Gold Editorials & Commentary

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.

GLD - on buy signal.

Sorry for not writing for most of the month of April, but I've been under the weather for the past few weeks. Now that I'm feeling better I should be back writing weekly articles.

It's amazing sometimes how much difference a year can make on investor psychology. For most of last year investors worried incessantly about a potential "double dip" U.S.

The NASDAQ 100 Index gapped up today to form a gap island reversal. (Chart courtesy Decisionpoint.com). The last time it did this was in December 2011, following which it reacted back before commencing a sustained rally.

The so-called Global Financial Crisis is a term so widely used that it has earned its own acronym of GFC.

We addressed the above question last year and arrived at the answer: no, gold left bargain territory long ago. We remain bullish on gold not because we think gold is still cheap, but because we expect it to get a lot more expensive.