As I was saying over the weekend, I reserve the right to change my mind when the facts change. Gold has not yet fallen enough to satisfy the requirements of a D-Wave, and I doubt they do. I am willing to call this a strong pull back into an intermediate cycle low, which is still good……just not as good. Similar conditions existed back in July when I strongly recommended we buy gold. The C-Wave lives on, and those who buy gold here will be happy later that they did.
We needed gold to take one more leg lower to satisfy the requirements of a D-Wave, but the large spec funds and commercials have caught gold at 1600 and are not allowing it to fall any further. I said over the weekend that the commitment of traders report looked very strong. Gold has now spent 9 trading days teasing 1600 but not falling below during normal trading hours. Gold never even touched the 200 dma.
Meanwhile, stocks are ripping out of an intermediate bottom. I think stocks could get back as high as the 200 dma. The dollar is due for a pull back. I think it is time to get back onto the gold train as it is leaving the station again.
Now, I am going to put a wrinkle into what I am saying. You ladies like buying things that are beaten up. In the pm arena, there is nothing beaten up more than mining stocks by far. The price of mining stocks relative to the price of gold is the lowest it has been in three years. That means the potential move in the miners will be much larger than the metal.
Mining stocks are the most oversold that they have been since back in 2008.
If things have not changed much in the next week, I am going to recommend we get back long into the precious metals, but this time with mining stocks.
