2013 | | Disqus

The Metals:

Gold relentlessly fell throughout most of world trade and ended near it late session low of $1349.75 with a loss of 8.81%.  Silver slid to as low as $22.805 and ended with a loss of 12.69%.

Euro gold fell to about €1041, platinum lost $89 to $1400.50, and copper fell five cents to about $3.29.

Gold and silver equities fell over 9% by late morning before they bounced back higher midday, but they then fell back off again in the last couple of hours of trade and ended with almost 10% losses.

The Economy:

Tomorrow brings CPI, Housing Starts, Building Permits, Industrial Production, and Capacity Utilization.

The Markets:

Charts Courtesy of http://finance.yahoo.com/

Oil fell on China’s weaker than expected GDP report.

The U.S. dollar index and treasuries rose as the Dow, Nasdaq, and S&P dropped about 2% on worries about China’s economic growth.

Among the big names making news in the market today were J.C. Penney, Citigroup, Dish and Sprint, and Allison.

The Commentary:

“The gold shares have been remarkably prescient when it has come to predicting the slide in the price of gold. We have mentioned that the ratio of the HUI/Gold was so skewed that something had to give, either the price of gold was going to have to drop further and at a faster clip than the HUI was falling or the HUI was going to have to start to rise to bring this ratio back into balance.

Seeing that the shares have led the price of gold lower, I think it just makes sense to look for a sign of a selling exhaustion in there first before the metal itself will bottom.

In looking at the following long term chart of the HUI, the technical damage is all too painfully evident if you are a holder of the mining shares. I think it was last week that I put up a chart of this and noted that since the bottom tine of the pitchfork had been violated, that the next technical level of support would not emerge until down near the 275 level. We are there now. Notice that using two different sets of points from which to sketch out the Fibonacci retracement levels, we have a confluence near the 75% retracement level of both sets of numbers. I have circled that with an ellipse on the chart.

As you can see, that is between 273 - 272. That is very near the low made so far in the session which is 272.60. Here is what to think of this. If this level does not hold the decline, and I think it will have held if the HUI can close today's session above 290, (The session is not over as I type these comments) then based on Fibonacci retracement theory, we are going down even further. There is another band of support down near 250 should we fail here.

I also want to make a point very clear here. Just because a market may bottom, does not mean that the bull market is now ready to resume. It is not. The chart damage and more importantly, the psychological and financial carnage inflected on gold bulls has been so severe, that it is going to take a massive sea change in sentiment towards this metal before the gold bull market will resume. In short, their confidence towards the metal has been dealt a massive injury and that is going to take time to heal.

Right now, the sentiment will be to sell rallies until the chart technical aspects improve. What will it take to do that? Answer - loss of confidence in the respective currencies of these various nations that have embarked on their large scale quantitative easing/ bond buying programs. Remember, this is still to all practical reasons, a zero interest rate environment. Yield is still the key. Since gold throws off no yield, and since investors have as of yet to lose confidence in these fiat currencies, there is not much incentive to own the metal. Something has to transpire to shake the complacency.

What will cause investors to lose confidence in their currencies, is the onset of inflationary pressures. With the entire commodity complex currently falling apart, it is difficult to see where that is going to come from in the very near future.

I would want to see wages rising, which as of yet there are no signs of, before getting to a different mindset towards inflation. Heck, the US jobs machine is broken with the number of jobs being created nowhere near what is necessary to spark a solid recovery. Right now, we are back in the deflationary mindset with the only thing preventing a larger share of investors to coming around to that view being the soaring stock markets around the planet. We may have finally now seen the first real chink in the equity bulls' armor however. Finally, the S&P 500 is responding in kind to the severe sell off in tangibles and to the various warning signals that have been popping up in the Russell 2000 and the Dow Transports. Still, even with all this carnage in the commodity sector, there remains an incredibly obtuse attitude towards these warning signals on the part of the "buy every dip in the stock market" crowd.

There is a real tendency among traders, (among human beings in general I might add) to not recognize a change in the dynamics of a situation. In other words, we tend to rely on what has always worked in the past and assume that will be the permanent order of things. Anything that deviates from that which we are familiar with then is looked at as if it is an aberration, something that is momentary and will pass before the familiar status quo reasserts itself. This is why inflection points in markets can be so difficult to ascertain. We ask ourselves, is this a change in the trend, or is this just another ongoing reaction in a bull market. The equity guys, for the most part, have not bothered to even ask themselves this question. They almost robotically and mindlessly I might add, continue to buy the dips in price expecting ever higher and higher prices in stocks while all that is transpiring around them should urge any of them with a bit of sense to exercise some caution and not be so damned dogmatic.

As I stated in a previous post, there is not a single human being on the planet who has ever lived through anything remotely resembling what is currently occurring in the financial realm right now. We are all sailing without a compass in that sense. How in the world can we know with any certainty where in the heck things are going to go right now? We are just making guesses, informed guesses based on experience and history, but they are guesses nonetheless.

In that regards, the behavior of the overall speculative crowd is what will help us navigate these waters. Herd instinct or herd behavior is difficult to predict but once it manifests itself, it is not too difficult to read. When the attitude of the herd towards equities changes, when they are reluctant to chase prices higher, when they begin to grow nervous over holding stocks, when the formerly confident dip buyers begin to second guess themselves, then we can note that when it occurs.

Keep in mind this one word - CONFIDENCE. When that goes, so too will everything else. That is the number one task now of these monetary elites and Central Banks - do nothing, say nothing, infer nothing that might rattle confidence.

Take a look at this chart of the Russell 2000. These small cap stocks have been a much better indicator of investor willingness to take on risk. One would have thought that with Qe3 and QE4, now combined with the near equivalent of the Bank of Japan's version of QE, that small cap stocks would be on a tear higher. They are not and that should pique the attention of investors. Here is a market that has now had THREE KNOCKS on a solid resistance level and has failed to better it. Not only that, it is back below the 50 day moving average. If the support level on this chart gives way, and I do not know if it will, then I would expect to see some more rattling of the confidence cage of these equity perma bulls.”- Dan Norcini, More at http://www.traderdannorcini.blogspot.com/

“Having been on the right side for well over a decade and even sidestepping previous major corrections, yours truly didn’t see this plunge in gold and silver coming. To those that have (and while apologetic be advised its not to those who have been bearish all the way up as they’re little more than broken clock forecasters who like a clock are right just twice a day) correctly forecasted this sell-off, congratulations.

In a world where “what have you done for me lately” has become a way not just on Wall Street but in life itself, the only question is where do we go from here?

In the very near-term (like hours to a few days) I’ve no idea. One thing when markets plunge like this, they mimic earthquakes. Even if there aren’t any more quakes, plenty of aftershocks are possible. Knowing how the financial services industry and much of the financial media that follows it has a negative slant against gold no matter what; I fully expect a wave of bearish forecasts and chest pounding bears to be front and center until further notice.

The gut check one must do is to first remember a golden rule – the ultimate crime in investing is not being wrong but staying wrong. Has what led a decade-long run in gold faltered?

I’ve said for years that there have been four primary factors to the great bull run:

• Central Banks, once dominant sellers became neutral or net buyers (thereby removing the single largest negative that existed for years).
• Gold producers, who once literally cut their noses to spite their faces by selling production forward, have up until now made significant hedging a thing of the past.
• The world has been on a race to debase paper currencies, printing piles of new paper money while piling up debt to unsustainable levels and this has allowed gold to become an alternative to paper (funny) money.
• The creation of ETFs allowed an enormous amount of institutional money to become buyers that otherwise most likely would not have sought exposure to gold otherwise.

So let’s see if the crime is staying wrong:

• The Cyprus threat (that a former Goldman Sachs Managing Director and now President of the European Central Bank conveniently mentioned right after his former employee issue a major sell and short gold commentary) is the only potential central bank sale known at this time and its really small potatoes in the bigger picture. I fully expect a few months from now we will learn that certain Central Banks were in fact major buyers during this swoon.
• I haven’t notice or heard discussed any significant increase in hedging and believe any producer who does will not be looked on fondly by its shareholders.
• Guess what? The Japanese QE only made the race to debase, to print oodles of new paper money and add to the pile of already too much debt, more of a bullish factor.
• The ETF scenario is the only one that may have been impacted as its seeing large scale liquidation but will turn a negative only if that keeps up even when the paper market rallies.

The hardest part of the puzzle has been up until to now, the huge difference in the paper versus the physical market for gold and silver. Look, when we had the gas crisis in the 70s and afterwards, the used car market saw a flood of gas guzzlers sold onto the market. When the real estate market blew up, inventory of homes for sale went through the roof. Yet, despite the severe sell-off in the paper market of gold and silver, companies and people who buy and sell physical gold and silver continue to report extreme shortages of available physical gold and silver. If you asked yourself this, I can only shake my head as well.

Bottom line – It won’t be quick and pain and anguish will still be around but when it comes to gold, just know this.”- Peter Grandich, Grandich Letter

GATA Posts:

Clive Maund: Gold smash aims to rebuild JPM's Comex inventory

Did single entity trigger gold plunge?

GGR's Arensberg responds to anti-gold propaganda posing as journalism

The Statistics:

As of close of business: 4/12/2013

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: Change in Total Tonnes from yesterday’s data: SPDR subtracted 22.865 tonnes.

COMEX Gold Trust (IAU) Total Tonnes in Trust: 210.21: No change from yesterday’s data.

Silver Trust (SLV) Total Tonnes in Trust: 10,497.59: No change from yesterday’s data.

The Miners:

Great Panther’s (GPL) first quarter production, Paramount Gold’s (PZG) Preliminary Economic Assessment, AuRico’s (AUQ) first quarter operational results, Bear Creek’s (BCM.V) public hearing, First Majestic first quarter production, Excellon’s (EXN,.TO) first quarter production, Coeur’s (CDE) first quarter production were among the big stories in the gold and silver mining industry making headlines today.

WINNER

LOSERS

Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.

Please see Yahoo’s Mining/Metals News Wire for all of today’s mining news.

- Chris Mullen, Gold Seeker Report

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Additional Resources for today’s Gold Seeker Report can be found:

• http://www.capitalupdates.com
• http://www.goldseek.com
• http://www.silverseek.com
• http://www.goldreview.com 

© Gold Seeker 2013

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-- Posted Monday, 15 April 2013 | Digg This Article | Source: GoldSeek.com

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