Price hardiness continued to be manifest in gold overnight, following Tuesday's partial repair of Monday's selling damage. The yellow metal continues to hover near $930 as dollar weakness and equally resilient oil values continue to validate short-term speculative inflows. Technicals offer a mixed picture, with gold above moving averages still - but also having entered overbought territory. In the broader sense, the $850/$950 channel is still the one within which gold remains confined. Fresh news on the macroeconomic or geopolitical front is needed in order to break above or below these markers.

Clearly, at least as far as the upside point to pierce is concerned, according to Mizuho Corporate Bank analyst Nicole Elliott, the $950 figure is the one to keep an eye on. “While we continue to favor an eventual break to new record highs, only when it holds clearly above $950 per ounce will bullish momentum kick in,” Ms. Elliott opined, without giving a timeframe. “This may be due to generalized U.S. dollar weakness, courtesy of U.S. government largesse, rather than renewed appetite for precious metals.” She added that: “gold bugs are currently two a penny -- always a worrying sign,”referring to backers of the precious metal as an investment. “More so, when prices are going broadly nowhere and one adds in storage and opportunity costs.”

Wednesday's NY price action started off with a $5.70 per ounce gain in spot gold, which was quoted at $930.70 bid. Players were offered a background showing a falling greenback (down to 81.89 on the index) and a climbing crude oil (up half a dollar to $60.60 per barrel). Silver gained 8 cents to start near $14.23 an ounce, while platinum and palladium kept adding to their recent rising spree on the back of spec fund money inflows. Wonder what next week's Bloomberg price survey might reveal as sentiment amongst its participants.

Bullish (?) newsflash: The World Gold Council, using GFMS-supplied figures, notes that Q1 net retail investment demand for gold was up 33% to 131 tonnes despite some dishoarding in eastern markets IIndia). Recently, GMFS also indicated that mine production on Q1 was equaled by scrap supplies -500 tonnes each.Let's not talk about the gold ETFs which added to their large gorilla proportions on the quarter and have now turned into King Kong. Do not irritate the beast, at any cost.

Do yourself a big favor and do not ignore the tremendous fall-off in jewelry demand during the period in question. Nice and robust though the investment demand may be, it is no substitute for global jewelry demand, which normally accounts for over half of total gold demand.This portion of bullion offtakefell 83 per cent year-on-year (!) to 17.7 tonnes for first quarter of 2009. We have said it before, we will say it again; the gold market remains in disarray. It has become totally dependent on one (cyclical and emotional) pillar.

The largest investor in coin and bar was Germany, where inflationary fears saw demand quadruple to 59 tonnes, while Swiss growth was even higher at 437%, taking it into second place at 39 tonnes.The US came in third, more than doubling to 27 tonnes as investors hedged against financial and economic risk.Countries such as Japan, Indonesia, and Thailand turned into net dis invetors during the period. Oh, if one could peer into the psyche of the average buyer and/or seller...For our money, Western buyers are typically about as far behind the curve as the Fed has been on inflation and/or deflation. Eastern buyers have had the edge...but we cannot put our finger on the origin of their sense of timing and value. It must be an intuitive thing.

Little wonder then, that entrepreneurial German spirits are seizing on the opportunity presented by local demand and are introducing...gold-dispensing ATM machines in that country. Nice idea. Nice, that is, if you do not mind parting with your hard-earned euros for a one gram gold ingot that sells for a 30% premium above spot gold. Gold, for $1200 an ounce? This, at a time when you can buy the same gold nearly at spot in the form of ETFs and pool accounts, at between 1 and 3 percent above spot for safekeeping accounts (Perth Mint, GoldMoney), or at between 5 and 8 percent above spot for major one-ounce coins?

Hopefully, the same business-minded spirits are also equally busy setting up a large network of convenience and department stores that will accept the little brick for at least melting value when sellers show up to cash in. Liquidity (as with any investment) is the only thing that matters, at the end of the day. That, and discipline, and timing. In the words of a veteran technical guru - Merv Burak:

Forget about hoarding a few ounces of gold as a protection against currency disruptions or purchasing loss due to inflation or whatever the industry is selling you. From a long term standpoint you could be dead before it does you any good. You are far better off watching the trend in gold or gold stocks and getting in on the trend and GETTING OUT when the trend is over.

Neither gold nor gold stocks are suitable as “INVESTMENTS”. [sounds exactlylike what James Turk said about gold recently]. They are, however, great as speculative vehicles. [or, as James also said, an alternative savings vehicle]. As such you are not looking at long term trends to invest but at intermediate or short term trends to speculate. For this, in my view, the technical discipline is your best bet to develop speculating or trading tactics.

You must have heard the saying, “you cannot time the market” a hundred times. They are right. You cannot time the market if you are using the fundamental discipline, and almost all of the “experts” who cannot time the market are fundamentalists. Yes, there are technicians that cannot time the market but most of them can.

I have been following gold stocks for many years and developed several gold and silver sector Indices (you see these in the Weekly Table at the end of these commentaries). Over bull and bear markets what comes out from these Indices is that during a bear market BOTH the “quality” and the speculative stocks decline about the same percentage amount. During a bull market, although the “quality” stocks get going first, the speculative stocks soon take over and provide multiple times the gains that the “quality” stocks end up giving you. So, the question is always “why go for the quality stocks?”

There are many experienced speculators (and manipulators) in the gold and silver stock industry. They are in it for the money (as you should be). Their trading (or manipulation) is seen on the charts and picked up by various technical techniques. They are the ones who determine when the bull trend will start and when it will end, especially for the more speculative stocks with nothing much behind them. You can do a lot worse than to follow their activities BUT remember to get out fast when the charts indicate their activities are now on the down side.

Gold and gold stocks can be pretty volatile at times. Take this into consideration when trading in stocks or futures.

Thus, the old and reliable conclusion: you have assets worth protecting over the long-term? Accumulate and hope not to have to sell. We call it: Buy/Set/Forget. Looking to 'make a killing' in the metals? Hang it up, unless you are a pro. As for the $1200 + per ounce German shoppers, well, they might have a bit of a wait prior to break-even.

Happy Accumulating.