“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"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


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Thursday, December 12, 2013

Gold Miners taking it on the Chin once again

There is news this morning that IAM GOLD has completely suspended its dividend. Unlike Barrick and Newmont, which both REDUCED their dividend payments earlier this year, IAG has done away with altogether.

News like this never serves a sector well which has already been beaten up so badly. Coming at a time in which it appeared some of the mining stocks were attempting to cement a bottom, it could not have been worse.

In a note to clients, Goldman analysts noted that IAG has one of the highest cash costs in the sector ($1200).

Unfortunately the entire sector is getting hit hard again today. Barrick, which just this week looked as if it was ready to bottom, has now fallen back into that Monday gap on the charts and completely closed it and then some.

Meanwhile, the HUI has now made a new low for this move down. It has scored a new 52 week low and is actually trading below the MONTHLY CLOSING PRICE made back in October 2008.



Let's see what the rest of the day brings. There is still a chance that the index and some of the respective miners could stage a late session move higher. That would be a hugely positive sign. If not, well... not much more needs to be added.

26 comments:

  1. Hilarious how all the King World News guys were jumping up and down again about how gold was going to move $275 in one day. Well, they were right, looks like that move is going to be down.

    Only a matter of time before that huge support level breaks and then all the CIGA's will finally dump their positoins.

    ReplyDelete
    Replies
    1. Mark;

      The US has over $90 TRILLION in unfunded liabilities. I cannot even wrap my mind around a number that large. At some point, some of these predictions made about gold, will undoubtedly occur but until the rest of the market participants actually begin getting concerned about such things, gold will continue to attract selling.

      Something needs to occur which rattles confidence and shakes the complacency in the broader markets. Until it does, it is more of the same. Investors by large seem to have lost their collective senses in light of the gargantuan amount of indebtedness wracked up by our government.

      My thinking is that tragically, too many of them are not worried because the day of reckoning seems a distant threat not to happen in their lifetime. I worry for my children especially for it is they who will inherit this mess and reap the consequences of our profligacy.

      We still have the hedge funds as net longs in the gold market. They might have to move to an outright net short position before we get a final bottom in this thing. I do want to note however that the longer gold can maintain a "12" handle, the more likely the odds become of an actual bottom. A change in the handle to "11" would then be the straw that might actually bring in the final wave of capitulative selling.

      I would keep watching the mining shares. If they rebound late today, it would be a very friendly signal.



      Delete
    2. Mark: We are monitoring the situation very closely at The News UNIT. Take a look at the recent findings:
      The News UNIT

      Delete
    3. News; more wild eyed calls? sparks

      Delete
    4. Perhaps he got his info mixed up. Silver looks to be cratering since that was recorded. He said silver would spike within the next 48 hours and Bitcoin would crash within 24 hours.

      SilverIsKingNewsWorld also has some important information and I'll make it free to all:

      Silver may spike in the next 48 hours but the spike will be from $19.50 all the way up to $19.60. If it drops, it won't go down below $19.00.

      Bitcoin may crash in the next 24 hours. If it does, expect many anti-Bitcoiners to post many "told you so" messages on the various finance blogs.

      Last but not least, the Mega Millions jackpot is $400 million tomorrow night. That's really about $140 million but our government will never miss an opportunity to lie in order to steal our money. My prediction is this: No one will purchase the winning ticket and the prize next Tuesday will be more than $500 million (~$170 million). Therefore, save your money and don't buy a Mega Millions ticket for this drawing and save it for the next drawing.

      Delete
    5. Steve in sparks: What wild eyed calls? The News UNIT is just like an online journal of news. I'm just watching all the fruits and nuts on their YOU TUBE CHANNELS and so forth. G4T and the NIA CARTEL along with the rest of the SILVER and GOLD CULTISTS. It's somewhat humorous actually. :-) I suppose TWTR will go up to $100 while the stock market corrects? You make the call.

      For additional entertainment go read:
      The News UNIT

      I don't take the stock market seriously anymore. I'm only interested in acquiring FEDERAL RESERVE NOTES. I suppose that will be known as money laundering and I'm a terrorist. Well that's OK too actually. I'm no stranger to reality.

      Delete
  2. Dan you must admit.

    We are now living in a perfect world environment whereby central banks can print infinitely with no negative consequences whatsoever.

    At the rate the CRB index and gold is falling, Yellen, Draghi, and Uncle Abe will be able to easily DOUBLE QE the next time there is any trouble in the credit markets.

    That will boost the Dow up to 20,000 and light a fire in emerging markets.

    Of course, commodities will also take off, resulting in a 50% bear market rally in the CRB index before Yellen starts flapping her pie hole again about "Inflation mandate", to send the commodity speculators reeling and reign in an over extended stock market.

    Meanwhile, Treasury prices will soar and cheap money will be available once again.

    Think about it.

    It is the perfect "Wash, Rinse, Repeat" cycle which guarantees unlimited prosperity for all.

    ReplyDelete
    Replies
    1. Mark;

      I certainly do admit that it would seem that money printing has no consequences whatsoever. I sure would not have expected that. I don't think a lot of others did either based on what we saw happening to commodity prices back during rounds one and two of QE.

      At some point however the market realized that the expected inflationary impact never materialized. Too much debt plus the fact that the money was not really making it into the broader economy but was mainly going into stocks.

      That is when gold fell apart and the rush into stocks and out of commodities kicked off.

      I guess it will just keep on going until one day when it stops. Until then, as you state, traders/investors going with the money flow are doing very well courtesy of the Fed and the rest of the Central Planners.

      Yellen scares the heck out of me because I think she will make Helicopter Ben look like Ebenezer Scrooge!

      Delete
  3. A word about the North Korean gold sale. If true, it would be a low in civilization if others are thinking, if its good enough for Nroth Korea to sell gold, its good enough for me. And then buy dollars of a country with a 17 trillion debt.

    ReplyDelete
  4. How bout these apples. I say go tell the FEDS to ....... themselves. http://www.zerohedge.com/news/2013-12-12/south-carolina-about-pass-bill-nullify-obamacare

    ReplyDelete
    Replies
    1. White Wolf;

      Three cheers for the Palmetto State!

      Delete
  5. Dan, I wonder if you might agree with the following.

    Aside from tax-loss selling, the miners are under pressure because $1225 gold puts many of them on the cusp of viability. I think, for this reason, a new low in the shares does not necessarily predict a new low in gold. Gold may have to drag the shares higher for a spell, until investors are convinced that gold is at a price the miners can survive on, say $1350. At that point, gold may stagnate, and the whole complex launches a traditional cycle, where the miners lead gold higher on expectations of inflation (i.e, the Fed's tapering seen to lag a rise in consumer prices.). Just an idea, but gold has had a month to follow the shares to new lows, and hasn't done it. Gold may be the leader here.

    ReplyDelete
    Replies
    1. Robert;

      That makes a lot of sense. I am always open to possibilities in these market because so many of the old reliable signals no longer seem to matter.

      Delete
    2. This is what I've been thinking, as well. I don't see how the HUI could drag gold lower when production is becoming unviable and thus the supply of newly mined gold should drop.

      Delete
  6. The Big Disasters for 2014 are China and Bitcoin; you heard it here first, from sparks; swb

    ReplyDelete
  7. it's well documented that virtually none of this money is reaching the end user. there can be no bidding up of prices. if rents continue to rise, and incomes continue to fall, where can inflation come from? When larger portions of income goes to fixed expenses and debt, who can bid up prices. the globalists are amazingly brilliant.
    -------------------
    Here's another article of bail-ins. Gold falls this time....

    Italy backs 8 percent minimum bail-in for ailing banks

    http://ca.news.yahoo.com/italy-backs-8-percent-minimum-bail-ailing-banks-133045683--finance.html

    ReplyDelete
    Replies
    1. u r spot on Eph; Just watch the Aussie and Copper; they will give u the answer; sparks

      Delete
  8. I wonder if lead in a well placed position to many banksters and their minions ...is the only way to end the worlds debt problems....imho

    ReplyDelete
    Replies
    1. Why do you rabble-rousing violent foolish types feel the need to come on these forums and try to incite some poor psycho to hurt others and himself?
      And what do you think causes mankind's problems? Is it always "those evil rulers"? Or is it the heart of each individual which must be changed by grace from Jesus?

      Delete
    2. dan;

      that would not solve anything... besides, leave any vengeance to God. It is His prerogative.

      Delete
  9. Speaking of bank bail-ins, is it safe to assume that cash held in a safe deposit box is not subject to the bail-in? Assuming that is indeed the case, it makes more sense for those who appreciate the "safety" of having their money in the bank, keep it in a safety deposit box rather than in a deposit account.

    ReplyDelete
    Replies
    1. i wouldn't keep much cash in safety deposit boxes. you might have some explaining to do if it were found. Someone could even see you place it in or take it out, and tattle on you like a brownshirt.

      storing cash is easy in homes. a little carpentry skills are needed, that's all. Keeping metal at home is a little harder theoretically. if you have a lot, especially silver, a motivated person with a metal detector and some time can locate your stash. This is another reason why I do not like silver as a store of wealth. It requires a handtruck.

      Delete
    2. Money in a safe deposit box can and will be considered tax evasion, subject to confiscation. You are presumed guilty and have to prove you are not.

      Delete
  10. The action in DUST (and NUGT) is just wild. The recent spike up caught me wrong footed, thought I would extract myself by selling some today after watching spot action last night, DUST gaped on open as usual but way past my sell price so I actually made more money than I had hoped for. Left some stock in the game to respect the down trend. Don't play NUGT that much as the upside possibilities are not that great...yet.

    Aside: Armstrong had this to say; "The rise in the currency is NOT indicative of an economic boom or strength. The currency will rise as money flees from assets. The higher the currency moves, the greater the decline in trade and the higher unemployment will rise." from a write up titled 'Deflation Causes a Currency To rise'.

    The title means to me that during deflation, debt is actually being paid down (if they would only stop printing at the same time but they can't and won't) with markets going through the needed pain of a downward cycle which lasts years to decades to rectify the outstanding debt (unless you are Japan and just make things worse). Ol' Yellen will continue to try and stop the business cycle from going down and in the process inflate the stock market bubble further even causing those overseas dollars to flow (rush) in.

    Notice your favorite packaged food products are shrinking in size and weight but the pricing stays the same or goes up slightly, is that inflation or deflation? Luckily here in the US, fuel prices are saving us from any open wound bleeding but leaves room for more taxation, you can't win. Ask Euroland with their VATs and unemployment,

    ReplyDelete
  11. Anonymous

    My Wife and myself were discussing the whole packaging slight of hand yesterday. Just about everything we bought cost the same but contained less.
    This is probably inflationary...or a clever way to disguise inflation.
    Same with buying a new car...sales are up but now the average car loan is 84 months, I remember thinking 48 months was ridiculous.
    Inflation is being held at bay only because of deception and sketchy reporting.
    When we will catch on? When car loans are 120 months and it takes two boxes of Mac & Cheese to serve 1 person? When households require both parents and any child over 12 to work just to keep the consumption going?

    To Mark - Say what you want about perpetual prosperity...it is an outright illusion and a lie.

    ReplyDelete
    Replies
    1. Dean, you are so right on! Not just the packaging, but every time I replace a shirt, sweatshirt, pair of slacks, the new product is flimsier. Inflation is rampant in the deteriorating quality of everything we buy, not to mention the illusion of demand that financing creates. Gold is truth, and it will rise when the truth outs. Unfortunately, not until then.

      Delete

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