NOTICE- DAN NORCINI'S COMMENTS CAN BE FOUND EACH DAY ON JSMINESET.COM ON THE LEFT OF THE WEBSITE'S HOME PAGE WHERE THE LINK TO HIS COMMENTS IS FOUND

I appears that Dan Norcini's Daily Comments have not ALWAYS been posted on the Main Page of Jim Sinclair's Website. You can't afford to miss Dan's comments each day. So, be sure to look for the link to his comments in the dark blue section, on the left side, of the Main Page of Sinclair's Home Page. Hourly Action In Gold From Trader Dan Posted: Mar 24 2009 By: Jim Sinclair Post Edited: March 24, 2009 at 2:54 pm Filed under: Trader Dan Norcini Dear CIGAs, There wasn’t much in the way of supportive factors for gold in today’s trading session as the Dollar was higher, crude oil was lower and bonds were lower. Equities were a tad weaker but after yesterday’s monster rally, the thinking in many quarters is that global stock markets have bottomed out. That removed the safe haven flow into both bonds and gold and allowed gold shorts to push the market down into stops as weak-handed longs were driven out. Those sell stops were the property of the trading funds who once again were handed their heads by the bullion banks. Failure by the bulls to push up and through the $960 area was the signal by shorter-term oriented traders to book profits if they were long and to add to shorts if they were short. The onus is now on the bulls to hold price above the $900 level. If they can do that, gold has a very good chance at consolidating its recent gains. If not, back down to near the $880 level we go once again. We had an $80 run higher in gold when the news hit that the Fed was embarking on a course of printing money to buy US Treasury and Agency debt. You might recall that news resulted in the single largest daily price drop in the Dollar in many a year. Gold shorts saw their lives pass in front of their eyes with a multitude of them who had gone short below the $900 level squeezed out. The problem for the bulls is that long liquidation tied to the stock market rally, overcame buying coming from those who are looking longer term at the implications of the Fed’s quantitative easing policy and its devastating effect on the Dollar. Make no mistake about it – the Fed believes that it is wise enough and nimble enough to nip the inevitable inflationary aspects of its policies when those begin to occur –and occur they will. Their immediate concern however is deflation and they are apparently determined to avert that at all costs, even if it means giving further impetus to the growing movement among many in the international community to abandon the Dollar as the global reserve currency. As a matter of fact, both China and Russia are becoming quite vociferous about this issue. This shift in sentiment away from the Dollar is momentous. It is the rare breed that is able to spot turning points in history while they are indeed occurring. It is generally only after the fact that the majority are able to point a finger at a particular occurrence and state; “history was made here”. Nonetheless, we are getting a ringside seat and observing the events transpire that will alter our way of life here in the United States forever. As citizens, we have reaped the benefits of the Dollar as the reserve currency, benefits which include a life-style for the average American that is leaps and bounds beyond that of the overwhelming majority of the world’s population. It encompasses everything from the size of our cars and of our homes all the way to the size of our military and our ability to project power around the globe. The loss of the Dollar’s reserve currency status would threaten all of this. That is why many of us are so deeply concerned about what is occurring in Washington with regard to its spending orgy and to the ruinous policies that the Fed’s short-sighted members are currently wedded to. There is still time to save the Dollar but one wonders just who is left in our nation’s capital to lead the charge. Back to gold – I am concerned by gold’s inability to hold near the 700 level when priced in Euros and the 650 level when priced in terms of the British Pound. We also have gold backing down from its highs in terms of most of the other major currencies as well. That has taken some of the luster off of the metal in spite of the fact that reported holdings in the gold ETF, GLD, are still holding near recent record levels. From my current vantage point it seems that while gold lacks sufficient impetus to push it through $960 and on up then to $1,000, it also should be well supported on any price dips given the medium to longer term implications of the Fed’s quantitative easing program. That portends that a range trade is the more likely outcome to look for over the near term with the metal waiting for some sort of signal to break it out either way. The current boundaries of this range are $960 on the top side and $885 - $880 on the down side. Official sector price capping has once again appeared, this time at the $960 level, (they can read the price charts as well), while value buying is coming in near the $900 level and on down. I am not sure what it will take to dislodge the bullion banks from the upper level but once again I would emphasize that hedge funds have it in their power to seriously threaten their death grip on the gold market if they will simply stand for delivery and force the issue. Next week begins that delivery process for the April contract so let’s see if any of them wise up between now and then. The mining shares are weaker today with the paper gold price weakness undercutting efforts of the bulls to push further through the swing highs made back in February of this year. Bonds have been rocked pretty hard today with traders’ focus back on the big supply coming this week. I should note here that bonds have surrendered half of the gains made following last week’s announcement of the Fed’s intent to purchase up to $300 billion in Treasuries. Given the huge surge in treasury buying on the heels of that news, the low of that day near the 123^23 level, takes on extreme technical significance. If that level is tested and fails to hold, bonds are in danger of facing a rapid collapse, especially if the thinking that the worst of the financial news is now behind us gains additional credibility. A lot of money that sought a safe haven in the bond market will flow out of bonds and into equities if investors become convinced that the stock market has bottomed and the economy is poised for a rebound later this year. Please keep in mind that I am not advocating such a view – I am merely stating what will happen if a sufficient number of investors adopt this view and move their funds accordingly. Equities are now sneaking back into positive territory as I put the finishing touches on these comments here just before the pit session close in gold. That is pulling the euro off its lows and serving to push the Dollar back off of its session highs. The yen is especially weak today as “risk” is coming back into vogue a bit and this is serving to bring sellers back into the Japanese currency. It is down against not only the US Dollar, but against all the other majors as well. The Euro-yen cross, while it has lost some of its predictive aspect for risk, still remains a decent indicator so we will be monitoring that for possible clues to both the bonds and to gold. Crude oil is lower today but remains above the $50 level with the quantitative easing play by the Fed proving to have been the catalyst to allow the bulls to shove it out of the range trade and put in a more definitive bottom. The peak gasoline demand season lies just ahead. Even natural gas looks like it too has bottomed out.