As usual we will seek to add more to a bullish gold stock discussion, such as Treasury yields and their spreads, gold’s performance to the stock market and even the US dollar, which is very over done to the upside. All of these and more will play in to an intermediate to long-term bullish case.
But on the short to intermediate-term, the Commitments of Traders data (cut off date Tues. the 10th) for gold and silver, due out tomorrow at 3:30 US Eastern time, and sentiment will be key.
On the former, we noted when it was bearish and that it has been on an improvement trend for weeks now. With the big hits on the metals since the last report, I am expecting a notable improvement toward the point where the trend may finally end (CoT is usually only ready for a bull case at the end of an improvement trend, not during one).
We also had noted the over bullish sentiment in the gold sector at the same time the CoT became unfavorable (and HUI hit the 210 target). So with Jason Goepfert’s (Sentimentrader) permission, I want to pass along his piece titled Gold Stocks Completing “Puke” Phase word for word.
Gold stocks had suffered big losses in six out of seven sessions heading into Wednesday. Such behavior has suggested a “puke” phase of prior declines, leading to at least shorter-term gains every time.
Click to expand the chart…
Click to expand the commentary…