Gold & Silver: Stuck In Oz; Stock Market: I’ll Get You My Pretty!

The downward plunge never ends when you think it will. There’s always a lower level. That way gold bug spirits get crushed before those left standing can become “joyous”.

Some thoughts from NFTRH 510:

Both gold and silver look like they could be in little daily chart bear flags. Oh no! More bearishness on the way! I am getting bullisher by the week.

Again, that is how it is with the precious metals. Sure, if you go too quickly you get some cuts, scrapes and if too eager, even amputations of fingers by falling knives. But this generally is the type of environment where you stand up and take notice. The gold obsessives – i.e. gold newsletter writers, gold stock experts, “gold analysts” (ha ha ha) and others who want their herds to remain enthralled as if there is no other sector in the markets – are in damage control mode.

Because gold and silver are technically bearish, the gold stock ETFs are on the verge of breakdowns and the world is still risk ‘on’ right now, the amalgam known as the gold “community” may find a need to give the troops the straight scoop, which is that it’s bearish out there. With every fiber of its being the “community” wants not to be saying that, but they have to in order to maintain credibility.

This is when you buy the sector. Period. Now, what does “buy” mean? Well I personally screwed up trades in NEM and AEM. So I am by no means saying that [it] is easy. You have to manage risk while at the same time keeping an eye on the ball, which is a general buying opportunity for anything from a potential strong bounce to a bull phase.

As to that second thing, a turn in the risk ‘on’ world to bearish and/or risk ‘off’ would be the right context. What is happening now is that the inflationists are getting dismissed and the people who buy liquidations within disinflationary backdrops are at the ready. While I am bullish on all counts but the macro fundamentals – which continue to be mixed to bearish – I’d continue to respect the possibility of a final flush before the rally gets going.

Nothing really to add. Here are the little bear flags, and there are also the lower lows to December that have got the “community” in the doldrums (again, one perma “joyous” fellow excepted).

gold and silver

But all of my experience tells me that you be ready for this if you care about these metals and their miners. You be ready to see the inflationist bugs completely washed away in fear of the US dollar (where is the “dollar collapse” cult these days, anyway?) and waning inflation expectations.

Now, I am not saying it is as simple as all that. It would be great if the macro (like Au/Stocks) and sector (like Au/Oil & Au/Materials) fundamentals would play ball ahead of time. But as noted a couple days ago the minor downturn in stocks was not a good time to short, and indeed stocks have done what they always seem to do and sprung back.

But with stocks, as the wicked witch heckled, “I’ll bide my time” and wait for a turn or bull continuation as may be the case, per parameters. But it would be cool for gold’s final indignities to come against a turning macro. Gold/Palladium and Gold/GYX are still constructive even if Gold/SPX is still stuck in Oz.

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