Gold has traded as low as $1,570 this morning, retracing some of Friday’s strong gains…as of 7:40 am Pacific, bullion is down $11 an ounce at $1,571…Silver is off 18 cents to $27.17…Copper is flat at $3.36…Crude Oil is 39 cents higher at $93.09 while the U.S. Dollar Index is off slightly at 82.66…
Soros:Ā Gold No Longer A Safe-Haven
Billionaire investor George Soros says Gold has been destroyed as a safe-haven asset, but expects continued central bank buying to support prices, according to an article over the weekend in the South China Morning Post…”Gold was destroyed as a safe haven, proved to be unsafe…because of the disappointment, most people are reducing their holdings of Gold,” Soros is quoted as saying…”But the central banks will continue to buy them, so I don’t expect Gold to go down…if you have the prospect of a crisis, you will have occasional flurries or jumps…so Gold is very volatile on a day-to-day basis, no trend on a longer-term basis”…Soros, who called Gold “the ultimate bubble” in 2011, slashed his position in the world’s largest Gold-backed exchange-traded fund, SPDR Gold Trust, by more than half to 600,000 shares in the fourth quarter of 2012 from 1.32 million in the third quarter…after a 12-year rally, Gold has fallen nearly 6% this year as investors have searched for better returns elsewhere including equities…
Problems In Portugal
Portugal is the latest example of how austerity in the euro zone is failing…the country’s Constitutional Court ruled on Friday that wage and pension cuts to public sector workers were unlawful…as a result, Portugal’s prime minister warned over the weekend that more spending cuts are coming in order to meet the conditions of the 78 billion euro ($101 billion) bailout it received in 2011…speaking in a televised address yesterday, Pedro Passos Coelho responded to the ruling, saying that is posed “serious obstacles and risks” to the 2013 and 2014 budgets…the European Commission responded last night by saying that Portugal must fulfill its bailout commitments to get an extension of maturity payments, which it requested along with Ireland…
IMF Managing Director Hails Bank Of Japan Stimulus
This should give everyone reason for concern…Christine Lagarde, the International Monetary Fund’s managing director, has welcomed the huge monetary stimulus plan unveiled by Japan and says it will help to boost global growth at a time when the outlook is already starting to improve…Lagarde said loose monetary policies and āunconventional measuresā had helped boost global growth and āthe reforms just announced by the BoJ are another welcome step in this direction”…she was speaking at a business forum in southern China yesterday…
Today’s Markets
North American markets are coming off their worst week of the year and face a major challenge this week as earnings season kicks off with results from aluminum producer Alcoa (AA, NYSE) after the close today….an unusually high number of negative warnings have come out recently with 107 negative revisions for companies in the S&P 500, the worst pace in 12 years according to Thomson Reuters…Fed Chairman Ben Bernanke will be speaking tonight on the topic of maintaining financial stability at a conference organized by the Atlanta Fed…through the first hour of trading today, the Dow is down 50 points at 145515…the TSX is off 3 points while the Venture is up 4 points at 1046…it’s an important week for the Venture is it needs to show some “follow-through” after very encouraging action last Thursday and Friday…Asian markets were mixed overnight but Japan’s Nikkei continued to climb after last week’s announcement of massive monetary stimulus from the Bank of Japan…the Nikkei gained another 359 points or 2.8% to close at 13193…the Nikkei business daily reported over the weekend that the central bank will buy government bonds totaling $77 billion in April…in response, the yen fell against the greenback to its weakest levels since 2009…the decline in the yen may spark fresh talk of a currency war after angry comments by Korean and Chinese authorities over Japan’s export advantage…European shares are up modestly in late trading overseas…
Updated Dow Chart
What goes up, must always come down, so a correction is certainly in store for the Dow given current overbought technical conditions as shown in John’s 1.5-year weekly chart below…however, it also wouldn’t be a surprise if the Dow climbed another 200 points in the near future as buying pressure remains strong and there’s still plenty of cash on the sidelines, waiting to pounce on any minor pullback…John’s Fibonacci target is 14723…
GoldQuest Mining (GQC, TSX-V) Update
Technically and fundamentally, GoldQuest Mining (GQC, TSX-V) is looking highly attractive at current levels as a speculative opportunity with more upside potential than downside risk…John’s charts in recent months have shown a strong support level at 35 cents which has held despite 9 consecutive weekly declines in the CDNX…since February 1, the Venture has fallen 15.2% while GQC slipped from 53 cents to an intra-day low March 25 of 34.5 cents…it closed Friday at 42 cents…GoldQuest in our view represents one of the best exploration opportunities in the market today with Romero comprising just 20% of the company’s Las Tres Palmas trend in the Dominican Republic where multiple new IP targets have recently been identified, including the highest chargeability anomaly to date…a 30,000-metre drill program commenced early in the first quarter and, quite frankly, it would be shocking if GoldQuest did not make another significant discovery at some point in the coming months…investors have been given more than enough clues in news releases December 20, February 11 and March 27…GoldQuest is blessed with a strong team on the ground that has intimate knowledge of the area…just prior to the discovery at Romero in late May of last year, we highlighted GoldQuest when it was trading at just a nickel…it rocketed as high as $2.03 last summer and has pulled back more sharply than it probably should have simply due to overall market conditions…with a possible rebound on the way in Gold stocks, GQC is certainly an opportunity to seriously consider given the exciting potential leverage investors have at current levels…
Below is an updated 2.5-year weekly GQC chart from John…the overbought condition from last spring and summer has unwound with RSI(14) currently flat at 40%…a bullish Slow Stochastics crossover below 20% is encouraging, and the declining 50 and 100-day moving averages are beginning to flatten out around 46 and 54 cents, respectively…technically and fundamentally, what we see with GQC is the ideal set-up for another powerful move to the upside though the exact timing is uncertain…the main spark, of course, will be more spectacular drill results…as always, perform your own due diligence…of course downside risks do exist with GQC (weak markets, disappointing drill results), but we find the risk-reward ratio in this instance to be highly favorable…GQC is up 2 cents to 44 cents in early trading today…
Fission Energy Chart Update (FIS, TSX-V)
Fission Energy (FIS, TSX-V) became short-term overbought recently based on several technical indicators and pulled back as expected last week to 98 cents, the Fibonacci 61.8% retracement level…below is an updated chart from John…the overall trend remains bullish…FIS is up 3 pennies to $1.05 in early trading today…
Updated Silver Charts
There are several factors that give us confidence that Silver is ready to rally, not the least of which is this long-term monthly chart from John showing Silver resting at strong support (note the Pitchfork line) while RSI(2) is at an extreme low…the RSI(2) indicator on all of the previous long-term monthly charts has been a very useful guide in determining “turning points”…RSI(2) is currently at its lowest level since the Crash, so a collapse below support at this juncture seems unlikely…extreme RSI(2) levels on the long-term chart like we’re seeing at the moment have consistently proven to be good buying opportunities, so there’s no reason to be believe that this time will be any different…
Silver Long-Term Chart
Silver Short-Term Chart
The last three trading sessions have formed a bullish Morning Star reversal pattern which needs to be confirmed…RSI(2) is emerging out of oversold territory, another encouraging sign…
Note: John, Jon and Terry do not hold a position in FIS.Ā Jon holds a position in GQC.
