Gold Editorials & Commentary

Gold stocks continue to face a stiff psychological headwind. As measured by their flagship HUI index, they were ripped to shreds in late 2008's brutal stock panic. In only 13 trading days, the HUI plummeted 49%!

Earlier this week I noticed a pattern in the market throughout an entire trading session that has inspired me to write a short piece on sector rotation.

"We are spending more money than we have ever spent before, and it does not work. After eight years, we have just as much unemployment as when we started and an enormous debt to boot."

Last weeks price action unfolded just as we expected. Money poured into stocks with the focus being on small cap, banks and technology stocks.

We are finally starting to see some retaliation against those “too big to fail” institutions who are basically criminals who have robbed the middle class of their wealth and livelihood over time.  Let’s hope it keeps up!

GLD - sell signal this week.

Summary and Conclusions

The US Mint's popular American Eagle gold and silver coins remain in high demand by US investors. Working to overcome production bottlenecks, the Mint radically stepped up operations last year to the highest levels by far of this entire secular gold bull.

So far this week has been pretty slow. Large cap stocks continue to lag the market which can be observed by looking at the Dow Jones Industrial Average which still has room to move higher before breaking the January high.

To be sure, almost without debate, all the financial world has turned to crisis mode. One can safely describe the norm to be crisis proliferation. This theme will clearly continue for the full year in progress. The signs are everywhere.

PUTTING THINGS IN PRESPECTIVE

Last week was exciting as we saw stocks and gold close above the February highs which confirms we are in a new up trend. The question everyone is wondering is:

How far will this market go before rolling over?

The UK's big newspaper, which has generally been gold friendly this past decade, says new research shows gold to have been the decade's best performing asset. Didn't take too much research to figure that one out.

GLD - on buy signal.

"In the short run, the market is a voting machine, but in the long run it is a weighing machine" - Benjamin Graham

After spending our entire lives in a dollar-dominated world, we Americans naturally view gold through a dollar-centric lens. We assume the gold charts we're seeing are universal.

Most competent market analysts, objective economists and honest politicians concur the current 26-year high in the Unemployment Rate at near 10% is totally unacceptable. To be sure it is today's gravest problem weighing on the country's population.

I have spent a considerable amount of time discussing how a supply-crunch is looming in the gold market.

Three weeks ago on February 5th, we saw an extremely high level of fear in the market with selling vs. buying volume at a 9:1 ratio. We note that in 2009 this extreme level of fear occurred at the bottom of each significant pullback.

Chairman Bernanke's testimony to Congress last Wednesday marks a major turning point as well as a flash signal for what lies ahead to anyone that is willing to listen.

I've exceeded the length I like the letter to be this week in the fundamentals section, so I will reserve the chart and technical analysis of the precious metals for my subscribers who will be getting a boatload of charts including monthly charts as well as the

GLD - on buy signal.

As expected the gold price was taken lower to the $1,100 level right on cue. I talked about this possibility in my latest weekly letter on the weekend.

Neither the US financial press nor the US bank leaders take the sovereign debt crisis seriously. Even the USCongress seems totally unaware of the growing global intolerance for government debt out of control.

I have been Banging the Drum in these letters about an eminent major economic and stock market crash since early 2007: A time when Barron's Round Table Gurus were predicting the continuation of the Goldilocks Economy and a DOW that would soon hit 36,000.

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value."  Alan Greenspan                        

Last week was strong with stocks and commodities moving up sharply. As nice as it was to see a rally, I still have my doubts whether this move has legs behind it. As prices moved higher throughout the week we saw volume become thinner and thinner.

Now that we are in the thick of earnings season for miners. I am seeing some excellent profits being reported by the miners, but their share prices are still well below when gold was closer to the $700 range.