BullMarketRun.com

Gold has been as high as $1,440 today as a rebound continues from the dramatic sell-off early last week…as of 7:20 am Pacific, bullion is up $16 an ounce at $1,423…hedge funds and money managers raised their net longs in Gold futures and options in the week to April 16, a report by Commodity Futures Trading Commission (CFTC) showed on Friday, as new money entered the market at lower prices – likely in anticipation of a rally out of temporarily deeply oversold conditions…Silver is 13 cents higher at $23.42…Copper is off a penny at $3.14…Crude Oil is flat at 87.99 while the U.S. Dollar Index is up slightly at 82.80…

Gold has three Fibonacci resistance levels in the $1,400’s as John’s chart showed Friday – $1,421 (38.2%), $1,453 (50%) and $1,484 (61.8%)…given the breach of critical support, first at $1,550 and again at $1,500, the primary trend at the moment has to be considered bearish…it’s also important to keep in mind a Fibonacci 50% retracement of the secular trend from the $253 low in 1999 to the $1,924 high in 2011 would take bullion down to $1,088…few analysts are expecting that, which probably makes it more likely…so what we’re saying is that it’s wise to be cautious of any rallies in Gold at the moment when the next $300 move is more likely to be to the downside than the upside…longer-term, we’re of the strong opinion that Gold will reassert itself and ultimately push through the 2011 high…a major correction, as Gold is in the process of now, will help lay the foundation for that move…

The View From Barclays Capital

Barclays Capital says it now looks for Gold to average $1,483 an ounce in 2013, describing the macroeconomic backdrop as still supportive but the near-term outlook as fragile…central banks are likely to remain net buyers, unlike the 1990’s when they were net sellers, Barclays said…however, there is potential for continued selling of exchange-traded products…the supportive macroeconomic backdrop includes ongoing global central-bank balance sheet expansion, negative real interest rates, loose monetary policy and risk of longer-term inflation, according to Barclays…“Indeed our economists expect most major central banks to remain in easing mode throughout 2013″, Barclays said…“Despite the heightened uncertainty across Europe, Gold has been focused upon the U.S. market and the better-than-expected macro data has weighed upon prices…indeed, hawkish Fed minutes have been interpreted as suggesting that quantitative easing will be curtailed sooner than expected…however, our economists see the FOMC (Federal Open Market Committee) voting lineup for 2013 as having a more dovish tilt than the full group of FOMC participants”…Barclays said it does not feel market dynamics have switched to the low Gold-price environment of the 1990’s when gross shorts hit record highs, central banks were net sellers and producers were hedging with prices testing the cost of production…“Prices are currently closing in on the marginal cost of production plus sustaining capex, but hedging activity predominantly relates to project-related financing”, Barclays said…“gross shorts are elevated, but central banks remain on the buy side and, despite the Cyprus news, we expect official sector activity to remain on the demand side…we now expect prices to average $1,483/oz in 2013 and $1,450/oz in 2014…Gold will need to find support from the physical market in the near term, but investor interest continuing to unravel poses the largest downside risk we see for prices in the forthcoming weeks”…

Meanwhile, Barclays’ chief technical strategist, Dhiren Sarin, told CNBC this morning that last week’s plunge in Gold reflects a loss of faith in quantitative easing measures by central banks in the West, and the next asset class that could be vulnerable to heavy selling is equities…”The breakdown in Gold in euros and U.S. dollars tells us that some of the belief in quantitative easing measures has faded, and policies by central banks aren’t flowing through to investors…the asset class most vulnerable for a selloff after commodities is likely equities”, he stated…he expects European and U.S. stocks to be most at risk…

Silver Updated Charts

As usual each Monday morning, John has fresh long-term and short-term charts for Silver…there are several “big picture” problems with Silver at the moment which point to a heightened risk of a drop to at least $19.50 an ounce in the coming months after breach of critical support in the mid-$20’s…a bearish -DI/+DI crossover supports this view…in addition, buying pressure has turned to selling pressure, and last week’s decisive move below the pitchfork tine is also highly significant…RSI(2) is currently at an extreme low, so the current mild rally is not surprising but it will meet stiff resistance…note the very pronounced down trendline in place since the 2011 high – similar to the problem the Venture is having…

Silver Short-Term Chart

Below is a 3-year weekly chart that shows how intense the sell pressure was last week…over the short-term, Silver will need to demonstrate support at $22 an ounce – last week’s low…at the moment, oversold conditions are clearly prevalent…the $26 level provided strong support on numerous occasions over the last couple of years – that will now be strong resistance…

Today’s Equity Markets

North American markets are off modestly through the first 50 minutes of trading today…as of 7:20 am Pacific, the Dow is down 47 points at 14501…Caterpillar (CAT, NYSE) posted earnings and revenue that missed Wall Street expectations this morning…it also cut its full-year outlook for 2013 to reflect a drop in demand for heavy equipment from its mining customers…Canadian earnings season kicks off this week…the TSX has lost 18 points in early trading while the Venture has gained 4 points to 943…the Venture has an opportunity today to post 3 consecutive winning sessions for the first time since mid-January…volume remains low, however, and we still expect a test of support at 860…in Europe, shares are moderately higher in late trading…meanwhile, Japan’s Nikkei average climbed 252 points to finish the day at 13568, its highest level in almost five years…below is a 20-year monthly chart from John that shows the Nikkei is on track to reach the Fibonacci target of 14000…

TomaGold Corp. (LOT, TSX-V) & Quinto Real Capital Corp. (QIT, TSX-V)

TomaGold Corp. (LOT, TSX-V) and Quinto Real Capital Corp. (QIT, TSX-V) reported additional results this morning from Monster Lake in northwestern Quebec…while the grades and widths are generally favorable, they did not exceed expectations or surprise to the upside – hence the selling pressure…keep in mind, as well, that the combined market cap for this play was already $15 million after Friday’s close…the market also has little to speculate on over the coming weeks until the next round of drilling commences near the end of May…best results from holes 102 through 107 included 11.30 metres grading 8.65 g/t Au (M-13-105) and 4.8 metres grading 37.1 g/t Au (M-13-106)…the current strike length of the 325 Zone is over 150 metres while the vertical depth is 320 metres…the companies believe the system follows a classic pattern of Archean Gold deposits, so we’ll see what deeper drilling reveals…this is still an interesting play that deserves to be watched closely, but we’re not surprised with the market’s negative reaction today…below is the LOT chart through Friday…weakness has been creeping into the technical picture recently, especially after a break below the Fibonacci 38.2% retracement level at 24 cents…

Fission Energy (FIS, TSX-) and Alpha Minerals (AMW, TSX-V)

Fission Energy (FIS, TSX-V) and Alpha Minerals (AMW, TSX-V) were halted prior to market open, pending news…FIS closed Friday at 84 cents, a 33% drop from its recent 52-week high of $1.26 and in line with the pullback that John expected…we’ll see what the news brings today…technically, it’s important that support holds around 80 cents and that the 50-day moving average (SMA) doesn’t begin to decline…

Note: John, Jon and Terry do not hold share positions in LOT, QIT, FIS or AMW…