Now that sentiment on this site has gotten a bit lathered up let me pull out my wet blanket and present my most likely scenario. It is based on my gold bottoming system which still has not turned, but is trying, and the fact that we still have not yet seen all the elements of a full blown Phase III decline. Keep in mind there is no law that says we have to see them, however in such a severe 5 year decline I would expect to see them. We have not seen bids removed for more than one day or put another way a period of illiquidity lasting up to one week combined with comical selling. We also have not seen full on issuer capitulation. Its my view that if we ever see sub-$1000 gold these conditions will reveal themselves.
In the mean time yes, we are seeing the initial turn in the sector here with the mid-tiers with little to no debt starting to rise up. I am partially long and playing these companies and have been since the early November bottom held… My best guess is we continue to rally here, but eventually flame out and we probe lower lows. Those quality mid-tiers don’t have to go to lower lows, but the majors probably will with the exception of companies like AEM. In other words, the quality companies mid-tier as well as majors are now bifurcating from the rest of the market. This is how bottoms are made.

Here is my take on the GDX:

p1

And the GLD with a bit further to run until that well tested upper S&R:

p2

And two views of the gold price allowing for a BT in this current rally to complete the move:

p3

p4

In the meantime, I totally concur with the recent comments by Spock that the game to be played is to play the long side of this incipient gold bull market. Why play a bear market (General SM) when you have all the CB fighting it tooth and nail. We have learned the hard way how hard it is to survive those vicious BMRs that only serve to rattle ones psychological well being. I have always said the big money is to be made in the buy and hold…in the long term primary trend. I believe that after the final leg down in the gold market which is at our doorstep we will be there.