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Gold has traded between $1,365 and $1,396 so far today…as of 7:30 am Pacific, the yellow metal is up $19 an ounce at $1,388…Silver has reversed earlier losses and is 19 cents higher at $23.53…Copper – and this isn’t a good sign – has declined another 12 cents to $3.19 as the International Monetary Fund cut its growth forecast for China…Crude Oil has slipped 84 cents a barrel to $87.88 while the U.S. Dollar Index is up two-thirds of a point to 82.47…

Views On Gold

Eric Sprott, commenting in the Globe and Mail this morning, likens the current pullback in Gold to 2008 when the price fell 30% in eight months amid the financial crisis to $700 an ounce, only to rally to nearly $900 by the end of the year and all the way to $1,900 in the late summer of 2011…

Goldman Sachs, which last week astutely changed its long Gold call to a short recommendation, says a huge shift has just happened in the commodity market, especially in bullion and natural gas…”There are weeks when decades happen”, Goldman analysts wrote in a research note yesterday as reported in an article this morning by CNBC’s Matt Clinch…”Over the previous five years the two highest conviction trades in the commodity complex were being long Gold in response to the debasing actions of central banks around the world and short natural gas in response to the shale revolution…these two trends have now likely reversed and our conviction in these new trends has risen significantly over the past month”, they added…Goldman’s recommendations aren’t always money-makers…according to both Reuters and the Financial Times, Goldman closed out its long Brent Crude recommendation Monday with a loss of 15% for investors who followed the call…back in 2008, Goldman was calling for $200 Crude Oil when it was trading around $130 a barrel, and we all know what happened after that…late in 2011, they were also anticipating new all-time high Gold prices in 2012 – as many people were (including us)…

According to Massachusetts-based EPFR Global, exchange-traded products linked to Gold have dropped $37.2 billion in 2013 as the metal hit a two-year low yesterday…Gold funds have suffered net outflows of $11.2 billion this year through April 10, the most since 2011, while global and U.S. equity funds had net inflows of $21.25 billion…

Central banks are among the biggest losers due to Gold’s collapse as they own 31,694.8 metric tons, or 19% of all the Gold mined, according to the World Gold Council…after rallying for 12 straight years, the metal has tumbled 30% from its September, 2011, record of $1,924 an ounce…global central bank monetary easing, along with growing corporate profits and slowing inflation, has boosted global equities by $2.28 trillion this year, according to data compiled by Bloomberg, and part of the stampede into equities (U.S. and Japan in particular) has certainly come at the expense of Gold…

According to the JPMorgan index, global inflation peaked at 4% in 2011 and has fallen steadily since…global prices in February were up only about 2.5% from a year earlier, the bank’s index says…JPMorgan has two scenarios for what happens next…its main one is based on a “bottom-up” collection of analysts’ forecasted price trends sector by sector around the world…that shows inflation rising very slightly from its current level for the rest of 2013…in contrast, JPMorgan’s “top-down” analysis, which is prepared by the banks’ economists and takes into account prices of commodity futures contracts, among other factors, shows inflation moving down closer to 2% in the second half of 2013…the headline on JPMorgan’s report – “The Slide In Global Inflation May Not Be Over”…

Today’s Markets

Asian markets were mixed overnight…Japan’s Nikkei average climbed 161 points to close at 13383…China’s Shanghai Composite, meanwhile, was quiet as it slipped just a point to finish at 2194…the Financial Times reported today hat a senior auditor in China had warned that local government debt is “out of control” and could spark a bigger financial crisis than the U.S. housing market crash…the report comes after disappointing growth numbers from China on Monday sparked a sell-off in commodities which fed through to global equities…European shares are significantly lower in late trading overseas…in North America, the Dow and TSX are both off more than 100 points through the first hour of trading while the Venture is down another 15 points at 945…

Low Cost Producers To Watch

The possibility of another down-leg in Gold could bring about some incredible bargains for long-term investors in producers with strong balance sheets and all-in “sustaining costs” that are significantly below the industry average…as we’ve stated many times here before, one of the best-run companies in the Gold sector in our view is New Gold Inc. (NGD, TSX-V) which will be reporting its Q1 results May 1…NGD‘s adjusted net earnings for all of 2012 were 40 cents per share ($184 million), and the company finished the year with a cash balance of nearly $700 million…assumptions used in NGD’s 2013 guidance were similar to those of most of its peers and include average Gold, Silver and Copper prices of $1,600 per ounce, $30 per ounce and $3.50 per pound, but New Gold is better positioned than most to handle the lower price environment for these metals…not surprisingly, the New Gold chart is showing weakness at the moment, and where we see the strongest technical support is in the $4 to $5 range which implies we haven’t seen the bottom yet in Gold…the last time NGD was trading at $5, Gold was at $1,250 which could happen again…NGD is up slightly in early trading at $7.05…

Yamana Gold (YRI, TSX)

Yamana Gold’s (YRI, TSX) chart is also showing increased down momentum which again suggests that Gold hasn’t hit bottom yet…YRI will be reporting its Q1 results April 30…CEO Peter Marrone has the company focused on quality ounces per share which contribute to cash flow and earnings growth…YRI is down about 30% since Gold’s all-time high in September, 2011, vs. a nearly 60% drop since that time in the TSX Gold Index…nearest strong support on the chart ranges from $9.20 to $11.00…as of 7:30 am Pacific, YRI is up 19 cents at $12.07…

D’Arianne Resources Inc. (DAN, TSX-V)

A company in the non-precious metals sector that is certainly worthy of our readers’ due diligence is D’Arianne Resources Inc. (DAN, TSX-V)…we’ve mentioned DAN before in this space, and the stock has also been performing well in the context of a bad overall market…D’Arianne is developing a large phosphate project (phosphate of course is an essential component of fertilizer) in Quebec with a bankable feasibility study expected later this year…the proposed open-pit Lac a Paul mine is expected to produce high quality igneous apatite concentrate with little or no containment…D’Arianne is in a sector that many analysts are growing increasingly bullish on…technically, the stock has been trading in a horizontal channel between 80 cents and $1.47 since November, 2011…a breakout at some point this year seems highly possible as this interesting project continues to progress…DAN closed at $1.31 yesterday but hasn’t traded so far this morning…

Note: John., Jon and Terry do not hold positions in NGD, YRI or DAN.