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The HUI chart (previous update) does not show gaps or volume. The GDX chart does. As yet, GDX volume is not showing much conviction. Although the price is pointing upward.

With the idea that there are three fat gaps below (91.21, 84.48 & 78.86) let’s play devil’s advocate for a moment and think about an alternate plan. This alternate could really mess me up if I hold onto the hedges and get forced by money-loss pressure to get rid of them. Then take a double whammy with gold stocks failing later.

Understand that I’m riffing on possibilities, not providing analysis here.

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Option 1

This is the path we’ve been on. Either the miners are ending the correction now, after only a moderate correction or they will end it after another decline to at least the upper gap and 200 day moving average, or the 84.48 gap and 50 day moving average.

Option 2

This is where it could get nasty for the likes of me, a hedge holder. What if GDX is rising and soon to make a new high for the cycle that began in July? What if it rises, fills the gap at 111.36, provides a double top and drops again? What if that comes with a Bessent/Warsh Goldilocks flattener operation?

Bottom Line

With #2 I’d have covered my hedges, felt good in the near-term, and been left naked while the bond market manipulators bring the pain to gold bugs (but probably not stock market bugs).

#1 could continue bullish or reverse and fail back into the correction. I much prefer option 1, the existing plan, regardless of whether or not the current bounce keeps on going to a real bull phase.

But I, and many of you I am sure, lived through the obnoxious 2012-2016 Goldilocks phase compliments of Bernanke. I felt like a lonely voice in 2012 having to call negative macro for gold stocks.

If option 2 takes place (at the hands of Op/Twist-lite, hence Goldilocks-lite) it would be much shorter, but maybe no less obnoxious, because it is not real. It is manufactured. In that case we’d (well, I’d) play bubble head and work the stock market. But my honest heart prefers gold and gold stocks. Operating as a soulful, heart-felt human in the financial markets can be hazardous at times.

So we shall see. I am considering getting rid of the hedges to avoid a would-be Option 2 double whammy. In that event I’d be ready to re-hedge or take profits higher if the two Wizards get really evil and paint Goldilocks and a ‘see, no inflation!’ sort of promo.

I don’t know if I could be slick enough to re-hedge if this is just a short-term ill-fated bounce and the short-term correction resumes. But it would be much better than seeing gold stocks fail into a coordinated operation from higher levels later.

Frankly, I am feeling less clear than usual and I owe that to having two adversaries I think are working in coordination at a politically sensitive time when maybe they don’t want gold advertising to the world how badly the administration has been screwing things up.

I am not getting political. Paranoid might be a better word. Food for thought, not overreaction.