Gold Editorials & Commentary

GLD - on sell signal.

I'm happy to say that this week Barron's magazine published an article I wrote on Electrical Power Consumption. You may want to buy an issue to check it out. Now down to business.

The fortunes of Europe's beleaguered euro currency have been heavily influencing US markets. Both stocks and commodities have been battered down recently by overwhelming euro bearishness.

The Biblical story is told of a tower built ever higher in order to achieve contact with the heavens, lest they be scattered upon the earth. They were scattered when the tower fell.

Gold's biggest problem since February has been one of relative weakness. This weakness in turn has kept the market-moving hedge fund players away from gold. But as we'll see in the latest commentary, that may be about to change.

"Has gold finally bottomed?" That is the big question we are going to attempt to answer in this update. Last week it bounced sharply after it arrived at the strong support at its September and December lows.

It's time to update our long-term weekly charts showing how the gold sector, as represented by the Barrons Gold Mining Index (BGMI), has performed in US$ terms, gold bullion terms and S&P500 (SPX) terms.

This past week was unusual as the stock market was under pressure, especially the bank stocks, while the price of gold and silver reversed their declines late in the week! More comments on this in my market update section below.

With a bank run in near full force in Greece and the country on the verge of exiting the Euro while still searching for a leader the world markets are reeling but gold and silver are finally catching a bid.

GLD - on sell signal.

Gold stocks have been pummeled mercilessly this month, their price action looking almost apocalyptic. The psychological stress spawned by such extreme weakness is intense, breaking the wills of this sector's few remaining bulls.

MARKET(S) UPDATE

Normally catching a bottom is not difficult. Bottoms tend to occur instantly while market tops form during a process. Yet, I've found that bottoms of long-term significance do not occur instantly. Like tops, they take time to develop.

It was a decent down-week early on but then things stalled Thursday before it was announced that JP Morgan had a small trading loss. This small loss forced an unexpected conference call which is odd.

GLD - back to sell signal this week as prices broke down from the consolidation.

In Early May, some potentially big things are happening that I want to bring to your attention.

Gold has had a rough time lately, grinding relentlessly lower. Such technical weakness has naturally spawned increasingly bearish psychology. This has led to a fringe view growing in popularity that gold's mighty secular bull has already given up its ghost.

The government recently reported that the U.S. economy grew at an annual rate of 2.2 percent, below the expected 2.5 percent rate. The jobless rate has declined, but mainly because so many job seekers have given up in their search for a job.

If today's landscape was a war setting, it would feature collapsed buildings, rubble on the streets, empty warehouses, smoke spewing upward from numerous city heaps, and fire hoses sending water in every conceivable direction throughout the entire city.

Over the weekend I had an interesting conversation with a local trader.

It was an interesting week with US markets looking strong briefly, only to show us failed breakouts and then reverse hard along with many leading stocks. Oil was hit hard and the related equities followed.

GLD - on buy signal.

In early May of 2012, the Silver to Gold Ratio (SGR), or the number of ounces of silver that one ounce of gold will buy is looking really good. How is that?

With the US stock markets surging nearly a third higher in just 6 months, the odds are rising for a major topping. As the best times to sell high, recognizing these events in real-time is very important for traders.

Investors and traders just can't seem to catch a break when it comes to economic news. For example Tuesday in the United States we saw strong ISM manufacturing numbers which surprised the market.

Arising from my last week's blog, a reader sent me the following link: Bond, Stock & Gold Market Update - Lundeen

The US Great Depression lasted from 1929 until 1945, but the deflationary phase of the Depression effectively ended in 1932.

A fascinating chart crossed my desk yesterday - apparently originated by Doug Short and referred to by Mike Shedlock.