March 27: Gold Slips But Miners Gain

The Metals:

Gold fell $10.29 to $1289.32 at about 3PM EST before it rallied back higher in the last hour of trade, but it still ended with a loss of 0.65%. Silver slipped to as low as $19.609, in London, but it then chopped back higher in New York and ended unchanged on the day.

Euro gold fell to about €940, platinum lost $13.20 to $1395.00, and copper climbed a few cents to about $3.00.

Gold and silver equities fell about 1% by early afternoon, but they then bounced back higher in the last hour of trade and ended with about 1% gains on the day.

The Economy:

Tomorrow brings Personal Income and Spending, Core PCE Prices, and Michigan Sentiment.

The Markets:

Charts Courtesy of http://finance.yahoo.com/

Oil rose on decent economic data and worries about Russia.

The U.S. dollar index saw slight gains on optimism about the economy.

Treasuries remained higher after today’s $29 billion 7-year note auction sold at a yield of 2.258% with a bid to cover of 2.59.

The Dow, Nasdaq, and S&P traded mostly slightly lower on geopolitical worries.

Among the big names making news in the market today were Ally Financial, Yahoo Japan, Cargill, Lululemon, Boeing, Airbus, Baxter, Citigroup, and BofA.

The Commentary:

“Same story as yesterday - The US Dollar is gaining some ground at the expense of the Euro and that is undercutting the bullish case for gold.

Geopolitical concerns are still lurking around due to events in Ukraine but as long as the market feels that escalation dangers are limited, safe haven flows into gold are waning.

Gold has now dropped $100 since making a try at $1400 on March 17. That proves the old adage that markets tend to generally fall faster than they go up (this is not an "always" thing but it does seem to occur more than the reverse). In the case of gold, the market moved up almost entirely on worst case scenarios of WWIII, Russian moves out of the Dollar, a new Cold War, etc. None of these events have panned out exactly as their proponents have suggested they would.

This is the danger inherent in rallies which are predominantly driven by short covering as was being noted here. Once those buyers are run out, who is left to chase the price higher? Gold needed to see FRESH speculative interest coming in from the hedge fund community and it was not getting it; especially after the FOMC gave such a hawkish view on the US economy and proceeded with their tapering plans.

In watching the price action closely during the session, gold managed to claw its way back off the worst levels of the session when the stock indices initially weakened early today. As the equities then moved higher into the plus column, gold began moving lower again. Right now, as I type these comments, the equities are once again weakening a bit but gold is actually moving lower, along with silver I might add.

The HUI was actually higher early in the session but has since then given up its gain and has turned negative. Its losses however have been contained at this point although that could change by the end of the trading day.

Take a look at the following chart of the HUI. Note a couple of things on the Directional Movement Indicator. First, the -DMI (Red Line ) has crossed back above the + DMI ( Blue Line) for the first time since the month of January. The bears have regained control over the market. Notice also that the ADX line ( Dark Line ) is showing some signs of turning higher suggesting the Potential for a trending move lower. I think we would have to see a downside violation of the 210 level however for this to occur.

I want to also note that much was made on some sites about the so-called Golden Cross, where the 50 day moving average crosses above the 200 day moving average from below. Many technicians regard this as a bullish development. For such an event to actually mean something, it is usually understood that the price of the underlying security ( in this case the index ) must REMAIN ABOVE both moving averages. That has not been the case here with the HUI. It has fallen below both moving averages just shortly after the time the Directional Movement lines reversed signaling the Bears were grabbing control of the market once again. In other words, any bullish signal from that event has been negated.

This underscores the rapidity at which markets move nowadays and especially markets which are driven by geopolitical events. Here is a bit of trading advice - unless you are very fast on the draw and spend significant amounts of time sitting in front of a computer screen watching prices and events, leave markets driven by geopolitical events alone. They are too dangerous for all but the professional traders who can move more quickly than the average screen watcher. Yes, you might miss a great opportunity for a big profit but you also risk suffering from severe losses. Just ask any of the bulls who bought up near $1390 who were just convinced that the West was going to level sanctions on Russia after the results from the Crimea region came in over that weekend a while back.

Also, never base a trade ( or an investment ) for that matter on a headline. NEVER! Let the market technical price action do that for you, AFTER you do some research on your own and not rely on the predictions of some "expert" who makes his or her case about why such and such market is going to the moon.

Remember, markets are based on differing opinions. Some are bullish; some are bearish. But keep in mind that they are just opinions and in that sense, guesses as to how the market might respond to a particular scenario. The only true proof consists of the price action. It either confirms or validates ones opinion or it does not. It really is that simple.

Traders who quickly realize that the market is not accepting their opinion and get out of the way become survivors and experienced traders. Those who want to blame other forces ( manipulators), etc, and whom refuse to get out, become former traders with a lesser net worth.

All that matters in this profession is whether or not you make money; not whether you were "right". You are only "right" if the market confirms you are right. Other than that you are just a guy with an opinion that meant nothing. Period. Humility is a virtue that will serve to protect you long after pride has made fools out of prognosticators who keep serving up one dogmatic prediction after another.

"Put not your trust in princes, in mortal man in whom there is no salvation", says the Psalmist. Wiser words were never recorded.

Here is a Daily Chart of Gold to close out these comments. I have noted the "Golden Cross" on the chart for your convenience. That is the 50 day moving average in green crossing above the 200 day moving average. Note that price has fallen below both of these moving averages, a bearish development. Typically in a strongly trending market to the upside, price will remain above these levels.

Bulls do have a support level within the general vicinity of that cross which comes in at the 50% Fibonacci Retracement Level at $1287. They only missed that by a few dollars today. If the bulls can reverse today's losses tomorrow to close out the week, they have a chance at stabilizing prices here. If not, and if $1287 gives way, there is some light support near $1280. After that, $1262 - $1255 is the next target.

For Gold to get some recent Bears nervous, it will have to regain its "13" handle for starters. If they can manage that, some of the shorts will go ahead and ring the cash register and move back out.”- Dan Norcini, More at http://www.traderdannorcini.blogspot.com/

GATA Posts:

London to become Chinese currency trading center

Mike Kosares: Volcker Rule starts April 1 and might push big banks out of gold

Koos Jansen: A first glance at U.S. official gold reserves audits

Evans-Pritchard sees Russia as loser in Crimea, Roberts as winner

UBS said to suspend FX traders in New York, Zurich, and Singapore

The Statistics:

Activity from: 3/26/2014

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: Change in Total Tonnes from yesterday’s data: SPDR subtracted 1.798 tonnes.

COMEX Gold Trust (IAU) Total Tonnes in Trust: 166.14: No change from yesterday’s data.

Silver Trust (SLV) Total Tonnes in Trust: 10,164.74: No change from yesterday’s data.

The Miners:

AuRico’s (AUQ) closed offering, Banro’s (BAA) Mineral Reserve estimate, Osisko’s (OSK.TO) drill results, Excellon’s (EXN.TO) 2013 results, and First Majestic’s (AG) updated Mineral Reserve and Resource estimates were among the big stories in the gold and silver mining industry making headlines today.

WINNERS

LOSERS

Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.

Please see Yahoo’s Mining/Metals News Wire for all of today’s mining news.

- Chris Mullen, Gold Seeker Report

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