Looks Who’s Holding Firm Amid the Carnage; the Gold Miners

Here is GDX holding the parameter we laid out for it in a subscriber update on Oct. 8.

Today GDX is declining back to a test of the support zone and the same rule applies as before; that thing needs to hold or new lows would appear likely. The pattern is actually in symmetry with its left side, if you put any weight on the importance of symmetry. To me it is a very minor consideration, implying that as of now the pattern is intact.

gdx

And so after much broad market carnage and drama, we have a still-intact GDX bounce pattern (Inverted H&S, which needs to clear 19 to activate).

But that is just a man who stares at charts writing that about a possible bounce. Of more importance is the pain spreading through the risk ‘on’ markets. And that includes commodities, which inflationist members of the group-thinking gold “community” want you to believe are all going to go up because… INFLATION!

Well, I fully expect to be proven right in continually harping on the gold sector’s best fundamentals, which have nothing to do with the snake oil being peddled about the Dollar Collapse, the Chindia Love Trade, the Western Fear Trade, inflationary global growth, war, terror, famine or pestilence.

By the way, gold bears also use the wrongheaded inflation angle. It works against naive gold bulls and wishful gold bears when the global inflation starts to fail and yet gold holds firm.

Cue the ‘cosm, the Macrocosm. There are many gold writers more popular with the gold bug “community” than me. But popular does not mean right. They just throw it * out there and a certain kind of gold bug laps it up. Well, how is Chindia and the global inflation trade now?

As I’ve harped on for like ever, we’ve got to be in line with the real (not imagined) fundamentals and that is what we are working on in NFTRH. We have presented one chart for instance, that shows if Thing 2 begins to out perform Thing 1, the miners are set up to ass launch harder than even the average die-hard might currently imagine. I want it, believe me. But not to the point where we will get out of line with reality in summoning it. We will continually gauge it and all the other important considerations. It’s all you can (or should) do in the markets. Be watchful and let ’em come to you.

The things going on in the macro over the last week, from pain in US/Global stocks and the risk ‘on’ trades, to commodities and the anti-USD trades have been steps in the right direction. But a sound manager will see through the work and not let wishes, hopes or other emotion take over.

You can bet we’ll be updating our individual gold miner charts this weekend and if we can develop macro and sector fundamental views to go with the technical view, the fun will begin. But first things first. Flipping Amigo #1, the SPX/Gold ratio over, we see that a certain risk ‘off’ metal got a little peppy vs. a certain bloated pig today. Nominal gold did squat, but it’s in the ratios to a constellation of cyclical and/or risk ‘on’ assets that the true funda will be found.

* “It” being whatever will sound best to the faithful troops at any given time.

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