We have discussed the theory that once the gold bear enters phase III the classic 6-12 week BMR is a thing of the past. Instead we have shorter stick in the eye vertical short squeezes. I would say what we just witnessed is consistant with this observation. This current snap back from the breakdown entering into phase III lasted all of 14 trading days one could even count it as 9 days with a retest of the 9th day. Just under 3 weeks to reach a 25% gain, that’s pretty violent. Of the 4 BMRs we have had since the beginning of this bear the shortest was 6 weeks and that was our most recent “truncated” pre-phase III BMR which simply flamed out. The other 3 were more robust 9-12 week afffairs. So this current 14 day (really only 9 days) was just what we expected as a Phase III short squeeze. I think it actually started to resemble a BMR, but that was because there were still a few die hard Bugs out there that may not have yet lost hope. Well, I think gold’s price action along with the rest of the other commodities Oil & Copper just stompted out this thinking.
So here is a view of the first Phase III violent short squeeze (VSS) is what we shall we call it.