NFTRH Update 4.12.13, Precious Metals & Broad Markets

Precious Metals

The view has not changed one iota that the precious metals are where the bullish action will be first, when the big US indexes finally top out and start to make some downside objectives.  This morning’s retail sales and consumer noise join the ISM and ‘jobs’ in the bad data sweepstakes.

Gold and silver are finally taking a climactic drop and breaking last summer’s lows.  Commodities are generally dropping and there seems to be a whiff of deflation in the air.  Except that the mighty US stock market has not yet gotten the memo.  At what point do conventional market players ask themselves how open ended is QE policy going to be before it helps the economy in a substantive way?  This is pure bald-faced inflation and yet the Fed has only succeeded in pumping stock markets and associated expectations.  They have not been able pump the economy beyond short spurts.

There is noise everywhere with I suppose Cyprus being the biggest one.  Or is it the little tyrant in North Korea?  I don’t know and don’t care.  The capitulation phase seems to be engaging for real in the precious metals.  Know what you like (quality only!) if you remain a gold bug as I do.

I still hold out hope for HUI 250, but the weekly chart is now more over sold than at the epic bottom in 2008.  I believe this is going to end up being a gift, but from what level?  Unless gold and silver get back above the broken lows of last summer, the next targets are lower.  Silver has nothing but hot air between current levels and 20.

I am now in greed mode, but have not bought a thing.  We have worked long and hard through months of grind to remain intact and ready.  My old saying ‘buy all in and around a bottom’ still applies, but first I want to see some sign of potential bottom making.  Capitulation volume and a head spinning reversal might be the first signal.

Aside from bottom guessing, I am going to watch things like cashed up explorers selling for cash value, gold in ground for free and other no brainer signs like we used in 2008.  I suppose the bottom line of this update is that the end game seems to have started after too many months of chop, grind and drop.  I am feeling really bullish as a contarian player is supposed to, but have not acted on this yet.

Broad Market

So many aspects of the broad global market have been dinged; Europe, emerging, commodities… and yet the US market levitates.  I am only short against the small caps but nothing has changed here either.  I expect 2013 to bring about some bearish opportunities.  But a total disaster could be a year or more out.  If the US indexes follow the HUI model we reviewed a couple weeks ago here on the site, it could be a year of chopping and grinding bulls and bears.  i.e., a market for traders.

Bottom Line

We have been awaiting changes in both the PM’s and Broads.  I think today is a kick off to the acute phase of those changes in the precious metals at least.