Ruhig heute... 
.......a sideway week ahead, bis 16.Maerz. IMO
Next Friday should be the Party for the Goldbugs. 
Le Metropole Members,
;)Adam Hamilton has served commentary at The Kiki Table
titled, "Gold-Stock Fears." 
"Echoing the mini-panic in commodities in early January,
the past couple of weeks have once again been trying
for gold and gold-stock investors. In just five trading
days ending this past Monday, gold fell 7.2% while the
HUI gold-stock index plunged 13.0%. The raw fear
spawned by this pullback has been pretty extraordinary."
.....
Gold-Stock Fears
....This cascading fear driven by the falling prices created a negative sentiment storm that buffeted gold, and especially gold stocks, like a hurricane shredding a seaside town. By the time the dust settled a few days ago, investors were deathly afraid that everything from central banks, to bear markets, to overextended Chinese stock-market speculators, to Martians were threatening to blast gold and gold stocks far lower.
But fear in the markets, while compelling at the time, is a totally irrational and useless emotion. Investors and speculators, if they ever want to become great, have to systematically train themselves to totally ignore fear. While there are rare situations in life that warrant true fear, such as plummeting to earth in a crashing airplane, nothing in the financial markets should ever scare us. We are merely talking capital here, not life and limb! And the markets are supposed to rise and fall.
As always, the best way to fight irrational fear is to confront it with rational perspective. One trading day considered in isolation, like last Friday’s $21 plunge in gold, can be scary. But one trading day, no matter how ugly, considered in the light of the months of action that led to it is almost never frightening. Traders need to concentrate on the trends, not the day-to-day noise, if they want to remain prudently rational.
So although the interesting 3.5% single-day decline in the S&P 500 a couple weeks ago led the easily excitable to believe that full-on global economic Armageddon was nigh, the charts remained coldly rational. Like many other commodities, the gold technicals looked fantastic throughout the entire mini-panic. Provocatively the Continuous Commodity Index hit an all-time nominal high two weeks ago soon after the stock markets peaked and only fell 3.2% overall compared to the S&P 500’s 5.9% total decline.
Gold’s 7.2% five-day decline was much worse than commodities in general fared, which is incredibly ironic considering gold’s elite safe-haven status. The traders who sold gold because stocks were retreating must have no history books, because gold tends to thrive in times of downside general-stock volatility. Adverse market turbulence increases overall gold investment demand on balance, so selling gold on stock weakness alone is foolish.
Yet this is exactly what happened in the midst of the irrational excitement of the moment. But even after this illogical sentiment storm, gold’s new uptrend still looks flawless. All gold did in response to the mini-panic in general stocks is pull back from the upper resistance of its textbook-perfect uptrend to its lower support. Curiously this minor move spawned a mini-panic in gold stocks, which has very bullish implications
Discussing central banks in the gold world is like talking about abortion or global warming. No matter what you say, 50% of the people are going to want to rip out your still-beating heart and drink your blood from your newly-cleaved skull. Personally as a gold investor I used to fear central banks quite a bit from 1999 to 2002 or so. But the more I observe their actions and the greater my own fortune grows in this secular gold bull despite central-bank machinations, the less I respect their fabled power.
Compared to you or me alone of course, a central bank is awesomely powerful. But compared to all of us investors together, a central bank is totally impotent. Think of an elite commando, a Navy SEAL, versus a single bee. No matter how many times the bee stings the commando, the commando is going to eventually crush it like a grape. Victory was never in doubt. But imagine this same elite commando versus a swarm of killer bees. It doesn’t matter how tough this soldier is, it doesn’t matter how many bees he kills, the swarm is eventually going to overwhelm and annihilate him in the end. Defeat is inevitable.
Worldwide the ever-growing ranks of gold investors are like a massive horde of killer bees stinging the central-bank commandos. Individually we are nothing, but collectively we rule the gold world. Every year the total amount of gold held by hostile central banks dwindles as they sell and expend their very finite supply of ammunition. And every year the total amount of gold held by investors swells. As long as central banks continue to sell and investors continue to buy, the balance of power in the gold world will continue tilting towards investors.
So for you folks who feared potential central-bank action to somehow lessen the recent general-stock mini-panic, please consider this. Gold bottomed six years ago in April 2001 at just above $255. During this entire six-year period, western central banks sold gold and badmouthed it every chance they got. They dumped huge amounts of physical gold onto the markets. The central banks can never do more against gold in the coming years than they did over the past six years because their “market share” of global gold holdings continues to decline.
What was the net result of their long campaign? From April 2001 to May 2006, despite their best efforts, gold soared 181% to $720! Investors worldwide including myself and our Zeal subscribers are getting rich, building big fortunes, by actively betting against central banks in the gold market. Now if gold had only gone from $255ish to $260ish over six years, then I can understand fearing central banks. But to fear inept government bureaucracies that “allowed” gold to nearly triple under their watch? I have infinitely more fear of my dentist.
So this gold bull’s stellar performance to date proves that fearing central banks is not rational. They are big and tough and mean like commandos, but swarms of investors always overwhelm them in the end all throughout history. Odds are the recent sharp pullback in gold had nothing at all to do with central-bank selling and was merely the result of temporary stock-market fears.
And it is interesting that even at the bottom of this latest gold pullback the metal was still looking fantastic within its newest upleg. From early October to early March, bottom to bottom, gold was still up 13.3% over six months. Now if the S&P 500 was up 13%+ over six months, investors would be ecstatic. But not in the incredibly surreal and paranoid world of gold. Gold-stock traders ignored gold’s awesome technicals and sold their stocks in a blind panic. The sky was apparently falling.
This next chart shows the behavior of gold stocks over the same period of time as represented by the HUI unhedged gold-stock index. For reference, the closing gold data is rendered in red underneath the HUI technicals. Even though gold, not the stock markets, is the primary driver of the HUI, the latter’s performance has been terrible. Many of our fellow gold-stock investors have been acting like preschoolers on Halloween, trembling in fright at the smallest odd sound or temporary selling streak.
The bottom line is gold’s technicals look fantastic. The HUI’s are much weaker, but the HUI always follows gold in the end so the catch-up rally in this beleaguered index has an excellent chance of being huge and fast. Although fear is a normal human emotion, it has no place in the financial markets. The fearful always lose money in the end.
And today’s gold-stock fears are nothing new, they are just recycled from the previous six years. And the gold-stock investors who sold out in response to these very same fears in the past missed enormous gains. The only ones who get rich in bull markets are those who train themselves to laugh at the wall of worries and focus on the cold, hard underlying fundamentals. Of course they remain very bullish for gold and gold stocks.
As always, the best way to fight irrational fear is to confront it with rational perspective. One trading day considered in isolation, like last Friday’s $21 plunge in gold, can be scary. But one trading day, no matter how ugly, considered in the light of the months of action that led to it is almost never frightening. Traders need to concentrate on the trends, not the day-to-day noise, if they want to remain prudently rational.
Adam Hamilton, CPA
