Hello and good Tuesday to you. Here are the few links of the week.... 
 

Gold Could Lose Safe-Heaven Bid as Equities Rebound
Gold has picked up quite a bit of relative strength as the equity market has decline. With the equity market rebounding what happens to Gold?
 

Precious Metals Video Update
Video update published Wednesday evening. Our latest thoughts on precious metals.
 

Interview with Mike Swanson
This was Wednesday afternoon.   


Some Gold Bulls Need a Dose of Realism
Great piece from Steve Saville debunking the "Gold Shortage" meme. 


January Fund Manager Survey
Great sentiment charts from the Fat-Pitch Blog


Selling Pressure & EM Valuations Attractive
Long update from Tiho Brkan at ShortSideofLong. 






Premium Snippets 



Chart 1 shows the NYSE along with two indicators: the percent of stocks trading above their 200-dma and the new 52-week lows. 

The stock market reached a selling climax a few days ago. We marked the other recent periods that were similar in terms of those two indicators. The number of new 52-week lows and the percentage of stocks trading above the 200-dma hit the highest level in 4+ years. 

You can't tell on this line chart but if you refer to the chart in our editorial you'll see that the stock market formed a strong bullish hammer (reversal candle) and on strong volume. I expect the stock market to rally and it could last at least a few months. 
 

Chart 2 shows a weekly candle chart of the US$ index and the net speculative position in the US$ futures market. We like to measure the Gold & Silver positions as a percentage of open interest. The US$ open interest isn't as large so we focus on the nominal position. 

Is the US$ getting ready for a breakout? It just made its second highest weekly close since the bull market began. Still, the US$ needs a strong weekly close above 100 to produce a breakout. Note that the speculative position is roughly half of what it was a year ago. Furthermore, another indicator (showed in our premium update) makes the same argument that sentiment has room to grow a lot more bullish. 



 


A rising stock market coupled with a breakout in the US$ index could be the catalysts for the next round of weakness in precious metals. There is also a Fed meeting this coming Thursday and that can provide added volatility. 

I looked at the past bear markets in equities, including 2011 and May is often an interim peak. Check what happened in 2001, 2002, 2008 and 2011. May was a significant peak in all of those years (which were in bear markets, though 2011 was really brief). In one of those years the market peaked before May. We often hear the phrase sell in May and go away. That may not matter in a bull market but it may really matter in a bear market. The market could be setting up to rally for at least a few months and it may set up a spring peak that could come close to May.

An equity peak in the spring could coincide with a potential bottom in Gold. Three of the last four major bottoms in Gold came in the February to April time frame. 

There are a lot of potential cross currents abound in the weeks ahead and we will cover them and all the best companies as best we can.  

In TDG #449, a 32 page update sent Saturday evening we covered the equity market, the US$, US$ sentiment, Gold & Silver as well as their CoT's. We also commented on several companies including one exploration company which is suddenly becoming an intriguing value. 

Whether you are accumulating Gold and Silver or want to speculate on promising juniors, our service can help you. We provide objective and actionable research on Gold, Silver and the companies. And we provide fundamental analysis reports of the companies. We also keep our eye on other markets. We are one of the only newsletters in the space that trades a real portfolio. That means our goals are aligned with yours. And we are one of the only editors who is a professionally credentialed analyst.

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