Moneycontrol.com
Gold rises with equities on optimism over EU summit
Moneycontrol.com
NEW YORK (Reuters) – Gold rose 1 percent on Friday, breaking a four-day losing streak, as bullion moved in sync once again with riskier assets on optimism European leaders will be able to contain the region's debt crisis.
US MIDDAY: gold risesBusiness Recorder (blog)
Gold bounces as German comments boost euroBusiness Day
Gold Breaks Four-Day Losing StreakInternational Business Times
Reuters
all 1,681 news articles »

Reuters India
Daily Bullion Market Update 10/18/11
CoinWeek (blog)
Tight domestic monetary policy and easing foreign demand has crimped activity, while Hong Kong's Chinese Gold & Silver Exchange Society, a century-old bullion bourse, started trading gold quoted in yuan. Silver had a very volatile price range today
BULLION MORNING – Gold moves in choppy trade amid eurozone worries, physical FXstreet.com
Gold Bullion Plunges, CFTC Votes on "Speculative Curb", Asia "Could Be New BullionVault
Gold falls with equities as euro zone talks stuckReuters India
BusinessWeek –Moneycontrol.com
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Right now treasuries and the U.S. dollar are viewed as refuges of safety, while gold, silver and miners are sold off. The perceptive investor notes that these U.S. debt instruments are forming a parabolic move as the herd tilts the see-saw in an unsustainable direction.

Again it is Mackay’s “Madness of Crowds” repeated over and over again. The panic is reaching such irrational heights that the masses are willing to give their hard earned cash to the Federal Government at negative interest!

What greater folly can there be than investors  putting their hard earned savings into U.S. debt for the next 30 years? Our country is bankrupt, the money of investors is being sunk in a bottomless pit of a government that can not manage its own finances.  Hard earned investor money that may never be seen again are disappearing into the maws of government incompetence and downright malfeasance. Talk about an irrational bubble!

Instead, such a money losing procedure would be better invested in palpable mineral assets in the ground. Here we have the spectacle of panic and fear propelling hard working middle class investors willingly leaping as lemmings into one of the most risky assets of them all U.S. Debt and selling real mineral assets for pennies on the dollar.

U.S. debt should’ve been downgraded a long time ago, but for the failure of their crony rating agencies to act in a fiduciary manner. They have a bad record.  Remember the subprime fiasco which is one of the causes of the impoverishment of our entire country. Talking about kicking the can down the road-it is a can of worms.

Foreign agencies are questioning the validity of the U.S. credit rating being assigned increasingly shaky assets, yet investors flock to them in search of liquidity.

A more rational approach would be to purchase a quality gold and silver producers who are posting increasing profits quarter by quarter, return on equity and a growing pipeline of development opportunities.

Gold Stock Trades sees a snapback occurring imminently. Do not be confused by the machinations of the Wall St. institutions in their age old process as they steer the small investor away from situations which they themselves are picking up at bargain basement prices.

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We may now be testing a bottom that may furnish us additional entry points. The current crisis may be just the excuse that the Federal Reserve has been waiting for to inject additional stimulus. Do not be dismayed by violent corrections as investors are forced to sell natural resource stocks in order to meet margin requirements. These liquidity traps may result in declines of 50-90% which are characteristic in the life cycle of junior mining companies.

To reiterate, we are possibly being programmed by the authorities to accept yet another stimulus. Recently Bernanke said, “…The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support.”

It is the old law of the casino: there can not be 100% of winners at blackjack. Perhaps 20% of the winners walk away with the losses of the 80% who go home with empty pockets. Joseph advised the Pharaoh of Egypt thousands of years ago, there are fat years and there are lean years during which as faithful stewards we should prepare ourselves for the hard times during the prosperous years by taking profits as targets are reached.

What do all these allusions mean to the subscribers of GST? Witness the panic and fear that now pervades the marketplace. The astute speculator watches and waits as the corrective process wends its way through the markets. It is the age old transfer of wealth from weak hands to strong hands.

Let’s look at the events of this latest correction. What we are now going through is not novel. As far back as the early civilizations until the present time, the financial markets have created winners and losers. Whether it be tulip madness or the Florida Land Boom fiasco, the markets have always found ways to separate the winners of the losers. Today’s bubble is not in mining stocks, but in U.S. treasuries.

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We have alerted our subscribers on many occasions during the past two years that global credit downgrades of sovereign nations were inevitable. It does not take a prophet to have foreseen the turbulence in the global marketplace that we have witnessed since the expiration of QE2. Standard and Poor’s cut the rating one level from AAA to AA+. This action sent shockwaves reverberating throughout the financial world as irrational investors sought U.S. treasuries for liquidity. These days of reckoning will be with us for a long time as investors flee from deteriorating paper after an artificially induced debt bubble to undervalued real wealth in the earth assets such as the gold  and silver miners.

Unfortunately, the American middle class is being rapidly disenfranchised. The economy has been pillaged by appointed officials who have received lavish bonuses from TARP monies instead of prison sentences. The very same miscreants who raided the hen house were appointed to reconstruct the chicken coop. The hard working Americans who pay the taxes and go to work every day have scant recourse but to accumulate miners and hopefully elect ethical representatives who will put a halt to ruinous printing of fiat money. It’s about time that the American investor awakens to this fiscal insanity. We believe there is a great opportunity in this growing divergence to pick up overlooked and undervalued mining equities and bullion after the recent selloff.

The G7 nations published a statement that they will take all needed measures to support stability in the global markets. Merkel and Sarkozy pulled out the big guns saying they would prop up shaky European Banks. Do not be surprised if Bernanke comes up with a similar quantitative easing approach to pay down American debts and avoid another crash. When Bernanke did this with QE2, in August of 2010, the markets took off and many of our selections in natural resources soared with doubles and triples.

Subscribers must realize that what is going on is a version of pump priming of whatever means necessary. Our firm has continually stated that we are being programmed with weak economic data and fear mongering by the media for additional stimuli to revive the economy.

Some readers are concerned that small miners may not be able to raise capital in these tight credit markets. Although there will be short term pullbacks and increased volatility like we have witnessed, the trend for Central Banks to stimulate the economy through whatever guises necessary should continue. Wealth in the earth assets and gold (GLD) and silver bullion (AGQ) will move higher over the long term. These healthy corrections are characteristic of mining stocks and the precious metal arena.



In conclusion, the recent upward reversal in the markets is an opportunity for subscribers to stay the course. It is only a matter of time before the upward move in bullion is reflected by the miners as they represent the source of bullion itself. Do not get caught up in the current panic and use this pullback as an opportunity to add or initiate positions in precious metals and natural resources mining equities.

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The action in the precious metals raises interest, especially in the maze created by a fear-driven market. Gold at this time is participating in a runaway move past resistance. Although gold has reached new record highs, it may begin stalling in its attempt to continue moving parabolically, while the undervalued miners play catch-up. What may this hesitation signal and shrinking of the divergence between miners and bullion mean to you?

Technically, it may be informing us that the bull move so many analysts are expecting is somewhat mature in gold bullion, but miners are just beginning to break out. Much like a sprinter who first moves backward in his running block in order to propel his thrust forward, gold may initially have to come down from its technical heights in order to amass the energy required for a more pronounced forward move. Bullion may have to take a time-out to rest, while miners such as Goldcorp (GG), Newmont (NEM) and Barrick (ABX) play catch-up; they look poised to break out of the running blocks.

It’s been a long run for the bullion since my firm’s late January 2011 buy signal. Make no mistake, it will rise though, refreshed to make another run to higher highs. A brief retreat for gold bullion to long-term trend support would be of no surprise. Indeed, it may represent a healthy and necessary correction in what my firm views as the ongoing highway of the long secular rise. These thoughts should not be regarded as bearish analysis at all. Instead they are being presented as a technical and healthy possibility to eliminate current media-hyped precious metals euphoria and avoid buying gold bullion at an interim top. Instead we suggest looking into the undervalued miners that are just beginning a potential major move.

We must include any and all eventualities. How pleasant it would be if the ultimate path to riches was one straight move higher. Investing doesn’t work like that, though. Markets are fickle and they do everything they can to confuse, misdirect and obfuscate the speculator. Precious metals investors must follow bullion and the mining equities as everything has its season. It appears to be the miners’ time in the sun.

US Treasuries have reached record highs reflecting the irrational fear of U.S. debt as a safe haven. Gold markets are ebullient as the media scares us with the bugaboos of horrific possibilities that may never come to pass. Your attention is also called to the falling U.S. dollar, which appears to be on the verge of breaking into record lows. It remains to be seen whether the panic in the greenback is just around the corner, as investors fear what impact QE3 will have on the currency. One might have expected the U.S. dollar to be an ironclad safe haven during the market decline in August, but it was not.

Such negative action may mirror inflationary decisions regardless of whatever compromises are reached. There is a sense that inflation is in the offing and that now only a Band-Aid will be applied to staunch the bleeding of an economy in trouble.

In the background is the ever-present figure of the Fed, which is taking whatever steps necessary to prime the pump to give us de facto quantitative easing in whatever guise necessary. For the present, a compromise may materialize, sufficient to take us to the next election in 2012, when the whole song and dance will be reprised in a repetitious third act.

Preparations are being made for further downgrades of the U.S. AAA credit rating, which may affect the security of treasuries as a safe haven. As speculators are entrapped by the fear of bad news, there may be a rush to the safe havens of gold and silver miners, and possibly uranium and rare earth miners as well. Such developments may be leaving these sectors as the only players left standing on the field.

Editor’s Note: Read more from Jeb Handwerger at Gold Stock Trades.

Recently two mining giants – Goldcorp(GG) and Barrick Gold (ABX) — published their bullish earnings reports showing increasing margins due to a rising gold price. Here is a perfect example of a report that’s trying to tell us something. The hidden message in these glowing statements is of great significance to gold traders. What is the other side of the story?

The fly in the ointment may be that the majors need new blood. They are having difficulty making progress with their next generation mines; experiencing delays and shortfalls. There is a sense of urgency in their pronouncements of increasing the capital they are going to spend on exploration and development of two key emerging assets.

Goldcorp specifically identified the El Morro Project in Chile, where it’s partnered withNew Gold (NGD), and which has the largest potential increase in reserves. New Gold has had a major breakout at $12 and phenomenal month of August.

Read the writing on the wall. The future of the majors lies not so much in glowing statements but in their hidden meanings. These companies, as measured by the Market Vectors Gold Miners ETF (GDX), are getting more mature and are facing diminishing reserves and a rising gold price. This may be the reason why their share prices are underperforming – they are sitting on large cash positions and must either increase dividends or look for growth through mergers and acquisitions.

My firm’s area of specialization is in researching promising explorers, as measured by theMarket Vectors Junior Gold Miners ETF (GDXJ), which will grow increasingly attractive as acquisition targets for the older majors. For example, the acquisition by Newmont Mining(NEM) of Fronteer.

Also witness the recent move by Agnico Eagle Mines (AEM) in investing $70 million dollars in a young promising company Rubicon Minerals (RBY), which had recently sold off to the downside. Also look at Aurico Gold’s (AUQ) takeover of Northgate Minerals (NXG) at valuation levels not seen in more than seven years. I realize that miners have been trailing bullion for several months and am convinced that their day is yet to come. Rubicon had recently published a decrease in resources, sending shares plummeting. Agnico seized the opportunity to make a very advantageous investment. In the Summer of 2008, Agnico had taken interest in Gold Eagle Resources at bargain prices. It didn’t take long for Goldcorp to buy the entire company, giving Agnico a significant profit. This may be exactly the template that other hungry majors will be looking to emulate as they buy emerging properties at discounted prices. As the price in gold bullion advances many situations increase in value. GST is always on the hunt for assets in the earth which are the mother lodes of the eventual bullion.

When the day of the junior miners comes, the profits will far outstrip those of bullion. From a technical standpoint, often times mergers and acquisitions are not readily discernible in chart patterns. Indeed, Fronteer had quite a nasty correction before it was acquired by Newmont. Suffice it to say that momentum traders rarely benefit from mergers in the making.

I’ve noticed that equity prices will fall below a rising 200 day moving average only to eventually break through on the way up. Interested parties might find juniors at irresistible bargains right now in comparison to gold bullion.

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Deflationary Repeat of 2008?

There is fear in the land. Many are asking where to go if a deflationary repeat of 2008 is in the cards. The response to such an event may be an initial decline in all holdings across the board. The market roller coaster may take us down, but if we keep our eyes open, at exactly the same moment we could see a sudden rise directly ahead in certain sectors.

The drop might initially reflect a short term decline in commodity markets which are inherently volatile. Nevertheless, the eventual payoff may be worth the ride. Global debt crisis woes may be causing the recent breakouts in hard assets such as gold and silver as global speculators search for authentic safe havens.

Dollar Vs. Euro: Greater Leeway For QE3

The old game of wheeling and dealing is going on behind the scenes as the G-7 meets. The US needs to have a cheap dollar in order to pay off rising debts. The weakness in the euro has caused a bounce in the US dollar and is only cosmetic. The dollar long term downtrend is still apparent as it attempts to rise above the declining 200 day moving average. The rise in the greenback gives greater leeway for the Fed to institute accommodative measures. Conversely, the Chinese require a rise in the yuan to fight inflation and need access to the West’s natural resources, which they can purchase with their hordes of cash and US treasuries.

Further Government Interventions

Indeed, there may be further interventions and potential easing measures by government and politicians for a short term extension of the ongoing drama, as they dot the I’s and cross the T’s in the publication of some kind of interim bailout.

Our elected representatives will play the old game of kicking the can down the road to the 2012 election. This will serve a major purpose of deflecting blame away from the foxes who raided the hen house in the first place.

They then will be able to shift the blame to the people who are busily paying taxes and government salaries. They will walk away exclaiming that the people have spoken. Little wonder that the public’s belief in politicians is at an all time low.

Bullish On Commodities

My firm maintains our faith in the natural resource sectors and wealth in the ground assets is the place to be. Surely there might be other conventional safe haven plays in such venues as the dollar and treasuries. These countertrend moves are transitory in nature. The bubbles are in long term US debt and deteriorating Western paper currencies, not hard assets and natural resources. Any short term decline in our chosen sectors should rebound violently to the upside.

Investing wealth in the ground is exactly what our Chinese counterparts want to do with their paper assets in the dollar and long term debt.

Look for increased Chinese participation in acquiring mining assets. I believe this is only the beginning in the long range rise in mining resources.

Safe Havens

So where are the safe havens now? Is it in treasuries, which are a promissory note by a government whose fiscal integrity is being questioned? Or is it the US dollar, which is constantly being inflated? Look at your grocery bills and the rising costs throughout the economy. These sectors will surely be punished by Ben Bernanke, a student of the Great Depression.

My firm chooses to regard our natural resource mining sectors as increasingly important safe havens. They represent not only real money, but realistic, non-fiat money of which no more can be manufactured. Do not be diverted or distracted from the path of sound money by bandaids, bailouts, and cosmetic “touch-ups”.

There has been short term profit taking in gold over the past few weeks as investors return to an oversold equity market. Make no mistake such a development is temporary and healthy as GST believes gold prices will make it back to the $1900+ area.

It is important that our comments be clearly understood. As the SPDR Gold ETF (NYSE:GLD) hit our overbought targets we moved laterally into our mining selections, which were just on the cusp of upside breakouts after several months of consolidation.

We remain firmly aboard the long term ascent of the golden highway. However, we are now reaching a point where the gold trade is becoming overcrowded and we see greater potential upside in our undervalued miners such as the Gold Miners ETF (NYSE:GDX) and Silver Miners ETF(NYSE:SIL).

A correction here to $1650 would be within the parameters of a healthy consolidation. Recognize that GLD has made a considerable move since our last buy signal.

As contrarians it requires tremendous discipline to take profits when everything is coming up roses and to buy when there is blood in the streets. Yet this is precisely the discipline of the astute trader. There are always situations under the radar, ripe for the picking.

The gold bullion trade may have been getting somewhat crowded in early August as these central banks entered during the eye of the storm. My readers have been prepared for this current debt hurricane for many years. Now when gold reaches the front pages of the media in early August our readers were prepared for a bullish consolidation and focused on the undervalued miners just beginning to make major moves.

The undervalued miners (GDX and SIL) have yet to enjoy the run up that gold (NYSE:GLD) and silver (NYSE:SLV) bullion has experienced in 2011 and look to have recently broke out. Our chart below suggests that a rise is imminent in our selections in the precious metal miners(GDX and SIL) to catch up to the underlying bullion.

The markets will do whatever they can to confuse and misdirect us as prices may possibly retreat from these interim levels to long term support. It has been a breathtaking rise in the yellow metal as the Euro and the United States both attempt to work its way out of their respected debt crises. We have seen an accelerated move in gold and this recent pullback may furnish some holders with the opportunity to reenter. The miners appear to be outperforming the bullion and may have broken a key downtrend.

The uptrend in gold is still intact. Moreover, my firm believes that the rise in gold and silver is a sign that QE3 will occur in whatever guises necessary. The lawmakers in Washington are not ready to adopt draconian measures to reduce deficits by raising taxes and by cutting entitlements. Instead, they are choosing a much easier solution which is to monetize the debt. The Fed will continue to print cheap dollars (NYSE:UUP) in order to pay off obligations. This is one of the subsurface meanings to the solution of the debt crisis. Investors are concerned by the current brittle economic fears of fiscal troubles that may lie directly ahead. Prices already are repeating last year’s meteoric rise in gold. As the U.S. dollar grows weaker and inflation increases, the price of gold will move higher over the long term although there will be healthy, restorative pullbacks along the way. During those pullbacks the miners should outperform and shrink a very wide divergence. Stay tuned to my daily bulletin.

The boards have been awash in a sea of red for precious metal investors.  After Operation Twist many forget the underlying reasons why the U.S. dollar (UUP) is rallying.  A few weeks ago we highlighted that Japan(FXY) and Switzerland(FXF) fired a shot heard around the world in an attempt to remain competitive in the global marketplace.  The rapid rise of the yen, a traditional safe haven currency, threatens Japan’s economic survival in an increasingly competitive world arena.  This holds true for the Swiss as well.

The franc and the yen were seen as safe havens compared to the U.S. Dollar.  This interventional action into the foreign exchange markets is the third time this year that Japan has had to resort to drastic measures of buying U.S. dollars in order to devalue the yen.  The Swiss, Japanese and U.S. surprise has sent the dollar soaring.  There appears to be a coordinated effort to boost up the dollar.  This is good for the struggling European problems as the indebted PIIGS can pay off their soaring debts with cheap Euros (FXE).  Finally, a dollar counter-trend rally has occurred.

The world markets sensing international monetary fear, regards Japan and Switzerland’s move as a shot across the bow.  As the world reacts to the action by the Federal Reserve’s Operation Twist, there is danger of other nations creating a full blown global currency war.  Eventually the good old U.S.A. seeing the dollar rise will be forced to devalue its own currency as a rising dollar makes it difficult for the U.S. to pay back its soaring debts.

Will the Fed or European Central Bankers through a Euro TARP come riding to the rescue in time to avert further bloodshed?  Bernanke has the option of doing what he did heretofore, which is to print fiat money.  The hoped for result in the Fed action, reflects the ongoing thesis of Gold Stock Trades, that a resort to additional global quantitative easing in whatever guise will be a welcomed relief from the pain that investors are undergoing.

Operation Twist has gotten the market to ask, “May we have some more QE…please?” This is why we have heard talk of further QE’s  down the road.  Are we being programmed for further accommodative actions as investors flee to the supposed safe haven of the U.S. dollar and long term debt?

Obviously the world is reacting with a loud, “No!” to Bernanke and Obama’s inept ability to jumpstart a struggling economy sending the U.S. dollar and treasuries(TLT) skyrocketing and selling equities (SPY), gold (GLD), silver (SLV) and copper (JJC).  The U.S. Dollar and treasuries are in overbought territory indicating that the risk aversion panic may be reaching a peak, while commodities are reaching record oversold levels and has provided a discount sale for investors who have not yet entered the hard assets secular uptrend.

Now the Fed and the ECB will be forced to come riding to the rescue before the whole system deteriorates any further.  Nation after nation are entering the currency battles.  Is the U.S. biding its time until Europe contains its own debt crisis?

What does this all mean for GST subscribers as the global hemorrhaging continues unrelieved dragging down our mining equities and gold and silver bullion to fire-sale prices?   Do not be dismayed as we firmly believe that precious metals remain a central core holding and that the miners will catch up after the margin calls are met.  Investors are selling the good stocks with real assets, to cover the losses in their weak stocks.

It is realized that the mining equity battlefield is covered with stocks (GDX and SIL) that are technically damaged.  However, this is not the time to flee the battle when the smell of gunpowder is in the air!  This is the time to be patient, remember the underlying fundamentals and look for compelling values.

We are adamant in the signal that the marketplace is sending us.  There has been a disproportionate ratio of down stocks to up stocks.  Usually a ratio of 10 to 1 indicates an immediate turnaround.  At this point the disproportion may be setting a record.   Unless this action is forecasting dire catastrophic events, there are no places to hide.

At this point the marketplace will accept even palliative measures as long as the downward descent is halted.  We expect Bernanke and Trichet to  come up with more powerful measures.  It may not walk like QE3, or talk like QE3 but in the very least it will act like QE3 by whatever means necessary unlike the twist.

Make no mistake, what is happening today in the general market has resulted in an extremely oversold condition in mining stocks(GDX) and gold and silver bullion.  A strong rebound rally is anticipated in these areas.

One of my readers just wrote, “Jeb, is the world coming to an end?”  These words are music to my ears as they indicate the fear from which significant rallies occur in precious metals.  Stay tuned to the rally that inevitably arises from such pessimism in my daily bulletin.

Disclosure: Long GLD,SLV, GDX

Check out my recent interview discussing the selloff in gold and silver.

This week, Molycorp Minerals (MCP:NYSE) went to bat before the House Foreign Affairs Committee, represented by CEO Mark Smith. What was needed was a confident batter presenting an urgent case for national survival. But instead of a strong slugger, all we got was a little leaguer. Opportunities were missed and runners were left stranded. The industry sent a very conflicted Mr. Smith to Washington.

First of all, Mr. Smith never questioned the categorization of the metal class, namely that heavy rare earths (HREEs) are lumped in with the more common, garden-variety light earths (LREEs). Not once were the members of the committee informed of the importance of the highly critical dysprosium and terbium minerals, or the serious consequences China’s supply monopoly poses for American industry. Meanwhile, Alaska-based miner Ucore Rare Metals Inc. (UCU:TSX.V; UURAF:OTCQX) is sitting on a mountain of dysprosium and terbium in North America’s backyard.

Indeed, the Machiavellian hand of China’s mining industry was not merely overlooked, but praised. Mark Smith’s presentation before the Congressional Committee read like an apologia for the nation’s draconian quotas. Not once in his presentation did he make reference to American sources of these valuable minerals. Instead, Molycorp was hailed as king of the REE hill, as if there were no other viable rare earth entities. It became an obvious case of not-too-skilled investor relations.

In every missed opportunity there exists a valuable learning experience. What else was omitted that would have made for a stronger presentation?

  1. Where does Molycorp get its heavy rare earths? Smith claimed Molycorp possesses a complete suite of rare earths at their Mountain Pass property. Assays have shown that this mountain possesses predominately light rare earths with little or no heavies.
  2. Why does Molycorp venture to far-away Estonia to process U.S. ore when it can be done more efficiently and economically on American soil? A new industry could be created here offering jobs to build a new, native industry.
  3. What was the significance of the aborted deal between Hitachi and Molycorp? The Japanese claim that Molycorp did not possess sufficient heavy rare earths to satisfy Japanese industrial needs. Smith glossed over the strategic importance of heavy rare earths right here in the United States.
  4. Why was no mention made of the Critical Minerals Act that has been languishing on congressional desks for many months? Encouraging Federal Government to support this act might have served to fast-track vital legislation. What could be more pertinent than weaning the U.S. from its dependency on China?
  5. Chinese policy makers have stated that the nation needs strategic rare earths for its own markets and that there are simply not enough of these resources to go around. They’ve even said they would welcome American firms to develop the sector on Chinese soil. Why not explore this opportunity to assist our Chinese colleagues, thereby furthering a more harmonious relationship?

Let’s hope that a more voluble and reasoned representative will inspire Congress at the next opportunity. Sadly, only four committee members were present at the hearing. Perhaps such North American players as Ucore, Rare Element Resources Ltd. (RES:TSX; REE:NYSE.A) and Great Western Minerals Group Ltd. (GWG:TSX.V; GWMGF:OTCQX) can send a slugger up to bat to advance our indigenous rare earth industry.

It’s not just Congress who could use some enlightenment on this oft-misunderstood market; even major investment firms demonstrate limited understanding of the rare earth sector. J.P. Morgan recently downgraded Molycorp’s rating, slanting its sector thesis by forecasting declining prices. Nowhere did they differentiate between the heavies and the lights. Dysprosium and terbium prices have not gone much lower. Investors fear that Molycorp and Lynas Corp. (LYC:ASX) will flood the rare earth supply when they come online, but this is not the reality.

Right now, LREE-heavy Lynas and Molycorp are half a loaf. All these two giants have to do is look to our recommendation list to find suitable heavy rare earth additions to complete the catalogue, or else they open themselves up to evisceration by bankers who may be playing both sides of the field.

Finally, is it not passing strange that JP Morgan chose to issue this negative pronouncement on the eve of Bernanke’s two-day conclave in Washington? Keep in mind that J.P. Morgan is being sued by individual silver investors who allege the bank “amassed an unfairly large position in silver futures and then used its position to drive down prices of silver and increase its own profits.” (Wall Street Journal) This lawsuit may indeed throw into question good-old J.P.’s credibility as an impartial observer. Do not forget that our rare earth stocks have an incredibly large short-interest position. This is not the time to flee the battlefields in this vital sector.

Gold Stock Trades Editor Jeb Handwerger is a highly sought-after stock analyst who is syndicated internationally and known throughout the financial industry for his accurate and timely analysis of the equities markets—particularly the precious metals sector. You can read his daily bulletin for timely updates on the rare earth sector by clicking here.

Stock markets are tumbling from Japan to Wall Street. Already shaky Spanish and Italian financial instruments are quaking in their fancy boots as Greece does not make the cuts needed to be able to receive financial assistance. Vladimir Putin, a prototypical example of a classic Russian Bear says that the American Bull has blunted horns and suffers from impotence. He states, “Americans are living beyond their means and shifting the weight of their problems to the world economy…They are living like parasites off the global economy and their monopoly of the dollar.” China joined Putin by calling the brouhaha in the West as “madcap brinksmanship.”

The scepter of fear is haunting the fiscal world from West To East. International turbulence is precipitating a search for safe havens. Treasuries (TLT) are hitting new highs, the U.S. dollar (UUP) has bounced versus other currencies, commodities (DBC) are being sold off and gold(GLD) and silver (SLV) bullion’s volatility has increased significantly.

These actions are signaling a notice of caution in an economy which is in desperate need of jobs. It is not only the debt crisis, it is the DEBT. The world is worried. No country including the United States can long remain a global factor when dollars are being squirreled away at close to 0% interest in cash and long term treasuries. This capital should be productively used to build factories, mines and mills.

Dormant dollars and treasuries are not exactly the B12 injection that the old bull needs. Do not be surprised as unemployment soars that the Fed at its upcoming meetings does a reprise of the show from the summer of 2010. It may not be a stretch to think that all of these developments may be programming us for Chapter 3 in an ongoing series of quantitative easing to try to stimulate job growth and to stave off a deflationary spiral as Operation Twist was a dud.

By now our readers should realize that it is specifically those sectors representing wealth in the earth resources such as the gold (GDX) and silver (SIL) miners that will prove to be areas of sizable payouts in times to come. Our sectors represent buys of a lifetime as the global economy is in convulsions.

It must be realized that not all wealth in the earth sectors move synchronously. Gold and silver are unique in that over the centuries they move from peaks to valleys and back again with breathtaking volatility. An examination of historic charts reveal that despite the ongoing roller coaster the precious metal arc rolls upward.

SLV:SPY iShares Silver Trust/S&P 500 SPDRs

Right now, gold(GLD) has achieved our long awaited pullback to the $1600+ area. Our firm recommended taking partial profits in a percentage of our holdings in gold before this pullback. It appears to be a prudent move as we witnessed a short term decline. Now may be a more propitious time to reenter at oversold conditions and after a healthy correction.

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Over the past few weeks I have alerted  subscribers that gold was due a healthy pullback.  On September 5th, 2011 I wrote,

“It’s been a long run for the bullion since my firm’s late January 2011 buy signal. Make no mistake, it will rise though, refreshed to make another run to higher highs. A brief retreat for gold bullion to long-term trend support would be of no surprise. Indeed, it may represent a healthy and necessary correction in what my firm views as the ongoing highway of the long secular rise. These thoughts should not be regarded as bearish analysis at all. Instead they are being presented as a technical and healthy possibility to eliminate current media-hyped precious metals euphoria and avoid buying gold bullion at an interim top.”

Barron’s quoted our Gold Stock Trades Premium Daily Bulletin today indicating a potential reversal after this post Fed, short term, volatile “twist”.

The Market Vectors Gold Miners ETF (GDX) gained 4.6% on the day while its small-cap minded cousin the Junior Gold Miners (GDXJ) rose 5.2%. The Global X Silver Miners ETF (SIL) finished higher by 5%.

“Seasonality should play a factor here. Historically, bear markets end and bull markets begin in the fourth quarter. To those summer soldiers considering throwing in the towel, this may be a time for reconsideration,” noted Jeb Handwerger, editor of Gold Stock Trades.

To read the full article in Barron’s click here.

Check out my recent interview discussing the recent selloff and one gold miner making major progress in mining friendly Nevada.