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The rally in the gold stocks which started in early December imploded last week. There was a
decent chance it could have lasted another month but succumbed to the overall market decline. After all gold stocks are stocks too. The bigger picture to review is not the stocks, but gold itself.
The original article has been edited here for length (…) and clarity ([ ]) by munKNEE.com – A Site For Sore Eyes & Inquisitive Minds – to provide a fast & easy read.
In the past 42 years gold has had 6 bull markets and, in those bull markets, the rally coming after the first correction following the first leg up has lasted 58, 61, 55, 55, and 64 weeks long. Our current rally since December 2016 lasted 55 weeks so its par for the course. We can now expect a retrenchment followed by the resumption of Phase II of the bull in gold.
In the chart below the classic buy point will be when the CCI reaches the -100 level as depicted. Once this entry occurs gold should resume its phase II. Phase II is the longest phase where the public eventually comes to understand the bull and wants in.
Gold could have a visit into the upper $1200 range!
Anything above $1230 remains a healthy back test.
It’s been a long hard road of base building:
Big Picture Saucer Bottom
Keep the big picture in mind. Gold is building out a solid foundation to support a massive powerful move. Big Bases = Big Moves
The Gold Stocks
My silver/gold stock buy indicator just entered the buy zone for the first time in two years. The last buy signal was the great buying opportunity of Jan 2016. Note it is now back in the buy zone, but it has not triggered a buy signal yet. It must turn up to trigger a buy but its important to know its ready to go.
We need to combine the above trigger indicator with my gold bottoming system for a launch signal. As of now the gold bottoming system is NOT on a buy.
The HUI:GOLD Ratio
The most important indicator in the system, the HUI:GOLD ratio, is not green as you can see below:
Negative Configurations:
The only positive signal:
The gold stock indexes are stressed and putting out mixed signals.
Gold mining stocks are hanging by a thread and stochastics indicate further to go to the downside before they turn around, but I think they are buyable here. Sure you are not likely to nail the bottom, but we are getting near the end of Phase I in the stocks whereas gold appears to have already entered Phase II. When Phase II arrives in the stocks they will likely explode out of the gate…
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