It was only a week ago we felt the gold stocks had a great chance of putting in a bottom. Monday supported our thesis but after Tuesday’s action and Bernanke’s jawboning it was apparent that the gold shares were in for a very difficult period.
All bull markets have to endure a plethora of corrections and all bull markets have to endure a handful of major corrections. The gold stocks are no different.
The collapse of 2008 remains fresh in mind. And yes, while collapse is the most overused word in the financial markets (next to bubble), 2008 was indeed a collapse for everything.
A cup and handle pattern is a bullish continuation pattern that represents a period of consolidation followed by an eventual breakout, which is the continuation of the previous trend. Typically these patterns last months and not weeks or days.
The gold and silver business is one that naturally involves much consolidation. The industry product is the same and the business is such that mergers and acquisitions are commonplace. As many readers know, the secular bear market of the 1980s and 1990s had an obvious impact on the exploration side of the business.
An important shift in global markets is taking place and it bears introspection. Gold has broken to a new high while Silver has established a bottom. Precious metals stocks have rebounded significantly from support
Nothing is certain but we want to see strong evidence before forecasting a turn in the market. In regards to silver, we see strong evidence that a bottom is in place and the market will move higher in both the short and intermediate term.
