Gold & Silver Trading Alert originally published on May 7th, 2014 7:08 AM:

Briefly: In our opinion speculative short positions (half) are justified from the risk/reward perspective for gold, silver, and mining stocks.

The most important thing that we saw in the markets yesterday was the major decline in the USD Index and the lack of proper response from gold, silver and mining stocks. Such a bullish factor should have made precious metals move much higher – but they didn’t… Or did they? (Charts courtesy of http://stockcharts.com).

Gold didn’t even rally on Tuesday. It declined by $1.80, which is odd and bearish given that the USD Index declined heavily. The decline itself wasn’t significant, but we can point out that gold didn’t move above the 50-day moving average. Basically, the Tuesday session was bearish on its own.

Since the currency markets were so important on Tuesday, let’s take a look at both: the USD and Euro Indices.

Generally, we saw a breakout above the declining, long-term resistance line in the Euro Index. At this time, however, the breakout is unconfirmed, and without meaningful implications. What’s more important, though, is how gold and silver reacted. They didn’t. Gold and silver moved just a little higher and that’s highly visible underperformance in case of gold and silver. They are not even close to moving to their 2014 highs.

Meanwhile, the USD Index moved significantly lower. In this case “significantly” means that it moved to the 2013 low, and that’s a major support level. Gold and silver are not even close to their previous highs, and this means that they are underperforming the USD Index, and as soon as the latter rallies, the former will decline. Are there any sings suggesting that metals are about to move lower? Yes! The cyclical turning point for the USD Index suggests a move higher as the current move has definitely been down. This means that when things change, the precious metals market will get a bearish push and that it will then decline significantly. The outlook for the precious metals market, therefore, remains bearish.

Summing up, the way precious metals market reacted to the U.S. dollar’s move lower (to the 2013 lows) is a bearish sign, and it confirms the bearish outlook that we outlined in previous alerts.

To summarize:

Trading capital (our opinion): Short positions (half) in: gold, silver, and mining stocks with the following stop-loss orders:

– Gold: $1,326

– Silver: $20.30

– GDX ETF: $25.20

Long-term capital (our opinion): No positions

Insurance capital (our opinion): Full position

You will find details on our thoughts on gold portfolio structuring in the Key Insights section on our website.

As always, we’ll keep our subscribers updated should our views on the market change. We will continue to send them our Gold & Silver Trading Alerts on each trading day and we will send additional ones whenever appropriate. If you’d like to receive them, please subscribe today.

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments – SunshineProfits.com

Tools für Effektives Gold- und Silber-Investment – SunshineProfits.DE

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Gold kicked off the week at just over $1300 before declining to a low of $1278 yesterday. Most of the time prices just moved sideways, drifting lower from time to time to test support. And when support materialised, the price quickly reacted upwards, because no bullion bank really wants to sell; instead they are trying to close short positions as profitably as possible.

Underlying physical supply is very tight, and GOFO (“The Gold Forward Offered Rate”) in London has now been negative every day since 3rd April 2014. Chinese demand measured through Shanghai Gold Exchange deliveries appears to have slackened after a very strong start to the New Year. However, it is not clear whether it is because of lower demand, or alternatively a reluctance among the large Chinese banks to bid up for physical in London. I suspect the latter may be the case, because the Chinese have always bought gold when bullion is available and have never chased the price up.

While on the subject of China, the IMF (“International Monetary Fund”) announced this week that on a purchasing power basis China is overtaking the US as the largest economy. Her latent power to purchase more precious metals is now far greater than for any single other nation, given a savings rate in excess of 40%; so any concerns about her dwindling demand are essentially short-term.

Meanwhile silver has been very weak, as can be seen in the introductory chart, giving up all this year’s gains and taking the gold/silver ratio to an exceptionally high 67 times. Interestingly, it appears that silver bullion has been disappearing from the markets at an extraordinary rate <http://www.silverdoctors.com/the-decline-in-shanghai-silver-stocks-picks-up-speed/> , with stocks at the Shanghai Futures Exchange falling from 1,123 tonnes a year ago to 258 tonnes today. Comex stocks have also declined by 218 tonnes since the end of February. Nobody seems to know why this is so, but the most likely explanation is that industrial users are stockpiling the metal as inventory at these ultra-low prices. It is also possible the Chinese government is adding silver to its own strategic reserves.

The broader market background to precious metals is extremely unusual. The Federal Open Market Committee (“FOMC”) statement was accompanied by the biggest GDP miss in a long time: first quarter GDP consensus was forecast to have slowed to 1.2% annualised, but actually came in at only 0.1%. Furthermore, it is becoming clear that subsequent revisions, particularly from disappointing construction orders in March, will take the GDP number firmly into negative territory. Yet the FOMC stated “Information received since the Federal Open Market Committee met in March indicates that growth in economic activity has picked up recently……”

While the Fed is whistling to keep its spirits up low, US Treasury yields are signalling a financial system awash with liquidity and a reluctance to invest in production. The ten-year Treasury bond yields only 2.63%, and even more extraordinary, Spanish 10-yr sovereigns are at 2.99%, Italian 3.05% and Ireland’s only 2.81%. Bearing in mind that government indebtedness everywhere has escalated at the fastest rate in history excluding during major war, there should be a substantial risk premium for this debt.

The logical explanation for a flight into financial assets and cash can only be a stalling US economy. Corporates are very active in bond markets, but they are only refinancing existing debt.

It really feels like the money bubble is poised on the edge of an economic chasm. Not falling into it involves throwing yet more money at the problem, which will eventually persuade western investors to buy gold and silver.

Next week’s announcements
Monday. Eurozone: Sentix Indicator, PPI. US: ISM Non-Manufacturing Index.
Tuesday. Eurozone: Composite PMI, Services PMI, Retail Trade. US: Trade Balance, IBD Consumer Optimism. Japan: BoJ releases minutes.
Wednesday. US: Non-Farm Productivity (prelim.) Unit Labour Costs (prelim.), Consumer Credit.
Thursday. UK: BoE Base Rate. Eurozone: ECB Deposit Rate. US: Initial Claims
Friday. Japan: Leading Indicator. UK: Industrial Production, Manufacturing Production, Trade Balance. NIESR GDP Estimate. US: Wholesale Inventories.

ends

NOTES TO EDITOR

For more information, and to arrange interviews, please call Gwyn Garfield-Bennett on 01534 715411, or email gwyn@directinput.je<mailto:gwyn@directinput.je>

GoldMoney is one of the world’s leading providers of physical gold, silver, platinum and palladium for retail and corporate customers. Customers can trade and store precious metal online easily and securely, 24 hours a day.

GoldMoney stores around $1.4billion of precious metals worldwide for over 22,000 customers.

GoldMoney has offices in London, Jersey and Hong Kong.  It offers its customers storage facilities in Canada, Hong Kong, Singapore, Switzerland and the UK provided by the leading non-bank vault operators Brink’s, Via Mat, Malca-Amit, G4S and Rhenus Logistics.

Historically gold has been an excellent way to preserve purchasing power over long periods of time. For example, today it takes almost the same amount of gold to buy a barrel of crude oil as it did 60 years ago which is in stark contrast to the price of oil in terms of national currencies such as the US dollar.

GoldMoney is regulated by the Jersey Financial Services Commission and complies with Jersey’s anti-money laundering laws and regulations. GoldMoney has established industry-leading governance policies and procedures to protect customers’ assets with independent audit reporting every 3 months by two leading audit firms.

Visit www.goldmoney.com. <http://www.goldmoney.com/index.html> 
Follow the GoldMoney Dealing desk team on Twitter:@goldmoneyupdate

Below is an excerpt  from a commentary originally posted at www.speculative-investor.com on 27th April 2014.

The boom/bust cycle is caused by fractional reserve banking. Rather than eliminate this practice, that is, rather than prevent the commercial banks from creating money out of thin air, central banks were established to ‘backstop’ the commercial banks. This paved the way for longer booms and more severe busts. Gold tends to do relatively well during the busts and relatively poorly during the booms.

Gold’s tendency to gain value during the bust phase and lose value during the boom phase is sometimes not readily apparent from the performance of the dollar-denominated gold price. This is because currency depreciation will sometimes cause the US$ gold price to rise along with most other commodities during booms and because a desperate flight to cash can cause the US$ gold price to fall along with other commodities during the initial stage of a bust. However, the gold/commodity (g/c) ratio usually paints an accurate picture, with the ratio typically having a downward bias during booms and rising sharply throughout the ensuing busts.

The relationship outlined above is illustrated by the following 20-year chart of the g/c ratio. The chart shows that since early-2001 gold has worked its way higher relative to commodities in general (represented by the CCI) via a series of leaps separated by multi-year periods of downward or sideways trading. Not coincidentally, the long, erratic climb began shortly after a major peak in the US stock market. Also not coincidentally, each of the leaps in the g/c ratio has happened in parallel with major economic problems and/or systemic crises. Between these periods of crisis there was rising economic and financial-system confidence. The result, in each case, was a lacklustre or poor performance by the g/c ratio.

The most recent peak in the g/c ratio (an all-time high) happened in mid-2012, at around the same time as fears of euro-zone sovereign debt default and monetary-union collapse were peaking. The ratio has since trended downward in parallel with rising confidence in central banking and increasing optimism about economic growth prospects in Europe and the US. Some indicators, such as the yield-spread and credit spreads, are warning that the trend of the past two years has ended, but a trend change hasn’t yet been confirmed by the g/c ratio.

A break above the blue line on our g/c chart (the 50-week MA) would be confirmation of a major trend change.

Regular financial market forecasts and
analyses are provided at our web site:
http://www.speculative-investor.com/new/index.html

We aren’t offering a free trial subscription at this time,

but free samples of our work (excerpts from our

regular commentaries) can be viewed at:

http://www.speculative-investor.com/new/freesamples.html

Gold & Silver Trading Alert originally published on April 28th, 2014 8:32 AM:

Briefly: In our opinion no speculative positions are justified from the risk/reward perspective.

The situation in the precious metals sector remains tense – miners have broken above the declining resistance line, while gold hasn’t. However, taking Friday’s intraday move in the USD into account, we can say more about the gold-USD link. Let’s take a closer look (charts courtesy of http://stockcharts.com).

Much of what we wrote previously remains up-to-date:

(…) the session itself was very specific. We marked similar sessions (similar volatility + significant volume) on the above chart with orange rectangles. It turned out that these sessions didn’t necessarily mark the final bottoms, but they have practically always (at least recently) been followed by short-term rallies (very short-term in early December 2013). Consequently, while the medium-term trend remains down, the short-term implications are bullish.

(…) we also saw a move below the previous April low and the immediate invalidation thereof, which by itself is also a bullish sign.

Gold has indeed moved higher, but it hasn’t moved above the declining resistance line, so the short-term outlook here is rather mixed. We have already seen a short-term rally that was possible based on the above-mentioned comments, so this move might be over or close to being over. The volume was not low during Friday’s move higher, but it was not high either, so the implications are rather unclear.

The same goes for the silver market, the situation is a bit more bullish than not, but overall rather unclear.

The mining stocks to gold ratio moved higher on Friday after a daily decline and overall closed slightly lower than it had on Wednesday. We don’t view this action as a breakout just yet.

If we take a look at gold stocks from a broader perspective, we get a picture in which gold miners are declining in tune with the previous declines. By zooming out we stop to see individual short-term upswings and downswings and start to see the general direction in which the market is moving. At this time, the trend that we see is down and the pace at which gold stocks decline is normal – there has been no divergence so far. The implications are bearish.

On a short-term basis, we saw a breakout in the GDX ETF, which, of course, is a bullish sign. It hasn’t been confirmed yet, and given what we wrote below the 2 previous charts, it’s not strongly bullish just yet. The overall pace of the decline and the lack of breakout in the GDX:GLD ratio make waiting for the GDX’s breakout necessary.

There is also another ratio that we would like to comment on today.

The above chart features the junior mining stocks to the general stock market ratio. In the majority of cases when the ratio of volumes was huge, gold was about to form a top or at least pause the rally. The signal was a bit too early in the early part of this year, but please note that gold’s price at this time is lower than it was when we saw the huge ratio of volumes.

Last week we saw a huge spike in the volume ratio – a record one. As explained above, the implications are bearish.

Meanwhile, the previously-completed head-and-shoulders pattern in platinum was invalidated in the final part of last week. The invalidation itself is a bullish sign and the above chart now suggests higher platinum prices (which also, to a smaller extent, indicates higher prices for gold, silver, and mining stocks).

We started today’s alert by writing that we can say a bit more about the gold-USD link. The USD Index moved lower in the first part of Friday’s session and taking this move into account, we now have a clearer picture.

Comparing the 2 most recent price moves (mid-April move higher in the USD and the last several days of lower values) in the USD and gold we see that they were quite alike. The dollar corrected some of its rally and gold corrected some of its decline. There’s not short-term underperformance or outperformance to speak of and the implications are neutral.

There is, however, one thing that can tell us more about the near future of the USD and precious metals prices and that’s the fact that the turning point is just around the corner. In the first days of May, we can expect to see a local extreme in both markets. At this time, the short-term direction is up in case of the precious metals and down in case of the USD Index, so we are quite likely to see a downturn start in metals and miners within a week or so.

We were asked if we still think that there is real downside in the precious metals sector. The answer is yes, because the medium-term trend is still down in metals and miners (note the pace of decline in the HUI Index) and the medium-term trend is still up in the USD Index. The negative gold-USD link remains in place. We are keeping our eyes opened and will monitor the market for signs of strength.

The bottom line is that the situation in the precious metals market remains too unclear to open any speculative position and the medium-term trend remains down. The situation in gold is unclear, unclear with a bullish bias for silver and mining stocks, bullish for platinum, but with bearish indications coming from the USD Index and the juniors to other stocks ratio. “When in doubt, stay out” – and so we do.

To summarize:

Trading capital (our opinion): No positions

Long-term capital (our opinion): No positions

Insurance capital (our opinion): Full position

You will find details on our thoughts on gold portfolio structuring in the Key Insights section on our website.

As always, we’ll keep our subscribers updated should our views on the market change. We will continue to send them our Gold & Silver Trading Alerts on each trading day and we will send additional ones whenever appropriate. If you’d like to receive them, please subscribe today.

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments – SunshineProfits.com

Tools für Effektives Gold- und Silber-Investment – SunshineProfits.DE

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Gold is now extremely oversold, with emotional opinion in paper markets unanimously bearish. Traders tell us the 200-day moving average is well and truly broken and the next support level is $1260. However, when gold broke down through the $1280 level yesterday it rallied sharply to test the $1300 level in a one-day spike reversal.

Market chat and technical analysis are one thing; more important are the motives behind the commentary, revealed by a dispassionate look at Comex figures. And here we see that Producers and Merchants short positions have fallen to an eight-year low at 73,033 contracts, against a long term average of 186,400. This is the primary source of liquidity for all futures markets, and it has simply dried up.

Swap dealers have also cut their shorts dramatically, reducing their net position by 26,582 contracts, and the eight largest traders between them have a level book. In short, the bears have to persuade us to sell, or they will be in trouble.

The figures quoted above are as of 15th April. Since then the gold price confirms this analysis by refusing to go lower and stay there (hence yesterday’s spike reversal), while open interest has risen from the post-Lehman crisis low on 4 April. This is shown in the chart below.

The rise in open interest tells us that the shorts, mostly hedge funds, are opening new positions and failing to drive prices lower, so the market is being set up for another bear squeeze. By way of confirmation the gold forward rate in London remains negative up to three months out, indicating an extreme shortage of physical metal at these prices.

In these markets sentiment can change very rapidly. We read this week that the US is on the brink of another housing crisis because sales (demand) have stalled. Last weekend the Ukrainian protagonists met in Geneva and agreed to “de-escalate” the situation. By Monday the situation was escalating again.

Oh, and the best contrary indicator of the lot was also on Monday, when according to the Wall Street Journal’s Market Watch blog, for the first time ever all 72 economists polled by the National Association for Business Economics expect the US economy to grow this year. It is usually right to bet against such unanimity in economists.

Next week

Monday. US: Pending Home Sales.

Tuesday. Eurozone: M3 Money Supply, Business Climate Index, Consumer Sentiment, Economic Sentiment. UK: GDP (first est.), Index of Services. US: S&P Case-Shiller Home Price Index, Consumer Confidence, FOMC Meeting (to Wednesday). Japan: Industrial Production.

Wednesday. Japan: Construction Orders, Housing Starts, BoJ Monetary Policy Meeting, BoJ MPC Overnight Rate. Eurozone: Flash HICP. US: ADP Employment Survey, Core PCE Price Index, Employment Index, GDP Annualised, GDP Price Index, Chicago PMI, FOMC Fed Funds Rate.

Thursday. Japan: Vehicle Sales, Real Household Spending, Unemployment. UK: Nationwide House Prices, BoE Mortgage Approvals, Net Consumer Credit, Secured Lending, M4 Money Supply. US: Initial Claims, Core PCE Proce Index, Personal income, Personal Spending, Manufacturing PMI, Construction Spending, ISM Manufacturing.

Friday. Eurozone: Manufacturing PMI, Unemployment. US: Non-Farm Payrolls, Private Payrolls, Unemployment, Factory Orders.

ends

NOTES TO EDITOR

For more information, and to arrange interviews, please call Gwyn Garfield-Bennett on 01534 715411, or email gwyn@directinput.je

GoldMoney is one of the world’s leading providers of physical gold, silver, platinum and palladium for retail and corporate customers. Customers can trade and store precious metal online easily and securely, 24 hours a day.

GoldMoney stores around $1.4billion of precious metals worldwide for over 22,000 customers.

GoldMoney has offices in London, Jersey and Hong Kong.  It offers its customers storage facilities in Canada, Hong Kong, Singapore, Switzerland and the UK provided by the leading non-bank vault operators Brink’s, Via Mat, Malca-Amit, G4S and Rhenus Logistics.

Historically gold has been an excellent way to preserve purchasing power over long periods of time. For example, today it takes almost the same amount of gold to buy a barrel of crude oil as it did 60 years ago which is in stark contrast to the price of oil in terms of national currencies such as the US dollar.

GoldMoney is regulated by the Jersey Financial Services Commission and complies with Jersey’s anti-money laundering laws and regulations. GoldMoney has established industry-leading governance policies and procedures to protect customers’ assets with independent audit reporting every 3 months by two leading audit firms.

Visit www.goldmoney.com.

Follow the GoldMoney Dealing desk team on Twitter: @goldmoneyupdate

___________________________________________________________________

Ends

NOTES TO EDITOR

For more information, and to arrange interviews, please call Gwyn Garfield-Bennett on 01534 715411, or email gwyn@directinput.je

GoldMoney is one of the world’s leading providers of physical gold, silver, platinum and palladium for retail and corporate customers. Customers can trade and store precious metal online easily and securely, 24 hours a day.

GoldMoney has offices in London, Jersey and Hong Kong.  It offers its customers storage facilities in Canada, Hong Kong, Singapore, Switzerland and the UK provided by the leading non-bank vault operators Brink’s, Via Mat, Malca-Amit, G4S and Rhenus Logistics.

Historically gold has been an excellent way to preserve purchasing power over long periods of time. For example, today it takes almost the same amount of gold to buy a barrel of crude oil as it did 60 years ago which is in stark contrast to the price of oil in terms of national currencies such as the US dollar.

GoldMoney is regulated by the Jersey Financial Services Commission and complies with Jersey’s anti-money laundering laws and regulations. GoldMoney has established industry-leading governance policies and procedures to protect customers’ assets with independent audit reporting every 3 months by two leading audit firms.

Visit www.goldmoney.com.

Gold & Silver Trading Alert originally published on April 23rd, 2014 7:28 AM:

Briefly: In our opinion no speculative positions are justified from the risk/reward perspective.

Yesterday’s price action in the precious metals market might seem perplexing to some investors and there’s good reason for it. Gold declined, but silver didn’t, and mining stocks actually managed to rally more than 1%. Let’s take a closer look (charts courtesy of http://stockcharts.com).

What we wrote yesterday about gold remains largely up-to-date:

Gold moved to its recent lows, but didn’t move below them. Technically, the situation hasn’t changed because of that, and thus, the outlook remains bearish, but it’s still possible that we will see some sideways movement or a small move higher before the decline really continues.

We still haven’t seen any breakdown, but we saw an attempt to move below the recent lows – a failed attempt. The latter is a bullish sign for the short term, even though the medium-term trend remains unaffected and down.

Moreover, please note that the GLD ETF has just formed a reversal hammer candlestick.

Gold priced in the Australian dollar moved lower as well and in this case we saw a completion of the bearish head-and-shoulders formation. Naturally, that’s a bearish sign. The move below the neck level of the formation is not huge yet, so the breakdown is not yet confirmed, but the situation is still more bearish than not.

Meanwhile, the platinum market still provides us with bearish implications. We saw a second daily close below the neck level of the head-and-shoulders formation. One more and the move will be confirmed.

Mining stocks, however, paint a quite different picture for the precious metals sector. Miners moved higher on Tuesday, despite a move lower in gold. This is a rather significant bullish sign for the short term. The volume was not huge, but the fact that miners managed to outperform gold so visibly is meaningful on its own anyway.

The situation in the USD Index remains very tense as it remains between two important lines (the declining resistance line and the rising support line). What we wrote yesterday in our gold commentary remains somewhat up-to-date:

The USD Index moved higher this week, but not high enough to do 2 things: to invalidate the move below the rising support line and to move above the declining resistance line. With the situation being unclear here, it seems no wonder that there was no decisive move in metals and miners. Once the USD rallies above the support/resistance levels, breakdowns in metals and miners are likely to follow, just as platinum suggests.

In general, the outlook for the precious metals sector remains bearish, but we may see a couple of days of sideways movement or slightly higher prices.

Only “somewhat” because of what we saw in the mining stocks and in gold. The precious metals sector looks ready to move higher in the short term (perhaps only a few days, but it seems very likely at this point), so even if we see a small move lower in the USD Index, it could trigger a visible move higher in the precious metals sector.

While the above is not enough for us to consider opening long positions (as the medium-term trend remains down), it does seem that the situation is no longer bearish enough for the short term to justify keeping open speculative short positions. Consequently, we are taking profits off the table (these were full short positions, so the profits are meaningful) and are getting ready to re-open short positions in the coming days (more likely) or weeks (less likely). We are focusing on short positions because we think the medium-term trend is still down, and thus (at least as far as short-term trades are concerned) short positions are less risky than long ones.

We previously opened short positions on March 5 with gold at $1,337.50, closed them on April 4 with gold at $1,297.25 and re-opened shorts on April 10 with gold at $1,320.50). We aim to repeat the above and we think that the circumstances now favor staying out of the market once again – for the record, gold closed at $1,283.10, so once again a short position was closed with the yellow metal almost $40 lower.

To summarize:

Trading capital (our opinion): No positions

Long-term capital (our opinion): No positions

Insurance capital (our opinion): Full position

You will find details on our thoughts on gold portfolio structuring in the Key Insights section on our website.

As always, we’ll keep our subscribers updated should our views on the market change. We will continue to send them our Gold & Silver Trading Alerts on each trading day and we will send additional ones whenever appropriate. If you’d like to receive them, please subscribe today.

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments – SunshineProfits.com

Tools für Effektives Gold- und Silber-Investment – SunshineProfits.DE

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Economies stalling

It wasn’t meant to be like this: six years of global money-printing should have guaranteed economic recovery. Until very recently, there was hope that finally the medicine was having some effect; but in the last few weeks investors have become noticeably more cautious. Is it Ukraine, or is it the slow-down in China? Whatever the story the truth is revealed in the chart of recent US bond prices shown below.

The Long Bond yield is leading the way downwards, having broken below the 3.5% level, and the 10-year bond seems set to follow its lead. Eurozone bond yields have also collapsed signalling either outright deflation or possibly, given its proximity to Ukraine, a flight from bank deposits.

This week the Ukrainian situation escalated with Russia’s Crimean strategy emerging in other eastern cities. Peace talks in Geneva today are not expected to improve things. Meanwhile Washington seems set to escalate financial tensions with Russia, potentially blacklisting businesses and even banks, as well as individual oligarchs. The financial consequences of any such action are bound to concern markets and could become destabilising, risking global economic prospects particularly with a Chinese slowdown.

Opinion is divided over the effects on the gold price. In western capital markets there is a widely-held view that a deteriorating economic outlook will provoke a run from commodities into cash, so those who regard gold as only a commodity are bearish but have almost certainly already sold. The four billion Asians who own most of the world’s gold take a different view having learned through experience that their currencies collapse instead.

This sums up the opposing forces behind the gold price. In futures markets the bets are in favour of shorting, while the Asians continue to buy physical. And this is why yet again, the London gold forward rate (GOFO) went sharply into backwardation last Friday when futures markets forced prices lower. It is even more negative this morning, signalling market strains are still increasing.

Prices for gold and silver sold off this week, with gold falling from a high of $1331 to a low of $1286 on Tuesday, and silver went as low as $19.22 at one point. The chart below shows how prices for gold and silver have progressed since the beginning of the year, and it can be seen that silver has been the outright loser.

However, as discussed last week, silver’s open interest on Comex has been building and is now close to all-time highs at over 164,000 contracts. When the tide turns, silver should be the star performer.

Next week
There is little doubt that the Ukrainian situation will dominate next week’s news. If it escalates, which seems likely, bullion may emerge as a safe-haven play.
Easter Monday is a holiday in many countries.

Monday. US: Leading Indicator.
Tuesday. Japan: Leading Indicator. Eurozone: Flash Consumer Sentiment. US: Existing Home Sales
Wednesday. Eurozone: Flash PMI. UK: BoE MPC minutes released, Public Borrowing. US: Flash Manufacturing PMI, New Home Sales.
Thursday.UK: CBI Distributive Trades Survey. US: Durable Goods Orders, Initial Claims. Japan: CPI.
Friday. Japan: All Industry Activity Index. UK: BBA Mortgage Approvals, Retail Sales.

ends

NOTES TO EDITOR

For more information, and to arrange interviews, please call Gwyn Garfield-Bennett on 01534 715411, or email gwyn@directinput.je <mailto:gwyn@directinput.je>
GoldMoney is one of the world’s leading providers of physical gold, silver, platinum and palladium for retail and corporate customers. Customers can trade and store precious metal online easily and securely, 24 hours a day.
GoldMoney stores around $1.4billion of precious metals worldwide for over 22,000 customers.
GoldMoney has offices in London, Jersey and Hong Kong.  It offers its customers storage facilities in Canada, Hong Kong, Singapore, Switzerland and the UK provided by the leading non-bank vault operators Brink’s, Via Mat, Malca-Amit, G4S and Rhenus Logistics.

Historically gold has been an excellent way to preserve purchasing power over long periods of time. For example, today it takes almost the same amount of gold to buy a barrel of crude oil as it did 60 years ago which is in stark contrast to the price of oil in terms of national currencies such as the US dollar.
GoldMoney is regulated by the Jersey Financial Services Commission and complies with Jersey’s anti-money laundering laws and regulations. GoldMoney has established industry-leading governance policies and procedures to protect customers’ assets with independent audit reporting every 3 months by two leading audit firms.

Visit www.goldmoney.com. <http://www.goldmoney.com/index.html> 
Follow the GoldMoney Dealing desk team on Twitter: @goldmoneyupdate

___________________________________________________________________

Ends

NOTES TO EDITOR

For more information, and to arrange interviews, please call Gwyn Garfield-Bennett on 01534 715411, or email gwyn@directinput.je

GoldMoney is one of the world’s leading providers of physical gold, silver, platinum and palladium for retail and corporate customers. Customers can trade and store precious metal online easily and securely, 24 hours a day.

GoldMoney has offices in London, Jersey and Hong Kong.  It offers its customers storage facilities in Canada, Hong Kong, Singapore, Switzerland and the UK provided by the leading non-bank vault operators Brink’s, Via Mat, Malca-Amit, G4S and Rhenus Logistics.

Historically gold has been an excellent way to preserve purchasing power over long periods of time. For example, today it takes almost the same amount of gold to buy a barrel of crude oil as it did 60 years ago which is in stark contrast to the price of oil in terms of national currencies such as the US dollar.

GoldMoney is regulated by the Jersey Financial Services Commission and complies with Jersey’s anti-money laundering laws and regulations. GoldMoney has established industry-leading governance policies and procedures to protect customers’ assets with independent audit reporting every 3 months by two leading audit firms.

Visit www.goldmoney.com.