The Gold & Silver Speculator (06 Dec 2012)

This is a sample entry from Kurt Pfafflin’s weekly market commentary newsletter, The Gold & Silver Speculator, published on December 06, 2012.

Been Dazed and Confused for So Long It’s Not True…

In case ya didn’t know, that’s a line from The Led Zeppelin song from their classic 1969 debut album Led Zeppelin…

After last week’s violent Mystery Mauling, Gold and Silver remain weak, essentially Dazed and Confused as a short-term wave of fear and uncertainty have gripped the markets. I suppose a relevant question would be the final song title on that album, How Many More Times…?

Since hitting a high of $1757 on November 23rd, Gold has shed over $70 (-4%) printing a low of $1686 yesterday (12/05/12). Silver topped out on November 29th just a tick shy of $34.50 before dropping -$1.91 (-5.5%) to a low of 32.58 (12/05/12).

In last week’s GSS (11/29/12), I examined the primary reasons I believe we’re going to see much higher prices for these heavy metals, hard currencies in 2013. But in order to get to “next year,” we still need to get through the next three weeks. While November and December have historically been kind to Silver and Gold over the years, a number of unique conditions have combined to create a Perfect Storm of negativity and weakness.

Take your pick or lump all ‘em all together: Redemption-forced Hedge Fund liquidations. Heightened/Exaggerated Year-End Book Squaring & Profit Taking by individuals and professionals alike. Uncertainties and real tax-consequences of the looming Fiscal Cliff and higher capital gains rates ahead. The Debt Ceiling and possible credit downgrades. Heavy technical selling triggered after $1700 support broken, etc, etc…

Fear and uncertainty leads to selling pressure, which we’re definitely dealing with now. I’m of the opinion that the current weakness is short-term and artificial in nature, but there is much to contend with.

As witnessed only a year ago, December can be an extremely painful time to be long these markets. Last year, Gold hit a high of $1750 during the first week before The Gutting began. Reminiscent of the horrifying scene in Stanley Kubrick’s The Shining where the hallways filled with blood, 3 weeks later, Gold finally found a bottom $222 lower…all the way down at $1528. This epic bloodbath will not soon be forgotten. But will it be repeated?

Near-term technical supports for Gold come in at $1672.5 (the 11/05/12 low), then major support at $1665 (200 Day MA). For Silver support, $32.58 has been holding up, but another washout could see it fall to $30.79 (the 11/05/12 low).

Bullish sentiment in the press/media is nowhere to be found as headlines abound, worrying whether Gold has finally lost its Glitter. Once Bullish (But Now Obviously Bearish) Traders/Analysts are starting to come out of the woodwork with freshly-sharpened claws and much lower price targets for Gold and Silver.

In fact, Goldman Sachs in their infinite wisdom basically declared the Great Gold Bull to be dead based on improving prospects for the US economy and higher interest rates. I completely disagree. The contrarian in me is sensing that this year-end shakeout may have a bit more room to run to the downside, but better days could be just ahead in 2013. You’ll recall the amazing $200 Crude Oil “super-spike” call GS made back in May 2008 when Crude was trading $130…? January 2009 Crude Oil scraped the bottom of the barrel either months later at $33, for whatever that’s worth to you…


US Federal Open Market Committee (FOMC) Meetings
WED 11:30AM (CT) – FOMC Interest Rate/Monetary Policy Statement Release
WED 1:00PM (CT) – FOMC Inflation/Economic Growth Projections Statement Release
WED 1:15PM (CT) – Federal Reserve Chairman, Ben Bernanke Statement + Q&A Session

Please refer to the charts below for further commentary and analysis…
*Look for email alerts/market updates should conditions warrant or if/when environment allows


February Gold 12-6-12


March Silver 12-6-12

“Central banks stand ready to lease gold in increasing quantities should the price rise.” — US Federal Reserve Chairman, Alan Greenspan in Testimony Before the Committee on Banking and Financial Services, U.S. House of Representatives (July 24, 1998)

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