Gold is off its lows after a weaker-than-expected U.S. jobs report…as of 6:05 am Pacific, the yellow metal is now up $2 an ounce at $1,638…Silver fell briefly below $30 an ounce but it’s now back above the $30 level, trading a dime higher at $30.17…Copper is down a penny at $3.76…Crude Oil is off $1.54 a barrel to $101.00 while the U.S. Dollar Index is flat at 79.17…
Gold’s Lull Before The Storm?
Over the last decade, there have been only five 40-day periods quieter than the one Gold has just had, based on the coefficient of variation (CV), which could easily be interpreted as a signal that we’re about to see a big move to the upside in bullion…the CV is the standard deviation divided by the mean average…comparing it with rolling 40-day periods since 1968, the CV shows that Gold has not had a quieter 40 days since mid-2007, just prior to a major advance…this also occurred in 2005 and toward the end of 2002, also prior to major bullish moves…
Today’s Markets
U.S. stock index futures as of 6:05 am Pacific are pointing toward a slightly negative open following release of the April jobs report…the American economy created a meager 115,000 jobs last month (the market was expecting a number around 170,000) with the unemployment rate falling to to 8.1%…job creation in the private sector was slightly better at 130,000, but overall the report painted a picture of a jobs market that had gotten a boost from unseasonably warm winter weather but now has cooled…the service sector again accounted for most of the job creation, growing 101,000 while manufacturing added just 16,000…governments cut a net 15,000 jobs for the month…though the headline number indicated job creation, the total employment level for the month actually fell 169,000…the disparity likely emanates from a drop in the labor force participation rate – or the level of Americans actively looking for jobs or otherwise employed – from 63.8% to 63.6%, its lowest level since December, 1981…the level of discouraged workers swelled from 865,000 to 968,000, an alarming increase of 12%…
European markets are off about 1% as of 6:05 am Pacific…Asian markets were mixed overnight with China’s Shanghai Composite gaining 12 points to close at 2452…
Euro Zone Elections
Politics will take centre stage in the euro zone over the weekend…recession-weary Greeks will pick a new government and polls show the French will probably elect the first Socialist president since 1995…local elections will test Italy’s political pulse while voters in a northern German state may deal a symbolic blow to Chancellor Angela Merkelās coalition…
Euro Zone Economic Weakness Continues – More Money Printing On The Way?
Euro-region services and manufacturing output contracted more than initially estimated in April, adding to signs of a deepening economic slump…a euro-area composite index based on a survey of purchasing managers in both industries dropped to 46.7 from 49.1 in March, London-based Markit Economics said this morning…that’s the fastest rate of decline since October and below an estimate of 47.4 published on April 23…a reading below 50 indicates contraction…
After shrinking in the final three months of 2011, Europe’s economy probably slipped into recession in the first quarter as the regionās worsening debt crisis forced governments from Spain to Italy to step up spending cuts…ECB President Mario Draghi yesterday said the economic outlook has become āmore uncertainā and left open the option of further stimulus after keeping the benchmark interest rate at 1%, already a record low…
China’s Stock Market Moving Higher
Recent market reforms announced by the Chinese authorities are proving to be a game changer for the countryās stock market, with the Shanghai Composite Index breaking above its 200-day moving average on Wednesday…āThe government is clearly nervous about how weak that market has been…it is clearly behind the A-share market rebounding, and like you donāt fight the Fed in the U.S., in China you donāt fight the government,ā Garry Evans, Global Head of Equity Strategy at HSBC told CNBC Asia’s “Squawk Box” this morning… over the past week, the China Securities Regulatory Commission (CSRC) has lowered transaction fees on equity trades, tightened IPO requirements and announced measures to enforce the delisting of unqualified firms…
Dynasty Gold (DYG, TSX-V)
Bottom-fishers may wish to do their due diligence and keep an eye on Dynasty Gold (DYG, TSX-V) which is trading at historical lows – it closed at just 2 cents yesterday – but has enough cash (approximately $1.5 million at the moment) to pursue new opportunities…with 118 million shares outstanding, DYG is trading just slightly above cash value…the company holds the Golden Repeat Property in Nevada, and a 70% interest in a Gold project in China which it’s trying to find a buyer for…
Rainbow Resources Chart Update (RBW, TSX-V)
Rainbow posted one of the best percentage gains on the Venture yesterday following positive news on its Big strike Project in the West Kootenays and an update on Jewel Ridge in Nevada with assay results from a sampling program expected in the next 7 to 14 days…John’s updated chart shows a definite reversal pattern, so the next several trading days could prove to be very interesting…Rainbow is up 21% for 2012 and has done a superb job of assembling quality land packages involving former producers in prolific jurisdictions with drilling just around the corner…one of the keys to Rainbow is the fact it has very experienced and dedicated “boots on the ground” in the West Kootenay region, and this army of prospectors will be key in identifying potential new discoveries over the next several months…that, combined with drilling of some exceptionally interesting former producers, gives us every reason to believe that following Rainbow’s progress between now and the end of the year is going to be quite exciting indeed…
Note: John and Jon both hold positions in RBW (Terry does not).
BMR
Over the last decade, there have been only five 40-day periods quieter than the one Gold has just had, based on the coefficient of variation (CV), which could easily be interpreted as a signal that weāre about to see a big move to the upside in bullionā¦the CV is the standard deviation divided by the mean averageā¦comparing it with rolling 40-day periods since 1968, the CV shows that Gold has not had a quieter 40 days since mid-2007, just prior to a major advanceā¦this also occurred in 2005 and toward the end of 2002, also prior to major bullish movesā¦
Just curious if the chart shows how many of those yrs were election yrs where the incumbent was doing and trying everything in his power to get re elected because he knows his rating as president is terrible and if the price of gold was going thru the roof like it should be… he would not get re elected… gold and silver in the paper markets are totally being manipulated more than ever right now in my opinion and it is doubtful we will see any major move until after the elections, unless there is a huge black swan event that the US Govt cannot control along with their crooked banker buddies..
Comment by Greg — May 4, 2012 @ 7:24 am
If anyone out there can make me feel optimistic, please step forward. I am
losing what optimism i had. If the Venture is going to trade in the direction
of bad news coming from somewhere in the world, we may be doomed, because we
can be sure, there’s a piece of bad news coming forward on a daily basis, from
some part of the world. R !
Comment by Bert — May 4, 2012 @ 8:40 am
Bert, my friend, I owe you some words of encouragement after you so kindly suggested I sounded like I was only 35…
We’re at extreme levels of pessimism in the junior market, which is the exact reverse of where things were at in late 2010 and early 2011….in hindsight that was a good time to cash in……now it’s just the opposite….
If you don’t think the Venture and the TSX Gold Index have already bottomed out, how much further could they drop? 5%??? 10%??? I can’t imagine more than that……if you think you’d be lucky and fortunate to get out of the market within 10% of its high, then the reverse is true as well……if you’re in within 10% of the bottom, you’re going to likely make a lot of money with a little bit of patience………
The fact the Canadian dollar is holding up so well speaks volumes about where commodities are ultimately going, and that’s higher……
Comment by Jon - BMR — May 4, 2012 @ 8:58 am
Jon, I still think we will see 1300 on the venture. That was my predition a month ago and it remains. 1300 will be the true double bottom.
Comment by dave — May 4, 2012 @ 9:07 am
2002, 2005 and 2007 were not U.S. election years….
I think what we’re going to see, Greg, is printing of money on a massive global scale over the second half of the year…it has already started……which is hugely bullish for Gold……you have this growth vs. austerity dynamic right now and I think growth will win out……
If Obama gets re-elected, and the Democrats retain control of the Senate and perhaps even regain control of the House, Gold could go ballistic……
Comment by Jon - BMR — May 4, 2012 @ 9:13 am
Jon,
unfortunately gold is going to go ballistic then… which is good and bad, that is exactly what this current adminsitrations knows too, and that is why they are doing everything they can right now to hold it back, imo..
Comment by GREG — May 5, 2012 @ 12:51 pm