C.S. As with our recent Call on Apple, nothing here will be scientifically proven - all our markets are rigged and are pure Esoteric Fiction now. Our feeling tells us that recent carnage in Gold and Gold miners, particularly, is the preparation to the Massive Liquidity Back Stop Operation.
Any such operation means the QE up to the infinity whatever it will be called. The action will be coordinated and must be unleashed on a truly huge scale in order to attempt to save the insolvent financial system from "the run on the banks". Battle Field will be in Europe - now Europe threatens to push all world economy into another recession. UK - the land of the brave, where all experiments with QE were started first - is already in recession technically. Austerity will be dying hard, but the Paul Krugman is now the bedside book.
What form this operation will take is not so important: there are rumors about Silver Bullet with banking super guarantee in Europe or it could be another LTRO spiced with World Wide Coordinated FED and Central Banks swap operations - the end result is that the liquidity will be flooding the system with record low Treasury Yields. The magnitude of the action will be very important - European banking system is under capitalised by 2.9 Trillion Euros now, according to UBS.
Gold smells any currency debasement - here we are talking about worldwide phenomena - so it will be killed first. Panic in the sector has already shaken all weak hands and once the public has realised what is coming gold will resume its uptrend.
Gold, Silver and Commodities have grown up and will live their own life in the Bull Market while General Market will be busted by recession.
Chart above provides us with some Technical confirmation of our Esoteric sensations, we have two very strong Reversal Candles on Weekly. Daily chart below is painting the Double Bottom Reversal with the recent retest of the low.
Gold miners were living lately in their own world - all excitement about the Sugar High general market action has left them behind.
We are at the 2010 Low on the Weekly chart - two year of gains were wiped out from the last October. GDX is trying to build the Reversal - we have the Reversal Candle and Volume signal. Move above MA200 will confirm the Buy signal here.
Gold Miners Daily chart is already excited with the new opportunity and screaming Buy on MACD, Volume on week of May 14th provided the confirmation of the positive move out of Oversold condition.
The real drama is on the chart above. Gold Junior Miners could be the New Misery Index of the New Normal. You do not know, what the financial pain means, if you were not investing in Gold, Silver, Copper, Lithium and REE juniors lately. Here Juniors managed to hit the 2010 Low. We have the Bullish Engulfing Candles now, Volume signal and the next move Up should confirm the Buy on MACD.
Daily chart above shows Buy with Strong Reversal Candle in the week of May 14th, Volume signal and retest of the Low in the week of May 21st, with Double Bottom Reversal. This elevator goes very fast in both directions, but not all passengers will be taken UP - collateral damage will claim the weak companies who was not able to finance and keep their projects.
Guidance will be the quality of teams, projects and who is behind the company - we are talking here about the opportunity not seen from February 2010, when market never looked back until Top in April 2011.