Concerning gold and noting that this is Friday, “they”…and we’ve no idea who “they” are, but we do indeed know that “they” exist… are out there again making mischief as they have tried to do so many times in the past. Fridays “They” wage war on gold. – Dennis Gartman from his Jan 29 “Gartman Letter”
With the entire precious metals community is still discussing the fraudulent LBMA a.m. silver fix, I happened to notice that the HUI gold mining stock index quietly is up 20% since January 19.
What I find interesting about this is that if this were a stock like AAPL or AMZN, for instance, CNBC/Bloomberg News/Fox Biz would be falling all over themselves with the declaration of a new bull market in those stocks. Instead with regard to mining stocks – crickets.
Perhaps even more interesting is this graph to the left, which shows the performance of the HUI from the inception of the precious metals bull market vs. the S&P 500 over the same time period. This is yet another example of information that will never be presented on the adult cartoon channels also known as financial news programming. Since the end of November 2000, the S&P 500 has traveled from 1314 to its current 1919, or 46%. But the HUI mining stock index has moved from 42 to its current 120, or 285%. That fact would probably surprise a lot of people.
Turning to the quote at the top of the blog, you’ll note that until very recently Dennis Gartman habitually used to lift his leg and urinate on the investment community, which he referenced simply as “bugs” (as in “goldbugs”). He used to veto with an iron fist any notion that the precious metals market is manipulated. Wonder what all off a sudden gave him religion?
Here’s another fact that might surprise a lot of people: It’s now being estimated that India imported at least 110 tonnes of gold in December. In addition, Swiss and Hong Kong gold exports to China reached a record in December. It’s estimated that China and India combined imported 300 tonnes of gold just in December. That goes a long way toward explaining why the amount of gold made available for delivery on the Comex has reached a low level not seen in decades and the paper to gold ratio has reached a level that is mindblowing.
The point here is that, just like the true underlying fundamentals of Amazon.com’s business model and financials do not fit the market valuation given to its stock, the underlying fundamentals of the physical gold do not fit the price as reflected in the fraudulent paper markets controlled by the LBMA and the Comex. If anything, yesterday’s LBMA silver fix reflects the endemic corruption in the paper gold/silver market. It also reflects the extreme degree of desperation to control the precious metals markets by the western bullion banks. The bottom line is that they are running out of physical metal with which to perpetuate their fraud.
Thus I’m not surprised that the mining stocks, as represented by the HUI index, are up 20% in a short period of time. The mining stocks are at their most oversold and undervalued in U.S. stock market history, especially when evaluated in relation to the price of gold and silver. But don’t wait around for Maria Bartiromo or Joe Kernan to start promoting the mining stock sector – that will never happen. As Dennis Gartman has noted, it’s a war on gold. But my best guess is that the key battles are now being won by the “bugs.”