Notice that the index managed to CLOSE INTO THE GAP region noted on the chart; it has not, however, managed to close ABOVE that gap. If this index fades and cannot maintain its footing up here, technicians are going to view that as a bearish signal and will be emboldened to come back into the market selling. At least the bulls showed some mettle today which was rather pleasant given the weakness in the broader equity markets.
I do think that the odds are favoring a bottom in this sector based on what I can see thus far. That does not mean these shares are ready to rocket higher as some suggest. What it more likely denotes is some consolidation or sideways movement until the bulls can convincingly seize the initiative.
The metal itself is having trouble clearing $1300, round number resistance that needs to give way before I personally will feel better about gold's prospects for the short term as well as that of the miners.
As mentioned here previously however, I expect more mining companies to be coming on with hedging programs so gold will meet selling resistance on the way higher from the companies that dig it out of the ground. There is no way they should make the mistake of not locking in some profits on future production. Even worse than that would be to end up producing at a loss!
Tomorrow we are going to have to sit around and parse the words that come out of Ben Bernanke's mouth once again, unfortunately. Whether he walks back some of his comments from last Wednesday remains to be seen. Personally, I still believe that his sole purpose in uttering those words was to knock down rising interest rates and send the bond vigilantes scurrying for cover.
The Fed, nor the US government for that matter, DOES NOT WANT higher interest rates. If however, Bernanke sends the US Dollar sharply lower, look for noise to start emerging out of the Eurozone. They do not want a higher Euro over there for the most part. The Swiss do not want a strong Franc either.
Truth be told, I look for him to say what both sides want to hear meaning that we will probably have the same old, same ol'. In other words, "we need accommodative monetary policy to continue but will look at the economic data to determine when and how much to begin scaling back or tapering those bond purchase. Some news flash!
Silver is still struggling to convincingly clear and LEAVE BEHIND the $20 level. Until it does, I am not interested in it.
good letter Dan; sad that we have to pay attention to the Clownke
ReplyDeleteThere you go Steve. Tapering not on present path. Done. Looks like gold to rally a bit more now. After 1300. I am in for a bit more.
DeleteThank you Dan
ReplyDeleteToday is yet another example of how Bernanke is the most powerful man in financial market history.
ReplyDeleteThe mere utterance of "words" ended up creating another huge surge in wealth for the "Fed Worshippers" at the expense of the "Stackers and Preppers" who keep predicting the end of the world and a massive collapse in the financial system.
Never before in world history has one man enabled such a huge wealth transfer out of the hands of milllions of guys like Gerald Celente and into the hands of a select few Wall St. insiders and small time daytraders who are piggybacking off the trend selected by Goldman Sachs.
Imagine the glory of buying "too big to fail" banks like Wells Fargo at $7 and selling it at today's price of $44.
Those same guys are probably now buying some junior mining stocks, so they can quadruple their gains during this bear market bounce in the HUI.
you have it right, Dan; the concrete lid remains in place at 1300 & 20, barring any end of week reversals; same thing goes for the miners as it looks like yesterday was a bull trap; steve in sparks
ReplyDeleteI bet Bernanke and his cronies are hitting the F12 refresh button on King World News blog regularly.
ReplyDeleteEvery time there are a series of outlandish price predictions posted for the PM's on that site, then KABOOM!!!, another pallet full of COMEX "Short Gold At Market" order tickets are hauled out of Ft. Knox and heaped upon the commodity exchanges.
Remember, the amount of physical gold and silver and annual mine production is limited.
However, the amount of paper shorts that can be created is limitless.
Ergo, instantaneous selling in gold and silver any time they want.
More gold mining companies fold.
More "Cash For Gold" stores close.
More mining CEO net worths decimated.
More demoralized "Stackers" and overzealous Asians stuck in underwater positions.
More profits, bigger Central Park flats purchased, more Bentley's bought by the Wall St. "To Big To Fail" CEO's and senior trading executives.
How easy is that?
but Mark, they are all billionaire, 55 year experienced, advisors to the world so don't they have to be right?
ReplyDeleteGood point, Steve.
ReplyDeleteMaybe they are set for life, and investment in mining companies are simply a hobby loss for them.
They can always make it up by starting a gloom and doom blog and earn massive Google fees by catering to the bomb shelter, hard money, and "Endgamer" types who by the way are the most degenerate gamblers on the planet by playing the gold futures market.
Funny how those gamblers have been dis-hoarded of their physical gold because they ignored Jim Sinclair's advice to stay out of the gambling parlors and are constantly having to meet margin calls.
Now all they have left are underground bunkers stocked with guns, ammo, and freeze dried tetrazzini., LOL.....
Dan, Faber, Zulauf, Farage, Grant, Roberts are worth listening to; as far as the rest of the daily donkeys, it is really sad about their ideas; my European friends just laugh at KWN for the most parts; but don't forget, the Russians and Chinese know more than all of us, right? Next stop looks like 16 for me in silver, but God knows I would like to get bullish; that is all, move along, steve in sparks
ReplyDelete