"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, May 3, 2012

Draghi Derails Gold

Apparently ECB President Draghi believes things are going so well over in Euroland that traders are "correct" in their perceptions that no near term stimulus is needed. Down went gold, and silver, and copper, etc. as money flowed out of those markets and elsewhere into I have no idea what based on the fact that the equity markets are lower and are the bonds. Let's call it mattress money flows.

Meanwhile data coming out ahead of tomorrow's payroll numbers are indicating that the report will not be particularly strong here in the US. It will be interesting to see if we get a weak number how gold reacts to it. Normally we would expect to see it lower on the risk aversion trades but if it actually moves higher on a weak number, it will be additional fodder for the notion that the weaker the economic numbers are in the US, the better the chances are of the Fed engaging in a third round of QE (at least as far as a growing number of traders believe).

Anyway, for whatever reason, once again gold could not make it past the $1680 level as it was not even able to make it any higher than $1672 before the buyers stepped aside. Having fallen back below $1650 is short term negative however and now we will need to see whether or not it will fall as deeply as the $1620 level or lower where previously buyers have made their presence known.

The mining shares are lower today (Gee what a surprise - do these things ever go higher anymore) but remain above 420 in the HUI. Perhaps we will get a bounce from that level and confirm it as a bottom. We simply have to wait and see.


  1. Feels like the mining sector investors have basically capitulated. What is your take on ABX? They increased dividend but market keeps selling them. Didn't know there was anyone left to sell anymore.

  2. Dan,

    Would you mind putting up an updated chart of the HUI against the price of bullion. I know you posted one not to long ago but would love to see how we are trading against it today as the HUI continues to languish.

    I see extreme value at these levels but I have felt that way for a while and have been getting punished. One of my largest holdings in Primero Mining PPP reported excellent Q1 earnings this morning before the bell and it is up 2.88%. For a 250mm market cap company to have revenues rise 29% and gold production up 10% and reaffirm guidance that is a joke of a move at 2.88%. If a tech stock reported that strong it would have popped for a double digit % gain. I guess I should be happy that it's even positive at all today considering how the other miners are getting slaughtered.


    Patience is a virtue. I continue to average in to the miners and wait for the tide to turn.

  3. Ouch it looks like the mining shares are now below 420. Where is all this selling coming from?
    HUI - 416.53 20.57 -4.71%

  4. Sigh I clearly spoke too soon PPP is now up .01. That's 1 penny on a great q1 announcement. Am I the only one buying precious metals miners??? Sure feels like it with this price action.


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