Gold as Greed

It's tough for people where I live. I don't mean Glaswegian council estate or LA 'Project' tough. I mean proper tough.

The child malnutrition rate (moderate and severe) here is at 27%, literacy at 47 and 31% (male and female, respectively), and 51% of the population is below the international poverty line of $1.25 per day. A recent rebellion, followed quickly by a coup d'etat and a saturation of the north by Islamist terrorists, has exacerbated this poverty-stricken country's existing problems, and created a new crisis of 400,000 refugees and internally displaced people. Now all the people have to look forward to is war and international military intervention.

Corruption, an eroding terrain, and the hangover from decades of colonial rule, have conspired to make this country the 12th poorest in the world.

This is perhaps all the more surprising given that this nation is the third biggest producer of gold in Africa.

Manic Miners

Well hello again.

Service as normal at Screwtape is being resumed after the emotional highs and lows of last week. By 'normal', I do of course mean 'technical analysis and philosophical discussion of precious metals as presented by five prosimians who like to use metaphors such as crème-de-menthe-drinking dung beetles'. So jolly well normal, in other words. And there'll definitely be no more underhand side-swipes or bitchy remarks aimed at the silverogosphere and its noble hosts.

Jeanne d'Arc Escapes From the Cellar

Hello, loyal readers of Screwtape. Sorry about my absence for the last month. I will give you three excuses, and you can decide for yourselves which, if any, of them are true. The first is that Her Majesty unexpectedly called upon me to represent her in a West African conflict zone, and I have needed to spend the last few weeks learning Bambara, improving my Walther-PPK handling, and brushing up on Land Rover maintenance.

The second is that I made GM Jenkins very, very cross indeed, and - for my own good, might I add - needed to spend a while in his coal cellar reflecting on my general attitude towards the silverogosphere, my bloggers-in-arms on other sites, and the over-rated value of sarcasm in a civilised world.

The third is that GM, Warren and I have been too busy preparing for Bilderberg, which we regularly attend as confirmed members of the Illuminati. This year has been especially pressing, given the coming financial apocalypse and all, and it's taken more time out of our busy schedules of whoring, renovating houses and hacking tax records (respectively) than we might otherwise have liked.

You pays your money, and you takes your chances. Anyway, I'm now back, and I'm ready to pwn the kidz like a boss [sorry - I don't know what happened to my more usually conservative diction there...]

In Like a Lion and Out Like a Lamb: Gold

[UPDATE: THE SILVER VERSION OF THIS POST IS NOW AVAILABLE HERE.]

The old English proverb of 'in like a lion, out like a lamb' to describe the weather in the month of March seemed to fit equally well the markets this year.

The stock markets started the month with real strength, before going on to give up a good chunk of their Q1 gains and then pulling back some of these gains right at the end of the month (the S&P500 being an exception to this, as it performed solidly throughout March). The PMs started in a similarly fierce manner: Gold closed on 1st March at $1725 and silver at $35.50, before they cratered later in the month to $1625 and $31.25, respectively, and then climbed back to close the month at a timid $1668 and $32.28.

A lot of this can be attributed to end-of-quarter portfolio reshuffling (and in the UK the end of March is also the end of the tax year), but there was also renewed nervousness about the state of the world economy, with Chinese data disappointing many economy bulls. So what's next for the markets (both PM and non-PM) and will April finally be the month when PM bulls start to get paid?

I'm going to break this down into a few posts, I think, as it's a big subject. This is the one for gold (the one for silver is now available here). Let's go to the charts...

Gold and its miners look ready for a big move

This has not been the happiest of weeks for PM investors. The sharp fall in the price of gold was triggered by that most feared of black swan events: Jeanne d'Arc wrote a bullish piece about gold mining stocks.

Literally seconds after hitting the 'publish' button, gold plunged by $35 an ounce, and went on to lose a total of around $70/oz from its pre-JdA-article level.

It's times like this that PM bloggers stare deep into what is left of their soul, throw their pens at the cat in frustration, and swear blind that they'll switch from writing about PMs to penning poems about lovely butterflies or creating daguerreotypes of renaissance sculpture. At least the butterflies won't change their spots seconds after a photo of them is published, and sculpture is harmless (and often armless) enough.

But I soon realised what utter nonsense this attitude was. Because the charts' indications haven't changed. And I still very much believe that we're about to have a big move higher in both gold and its mining stocks. Let me try to convince you again...

Time to go long the gold miners again? (UPDATED) (AGAIN)

[UPDATE: For a major update to this post, please click here.]

Well, Jeanne's feeling very bullish today.

This may be because of Screwtape's fortunate escape from its obligations to pay Brian O'Flanagan a golden parachute on leaving the blog - an escape from financial ruin engineered solely through our having the wit of forethought to get photographic proof of some of his less salubrious peccadilloes (it's always the rich and powerful that end up in the basest of situations, you know...) Or perhaps it's because of my successful coup d'état which has left me the de facto sole contributor for a few weeks.

But whatever the reason, I've spent the last week or so picking up mining stocks. And here's the real reason why.