"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


Thursday, February 27, 2014

Mining Shares Cannot Hold Gains

In what appears to be reminiscent of the not-too-distant past, the mining shares traded hesitantly for the entire session while the broader markets were on a tear higher. Yellen's testimony early in the day seemed to put the precious metals sector on a bullish footing but by the afternoon, prices began to slip with the result that the HUI ended up settling barely above its session low. That is not encouraging especially with the broader market just missing setting yet another all time high ( basis the S&P). It did manage to put in an all-time CLOSING HIGH however.

Here is the chart - a couple of things stand out to me. First, and most importantly, the ADX has turned down indicating that there is at least a temporary halt in what had been the recent uptrending move. Positive Directional Indicator remains above the Negative Directional Indicator meaning that the bulls still have control of the market however.

We will have to monitor the subsequent price action to see at what levels the dip buyers surface. A reasonable place to expect their first appearance would be when/if the index dips towards the 200 day moving average near 231-232. Below that lies the near confluence of the 100 day and 50 day moving averages. That comes in around the 215-217 level on the index. Bulls would not want to see this index fall below that level as it would probably trip the ADX into a negative posture.

There were some very wild moves occurring across several commodity markets today. How much of this is related to end-of-the-month position squaring and how much to actually waning upside momentum but the grains were hit fairly hard today, especially the beans. I definitely want to see the price action across the grains tomorrow as we end this month. AS I said yesterday, maybe the February Break is going to show up here to END the month of February and start the month of March. If so, it is a month overdue.


  1. "We both know that modern man rebels against the very concept of the word, "sin" as being an outdated concept from an unenlightened age. Yet God changes not in spite of the protestations of modern man against His authority."

    Spot on Dan. The biggest sinners throughout time were always saints - simply cause they had the conscious to be aware when they sinned. Today so many are so wet they don't feel the rain anymore.

  2. PM Miners Led the Precious Metals since December. Now Miners are awaiting Gold's Breakout at $1350 on its 3 year resistance trend-line.

    Agri Commodities did breakout from their 2-3 year downtrends but businesses engaged in agri did NOT rise because investors, as of now, feel that this is just a short blip due to bad weather. But i expect all of these to breakout too despite future good weather.

    However Dow & S&P are on the verge of Long Term Breakouts despite a terrible slump in fundamentals & economy.

    Its all Hyperinflationary. As the market knows that Yellen will Chicken Out of Tapering at the first signs of distress.

    Precious Metals miners will surely be the star performers of 2014.

  3. Only 1 question for today. Why arent the gold shorts in a state of panic ?

  4. Next question, dollar down WAY MORE than yesterday and still no gold move. Dan do you have thoughts on this?

    1. TDXman;

      lots of strange price moves today. interest rates are moving higher yet the dollar is moving lower. I can see gold undergoing a bit of weakness with higher interest rates but quite honestly, some of this might just be that end of the month book squaring that I mentioned this week. That can cause all manner of price dislocation.

      The revised Q4 number for the US showed growth much slower than the original estimates so that could be a factor as well.

      hard to read too much into one or even two day's price action at this time of the month... let's let the dust settle and see what we get by the end of the day. With stocks continuing to soar into new record highs, the reason to buy gold, in the mind of many big players, is fading somewhat. They love stocks and more importantly they love those big gains.

  5. Read Romans Chapter 1:16-32

    I feel it is EXACTLY what we are seeing in our nation today. VERY CURIOUS why there has been no move in GOLD with the dollar getting hit hard???? I guess the ESF has been caught off guard. Russia again embarrassing our idiot leaders....

  6. Hilarious. Russell 2000 now up 14 out of the last 15 days, now at world record highs, and gold going nowhere an mining shares under pressure with stocks like TRX still trading at 2006 levels.

    Funny how none of the "acclaimed experts" and "40-year veterans" predicted the greatest stock market run ever recorded and the 2nd worst bear market in mining stocks in 50 years.

  7. it is funny that on a day when the gold shorts should be in a state of panic, its the gold longs that are in a state of panic. Whoever was waiting for a big dollar decline to see gold rise, must be shaking their heads at this move.

    1. arnie;

      I am going to be most curious as to what, if any, changes occur to the GLD holdings after the close today. If they drop sharply, it will probably be on account of these guys wanting to chase stocks again and selling their gold to get the funds to do so. We'll see.

    2. World's biggest gold ETF eyes 1st monthly inflow in over a year

      * SPDR Gold Trust holdings up 10.5 T in February

      * Last net increase in reserves was in Dec. 2012

      * Weak U.S. data, softer dollar lift gold prices


  8. Yes, looking like another "terrifying collapse" in the mining shares once again as gold tumbles. By the way, California is now getting world record 24 hour rainfall, thus relieving the drought conditions, and that storm is expected to travel towards Texas and dump huge amounts of rain.

    Therefore you can expect a huge clothesline drop in agriculture and meat prices any day now.

    As usual, things always revert back to normal, always to the benefit to the consumer.

    Stay in the system.

    1. Mark, you are way incorrect on the California drought situation. sparks

    2. And on a bunch of other points as well.

    3. Mark
      This storm while nice and causing local floods and etc. is just a drop in the bucket compared to how far we are behind. There is significant long term damage to Central Valley Agg that we wll be paying for years. It only takes a little time with no water to kill a tree that takes years to grow.
      And replacement only happens if there is a reasonable chance of water to grow a return. The politicians are making this less likely every day.

  9. The fact is that gold is manipulated lower, and Comex is just about to implode; there's this tremendous demand coming from Asia that will squash the shorts, and finally, there's the Jim Willie's Voice, I mean, how can you not believe in the Voice!

  10. Abraxas:

    There is a reason why poor Jim Willie CB lives in a mud hut in Costa Rica, after incorrectly predicting the dollar collapse, bond market collapse, hyperinflation, and Morgan Stanley going under, and COMEX implosion.

    Exhibit A is the junk bond ETF's are almost back to record highs, some are up 15 out of the last 17 days, going up at a perfect 45 degree angle.

    Exhibit B is today's 15-min. chart of MS, GS, C, BAC, WFB and all the other "Too Big To Fail" banks which are now taking off like scalded dogs today.

    And don't even get me started on Chipotle, now at $570, a massive run from a low of $35 in 2009.

    Now if Eric King had only interviewed the CEO of Chipotle instead the last 5 years, he'd be a rock star hero featured on Bloomberg and CNBC as an "acclaimed expert", LOL.....

    1. Mark, while i agree that Jim willie was not correct past few years, he may be a bit early in his forecasts.

      World Reserve Currency failures occur over decades or centuries. Timing this is not an easy task. Forecasts must be given a variation of a decade atleast.

  11. Have traded commodities for a long. I will take Dan's advice not to make too much of one days trading. But the action in gold and silver today, given the dollars weakness and the higher markets accross the board falls into the shocking category. I just wonder if there are longer term implications from it.

  12. Wow, Northern Dynasty (NAK) getting decimated, down 30% today, looks like another disasterous investment.

    Minefields everywhere in this sector, no pun intended, lol!!!

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