Ranting Andy…

half of yesterday's HUI gains gone in 5 minutes with SILVER UP and gold barely up

You guys saw that GLD fell $2 in the first two seconds of NYSE trading, right?

GOVERNMENT COMPUTERS rule every stock in the market, like in Terminator.

I am not being a jerk, I am being a REALIST.

This is NOT the 1970s, it is a new, evil world where computers can, and HAVE kept entire sectors DOWN (or UP) for years on end.

Think about it, silver is nearly $43 ($48-$50 in the real world) and the stocks are DEAD. And I mean DEAD. Just look at the juniors today; it really looks like a holiday in Canada, as nearly none have even TRADED AT ALL yet.
A

BTW, not all negative - wil be happy to recant when I see ONE FREAKING DAY of PM STOCKS OUTPERFORMING BULLION - JUST ONE - last one was November 2010, before the GOV'T COMPUTERS took over this sector eom
A

RG, who has had some hot hand of late…

The performance of the shares,..

Bill,..
As so many of the GATA Army are rightly grumbling the performance of the pm mining sector is quite abhorrent at present. I cannot for the life of me remember such obvious disconnect from the metals for such a lengthy period. But as ever my take is ‘if it isn’t right, it isn’t right’ and a reversion to the mean will come.

My understanding for what it’s worth is that much of the ‘smart set’ in the hedge fund industry are still shorting these stocks against the metal. Essentially by doing so they’re clearly expecting a correction across the complex because the mining stocks are traditionally seen as leverage to the metal.

While silver has been on a tear for months now, gold hasn’t and is in fact only some 3-4% higher today than it’s spike top in November. It seems increasingly clear to me that there has been a magnanimous effort to curb the rise in the price of gold throughout this second charge of liquidity, QE2, which officially began sometime in early November.

As I pointed out in previous correspondence, the last major upside day for gold was in very early November with a rise of some $40. Since then there has been only a handful of sessions where the price has pushed past the increasingly watched 1% mark, and even then the maximum has been circa $20.

Even now with gold breaking out decisively through the $1,440 level in recent weeks, daily upside moves have been restricted to the 1% mark.

But I think that’s about to change and when it does it’s going to be explosive. The more I follow the gold action of late the more I sense a coiled spring, which is about to unshackle from it’s short attired masters imminently.

The expectation for a correction in the pm sector is not only shared by the numbskull’s but much of the traditional industry has been voicing their concerns recently. the game’s over for these naysayers when gold blows upside by 2%+ in a daily session. The hedgies will realise they’re on the wrong side of the boat, loaded against the leverage play, and the scramble for the exits will be furious. I’ll be disappointed if we haven’t seen the start of this by the end of this month perhaps much sooner, although exact timing has never been my forte.

It’s always darkest before the light’s turned on. Reach for your sunglasses because I think this is going to be a bright one.
Very best,..
Rich (Live from ‘The Scarborough Bullion Desk’)

Re, the shares, this afternoon I received a phone call from a veteran Café member/GATA supporter who also has been a retail broker for many years. Talk about "bonkers." He was bonkers how ludicrous/outrageous the action of most of the gold/silver shares was today. It has been terrible for MONTHS now, but today took the cake for him AND ME. The HUI fell 1.56 to 584.21 and the XAU lost .47 to 218.71.

We have delved into the horrendous action in the precious metals shares all week. More on what’s going on. Mexico Mike sees it this way:

Divergence

The market does not believe the metals will hold these current prices, let alone march higher. The shorts are fading the move all the way up. Meanwhile worldwide demand picks up on any minor selloff so we have not been subjected to a really nasty selloff for a while. This divergence must be resolved one way or another. So either the metals will correct lower perhaps we endure another slow spring-summer for the sector - OR - we continue to set new highs for the metals and eventually the mining stocks will explode higher in a catch-up rally. Given that most of the producing juniors are now awash in cash flow and posting record operating profits, my guess is the smart money will find these stocks and start bidding them up shortly if the metals rally continues.

Last summer I reported several times how the stocks were fantastic bargains even though they seemed to be ignoring the metals prices. I was able to buy juniors like First Majestic and Endeavour Silver below $4 and these eventually went on to become market leaders when the divergence was resolved in the market. I am now seeing similar bargains in other stocks and buying the hell out of them. Sure we could waffle sideways or correct lower from the current price range, and I will just continue to add more shares. I think it will be resolved in a breakout to new highs for the sector and more fat trading profits. The sentiment for PM stocks is terrible right now and that just looks like opportunity as far as I am concerned.
Cheers!
MexicoMike