Yogi,
The gold stocks played pretty well according to script. With the inflation news shock the normal POG reaction would be to rise, but since this is a manipulated market, the POG was pushed down. Meanwhile the gold stocks reflected the inflation sentiment, at least in a small short covering rally, quickly stemmed by the decrease in POG. I expect the XAU will be contained by this action of the POG (price of gold) until the general equities rally. If this takes awhile then manipulative pressure on the POG may cause new lows, which will suck the XAU down with it, but not to new lows, due to hedging of portfolios with XAU stocks Why else the volume in them, it has not all been negative selling pressure, as they have not made lows in proper relatinship to the POG.
If inflatinary perception continues, then it will be a mute point to hold down the perception of inflation, the POG, and it will be set free to rally on short covering. If there is a severe market correction, we may see a divergence between the XAU and POG which hits record proportions.
In any case, I hope to buy some of my favorite Blue Light Special Gold Stocks at an additional 10% or so discount, soon. I consider this a risky call; I have cut my positions in these stocks on the rally this morning, taking profits and hoping to buy in at great prices. If POG rallys before I can repurchase then I will be going to plan "B".
In any case it leaves me with lots of cash, flexibility and new profits to cover my remaining equity longs.
If I am right and your buy signals were premature, then it is further proof of the gold market manipulation, which is evidence to trade on.
If your buy signals are right and I was premature, then it would indicate the trend in POG manipulation is weakening and it may be time to approach the gold equities as viable stocks.
Bottom line, in my view, gold stocks up after a final bottom soon (but not a new XAU low) or gold stocks up more slowly, longer term, but in either case up, the time frame is the only variable.
BWDIK, this precious metals market has confused many a pm trader and I may be as befuddled as any.
Roebear |
