Silver hit a low not seen since late in 2010 this morning, and the price of gold has again broken back under the $1,400 per ounce mark. Gold is back up to $1,486 on last look. Kitco.com was bearish earlier showing silver could break under $20 before it showed the total numbers of speculative bullish positions in gold, silver, platinum, and palladium.

The move is trying to bring favor back to miners. The Market Vectors Gold Miners ETF (NYSE: GDX) top ETF is up by 4.5% at $27.58 and the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) is up 4.8% at $10.96. The reality is that these bounces are off of 52-week lows and much may be short covering. Gold itself was down over 19% in dollar terms so far in 2013 before today’s bounce. Now compare that to the miners, where the “GDX” was down literally about 45% just in 2013 as of this morning’s new lows.

Silver Wheaton Corp. (NYSE: SLW) frequently trades in tandem with silver and its shares have recovered by 4% to $22.62 so far this Monday. The iShares Silver Trust (NYSE: SLV) was down as much as 29% in 2013 at this morning’s lows, while Silver Wheaton was down about 41% year to date as this Monday’s lows.

ETFS Physical Platinum Shares (NYSE: PPLT) is up 2% at $147.74 so far today, but this broke under $142 earlier and the platinum ETF was down by only 6% so far in 2013 at the lows this morning.

Our view is generally that trying to call an exact bottom is a very painful game. Sometimes it works and sometimes it doesn’t, and there are equal numbers of reasons for each. That being said, here is a view of the latest action in the price of gold via stockcharts.com showing you where the GLD ETF was trying to hold some support this Monday.

As of 2:30 or so EST we have the Market Vectors Gold Miners ETF (NYSEMKT: GDX) up 1.47% at $29.01 and the Market Vectors Junior Gold Miners ETF (NYSEMKT: GDXJ) is up only 0.67% at $12.09. The SPDR Gold Shares (NYSEMKT: GLD) is up 1.95% at $138.10. Here is why we are concerned about this deep underperformance, with the performance measurements being year-to-date so far in 2013 based upon the closing price from Friday:

• GLD -16.4% YTD
• GDX -38.3% YTD
• GDXJ -39.3% YTD

Kitco.com showed that the last price seen after the 2 PM mark was up $19.80 at $1,426.75 for spot gold. This is a 1.4% gain versus the “GLD” exchange traded product backing metal being up actually 1.95% about 30 minutes later. Miners have been bettered to the tune of more than twice as much as actual gold prices on the way down. So if a stabilizing day comes and the miners do not get the bounce back at anywhere close to as much as twice the rate, well it seems that investors who make actual investment decisions rather just speculating decisions may not be as convinced that the rally is real.

We do not want get into a daily or multiple times per day argument over gold prices versus the miners. That being said, this just doesn’t look or feel right on the surface. There are also some still negative on the day as well in the gold mining complex: Barrick Gold Corporation (NYSE: ABX) down 1.27%; AngloGold Ashanti Ltd. (NYSE: AU) down by -0.4%; and Harmony Gold Mining Company Limited (NYSE: HMY) down by -0.6%. None of the major mining players are seeing the major bounces we would have expected.

To show just how bad the carnage has been, the SPDR Gold Shares (NYSEMKT: GLD) is actually down an unheard of 18% so far in 2013. The miners are even getting hit harder as the Market Vectors Gold Miners ETF (NYSEMKT: GDX) is down a whopping 38% year to date. Many investors want to know what the bottom in the price of gold is and how to buy gold.

While we have seen the analyst calls growing for gold to go to $1,300 or even $1,200, some Wall St. analysts are starting to defend shares of the beaten and taunted gold miners.

AngloGold Ashanti Ltd. (NYSE: AU) was raised to Buy from Hold at Deutsche Bank on Wednesday, and the weakness was cited as a buying opportunity.

Gold Fields Inc. (NYSE: GFI) was raised to Buy from Hold at Deutsche Bank on Wednesday, also cited as a buying opportunity on the weakness. Gold Fields also was raised to Neutral from Sell by Citigroup on Monday, although in all fairness the that call was a negative sector call on both gold and silver.

On Monday we saw that Randgold Resources Ltd. (NASDAQ: GOLD) was initiated with a Buy rating by a firm named Dundee, and BMO Capital Markets also raised its rating to Outperform from Market Perform.

Canaccord Genuity also on Monday began coverage of a company in Canada called Carpathian Gold Inc. (CPN.TO) with a Speculative Buy rating.

Another call in Canada came from BMO Capital Markets, where it started coverage of Mandalay Resources Corp. (MND.TO) was raised to Outperform from Market Perform.

We strongly suggest that investors do some serious homework before trying to catch a falling knife. It can be a painful, dangerous game. Taking any full positions amidst a serious correction also can turn large fortunes into small fortunes.

The trend is still lower in the price of gold. As a technician or chartist would say, “It is in a downtrend until it isn’t.”

Gold Fields said that employees at its Tarkwa and Damang mines in Ghana have embarked on illegal industrial action that has led to production at both mines being stopped. The company holds a 90% interest in the mines. This strike follows the Ghana Mineworkers Union, and its affiliates called the Professional Managerial Staff Union and the Branch Union, presenting management with a number of demands yesterday. The company also said that these groups threatened industrial action if the company did not respond positively to the demands within 24 hours.

What is said to be at issue is a dispute in the determination of profit share payments to employees and other issues. Gold Fields listed more issues being the unconditional reinstatement of an employee who was dismissed following an internal disciplinary procedure, dissatisfaction with certain management structures, the removal of certain members of senior management, concerns about catering delivery models and allegations of discrimination between expatriate and Ghanaian employees. The company said that it is analyzing and investigating the demands “as a matter of urgency” but also said that it appeals to all of its employees to maintain law and order while this process is underway.

Gold Fields said, “The company holds the view that the industrial action is illegal and unprotected. This could expose participating workers to the no-work, no-pay rule as well as possible dismissal.”

Apparently shareholders are also dismissing the shares. In New York trading, the ADRs of this South African company are down more than 2% at $7.16. The stock hit a new 52-week low of $7.12 earlier in the morning, versus a 52-week high of $12.09. Note that Gold Fields still has a market cap of just over $5.2 billion.

The Market Vectors Gold Miners ETF (NYSEMKT: GDX) is also weak on the news, or perhaps on the trend of gold and gold miners continuing to head south. At $35.67, this just hit a new 52-week low as well, down at $35.55, this morning.

We have already noted some of the issues investors need to keep in mind about gold this year, and the dumping of physical gold by ETFs like the SPDR Gold Shares (NYSEMKT: GLD) and the ETFS Physical Swiss Gold Shares (NYSEMKT: SGOL) appears to indicate that investors are more willing now to bet on a recovering global economy. The need for a safe-haven seems to have taken a backseat to a new appetite for risk.

The impact goes even deeper though. If gold prices continue to decline, demand for gold will fall and the prices that gold miners are able to get for their production will fall, putting even more pressure on the tenuous profits now available to gold miners. The gold miner ETFs, Market Vectors Gold Miners ETF (NYSEMKT: GDX) and Market Vectors Junior Gold Miners ETF (NYSEMKT: GDXJ) are both down around 20% since the beginning of the year, although neither had a particularly buoyant 2012 either.

The bad news even spreads to silver, where the Global X Silver Miners ETF (NYSEMKT: SIL) is down the same 20% since the first of the year and the iShares Silver Trust (NYSEMKT: SLV) has lost 10% since a mid-January peak.

The gold sell-off could just be temporary, and a shock to the global economy could bring investors back. Lord knows there are plenty of things that can still go wrong with the slow economic recovery.

Gold prices have lost the wind at their back, gold production prices are higher and demand for the shiny yellow metal is not being juiced up by industries and consumers. Labor issues in many parts of the developing world have also turned what had been a risk into an actual higher cost event. We recently gave an update with a muted outlook after taking World Gold Council data into consideration.

To show just how bad thing shave been: the Market Vectors Gold Miners ETF (NYSEMKT: GDX) hit a new 52-week low of $36.47 on Monday against a prior 52-week range of $37.02 to $55.25. But wait, it gets worse. The ETF tracks the NYSE Arca Gold Miners Index. This index appears to be at a three-year low.

Here is what we are seeing in other gold majors:

Newmont Mining Corp. (NYSE: NEM) is down 1.6% at $38.95, under the prior low of the past year as the 52-week range is $39.56 to $59.03, and it is now under $20 billion in market cap. This is the lowest price back to August of 2009, if you do not pay attention to dividends.

AngloGold Ashanti Ltd. (NYSE: AU) is at $23.77, versus a prior 52-week range of $23.88 to $41.20. This is the lowest going back to February of 2009.

Barrick Gold Corp. (NYSE: ABX) is at a new 52-week low of $28.89, versus a prior 52-week range of $29.33 to $47.24. This $29 billion value compares to a low back in December of 2008 if you do not count dividend payments.

Goldcorp Inc. (NYSE: GG) is still worth $26 billion, and at $32.05 after a 1.5% drop, it still has 2% to go before hitting a new 52-week low.

What is interesting is that gold itself is at $1,574 per ounce. That is still more than $30 above the 52-week low from May of 2012. The World Gold Council noted that gold was up about 8% in dollar terms in 2012, and that was the 12th consecutive annual gain.

Exchange Traded Funds

The SPDR Gold Trust (NYSEMKT: GLD) and the iShares Silver Trust (NYSEMKT: SLV) are perhaps the best-known of the precious metal funds. In the past 12 months, GLD shares have dropped 3.5% and shares of SLV have lost 7%. Central bank gold purchases and purchases by ETFs are driving the gold price, whereas silver gets more attention for its role as poor’s man gold and its industrial uses. Neither of these can ever really be considered a value play, but that is not why people invest in precious metals in the first place.

Mining ETFs include Market Vectors Gold Minters ETF (NYSEMKT: GDX), Market Vectors Junior Gold Miners ETF (NYSEMKT: GDXJ) and Global X Silver Miners ETF (NYSEMKT: SIL). Over the past 12 months, shares are down from about 16% at SIL to more than 37% at the junior miners ETF. As the next few paragraphs indicate, that is not likely to change in 2013.

Mining Companies

Rising costs, labor troubles and diminishing ore quality get the blame for the mining industry’s poor showing in 2012. None of these issues is anywhere near a solution. One miner is getting back into the energy business to try to boost its profits, but except for the very largest mining firms that is not a widespread option.

Barrick Gold Corp. (NYSE: ABX) closed at $32.73 last night and has a market value of about $32.75 billion. The consensus target price from Thomson Reuters is $49.10, and the 52-week range is $31.00 to $50.02. Barrick has a dividend yield of 2.4%. The implied upside to the consensus target is 50%.

Goldcorp Inc. (NYSE: GG) closed at $36.13 last night and has a market value of about $29.3 billion. The consensus target price is $49.20, and the 52-week range is $31.54 to $50.74. Goldcorp has a dividend yield of 1.7%. The implied upside to the consensus target is 36%.

Kinross Gold Corp. (NYSE: KGC) closed at $8.27 last night and has a market value of about $9.43 billion. The consensus target price is $12.90, and the 52-week range is $7.11 to $11.68. Kinross has a dividend yield of 1.9%. The implied upside to the consensus target is 56%.

Newmont Mining Corp. (NYSE: NEM) closed at $45.25 last night and has a market value of about $22.46 billion. The consensus target price is $57.50, and the 52-week range is $42.55 to $64.43. Newmont has a dividend yield of 3.1%. The implied upside to the consensus target is 27%.

Yamana Gold Inc. (NYSE: AUY) closed at $16.76 last night and has a market value of about $12.6 billion. The consensus target price is $22.90, and the 52-week range is $12.68 to $20.59. Yamana has a dividend yield of 1.6%. The implied upside to the consensus target is 37%.

Freeport McMoRan Copper & Gold Inc. (NYSE: FCX) closed at $35.69 last night and has a market value of about $33.87 billion. The consensus target price is $40.15, and the 52-week range is $30.54 to $45.55. Freeport has a dividend yield of 3.5%. The implied upside to the consensus target is 12%.

Silver Wheaton Corp. (NYSE: SLW) closed at $37.18 last night and has a market value of about $13.17 billion. The consensus target price is $46.80, and the 52-week range is $22.94 to $41.30. Silver Wheaton has a dividend yield of 0.8%. The implied upside to the consensus target is 26%.

Coeur d’Alene Mines Corp. (NYSE: CDE) closed at $22.93 last night and has a market value of about $2.05 billion. The consensus target price is $30.60, and the 52-week range is $15.15 to $31.97. Coeur d’Alene does not pay a dividend. The implied upside to the consensus target is 33%.

Stillwater Mining Corp. (NYSE: SWC) closed at $14.41 last night and has a market value of about $1.68 billion. The consensus target price is $15.40, and the 52-week range is $7.47 to $15.24. Stillwater does not pay a dividend. The implied upside to the consensus target is 7%.

Implied gains on most of these stocks are too large to be anything but value traps. Freeport and, perhaps, Silver Wheaton are exceptions. Stillwater, the only platinum and palladium producer in the United States, is too small to have much impact on the expected global shortfall of platinum in the next couple of years, but the company obviously benefits if it can maintain and even grow its production.

You have to understand that the World Gold Council is, of course, “pro-gold” as you read through it. That being said, our take is that gold’s peak may remain elusive but is now closer rather than more distant. The gold bugs will not like this viewpoint. Just do not consider this as the town crier calling the death of gold (and silver too).

The council talks about gold’s currency-hedging perspective, its diversification qualities, its stance as a risk in tail-risk (or Black Swan) events, and even how foreign central bank diversification plays a role in gold. If you invest in the SPDR Gold Shares (NYSEMKT: GLD) and the lower-fee ETF via the ETFS Physical Swiss Gold Shares (NYSEMKT: SGOL), you better read through the report.

Gold mining investors who own the Market Vectors Gold Miners ETF (NYSEMKT: GDX) will want to pay attention. Even those who invest in silver via the iShares Silver Trust (NYSEMKT: SLV) better play attention here, because the metal known also as the Devil’s Metal is in many cases nothing more than the leveraged and speculative trade on gold. Many traders and investors think of silver as the dumb-money or poor-man’s bet on the gold market.

Gold had a weak fourth quarter, but it still rose by about 8% in dollar terms in 2012. Why are we getting somewhat cautious or leery even if the Gold Council is still optimistic? Gold has risen for 12 consecutive years now. This is no dot-com bubble. What was an asset-class trade ahead of the world recession became the ultimate flight to safety. Now it is a hedge against all global currencies as they race to devalue paper assets. Is buying the renminbi or yuan safe? What happens when the Federal Reserve and Treasury efforts include $85 billion of bond purchases per month when the U.S. deficit is out of control? Gold is a hedge against the Johann Gutenberg efforts of world central banks.

Another issue that gold investors need to consider is that the Gold Council also talks up how gold has seen low volatility despite the end-of-year price drop. Just go look a the key ETFs we talked about above. The trading volumes are generally lower. Does this mean that gold peaked? Maybe. It could just mean that gold is trying to set a new base level from which it can rally.

The good news by our take is that the World Gold Council does at least address the implied risks. A normalized Fed policy without a future low-rate (or no-rate) policy, weak or fragile growth, new Bank of Japan efforts and more. The overall tone from the Council remains bullish, but we would only expect that stance, even in a neutral scenario. The recent rise in interest rates may continue if the woes of Europe keep tempering and if the U.S. recovery is not entirely derailed by Washington D.C. That rise in rates has yet to ever fully take shape, but rising rates that come close to offering above-inflation rates would ultimately start to compete for investment dollars against gold.

Gold is still an asset class that needs to be owned by almost every sort of smart-money investor. Silver might as well be thrown in there too. The question boils down to how much and how aggressive buyers should be when the price pulls back and when it rises. Gold is an ultimate hedge. That being said, the outlook for 2013 is very detailed and remains bullish, but it seems that the council’s outlook after 12 consecutive years of gains in gold may be signaling what the gold bugs do not want to hear.

Is gold dead? Not by our take. Will gold enjoy another 12 consecutive years of higher and higher prices? Not even if it should rise through time.

Here is the World Gold Council’s full investment commentary.

Germany announced last week that the Bundesbank would begin repatriating gold reserves held overseas. The central bank said it wanted to keep more than 50% of its gold reserves at home, up from slightly less than one-third currently. The Bundesbank will move all its gold reserves now held in Paris back to Germany and reduce its reserves held in New York City.

Why are the central banks doing this? It is very simple. Gold tends to rise and fall with changing government economic policies. The trend in a world where nations are swamped with stagnant economies and dropping export demand is massive stimulus like we have seen here in the United States. Massive stimulus and printing money to pay for it ultimately leads to inflation. Central banks are hedging themselves against their own actions.

China is the second largest economy in the world, yet the only the sixth largest holder of gold in the world. According to the World Gold Council, the People’s Republic is increasing its holdings at a quickening pace. Why? Because gold is real money in a paper money world. It cannot be printed at a central banker’s whim. If China really accelerates its gold purchases by exploiting its huge cash reserves to become the number one holder of gold in the world, prices could skyrocket.

So how does the individual investor participate and protect against the decline of the U.S. dollar? The simple route is to own the SPDR Gold Shares (NYSEMKT: GLD) exchange traded fund. Another route is to own a basket of gold mining stocks via the Market Vector Gold Miners ETF (NYSEMKT: GDX).

There is a time when all bills come due. If those bills are paid with freshly printed currency, the end result is inflation and weaker currencies. Gold will rally the most where currencies weaken the most. When governments around the world are making it a priority to have their gold at home and owning more of it, investors should as well.

In what appears to be very large front-end cuts to 2013 pricing for both metals, Deutsche Bank lowered the 2013 forecast for gold by 12.1% per ounce to $1,856 per ounce. The 2014 estimate was cut by 5% to $1,900 per ounce. Gold closed yesterday at $1,646.30 and is trading up $5.90 today on the February contract at $1,652.20.

Even though the cuts look large, could this be a good entry point for investors? From these levels that still would provide upside of more than 12%. The SPDR Gold Shares (NYSEMKT: GLD) ETF closed yesterday at $159.43, down from a 52-week high of $174.07. A move to the Deutsche Bank target for 2013 could create a new 52-week high at $178.56.

This might also provide a solid entry point to large gold-mining companies. Barrick Gold Corp. (NYSE: ABX), with 27 operating mines around the world, may be a solid pick. It closed yesterday at $34.09, very close to the 52-week low of $31. This compares with a high of $50.39 in the past year. The Market Vectors Gold Miners ETF (NYSEMKT: GDX) provides a way to invest in a large basket of gold-mining stocks. It closed yesterday at $44.48, down from a 52-week high of $57.94

The cuts at Deutsche Bank for silver were even larger. The 2013 price was lowered by 16.8% to $37 an ounce, while the 2014 forecast was lowered 5% to $38 per ounce. Like the cuts for gold, this may seem like a negative call, but does this really provide an opening for investors?

Silver closed yesterday at $30.082. Again looking at the lowered targets, that still seems to provide tremendous upside. The iShares Silver Trust (NYSEMKT: SLV) closed yesterday at $29.18, well off its 52-week high of $36.44. Silver Wheaton Corp. (NYSE: SLW), a premiere silver mining company, closed at $34.60, more than 20% below its 52-week high of $41.30.

With growing industrial demand as a backdrop for silver pricing, and central banks printing enormous amounts of money supporting gold, this may be an excellent entry or reentry points for investors looking to hedge and diversify their portfolios.

See also: Gold and Silver: Look for Another Great Year in 2013