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Precious Metals Intraday Alert: Bullion Upside Reversal Confirmed By Mining Shares

TND Exclusive Report / By Eric Dubina-developing-bull-market1

Bullion was mauled in the overnight session, when thin volume facilitates cartel price management.  As can be seen with the overnight session’s sharp decline, this was not the typical stair-step downward move that would be considered normal profit taking following last week’s big gains.  In fact, the regular session on Monday saw normal profit taking during London and New York trading sessions.  Who in their right mind would try to exit large positions for profit taking during the most illiquid period during Tuesday’s overnight session?   It should also be noted:  the argument can be made that coming into Monday during the access hours there was a small cartel raid that set the stage; who needs “nudge teams” when they already exist on Wall Street?

















Conventional thinkers outside of the reality-based community might scoff at this analysis.  So be it.  The bottom-line is that Tuesday’s overnight session witnessed a raid.  It’s very visible in the chart.

Today’s upside reversal speaks to the underlying strength of this new bull cycle.  The character of the bullion market has changed, readily apparent to anyone with a lick of “mercantile sense” as James Sinclair observes.  It also comes a day before the release of minutes from the FOMC, and futures contract settlement later this month.  Precious metals markets typically come under pressure against that sort of backdrop.

Hedge funds are incrementally increasing their long exposure.  Some of these very same hedge funds were playing the short side more aggressively only three weeks ago.  In addition, the hot money crowd is demonstrably not interested in laying on big, new short positions; many are looking for entry points to get long.  This shift in the speculator community is contributing to fast upside reversals like we see in this morning’s trade.

Meanwhile, fundamentals for the physical market are strengthening.  The seasonally strong period for Asian purchases has begun.  We also have the bullion banks apparently net long both gold and silver.  The talking heads on CNBC might not be able to see that the bullion markets have turned, but you can and that’s why you’re reading this (and the brainwashing box is ideally turned off!).


Mining Shares Confirming Bullion Price Action

Monday’s standard profit taking was telegraphed to some extent by Friday’s tepid trading across mining shares.  Mining shares have a tendency of revealing short-term inflection points when it comes to the speculator community.  The shares also can reveal shifts in the aggregate view of longer-term oriented investors.

Ever since the cyclical bear cycle in bullion began last fall, all mining share rallies were eventually sold.  Precious metals equities acted like they had fallen into a bottomless pit.  Early this month, that pattern decidedly changed.  Dips are being bought – sometimes, quite aggressively.

Today’s trading offers a perfect example.  It speaks to the fact that the character of the precious metals market has changed.  At 12:00 EST, Gold was up about half a percent, Meanwhile, the Market Vectors GDX ETF was up over a buck, and more than 3.5%.  Trading volume in the shares has been healthy all morning.  This” confirming” trading action is consistent with a precious metals market that has fully switched into a new bull market cycle.

Last Friday, SD Weekly Metals & Markets radio show covered our longer-term forecast for the balance of the year and 1Q-2014.  Click here to listen to the show.   Trading we see this week fits with our longer-term forecast.  Most investors are not seeing this rebirth of the bullion bull market cycle.  Eventually, that will change.

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About the Author

- Mr. Dubin is the Managing Editor of He has 25 years of experience as an independent buyside securities and global macro analyst. He has well over a decade of experience as a financial journalist, editor and political analyst. He's primarily an autodidact, but his formal education includes degrees in economics, international relations and MBA. He welcomes feedback on his articles and will make an effort to respond to comments. Email Eric by sending to "Eric" and then He can also be "followed" on Facebook:

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  1. UglyDog UglyDog says:

    Eric…don’t you find it peculiar that the reported national debt has remained stuck at $16,699,396,000,000 for the last 90 days, $25M below the legal debt ceiling limit.

    • Eric Dubin says:

      Well, as you know, the Treasury Dept. plays games with accounting to buy time. They “borrow” funds from things like department/agency pension funds, and then “replace” the money after the debt ceiling has been upped again. The fact that we’ve been just a tiny bit under $17 trillion for all this time just goes to show that the monkeys at the Treasury are performing some amazing feats of accounting gimickry.