Gold Miner Bounce, or Something More? Fundamentals Engaging Again

On September 1 we reviewed this chart in an NFTRH update projecting a gold sector bounce due to an over sold condition, a preponderance of gold bugs talking about an intermediate-term bearish condition and the hit of notable (but not the most major) support at around HUI 220.  From the update:

“A very simple update.  HUI has been pounded down to the support area defined by the lateral cluster that was the May-June pattern, and has filled Gap #1, as expected.  RSI is over sold and gold bug sentiment is over bearish.  That means the probabilities of a bounce have greatly improved.  If said bounce occurs, the key level remains the 50 day moving averages up around the channel bottom.”

hui daily chart

Doink, Huey is just about there after throwing on a cool 30 points in the last 3 sessions.  Here’s the updated chart.  The price is at the EMA 50, with the SMA 50 up at 261.  Our bounce range, per NFTRH 411, was 250-265.

hui daily chart

Complicating matters is that the 3rd Amigo just came into the picture against the economy, as ISM Services slumped in August, joining ISM Manufacturing and of course, Payrolls.  The Federal Reserve is painted as the clowns we have been portraying them as after an August full of jawboning and one big cluster fuck of mixed messages known as Jackson Hole (I wonder if Yellen has brought her tool box in from the garage?).

Here is one of the four ‘Gold vs.’ charts we use to gauge the macro fundamentals, gold vs. stock markets.  All through this multi week consolidation in gold’s fundamentals (as the economy bounced, on cue) the components of this chart held intact.  At today’s close they are only more so.

gold vs. stock markets

Over a year ago we began talking about a necessary draining of confidence as a key to the gold sector’s fundamental backdrop.  If you look back at August, you laugh, you cry and you shake your head in wonderment at these Bozos.  You lose confidence.

Bounce or not?  Who knows?  I don’t need to know because when I get fundamentals in my back pocket I am stronger than the average casino patron who’s probably watching green and red lights flashing all day long.  I am starting to feel strong.

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