In his new note he writes:

We still forecast 450 S&P, sub-1% US 10y yields, and gold above $10,000

My working experience of the last 30 years has convinced me that policymakers’ efforts to manage the economic cycle have actually made things far more volatile. Their repeated interventions have, much to their surprise, blown up in their faces a few years later. The current round of QE will be no different. We have written previously, quoting Marc Faber, that “The Fed Will Destroy the World” through their money printing. Rapid inflation surely beckons. But that will not occur without firstly a Japanese-style loss of confidence in policymakers as we dive back into recession and produce dislocative market moves.

Source: BusinessInsider

Now before reading any further, I want you to read my analysis of May 16th 2012 titled “Short-, medium- & long term technicals for Gold & Silver”:
http://profitimes.com/free-articles/short-medium-long-term-technicals-for-gold-silver/

The following is a brief excerpt:

The BPGDM index from stockcharts, which shows the % of mining stocks that have a BUY signal on the Point&Figure chart, is very depressed at 10.71% at the moment. In late 2008, this index reached 0% for a very short time. Funny to see that that time, the mining stocks had set a higher low. The HUI index has now dropped below the 50% Fibonacci Retracement level from the bottom of 2008 to the top of 2011, so the next target would be the 38.20% level, which comes in slightly below 350. My expectations are that we might get close to this level over the next couple of days, followed by a very sharp rebound (possibly as high as 450, which is the 61.80% level). What happens then is still unknown, but as I pointed out, the severe underperformance of the HUI stocks to Gold is very similar to 2008, which means that the decline might not be over yet, even though a sharp bounce is overdue now with the extreme bearishness…

Well, as we can see in the following chart, that point was indeed a bottom, and the HUI rallied very sharply (even more than I expected), to 525. What we can also see, is that the pattern has held up quite well, although the time frame was a bit longer than anticipated:

We can also see that for the first time since 2008, the Bullish Percent Index is at ZERO, meaning that NONE of the gold stocks is showing a Buy signal on the Point&Figure chart.
This could be an opportunity for a contrarian investor/speculator: if everything looks as bad as it possibly can, there is no-one willing to buy and everybody wants to sell. At some point everybody that must get out is out, and there will be no sellers left.
That sets the fundamentals for a sharp rally.

A bit further down in the article, I also wrote about the extreme overbought conditions of both Gold and Silver on Quarterly and Yearly basis. Well, with the current drop, those extremes have faded.
In fact, Gold landed exactly at the middle bollinger band (so far), so as long as 1321$ holds, this could be a the ideal situation for a nice rebound. This quarter has just started, so there’s plenty of time, to either drop below this level, or to reverse sharply higher.

In case we get a strong reversal, chances are high that Gold will rise dramatically over the next couple of years.
However, should a strong reversal not take place, and price drops below 1321$ (and closes below there at the end of this Q), then I think that Gold has much further downside (potentially as low as 900-1000$). That might either mean that the Gold Bull Market has run its course, or that we are seeing a similar situation as in 1974-1976, when gold first dropped 40%, before exploding higher (from about 100$ to 850$ per ounce).

Talking about the 70′s, while a bit off-topic: Here’s what happened to the Dow Jones in 1972-1975

Now here’s what happened to the Dow from 2010-today:

If this pattern holds, fasten your seatbelts, because the Dow might be ready to drop 50% or more!

Gold stocks are extremely depressed right now, and to give you an example of how depressed, here is a daily chart of ABX (Barrick Gold):

What this chart shows, is that price is currently trading 44.65% below its 200EMA, 39.04% below its 100EMA, 33,69% below its 50EMA and 26.60% below its 20EMA.
When we compare that with the bottom of 2008, we had values of 47.02%, 47.42%, 40.98% and 30.83% respectively.
So the current situation for ABX (and many other Gold mining stocks) looks similar to the bottom of 2008.

This month alone, ABX lost over 35% of its value. That’s the Biggest gold producer in the world!

When we look at the weekly chart, we see something that doesn’t happen too often: we have a Bollinger band Crash trade, meaning that the entire candle is outside the bollinger bands. This is often a sign of capitulation. Of course it could go lower, but I think the downside risk for ABX (and other Gold stocks) seems to be limited (SHORT TERM), and rather think that a strong rebound (at least 20-30%?) is in the cards. It depends when it will take place, but price should at least move back to the lower bollinger band at some point, either in April or in May.

We can also see in the chart below that price is also substantially below its weekly EMA’s (200, 100, 50 and 20 WEMA respectively), just like in 2008.

What were the indicators which were flashing red in 1999-2000, just before the collapse, he wondered? What were they showing in 2006-7?

Seymour’s conclusion: There are nine indicators you need to watch. Just nine.

They range from the Volatility Index or “VIX,” a measure in the options market, to the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI), to the amount of stock that insiders are dumping on the market.

He put them all together in a doomsday machine he calls “the Greedometer.” It tells you just how dangerously complacent and carefree the market has become at any moment. See the Greedometer.

Source: Marketwatch

Hard assets are gaining momentum once again as market participants digest the potential impact of central bank printing initiatives. After last year’s record level of central bank intervention, 2013 is gearing up to be an even more prolific year on the money-printing front.¹ Japanese Prime Minister Shinzo Abe recently unveiled Japan’s tenth Quantitative Easing program to follow the country’s current $224 billion stimulus announced on January 11th. The US Federal Reserve is steadily printing US$85 billion a month under its QE3 & QE4 programs, and reports indicate that the European Central Bank is close to launching its much-awaited Open Market Transaction (OMT) program to purchase European sovereign debt. It’s a money-printing party and everyone’s invited. Even the new Bank of England head, Mark Carney, has hinted of plans to launch more monetary stimulus.²

Professional investors have noticed and are expressing concern over the consequences of concerted currency devaluation and the continuation of zero-percent interest rates. PIMCO’s Bill Gross, aka “The Bond King”, is now regularly touting gold and hard assets as a prudent investment in 2013.³ While his advice appears to have fallen on deaf ears, interest in inflation protection is once again on the rise. We continue to believe that precious metals remain the place to be invested in this environment and are always interested in different avenues with which to participate in the sector’s inevitable rise.

Despite being long-time precious metals enthusiasts and active investors in gold and silver, we did not focus on “the other precious metals”, platinum or palladium, until very recently. Our interest in the space was ignited by a client’s request to assess investment opportunities in the debt and equity of Platinum Group Metal (PGM) mining companies – an exercise that came up almost completely dry. As long-time resource equity investors, we are familiar with the mining industry’s supply/demand cyclicality and the impact it has on commodity prices. Looking more closely at the PGM miners, the platinum and palladium industry reminds us of the uranium industry back in 2003. Like uranium, platinum and palladium are crucial to a number of important industrial applications where demand for them is relatively inelastic to price. And like uranium in 2003, palladium is also marked by an opaque, but rapidly diminishing foreign supply stockpile, which had previously balanced out the market and effectively capped the price. Investors will remember that uranium proceeded to perform extremely well from 2003 onwards based on the fundamental supply/demand imbalances that ensued. Our assessment of the PGM industry has led us to believe that platinum and palladium have the potential to do the same. The one difference being, however, that whereas in uranium, where we chose to build our exposure primarily through uranium mining equities, platinum and palladium exposure appears to be best gained through the metals themselves… hence the launch of the Sprott Physical Platinum & Palladium Trust this past December (NYSE Arca: SPPP, TSX: PPT.U).

…

PALLADIUM

The palladium story is similar to that for platinum from a demand perspective, but has a different supply picture that makes it more compelling in our view. Palladium generally occurs with platinum and other PGM metals and is usually associated with nickel and copper. Like platinum, palladium’s main industrial usage is in catalytic converters, most notably in gasoline engines. It is also used in jewellery, watchmaking, dentistry, surgical instruments and electrical contacts.

Almost 40% of the world’s annual palladium mine supply comes from Russia, primarily through operations at Norilsk. Russia, naturally, does not provide much information on its palladium stockpiles, but various reporting agencies are able to piece together reliable estimates for annual supply and demand.

The palladium market is tight, and appears to be getting tighter. It has gone from a 1.26 million ounce surplus in 2011 to a 915,000 ounce deficit in 2012. This represents a swing of over 2 million ounces this year due to contracting supply, increasing gross demand and diminished recycling, resulting in a supply decrease of 790,000 ounces (see Figure E). If you factor in the ~200,000 ounces we purchased in our Trust, the deficit for 2012 increases to 1.15 million oz.¹¹

As bullish as we are on the supply dynamics of platinum, it is palladium that appears to be poised to move higher in the short-term. The palladium market is now in supply deficit globally and will experience a residual deficit in 2013 even after existing stockpile sales are taken into account. Russia has historically maintained a sizeable palladium stockpile which has represented a key source of supply over the past two decades. 2012 reports suggested that that stockpile was nearing depletion, with sales expected to fall below 100,000 ounces in 2013, versus the 250,000 ounces that are believed to have been sold last year.¹²Those numbers were also supported by Swiss PGM data, where the most recent 2012 numbers show Russian palladium shipments running 72% lower than the same period in 2011.¹³ All of this was recently confirmed by Norilsk itself, when an executive conceded in an interview on November 29th (and later confirmed by industry watchers like GFMS this past January) that the supply overhang from Russian stockpiles is officially close to being depleted. If this proves to be true, it will represent a significant shift in supply, since those stockpiles were a main contributor in balancing the palladium market for the last ten years.

FIGURE E

Source: Johnson Matthey Platinum 2012 Interim Review

One other bullish palladium supply factor relates to the Norilsk mines themselves, which produce more palladium than the next four largest palladium producers combined. Norilsk’s 2012 palladium production is expected to account for 42% of global supply. Despite higher prices, Norilsk is not expected to expand its annual palladium production for at least 10 years, because that’s how long it will take to develop the new mines it requires to increase production. In addition, the existing operations are reported to be having difficulty maintaining their average 2.7 million ounces of annual production due to diminishing ore grades at depth within the ore bodies Norilsk is mining. With Russian state supplies dwindling, and Norilsk’s palladium production flat at best, the supply picture in 2013 has a very high probability of tightening further. This is especially likely if South Africa’s 1.5 million ounces of palladium production is also impacted by further strikes and mine shutdowns.

Palladium demand has been robust, having risen by 15% year-over-year in 2012 to 9.73 million ounces.¹⁴The growth has been primarily driven by increased use in autocatalysts, the demand for which alone is forecasted to increase by 7% in 2013. Given the probability of tightening supply in the years ahead, we could potentially see a hoarding reaction by industry users as supply constraints become more pronounced. In year 2000, a similar reaction by industry users led palladium to trade over $1,000/ ounce. It is also interesting to note that palladium has the second highest amount of short positions in the futures market in relation to total annual production – second only to that for silver. The reversal of those short contracts may represent a significant source of investment demand as prices continue to rise.¹⁵

Read More: SprottPhysicalBullion

This does not look very appealing, does it?
What if there were some kind of system that:

1) performs good in any kind of market
2) limits the losses in any kind of market
3) doesn’t take much time to follow up

Do you think it exists? I was sure that some kind of system exists. I therefore used a lot of time backtesting several strategies.
So far, this looks very promising, doesn’t it?

Below you will see first a chart of the model versus the SP500 index. In the second chart, you will see the maximal drawdown (the % loss from the peak), and in the third chart, you can see how much money was invested in the market:

The max. drawdown is only -11.96%, compared to -56.78% for the SP500!
The Average annual return is 9.62%, and the total return is 265.47%, against only 23.61% of the SP500 over the same period!
The correlation with the SP500 is only 0.06, which means that the portfolio is basically not correlated with general markets at all!

The best of all (for passive investors), is that one only needs to look at the portfolio once in 4 weeks to rebalance!

The returns are including dividends and an assumed 0.5% transaction cost.

The nice thing is that the portfolio rose when markets fell (sharply). That was because I implemented an hedge of 70% of total Equity in SH (Proshares Short SP500) when current year consensus EPS estimates are trending down. The EPS trend is defined as the simple moving averages of the 5 vs. 21 weekly data points.

Below you will see the factors I used at portfolio123.com (sign up for a free trial!)

 Period

Date Periods: 01/02/99 02/13/13

 General

Based on: 4Weeks – 12.58% annual based on Piotrosky

Starting Capital: $10,000

Benchmark: S&P 500

Commission each Trade: 0.5

Commission Type: % Of Total

Slippage Pct: 0.0
Rebalance Frequency: Four Weeks

Allow Rebuy Sold Holdings:Yes

Price for Transactions: Next Open

 Position Sizing

Position Sizing: Pct of Portfolio Value

Pct of Portfolio Value: 10.0

Max Deviation: 30

 Universe and Ranking

Universe: All Fundamentals

Ranking System: All-Stars: Piotroski

Use Ranking System Default

 Buy Rules

Buy1: EPSPExclXorTTM>0 // EPS above breakeven

Buy2: OpInc(0,TTM)> 0 // Operating Income above breakeven

Buy3: OCFPSTTM>0 // operating cash flow per share above breakeven

Buy4: GMgn%TTM> GMgn%PTM // gross margin improved in past year

Buy5: OCFPSTTM>EPSPExclXorTTM // operating cash flow per share above EPS

Buy6: DbtTot2AstQ< DbtTot2AstPYQ // Total debt to assets ratio down in past year

Buy7: CurRatioQ> CurRatioPYQ // Current ratio improved in past year

Buy8: AstTurnTTM>AstTurnPTM // Asset turnover improved in past year

Buy9: ROA%TTM> ROA%PTM // Return on assets improved in past year

Buy10: ShsOutAvgTTM<= ShsOutAvgPTM // Number of outstanding shares did not rise in past year

Buy11: Div5YCGr%> 10

Buy12: ROE%5YAvg> 10

Buy13: PEG< 1.3

Buy15: Universe(NOOTC) And AvgDailyTot(20)> 50000 //eliminate least liquid stocks

 Sell Rules

Rank: Rank< 80

 Stop Loss

Stop Loss Strategy: None

 Hedge / Market Timing

Hedging Options: Enable

Hedge Vehicle: ProShares Short S&P500 – SH

Pct of Total Equity: 50

Include Cash: Yes

Transaction Type: Long

Use Margin: No

Entry: sma(5,0,#spepscy)<=sma(21,0,#spepscy)

Exit: close(0,#sprp)>=1 and sma(5,0,#spepscy)>sma(21,0,#spepscy)

ORKO ANNOUNCES SUPERIOR PROPOSAL

VANCOUVER, BC, CANADA – Orko Silver Corp. (“Orko” or the “Company”) (TSX-V: OK; Frankfurt: OG3; OTCUS: OKOFF) announces that it has received a binding proposal from Coeur d’Alene Mines Corporation (“Coeur”) for the acquisition by Coeur of all of the issued and outstanding common shares of Orko (the “Orko Shares”) by way of a plan of arrangement (the “Coeur Proposal”). The Board of Directors of Orko (the “Orko Board”) has unanimously determined, after receiving the advice of its financial and legal advisors, that the Coeur Proposal constitutes a “Superior Proposal” pursuant to the arrangement agreement between Orko and First Majestic Silver Corp. (“First Majestic”) originally announced on December 16, 2012 (the “First Majestic Agreement”) and has provided notice of such determination to First Majestic.

Under the terms of the Coeur Proposal, Orko shareholders may elect to receive in exchange for each Orko Share:

• ·         0.0815 common shares of Coeur (“Coeur Shares”) and C$0.70 cash and 0.01118 warrants to purchase Coeur Shares (“Coeur Warrants”);
• ·         0.1118 Coeur Shares and 0.01118 Coeur Warrants, subject to pro-ration as to the number of Coeur Shares if the total number of Coeur Shares elected by Orko shareholders exceeds approximately 11.6 million; or
• ·         C$2.60 in cash and 0.01118 Coeur Warrants, subject to pro-ration as to the amount of cash if the total cash elected by Orko shareholders exceeds C$100 million.

If all Orko shareholders were to elect either the all cash (and Coeur Warrants) or the all share (and Coeur Warrants) alternative, each Orko shareholder would receive 0.0815 Coeur Shares and C$0.70 in cash, together with 0.01118 Coeur Warrants, for each Orko Share. Each whole Coeur Warrant will be exercisable for one Coeur Share for a period of four years at an exercise price of US$30.00, all subject to adjustment in accordance with the terms of the Coeur Warrants.

Based on the closing price of Coeur Shares on the New York Stock Exchange (“NYSE”) on February 12, 2013 (and $0.08 of warrant value per Orko Share), the Coeur Proposal implies a value of C$2.70 per Orko Share.  The Coeur Proposal represents a premium of approximately 25% to the implied value of the consideration offered pursuant to the First Majestic Agreement based on the February 12, 2013 closing price of both Coeur and First Majestic’s common shares on the NYSE and Toronto Stock Exchange, respectively.

Except for the consideration being offered, the agreement proposed by Coeur is substantially similar to the First Majestic Agreement, including with respect to the treatment of outstanding options to purchase common shares of the Company. The proposed agreement with Coeur includes a termination fee, payable to Coeur in certain circumstances, of C$11.6 million, consistent with the termination fee payable to First Majestic under the First Majestic Agreement.

Under the terms of the First Majestic Agreement, First Majestic has a period of five business days, expiring at 11:59 pm PT on Tuesday, February 19, 2013 (the “Response Period”), during which to offer to amend the terms of that agreement.

If, within the Response Period, First Majestic offers to amend the First Majestic Agreement such that the Orko Board determines that the Coeur Proposal is no longer a Superior Proposal, Orko will be required to enter into an amendment to the First Majestic Agreement and implement the amended agreement. In that circumstance, no agreement will be entered into between Orko and Coeur with respect to the transaction proposed by Coeur.

If, within the Response Period, First Majestic does not offer to amend the First Majestic Agreement, or if the proposed Coeur transaction continues to be a Superior Proposal following a proposed amendment to the First Majestic Agreement by First Majestic, Orko intends to pay First Majestic the agreed termination fee of C$11.6 million, terminate the First Majestic Agreement and enter into the agreement proposed by Coeur.  In that event, the directors and officers of Orko will enter into lock-up agreements with respect to the transaction proposed by Coeur (on substantially the same terms as the lock-up agreements they entered into with First Majestic) pursuant to which, among other things, they will agree to vote in favour of the transaction proposed by Coeur at a special meeting of securityholders of Orko to be called to consider such transaction.

In conjunction with the Coeur Proposal, Coeur has proposed to provide Orko with an C$11.6 million convertible loan to finance the First Majestic termination fee (the “Coeur Loan”).  Orko would enter into the Coeur Loan concurrently with the execution of the agreement proposed by Coeur.

In this Gold Report interview, Dent predicts a global crash between mid-2013 and early 2015, in an ongoing decade of economic coma. For now, gold and gold equities are great investments, but when the crash comes, read on to find out what he suggests will be a good sector until the echo generation enters the workforce and starts buying potato chips and houses.

…

Recently, Japan’s strategy has been to print enough yen to push down its currency to increase exports, even though its domestic economy is dying due to an aging population, bad demographic trends and super-high debt ratios. By doing this, Japan is starting the next trade war. Other countries will respond by lowering their currencies and doing more stimulus. If you keep doing this, the whole thing will break down at some point.

The question is when. We think the next breakdown will start in late 2013 or early 2014.

…

TGR: Roller coasters can be scary things. Unless you are looking in the rearview mirror, how do you know when is the high and when is the low?

HD: It is not easy. We predict that the Dow could go as high as 15,000 this year before dropping to 6,000 in early 2015. Nobody can predict the exact top or the exact date.

You can only guess by seeing when investors are overly bullish or bearish and when patterns are stretching on.

…

According to your research, when will enough young people be in the workforce earning money, buying potato chips and houses to pump up the economy again?

HD: We are looking for that to happen in the early 2020s.

…

Your key goal should be to protect the gains you made in the greatest global bubble boom in history. Get out, keep cash and wait for the next big crash. Then buy at $0.20 or $0.40 on the dollar. What could be better than that?

However, when I was playing around a bit with Fibonacci levels (as I have done before, which is why I knew $700 was going to be a tough nut to crack), I came to a target price of $1,250…

Don’t believe me?
Look at the chart below:

- the bottom of 2008-2009 serves as the 0% line.
- as $700 has been very strong support as well as resistance, I assumed this would be a very important Fibonacci level, which is why I assumed it would be the 50% level.
- Based on the two points above, we immediately get the 100% line at $1,250.
- to make the point even stronger, look at where the other Fibonacci levels come in:
- the 23.60% level comes in at $415′ish, where palladium found initial support in 2008, and early 2010.
- the 38.20% level comes in at $575′ish, where palladium faced resistance in May 2010 and support in Oct/Nov 2011 and July/August 2012.
- the 61.80% level comes in at $835′ish, which is around the  2011 highs…
- and last but not least, the 76.40% level comes in just below $1,000, which could become a psychological resistance level…

If my Fibonacci retracement levels prove to be correct, and Palladium will rise towards $1,250, here’s a draft of what I think COULD (but of course not necessarily should) happen…

Palladium seems to be getting ready for $1,250. Are you?

Here is an excerpt of an article from Businessweek today:

Palladium reserves in Russia, the world’s largest producer of the metal, are “pretty much exhausted” and sales this year may be only 3 metric tons, according to Johnson Matthey Plc. (JMAT)

Russian inventory sales dropped 68 percent to 250,000 ounces last year from 775,000 ounces in 2011, according to Johnson Matthey. Sales from state stockpiles are expected to range from “zero to several tons” in 2013, Anton Berlin, deputy chief of ZAO Normetimpex, OAO GMK Norilsk Nickel’s sales arm, told RBC TV yesterday.

“Maybe 3 tons this year, and that will be it,” Peter Duncan, general manager of market research at Johnson Matthey, told reporters in London today. Three tons is equivalent to 96,452 troy ounces. “Russian state stockpiles have been dwindling and are now pretty much exhausted.

Read more: Businessweek