Chart for 15 March 2013 market close plus outlook for week ending 22 March 2013.
The MS down trend dating back from early October, 2012 continues. MS has fallen below last weeks low which was lower than the July 2012 lows which I estimated to be lower than any MS lows seen in 2010, 2011, and 2012. Nothing in the MS trend indicates that current lows are a bottom, although the rate of deteriation has slowed significantly on a week over week basis.
Physical deliver of gold on the Shanghai Gold Exchange (SGE) continue at a brisk pace with 28 tons delivered on 15 March 2013, the largest single day delivery during the month. March is on track to match the record January 2013 delivery of 300 tons. I provide a daily snapshot of the Shanghai Gold Exchange action on my daily Gold Mining and Silver Mining Stock News Headlines page.
The Cyprus Bank Deposit Bail-in -- what will its impact be on the price of gold and will an even strong trend towards holding physical gold outside of the banking system build? A 9.9% levy on all bank deposits in Cyprus has in my opinion the potential to be the spark that ignites a turn around in gold prices. Sunday main stream view, Europe Braces for Fresh Turmoil With Cyprus Deposit Levy is far from clear as to what impact to expect on price of gold given the likely surge in the US$ if funds flee the Euro. Also see Traders braced for market turbulence amid bailout chaos in Cyprus for more on unexpected consequences, or better still, track the Cyprus action via twitter where dozens of tweets are arriving per minute.
The Kitco Gold Survey of market participants completed 15 March 2013 has 68% of the participants bullish while 24% are neutral and 8% bearish. Taking the Kitco survey results as a contrary indicator suggests next week is more likely to be neutral or bearish.
The MS trend suggests the current bearish decline is like to contnue while the strong SGE market for physical gold suggests further gold price drops are unlikely to be significant. Since bottoms are always formed around market sentiment lows, and given the strong physical market support, I believe now continues to be a reasonable time to add to physical gold holdings and for additional leverage to add to gold and silver producer equitites (this is opinion and not investment advise). When the MS trend does turn up, I believe current gold and silver equity prices will be viewed as recognized as great bargains.
The key metric to watch for next week is the price premium and daily delivery quantities for gold on the SGE. The key event to watch is the gold market reaction to the unfolding of events in Cyprus and the looming bank holiday.