GoldMinerPulse: Market Sentiment Track Record

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GoldMinerPulse Market Sentiment (MS) Metric Track Record

22 March 2013 View After Market Close: MS Up Slightly From Multi-year Lows.

• The MS down trend dating back from early October, 2012 remains in effect. For the week ending 22 March 2013, MS has recovered slightly from the multi-year lows in the prior week. On a slightly positive note, the MS trend has resumed tracking the Price of Gold (POG) trend. However, based on the July 2012 MS recovery, I would prefer to see the MS trend leading (ahead of) the POG trend before saying, with any confidence, that a new up trend was forming.

  

• The Cyprus bank fiasco is getting worse, much worse. Consider 21 March 2013 news headlines including a Bloomberg story Russia May Review Share of Euro in Reserves, Medvedev Says

  • Cyprus's financial crisis may force Russia to review the share of euros in its international currency reserves, the world's fourth-largest stockpile, according to Prime Minister Dmitry Medvedev. An unprecedented levy on deposits in Cyprus banks that was backed by European finance officials as a condition for the country to receive a bailout, was "not just unpredictable, it's evidence of some inadequacy," Medvedev said, according to a transcript of his interview with Interfax and foreign media on the government's website. "We have 41 percent or 42 percent of our reserves in euros," Medvedev said. "It’s big money, and we, like any country, value predictability."

  and from The European Union Times, Russian Leader Warns, "Get All Money Out Of Western Banks Now!"

  • A Ministry of Foreign Affairs (MFA) "urgent bulletin" being sent to Embassies around the world today is advising both Russian citizens and companies to begin divesting their assets from Western banking and financial institutions "immediately" as Kremlin fears grow that both the European Union and United States are preparing for the largest theft of private wealth in modern history.

• Physical deliver of gold on the Shanghai Gold Exchange (SGE) continued at a record pace with 35.7 tons delivered on 22 March 2013, the largest single day delivery on the SGE. 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.

• Physical gold delivery on the SGE is increasing at a rate of approximately 5 tons/month while the growth rate in the world gold production is growing at approximately 1 ton/month.

  

Outlook for Week Ending 29 March 2013

The MS trend suggests the trend for the week ending 29 March 2013 is likely in sideways / neutral pattern as a base of support is built on last week's multi-year MS lows. The continued strong SGE market for physical gold suggests further gold price drops are unlikely, especially given the Cyprus fiasco engineered by the EU and IMF. The 21 March 2013 comments from Medvedev, and their likely impact on gold (i.e. euros flowing into a gold as a safe haven) are well worth considering. Will the recent pattern of money flows in the US dollar in troubled times final transition into money flows into physical gold in times of financial stress? This is most certain to happen eventual and first evidence of such a move may account for the record physical gold delivery on 22 March 2013 at the Shanghai Gold Exchange. Since bottoms are always formed around market sentiment lows, given the strong physical market support, and given the developments around the Cyprus fiasco, I believe now continues to be an excellent 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. Will large daily physical gold delivery volumes continue from last week or even grow? The key event to watch is the gold market reaction to the unfolding of events in Cyprus and the second week of the Cyprus bank holiday. Given the Medvedev comments from 21 March 2013, the price of gold in euros should be interesting in the coming week.

GoldMinerPulse Calls From Past Friday Market Closings

• 2013-03-15 -- MS Continues to Make Multi-year Lows

• 2013-03-08 -- MS At Multi-Year Low

• 2013-03-01 -- MS Hitting Lows Not Seen Since July 2012

• 2013-02-22 -- Up trend from 20 December 2012 Failed

• 2013-02-15 -- Up trend from 20 December 2012 Confirmed

• 2013-02-08 -- Up trend from 20 December 2012 Still Holds

• 2013-02-01 -- Up trend from 20 December 2012 Still Holds, But Is Weakening

• 2013-01-25 -- Up trend from 20 December 2012 Still Holds