NFTRH Interim Update 1.28.13, Gold Sector

The main gold stock indexes (HUI, GDM) are severely over sold on a daily time frame.  It is difficult to see how a crash would happen from this state.  Has not nearly every gold bug that was going to give up the ship done so?  Conversely, it is easy to see how a rebound could happen.

I remain of the opinion that fundamentally the gold stock sector may be nothing special if an inflationary up surge is in the offing.  At the same time, that is usually when the inflationists jump aboard and push things higher.

If the miners rally, it could be a strong one.  And if the macro remains as indicated, with PALL leading gold as just one example of items that may out perform gold temporarily, then the miners would be a ‘sell’ down the road.  No holding them into inflationary blow outs for this player.

The point of this update however is that we have gotten some downside follow through today after Thursday and Friday’s high volume declines.  Things appear to be setting up to bottom out… pending the parameters noted in NFTRH 223 of course.  Complicating the situation is FOMC stuck right in the middle of the week.  Some may wish to get through that noise fest before evaluating.

[edit] Risk averse people might want to wait to let a rally start before getting involved or further involved.  Because if a rally begins, I think it will have legs after coming from such over sold levels.  Bottom calling could turn into knife catching, after all.

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