"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Monday, February 7, 2011

Trader Dan on CBS Marketwatch

DJ MARKETWATCH VIEW: Gold Watchers See Positive Signs On Outlook

Mon Feb 07 08:28:52 2011 EST
   By Peter Brimelow

  Has gold turned the corner? Gold watchers see several positive signs.

  Gold had its first up week of the year, but Friday was a disappointing day. A
spectacular rise on Thursday, $20.90 in the CME April contract, broke the
downtrend that set in at the end of last year. But a further rally attempt
fizzled and April gold closed down $4, on low volume. Both gold and gold shares
(as represented by the Arca Gold Bugs Index) seem to have broken their New Year
downtrends--but strong confirmation was tantalizingly lacking.

  However, another part of Friday's market activity greatly excited two very
experienced gold followers: the Treasury sell-off.

  At JSMineSet, Dan Norcini stressed on Friday evening:

  "The big development in today's market session was the breakdown in the long
bond ... bonds have been carving out a five-week old sideways trading pattern
... the longer a market runs in a sideways pattern, the more significant the
breakout tends to be when once it occurs ... In the case of the bonds, the
breakdown was to the downside. I should also note that volume on the sharp move
lower was very heavy, always a good sign that the move is legitimate."

  Australia's The Privateer was even more direct on Saturday in a commentary
cheerfully entitled, "Look At Those Treasuries Go!"

  "Regardless of anything else going on around them, the yield on Treasury
paper is inexorably rising and the pace of that rise is accelerating ... As The
Privateer has pointed out MANY times, the REALLY BIG bull markets in precious
metals come when the yield on their 'substitute' as money--government
bonds--show rising yields and falling prices. The rising yields show an
increasing unwillingness to hold them."

  Despite Friday's misfire, the week saw other concrete positive news for gold.
It started with the influential Gartman Letter increasing its model portfolio
gold holdings on Monday. It continued with several reports of buying of
physical gold from India, both on Le Metropole Cafe, which always stresses the
premiums over world gold in the country it likes to call the world's largest
gold importer, and from Edel Tully, the gold analyst at UBS, a major bullion

  On Wednesday, UBS published a valuable chart of an index of the bank's gold
shipments to India, clearly showing a recent surge, and offered the remarkable

  "We struggle to recall a month when our total physical sales have been

  In fact, the reason for this is not so much India as China, as UBS makes
clear. In early December, the chairman of the Shanghai Gold Exchange revealed
that gold imports into China had quintupled in 2010, being already 209 metric
tons by the end of October, a very serious number in the context of gold.

  On Wednesday, the Financial Times published a story quoting bullion dealers
saying China imported another 200 tons in the following three months. Many
observers are amazed.

  China is currently celebrating the Lunar New Year, which lasts until
Wednesday. It is possible that this buying, while unprecedented, is highly
geared to this important holiday. But UBS reports that Chinese importers have
been seeking shipments for after the holiday.

  So it appears from a macro and a very gritty physical trade level, the
outlook for gold looks great. But will the price notice?

  (Peter Brimelow is author of "The Wall Street Gurus: How You Can Profit From
Investment Newsletters." He writes for MarketWatch. He can be reached at
415-439-6400 or by email at AskNewswires@dowjones.com.)

  (END) Dow Jones Newswires

  02-07-11 0828ET

  Copyright (c) 2011 Dow Jones & Company, Inc.


  1. I think that physical gold is struggling to decouple from the paper gold market and will continue to do so for at least another month or two. It's obvious, at least in my eyes, that their is a race by China, India, Russia, Saudia Arabia, etc. to secure their wealth through the acquisition of gold and to help their position in the rise of a new trade currency. I am beginning to think it will be the Yuan rather than the sdrs, but that's beside the point. China is opening backdoor access to a lot of gold through their purchase of Eurobonds via some type of gold swap arrangement. They aren't buying those bonds out of the kindness of their hearts, but wisely see they can demand payment type and premiums and are creating a beholding relationship with previous NATO allies. It looks very much like the US and UK have been completely outmaneuvered and will quickly be shown their back room seats. I think China has lessened their Comex purchases and will use these Eurobond purchases in some type of gold swap utilizing, maybe, the IMF. This arrangement will allow Blythe to continue to suppress gold through mountains of paper, in the short term, which is exactly what the CHinese want them to do until they lock in the swap prices. Your thoughts?

  2. Congrats on starting your blog!

  3. Dan, I get great insight from your analysis and discussions with Eric on the KWN Weekly Metal Wrap. I will be visiting here often.

  4. Welcome to the blog world and I have added you to my blog list on my blog...My readers will enjoy your commentary.

  5. Hello Dan - I am a long time fan anxiously awaiting your updates on JSMineset and KWN Weekly Metals Wrap. I bookmarked your blog and is part of my PM market news.

    This is great!


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