Saturday, 29 June 2013

Depressive June ending with a manic gold miner recovery rally

Precious metal investors have been watching in disbelief how gold tumbled through all resistance levels eventually bottoming well below $1200 in European trading and during the NYMEX morning session, yesterday June 28. The recovery rally however was written in the stars:
  • On Thursday, precious metal miners followed the stock market recovery, ignoring the continuing plunge of the yellow metal;
  • While gold continued the last stage in its race to the bottom, silver upheld well on Thursday and both platinum and palladium reverted course and started recovering; the proverbial "bridge too far" for gold bears...
The carnage among miners was stunning: the HUI/gold has plunged to a fresh low of 0.169 (a level of relative valuation not seen since early January 2001). Gold quoted at $264 back then... The out-performance of miners during the entire gold bull market is washed away.  Miners have been grinding lower with only few minor recoveries on the way down. For graphs see the gold miner pulse page.

The vigorous miner recovery was leading gold eventually reverting course. On Friday, miners of the "goldminerpulse" database were rallying pretty much across the board. HUI/Gold ends the week at 0.184, up marginally compared to Friday June 21.
It 's always a risky business calling the bottom in for gold, especially at the start of what is known to be the seasonally weak "summer doldrums". However, we've been taken by surprise so often that the first upward blip of the eventual gold recovery rally most likely is going to be labelled a 'dead cat bounce'. I don't believe 3-digit gold prices (in USD) are looming behind the corner.

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