alice

NFTRH; Dialing in the Gold Miner Buy Zone

For we gold bugs in the NFTRH sphere, let’s have a specific update on a subject that is hitting my inbox a lately; a potential buy area for the miners. Apparently CNBC is making fun of gold, analysts of different types (systems, EW, cycles… ) are bullish, no bearish, no bullish… dohhh. It is tax loss selling season and the sector seems all but forgotten (in line with its rotten current fundamentals).

Well, I will tell you that sentiment is coming around to pervasively bearish, and although commitments of traders (CoT) are not favorable for gold and silver, simply looking at the chart of GDX, I think a low can be seen out ahead (hopefully with CoT getting addressed fairly rapidly).

Using the HUI monthly chart we have noted a big picture situation that is not so bad (and potentially very bullish), and projected that gold stocks can spike up and down within a consolidation pattern to the big 2016 up surge. Again, CoT aside, I’d look at a drop in GDX to the lower wedge line (hopefully amid pervasive sentiment agony) as the next buy area, or at least an area to buy some with more powder reserved for a quick test of the July low.

gdx

GDXJ’s next buy level looks like 30.50 or so.

gdxj

What we’d want to see is the ETFs drop to these reasonable technical levels, sentiment get bombed out (apparently CNBC is making fun of gold, which I love) and the CoT get addressed. It could still be a couple of weeks or so before we register these conditions. Could there be a big event to cure the CoT in quick time? If not, that would remain a concern as far as a long-term rally prospect goes.

But for now, let’s think about a drop to the bottom of the wedges, but also consider that if they rally sooner rather than later, a break of the top lines on the wedges would probably signal a resumption of the bounce that we’d been expecting from October’s over sold condition.