SBM’s short Gold Call continues to play out. In contrast we take a Trading Buy position on silver today.

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And so, Gold weakened to its lowest level in more than a month yesterday, falling through the keyy 200 day moving average, even in the face of currency weakness, in particular the Yen which moved towards the key 95 level late last night. That is a powerful signal to Gold bulls – if it cannot move up in the face of continued paper money debasement and also reports of a North Korea nuclear test then when can it?

We made out case for shorting Gold through 2013  in our special New Year edition on page 93, see link here – and suggest any gold bulls read it to appraise themselves of a bearish view.

In contrast, we have taken a modest bull position on silver around $30.80 believing that the precious metal is more underpinned than gold and that it is due a technical bounce at least. See chart below.

Comments from the US Treasury under secretary yesterday that the G-20 needs to refrain from competitive devaluations and promote transparency in exchange rates also weighed on the yellow metal. Global growth was “weak and vulnerable to the downside,” she additionally said yesterday. Interestingly, the dollar index was at its highest level since the beginning of January – it looks like market positioning is short dollar and there could be some more covering to come.

ETP assets backed by gold fell 0.14 percent to 2,611.41 metric tons yesterday, the biggest decline since Jan. 24 and a sign of waning investment interest.

So far in 2013, Bullion has declined 1.7 percent this year whilst silver has advanced 1.8 percent and platinum the major mover, climbing 10 percent following shortages in SA. For an update on our gold bear stance, download the guide below in which we add to our bear case.

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