Gold Equities & Gold Price Divergence Nearly Over

We've all been waiting for the end of the market distortion that has resulted in gold bullion value and gold equity values going their separate ways.

The battle to keep gold in an 'accumulation' range for central bank buying is almost over.  While gold will be bouncing as the super-traders in the employ of government work hard to keep it in the desired range.  But the equities will be catching up soon as investors sidelined by the fierce short 'para-financial' black-ops traders realize that gold equities are where to be before the run.

You will see more and more articles like the following one in the coming couple of months (even while the talking heads babble on about the confusion that they see all around them).

Accumulate good gold equities now...

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Gold Divergence from Equities is about to End

by John Galt
June 8, 2012 05:30 ET

On my radio program of June 6, 2012 I pointed out how gold has been leading the equity markets. In this commentary, I shall show how the two divergences from 2007 to this year will end and result in a short term collapse in stock prices. First, let’s review the chart of the S&P 500 versus the GLD ETF from 2007 to June 7, 2012:

The initial divergence as highlighted in the chart above shows that gold and equities had a wide spread with no indication of economic problems and the proverbial “risk on” trade that was initiated by the Federal Reserve under Alan Greenspan could continue for some time. There was no reason to invest in gold as the economic perception was that there was not a detectable economic emergency or crisis. That false perception changed after the collapse started in February 2007 as gold climbed sharply only to end the divergence in the summer of 2008 where everything started to collapse. After the reflation trade of 2009 began with the Fed’s QE1, the GLD (aka gold) led the S&P 500 until the summer of 2011 where the second major break in the chart pattern occurred. This break was due to the Federal Reserve’s half measure known as “Operation Twist” where as gold was predicting a massive Quantitative Easing program which never happened.

The second chart puts the past year’s events into sharper focus:



The chart illustrates with the two blue and red arrows the synergy between gold and equities moving in tandem until the break last summer. After the  perceived failure to reflate an economy that would deteriorate in the future was realized, the circled portion of the chart indicates the double top in the GLD/Gold which has been in a long term decline since last summer. Meanwhile equities diverged from the move in gold and rallied one more time in 2012 as the markets have been given a Pavlovian like reaction to believe that the Fed would bail out everyone regardless of the economic consequences.

Gold however has warned that this is not the case. When you analyze the year long bear market in gold prices it becomes apparent that this consolidation has one more major move to the down side and support in the GLD is between 124-128, in the physical gold between $1260 to $1360 per ounce...

Read full article here

Gold's new location: Ground Zero "It's all up from here!"

We are watching the formation and coming confirmation that the bottom in gold is in.  Inevitably this also means that the world's economy is hitting its head on the ceiling for growth as a result of financial damage.

It is already clear that we cannot get ourselves out of the mess created by our management of the fiat system and its built-in requirement for the type of monetary imbalance that encourages the growth of apparent wealth (like apparent wind if you are a sailor).

Because it is clear that austerity will limit the return to economic health political bodies will opt for the solution that will destroy the value of the debt already held.  That solution is inflation.  Printing money. 
Returning us to the human-shared notion that gold is money.  The central banks have been bulking up with gold.  China and the US have already planned how the movement will happen in such a way that China will not lose the wealth it presently holds in US dollars.  That have been and continue to employ US dollars in the accumulation of gold.  They are not alone either, all central banks have been doing the same.  The super-traders job has been to manage the gold price by direct and indirect manipulation. 

Regardless of the co-ordinated misdirection, miss-information and disinformation distributed through various public media one must keep focused on the real prize.  It is coming for those who do not lose their heads in the storm of BS.

As Marc Faber says:

There's No More Downside For Gold

Gold which was trading near one-month highs yesterday, is off 0.47 percent today,and at $1,626.20, is well off its 52-week high of $1,922.
Marc Faber, author of the Gloom, Boom and Doom report was on Bloomberg TV saying gold has bottomed out:

"I'm not sure that Gold will not make a new high this year, but I think we've bottomed out and some gold mining shares have become very very inexpensive compared to the reserves they have.

And i think that in the current environment where it is clear that the worse the economy becomes the more the money printers will be at work, that to own a currency whose supply can not be increased at the will of some clowns that occupy the central banks is a desirable investment."

Read more here.

Gold Bears... Be Afraid, Be Very Afraid

Bill Gross just put out a warning in the form of an investment in QE3.  The past QEs have been very good for gold.  So gold bears would do well to pay heed.

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This guy has placed a $133 billion bet QE3 is going to happen

Frik Els | April 20, 2012

After failing to scale the psychologically important $1,800 an ounce bar at the end of February, gold has taken a few hard knocks on the way to its current trading level of around $1,650.

The spikes downward have all been thanks to Ben Bernanke and the US Federal Reserve and the fortunes of the precious metal seem increasingly linked to monetary policy in the US.

At the start of April for instance gold dropped some $60 an ounce in a single session when Fed minutes appeared to indicate a third round of so-called quantitative easing was off the table and its policy of zero interest rates may be coming to an end sooner than previously thought.

If the Fed stops flooding markets with cheap money, gold’s allure as a storer of wealth and an inflation hedge is diminished. Tighter monetary policy also strengthens dollar, further hurting the yellow metal.

Quantitative easing has been a massive boon for gold. The Fed’s new near-zero interest rate policy and purchases under QE1 kicked off on 16 December 2008. On 15 December 2008 an ounce of gold cost $837.50. Late on Friday, June contracts in New York changed hands for $1,642.80.

That’s a 96% improvement for the precious metal on the back of QE1 and QE2 (first mooted in August 2010) and ‘Operation Twist‘ (started in September last year and set to expire at the end of June). Before QE1 the Fed’s total assets were below $1 trillion. It is now closer to $3 trillion.

Read full article here

Manipulation makes Us a Gift of Gold and Silver

Manipulation of precious metal prices?  Yes?  No?  Regardless of what you 'believe' Harvey Organ's view must be taken into account when trying to read the planted (IMO) tea leaves that are left to the rest of us who don't 'own' this market.

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Harvey Organ has been analyzing the bullion markets closely for decades. The quality and accuracy of his work is respected enough to have earned him an invitation to testify before the CFTC on position limits for precious metals back in 2010.

And he minces no words: Gold and silver prices are suppressed. With extreme prejudice.

In this detailed interview, Harvey explains to Chris the mechanics of how he sees this manipulation occurring, why he predicts this fraudulent pricing scheme will collapse soon, and why it's critical to be holding physical (vs. paper) bullion when it does.

The real suppression of the metals started in 1988. That’s when the leasing game started and was invented by J.P. Morgan.

These guys would go around to the mining companies and say, “Listen, I’m going to pay you for your gold in the ground and I will sell it. You just pay me as you bring it out.” So that was cheap financing to the miners. Barrick, the biggest mining company of them all, went in on this and it financed a lot of Nevada projects.

Once the leasing game came, the actual selling, the extra selling, suppressed the price. In the first five years, it started at maybe three hundred to four hundred tons. It didn’t start to get really bad until probably ’97-’98 with the Long Term Capital affair. And that’s when the leasing started to become around maybe 1,000 tons of gold. And it hasn’t stopped.

And silver is the same.

And that’s why you've had a long-term, 20 years of suppression of the metals. The problem now is that the physical is now gone. Where is going? It’s gone from West to East.

A lot of people don’t know that China used to refine close to 80% of the world’s supplies of silver, because it’s very toxic. Up until probably ’85, the Chinese handled 80% of the world’s refining of silver. Now they're down to 40%, but that’s still a major part of China’s industry. They are keeping every single silver ounce they refine, and gold. They are keeping it for themselves; their reserves are rising (though they don’t tell exactly). Two years ago they went up to 1,054 tons and I can assure you it’s probably triple that now. These guys are not stopping. Just like they are not stopping in oil. They know what the game is and they are slowly taking all their U.S. dollars that are on their shelf and converting them to gold, oil, copper – anything that’s real.

Continue to read this article.

Goldbggr Brief: New Carolin Gold Corp.

This is a rare opportunity, in my opinion, for investors please review—do your own due diligence and speak with a qualified person before making any investment decision.

I believe this is a very unique opportunity for investors interested in the long term value potential for gold equities in terms of current conditions and forward currency stability concerns. It's present valuation given the recent P.E.A. done on the gold resource contained in the old Carolin Mine tailings impoundment is highly disconnected from the implied fundamental present value.

Presently I am working with New Carolin Gold Corp. and own shares in it. —G

Goldbggr Brief on:
New Carolin Gold Corp.
TSX-V:LAD
Closed Friday March 16, 2012 at CDN$0.145


The LAD.V share price at $0.145-0.165 is quite undervalued given the facts. The question is when will others see the potential growth value here?

As a near-term gold producer:

LAD.V has a property with 5 historical underground gold mines on it
- last mined actively in 1982-84 - closing after the gold price fell below US$350/oz
.

The key points for being able to quickly become a gold producer here are the Company maintains BOTH the mine permit and tailings impoundment permits in good standing.

The project location is in a stable mining-friendly jurisdiction (2 hours drive from Vancouver in British Columbia, Canada).

Tailings recoverable gold: The Company has assessed the economic potential for gold recovery from the old Carolin Mine tailings impoundment. The recoverable resource has been stated that the "project as designed is expected to produce a total of 24,483 ounces of gold contained in concentrate" at a capital cost of $8.3 million and a "current industry estimate of USD $1,100 per oz as a long term gold price".

See the news release:
New Carolin Gold Announces Positive Preliminary Economic Assessment Of The Tailings Reclamation Project: http://www.newcarolingold.com/index.php/news-mainmenu-54/2012-news-releases/227-new-carolin-gold-announces-positive-preliminary-economic-assessment-of-the-tailings-reclamation-project-

The Company is also awaiting two NI 43-101 resource reports
1. On the 40,000 metres of drilling done on the Carolin Mine which need to be brought up to NI 43-101 standard having been originally reported on before the implementation of the NI 43-101 standards for resource calculation.
2. On the open pit potential of two separate zones


However, New Carolin Gold Corp. is doing BOTH mine development and exploration.

As an gold resource explorer:

The key point being that even though there are several small past producing underground gold mines on the property there has been very little actual exploration to define the size of its gold resource.

Recent airborne geophysical exploration offers a glimpse on what they are looking at. See their recent "Airborne Geophysical Survey" (see news release below).

From the January 19, 2012 news release:

New Carolin Gold Announces Results of Airborne Geophysical Survey Over The Ladner Gold Property

Thursday, 19 January 2012

"...The results indicate the presence of a major magnetic linear structure that can be traced for over 18 km within the Company’s claims that comprise in part the Coquihalla Gold Belt. This linear structure is attributable to the presence of serpentinite, which is associated with gold mineralization. The calculated vertical gradient map also indicates the presence of northeasterly striking fault structures. The northwesterly trend of this magnetic linear structure parallels the major Hozameen fault structure.


The Emancipation Mine, Carolin Mine, Idaho/Aurum Prospect, Montana Prospect, McMaster Zone and Georgia No 2 Prospect all occur along this magnetic boundary. The Pipestem Mine is located approximately 800 metres to the east of this contact, but also higher up in the stratigraphic sequence. There remain several kilometers of untested ground along this magnetic anomaly.


The Total Count radiometric data (sum of potassium, thorium and uranium values) indicate the presence of potential felsic rocks in the northern part of the claim area. Gold prospects in this area are associated with felsic dykes.


The vertical gradient and total count radiometric maps can be viewed on the Company website:
 http://www.newcarolingold.com/index.php/geophysics


New Carolin Gold Corp. has a past producing gold mine (Carolin Mine) with unknown resource dimensions and many important reasons to properly assess it fully. The Company has already identified a "major magnetic linear structure that can be traced for over 18 km within the Company’s claims" (see Jan 19th news release above).

With so many historical mines the potential to expand the resource is very high as indicated already in this early stage of exploration.

New Carolin Gold Corp. will be focusing on BOTH the delineation of the dimensions of its potential gold resource and restarting gold production as it moves forward.



The money:
 The Company just closed two private placements for a total of approximately $750k
2. PEA (Preliminary Economic Assessment) of the tailings (see March 14 news release) shows a recoverable 24,000 oz gold-resource providing the company potential cash flow.


Coming:
The Company is presently awaiting the results from two NI 43-101 resource reports on:
1. the 40,000 metres of drilling done on the Carolin mine (before the advent of the NI 43-101 standard) and;
2. the open pit potential of two separate gold zones

I believe this is still very early days in the development of New Carolin Gold Corp. into a near-term junior gold producer with real potential to increase its resource asset. Given that the behavior of gold stocks share valuation in general relative to the valuation of gold and taking the existing conditions of the current financial and currency instability I believe that we could be seeing good upside potential across precious metals equities in general. This is my opinion.

Presently LAD.V is trading between $0.145 and 0.17. If I am right, in my opinion, I wonder for how long LAD.V's share price will remain at this level.

Gold is Deepening its Hold on the World's Financial System

So much afoot in the world of shifting financial power.

It is my opinion that the inflation that affects the price of gold will NOT be because of inflation in US$—the US$ is on its way off center stage. The 'reserve currency' battle is already being lost where the US dollar is concerned: countries are already actively avoiding using the US$ in trade agreements like the one now happening between China and Japan. But it's not just in trade agreements. Iran in having been kicked out of most of the world's central banking cabal is now using gold as a currency. Read this:

"...This week we're informed that Iran is using gold or oil to buy food as new financial sanctions have hurt its ability to import basic staples for its 74 million people. The difficulty paying for urgent import needs has contributed to sharp rises in the prices of basic foodstuffs, causing hardship for Iranians with just weeks to go before an election seen as a referendum on President Mahmoud Ahmadinejad's economic policies.

New sanctions imposed by the United States and European Union to punish Iran for its nuclear program do not bar firms from selling Iran food but make it difficult to carry out the international financial transactions needed to pay for it.

"Grain deals are being paid for in gold bullion and barter deals are being offered," one European grains trader said. Some of the major trading houses are involved. Another virtue of using gold is that barter or gold payments are the quickest option to get imports..."

And:

"...Iran is a classic case of why gold is a last resort, reserve asset. Iran's currency is worthless outside its borders; its name is mud in the developed world -it's this that Alan Greenspan described as "in extremis".

He said, "Gold is money, in extremis". For Iran that is a very real and present situation now and gold is providing a rescue for them. It's doing the job it's expected to do. The most prudent investors in the world are central banks and those that have made sure they hold a good quantity of gold. Those who can now afford to are buying it up as fast as the market will allow.

Right now, the price of gold in the Iranian currency is sky high, but the value of that currency outside the country is zero. So much for gold prices in local currencies! When such a situation is reached, then what we have repeatedly said comes true,

"It's not the price of gold that counts, it's the number of ounces you have!"

Are there countries out there that could move down the same road as Iran? Can developed countries face the same situation? Maybe not so far down that road as things stand now, but in an uncertain future, that could happen to several rich and poor countries including the U.S.

• If the dollar cannot hold its sole, reserve currency position and foreign buyers cease to accumulate more, the value of the U.S. dollar will fall heavily. The U.S. will then be forced to stop issuing dollars for imports but rather sell goods to earn foreign currencies -the same as all other nations have to.

• If the Eurozone fragments, those nations leaving the Eurozone will have to turn back to their old currencies and a two-tier currency system. Then their gold reserves will take on extra importance. The continued doubts about Greece tell us that Greece is moving closer to default and to "In extremis" times. We now hear that despite it cooperative implementation of austerity measure Portugal's debt is still rising strongly as a percentage of GDP. As cash flow to repay debt contracts, it is inexorably moving into extreme times..."

The above is from Julian D. W. Phillips article:

Why Gold, 'In Extremis?' Are We There?

Read the full article here.

and gold continues to return to its position as the basis for money in OPPOSITION to the fiat currency—more from the same article:

"...We are watching the euro struggling stay up against the dollar despite the massive support the currency swaps have given the euro. Just one bank signaling distress may well be the single shot that started the First World War. Then lack of confidence in the monetary system in Europe will force a wider use of gold in support of currencies.

Gold as Collateral - to unclog money flows, but at any price

We have seen gold used as collateral by commercial banks and behind closed doors by sovereign states in the last couple of years. This has discreetly mobilized gold and returned it to the monetary role in a critical but shadowy way, so far.

Gold brings interbank/international liquidity to clogged credit markets, acting as a guarantee of repayment and allowing for the lowering of interest rates on interbank/international loans. This role supports the paper money system and does not oppose it. Banker's like that! They can love as well as live with gold in that role.

Whatever way gold is used, whether it be in an Iranian situation or to support the monetary flows between institutions, we are seeing gold's value prove time and again a vital, active, reserve asset!..."

Read the article here.

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More "Go Long" Gold Junior Chatter

Another point on this wagon that appears to be in for a ride... a point of view that has a technical spot light: the S&P TSX Venture Composite Index (CDNX)

The Index looking like its definitely come off the bottom and broke the down trend that ran for most of last year. For the careful: wait for the confirmation that the down trend is officially over. Or put on a little risk and start accumulation your favorite targets. I believe the index will trade a little sideways for a bit yet perhaps waiting for the golden cross formation.

I haven't waited. I don't believe we get many opportunities like this and so I am acting. Remmeber to do your own due diligence and speak to an accredited financial advisor.

G

Here are some excerpts from Matt Badiali, editor, S&A Resource Report :

It's Time to Get Long Junior Miners

Wednesday, February 1, 2012

Things are looking bullish for junior mining stocks...

Junior resource stocks are some of the riskiest, most volatile assets in the market...

...From peak to trough, the Venture Index lost about 45%.

Today, though, it looks like things are turning around... The Venture is up 16% over the last month. And it's crossed above its 120-day moving average – a simple trend indicator. I think this could be the beginning of another bull run in junior resource stocks. The conditions are perfect...

The long-term bull case for gold and silver is still intact. The U.S. and Europe still have huge debts and unfunded liabilities that can only be paid back with devalued paper money (which is bullish for precious metals). And the growing economies of Asia are still accumulating more gold each year.

After almost a year of terror, all the bad news is priced into the market. Several companies were trading for less than the cash in the bank. And some of the best stocks in the sector dropped 80%-90%.

But now, investors are tired of being afraid. And it looks like the world might not end... So some investors are dipping their toes into the risky pond again. The Venture Index is within spitting distance of breaking its November high at 1,670. Once it does, the rally is official...

Read full article here.