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Why There's Upside To Silver's Four-Year Lows

By: David Sterman of Street Authority

Even as investors were re-embracing stocks in 2010 and 2011, they scored really big gains with one of the hottest commodities in the world: Silver.

The precious metal soared in price from under $20 in August 2010 to nearly $50 an ounce by the next spring. In the hindsight, the silver spike was a classic bubble, fueled by inflation concerns that simply never materialized.

Though few people could have guessed that silver would be capable of a 150% nine-month gain, few also would have predicted that the eventual slump in silver would be so extended. Silver prices fell back below $30 an ounce by the start of 2013, and they've been in freefall ever since. A snapback to 2011 peaks is out of the cards.

You can get a sense of just how painful the silver slump has been by glancing at the performance of key exchange-traded funds (ETFs). The leveraged (2-times and 3-times) funds have been among the market's worst performers.

And when it comes to the silver producers themselves, it appears as if sentiment has utterly collapsed. In recent weeks, industry share prices have slumped another 20%-to-30%. In contrast, the pullback in gold prices and shares of gold miners has not been nearly as severe. [Read more...]

Article source: http://www.streetauthority.com/node/30483117

Can Gold Act as a Safe Haven Again?

The Gold Report: The World Gold Council, which gets its numbers from Thomson Reuters GFMS, reports that total gold demand in Q2/14 fell by 15% versus the same period in 2013. Furthermore, physical bar and official coin demand were basically cut in half while jewelry demand fell by 217 tons or 30%. What do you make of all of that?

Christos Doulis: Clearly, there has been less enthusiasm for owning gold in recent years. A lot of that has to do with the concept of gold as a safe haven. Six years ago, when the financial crisis was in full swing, gold was $800900/ounce ($800900/oz), but on its way to $1,900/oz in September 2011. The fears associated with that period have largely receded and we're seeing a decrease in both gold investment and jewelry demand, which is often a form of savings in non-Western nations. We're seeing a reaction in demand because the fear component that drives interest in the gold space is down significantly.

TGR: Meanwhile, central bank gold purchases were up 28% year-over-year. Is that the silver lining?

"Cayden Resource Inc. has a quality project that will likely be among the lower-cost producers."

CD: I'm a goldbug in that I think everything that has happened since 2008 is ultimately positive for precious metals prices. We've had a massive money printing exercise. The markets are running because there's so much money and the money has to go somewhere. The fact that central banks are buying gold tells me that goldthe currency between states and central banksis still regarded as an important part of the reserve mix. While the demand for gold among general investors may have decreased during the last few years, the policy makers in the central banks are well aware of the seeds that have been sown in a fiat-currency race to the bottom.

TGR: With the U.S. economy seemingly strengthening, gold seems destined to trend lower in the near term. What's your view? [Read more...]

Article source: http://feedproxy.google.com/~r/theaureport/Ajgh/~3/os-pPnWTuxI/16271

Sentiment Shifting for Gold Bugs

From a post on the HUI at the site last week:

“There are worse things that could happen than filling a gap and scattering the wrong kind of gold bugs back out.  Then it would be up to the longer-term charts to do the heavy lifting if the daily does fulfill this downside potential.”

The gap was filled, the top end of the anticipated support zone was reached and indeed, the wrong [i.e. momentum players] kind of gold bugs are scattering back out.  The hard sell down on Thursday was very likely due in large part to the selling by traders with a fetish about gold as a geopolitical or terror hedge.

We should continue to tune out these people and while we are at it, tune out the ‘Indian wedding season’ and ‘China demand’ pumpers in favor of real fundamentals like gold’s relationship to commodities and the stock market, the Banking sector’s relationship to the broad market, Junk Bond to Quality credit spreads and US Treasury bond yield relationships.

It’s boring stuff compared to all that demand in China, Modi’s pro-gold regime in India and of course how we are all going to go down the drain amidst war, terror and an age of global conflict unless we have a ‘crisis hedge’.  The only terror gold investors should care about is that perpetrated upon paper/digital currencies by global policy makers.

So last week was good in that it blew out those who were hanging on through the 2 month long grind that did indeed turn out to be short-term topping patterns.  I don’t mind telling you that my patience was tested by the bullish spirits, especially on up days with Ukraine in the headlines.  I did not think it would take 2 months to resolve, but every time the sector looked like it would crack, a new geopolitical flashpoint would show up in the mainstream financial media.

That condition is now being closed out.  Taking its place could be a bottom of at least short-term significance (i.e. to a bounce).  We have a fundamental backdrop that is not fully formed and a big picture technical backdrop that has degraded in gold and silver and is not proven in the equities.  So whether we bounce only, go bullish for an extended rally or even bull market, or (and it’s still on the table folks) fail into the ‘final plunge’ scenario, we are dealing in potentials, not confirmed trends.

Moving on let’s check sector sentiment.

st.au.optix

The current hook down in gold’s Optix (Sentimentrader.com’s aggregated Public Opinion data) is correcting recent surges in optimism.  This is coming amidst a small positive trend.  ‘Uh oh, dumb money is getting positive!’ think contrarians anxiously.  But the historical view shows that the Optix rises in the initial stages of a bull market. [Read more...]

How is Doug Casey Preparing for a Crisis Worse than 2008?

By Doug Casey, Chairman

He and His Fellow Millionaires Are Getting Back to Basics

Trillions of dollars of debt, a bond bubble on the verge of bursting and economic distortions that make it difficult for investors to know what is going on behind the curtain have created what author Doug Casey calls a crisis economy. But he is not one to be beaten down. He is planning to make the most of this coming financial disaster by buying equities with real value—silver, gold, uranium, even coal. And, in this interview with The Mining Report, he shares his formula for determining which of the 1,500 "so-called mining stocks" on the TSX actually have value.

The Mining Report: This year's Casey Research Summit is titled "Thriving in a Crisis Economy." What is the most pressing crisis for investors today?

Doug Casey: We are exiting the eye of the giant financial hurricane that we entered in 2007, and we're going into its trailing edge. It's going to be much more severe, different and longer lasting than what we saw in 2008 and 2009. Investors should be preparing for some really stormy weather by the end of this year, certainly in 2015.

TMR: The 2008 stock market embodied a great deal of volatility. Now, the indexes seem to be rising steadily. Why do you think we are headed for something worse again?

DC: The U.S. created trillions of dollars to fight the financial crisis of 2008 and 2009. Most of those dollars are still sitting in the banking system and aren't in the economy. Some have found their way into the stock markets and the bond markets, creating a stock bubble and a bond superbubble. The higher stocks and bonds go, the harder they're going to fall.

TMR: When Streetwise President Karen Roche interviewed you last year, you predicted a devastating crash. Are we getting closer to that crash? What are the signs that a bond bubble is about to burst? [Read more...]

HUI, Gold & Silver; Fun With Monthly Charts

Outside of the sound practice that is physical gold ownership in a time of monetary gamesmanship, the precious metals sector is all about speculation, at least according to 9 out of 10 chart jockeys and momentum junkies micro managing every short-term twist and turn.

Indeed, NFTRH manages gold, silver and the gold stocks on down to the short-term views as well, but that is only because the long-term views have stated that this is a time to be paying attention.  Do we pay attention because we have waited so long to promote our orthodoxy and finally be right as gold bugs?  No.  We pay attention when a chart tells us to pay attention.

While we manage the shorter-term views (both macro fundamental and technical) rigorously in the weekly report and interim updates, here I’d like to dial out to the big monthly picture with 3 large (click to expand as needed) charts of HUI, Gold and Silver to see their stories, which are the reasons we are managing shorter-term views.

HUI Gold Bugs Index

hui

First HUI monthly reviews the warnings to the analysis from 2012 and 2013.  They were very clear and should have kept people out of much of harm’s way with respect to gold stock speculation. [Read more...]

Sean Rakhimov: Upward Trend a Silver Investor's Friend

The Gold Report: The Washington D.C.-based Silver Institute reports that net silver demand has exceeded net silver supply each year since 2004, with a supply deficit of 113 million ounces (113 Moz) reported in 2013. Why hasn't that trend translated into dramatically higher silver prices?

Sean Rakhimov: First, I don't put much faith in these numbers. For instance, CPM Group has somewhat different numbers. Either way, silver supply and demand have been roughly in equilibrium, in my opinion, over the past decade or so. Second, silver manifests itself as a precious metal in times of crisis or uncertainty. When it's business as usual, silver acts more like a base metal and trades more on supply and demand numbers. Silver prices will respond during a crisis as its perception changes from an industrial to precious metal. That's when you will see more of what we saw in 2011 when in the space of about six months silver went up three times. Another period like that is coming.

"Excellon Resources Inc. has a handle on its deposit's cost structure and grade."

TGR: In early June we started to see stronger precious metals prices and that has carried through. Is this a trend?

SR: It is the beginning of a trend. Precious metals characteristically start going up after a prolonged decline, yet early in the reversal they rarely inspire any confidence because the last dozen or so similar moves fizzled after a 1020% move. This could be one of those. Silver is at $21 per ounce ($21/oz) now, maybe next week it will test $18/oz again. It's anybody's guess but I believe that toward the end of the year we'll probably see higher numbersmaybe substantially higher.

TGR: Is there a telltale sign that shows investors that this upturn is real? [Read more...]

Article source: http://feedproxy.google.com/~r/theaureport/Ajgh/~3/gl8kpOUWCFs/16141

The Government's Disastrous Reign over U.S. Money

By Elliott Wave International

Very few people know that the United States did not create a monetary unit pegged to "buy" some amount of metal, as if the dollar were some kind of money independent of metal.

In 1792, Congress passed the U.S. Coinage Act, which defined a dollar as a coin containing 371.25 grains of silver and 44.75 grains of alloy. Congress did not say a dollar was worth that amount of metal; it was that amount of metal. A dollar, then, was a unit of weight, like a gram, ounce or pound. Since the alloy portion of the coin was nearly worthless, a dollar was essentially defined as 371.25 grains -- equal to 24.057 grams, or 0.7734 Troy oz. -- of pure silver. (15.43 grains = 1 gram, and 480 grains = 1 Troy ounce.)

In a nutshell, a dollar was equal to a bit more than 3/4 of an ounce of silver; or, in reverse, an ounce of silver was equal to $1.293.

The same act declared that a new coin, called an Eagle, would consist of 247.5 grains of gold and 22.5 grains of alloy. It valued this coin by law at ten dollars, meaning 3712.5 grains of silver. [Read more...]

Gold, Silver & the Macro

Those micro managing the precious metals are fixating on the Symmetrical Triangle (bearish continuation) and a coming 'Death Cross' of the MA 50 below the MA 200.

The Sym-Tri has been apparent for about three weeks and the Death Cross is hype put forth by those who would make grand TA statements.  The Death Cross means next to nothing.  I mean, how much good did the Golden Cross that the "community" was pumping in March end up doing?

gold

Gold is bearish and has been bearish by its technicals (below the 50 and 200 MA’s), and ever since the economic soft patch was was put behind us (cold weather, remember?) by its apparent macro fundamentals as well.  NFTRH has been keeping this situation locked down and in a box for future reference.  The box will be opened when the time is right.

Meanwhile, I'd suggest that people avoid micro managing gold.  It is not an idol or a religion, and while there is a whole industry champing at the bit to begin promoting it again, it is just a tool for retaining the value of money.  Sometimes tools sit in the toolbox.

As for silver… [Read more...]

Don't Keep Your Gold and Silver in the US, Says Marc Faber

Publisher Marc Faber discusses the fragile state of the US and global financial systems… how rising inflation will affect the average American… how soon the bubble will burst… and why gold and silver will triumph.

Here are a few highlights:

"The US is a country that likes to create trouble, but they don’t like to clean up things."

"We've now been five years into the bull market and the US economy bottomed out in June 2009. We already had a crack-up boom—not in the economy of the typical household, but in the economy of the super-well-to-do people, whose asset prices rose dramatically and as a result created a huge wealth inequality." [Read more...]

Which Companies Will Bring in the Green?

The Gold Report: In a call with Sprott clients last week, you said that the junior resource market is at an intermediate-term top right now and there will be good summer entry points. Why is the market at a top now instead of May, which is more typical? Should investors wait until the summer entry points to get into good juniors?

Rick Rule: The top could continue through mid-May. If investors have positions in their portfolios that they aren't thrilled with, they should use this market to sell. One of the things I've noticed is that if an investor paid $1 for a stock and the stock is at $0.35even if the stock was valuelessthey are unwilling to sell it for $0.35. In many cases, the stocks that fell from $1 to $0.25 or $0.35 are now selling at $0.50 or $0.60. My suggestion is that this is a great time to take advantage of it.

"Tahoe Resources Inc. has one of the finest silver deposits in the world."

I want to draw people's attention to the fact that the market is up 40% in some cases from its bottom. Amazingly, people are more attracted to that than a market that exhibited bargain basement prices.

Although I believe that the market has bottomed, we're going to be in an upward channel with higher highs and higher lows, but we are certainly going to exhibit the volatility that the market is famous for. It's my suspicion that the summer doldrums will see lows that, while higher than last summer, are substantially lower than the prices that we're enjoying today.

TGR: Gold has been above $1,300/ounce ($1,300/oz) for several weeks. Is that influencing the market? [Read more...]

Article source: http://feedproxy.google.com/~r/theaureport/Ajgh/~3/q1TvAozm7V4/15899

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