Remarkable Day in Charts
Today was a thing of beauty that needed to be captured visually. Gold has closed two days in a row over $3400 for the first time ever. The fuel has been the exhaustion of the US dollar short covering rally that Trump started in early July with more and comprehensive tariff threats. Bears in New York attacked the Gold bid for 7 days in a row trying to force a close below the 50 dma. In that time period, August, October and December Gold futures combined open interest remained largely unchanged. The play-yah was being played by savvy Gold Bulls. If there was a time to bring out the big short selling guns, it's tomorrow. If Old Yeller closes over $3450, a spirited attempt at the ATH of $3500 soon after is virtually guaranteed.
Silver has had a nice run for the last three weeks. I show the chart on the 3-year time scale as it is the most enlightening. There's a high probability the metal will take a consolidative breather here below $40 for three reasons. The first is a 32-month resistance line crosses just above the current price, intersecting roughly at $40. Secondly, a well defined Bearish Wedge has formed, a reliable chart pattern at portending a trend change. Lastly, $40 is a nice round number likely to be defended with vigor by shorts.
The HUI just made 13-year highs today. Several miners hit ATH's. My favorite Gold miner, Aris, just printed over $10 Canadian. I had to sell my warrant position prior to next week's expiry. Now I'm on the other side of the fence hoping for a pull back to get back into their stock and Call option leaps.
The big story of the HUI reaching multi-year highs is actually the chart below it. The HUI/Gold ratio has been gaining strength and now actually over the elusive 13% mark. I noted since early May precious metal royalty stocks have caught strong buying indicating fresh money is flowing into the sector. Now the HUI/Gold ratio is slowly showing the worm is turning. Someone posted a week or so ago that some poster's not affiliated with this Board said the money has already been made here: I firmly disagree.
We have all of these wanker precious metals analysts continually calling for a top in the sector. Many called for Gold's average price to be $2900 for this year and now they are reluctantly raising it to $3200. Wow, what a prescient call after 7 full months of trading are about finished? It is these neutral/bearish forward estimates that have restrained investment in mining stocks. Now, ever so slowly, investors are realizing how real the Gold/Silver Bull run is today. In coming weeks, I think the sector is going to start getting more of that Aretha Franklin vibe of R-E-S-P-E-C-T Take care, TCB as more record financial results are revealed.
My last chart of the evening is of the $Buck. Last week, small surges in the USD emboldened Bears to hammer Gold at the New York open, almost daily. Now the shoe is on the other foot and Bulls are kicking Bears ass's with it. I've been writing down daily the Gold futures open interest the three nearest front months. Yesterday in the first for awhile, OI increased 24,000 contracts and that was good enough to push Gold over $50 higher. There is a massive amount of buyside firepower that can be spent before anyone can call the metal over-bought and we're sitting just $70 away from another ATH. The USD looks like it is on its way to retest the multi-year low of 96.38, which is a mere 1 point away. Things may get crazy nuts on the bullish side of Gold, if 96 falls anytime soon.
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Credit to tobinator00 |
