Recall back 2 weeks ago before the flush I posted on the predominance of bear flags throughout the sector and how it was ominous. Well we did break down, but guess what…here we are again. Plenty of those flags have reformed.
But first a look at gold.

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The Matterhorn update looks like it is building out the set-up for a classic halfway pattern breakdown. This would target a move down to the lower blue dashed line of 1208 as a minimum. Possibly even lower.
On the second daily gold chart the decline looks absolutely treacherous. It has the look of an unfolding disaster, which will take no prisoners, This looks dangerous knights.

Platinum and Silver confirm.

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Platinum is a much less emotional metal and it often leads gold. Here we see Platinum getting a head start ahead of gold and may be signaling more trouble ahead for gold. Don’t forget to view the money flow on the bottom it’s a rush to the exits. Finally silver, I purposefully omitted drawing any lines on this chart to make the moving averages stand out. This is ugly knights. Look how the breakdown sliced right through the 150 & 200 EMA just as they flattened and are now tilting down. Also the 200 EMA has acted as a cap on price. Silver has not been able to sustain a closing price above the 200 EMA. Trouble ahead.

The Bear Flags

I am just posting a few of these so you get the point. What we see here are sequential bear flags forming. This looks very foreboding to me.

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Note how the relation to and interplay of price to the 150 EMA on these. Need I remind everyone that a bear flag underneath or on a declining 150 EMA is a major red-flag and spells trouble.

TAHO seems to be the cleanest and clearest as to what lies ahead. Note the CMF indicator on all of them. Its saying get me out.

So where is this all leading? As I have mentioned, this correction has been an 8 week -31% affair. That’s longer and deeper than the average first correction in a bull market. It appears to me we have had a fervent religious element in the PM sector that needs to be shaken out and Mr. Market is setting up to do so.

Viewing the chart below of the GDX, if GDX was to rip through support at the 21 level and as a worse case decline to the 19.33 level I believe the required shake out would be accomplished in spades. At that point faith and belief in the new bull market would be sufficiently violated to allow the next advance to begin.

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I have stated several times I have adopted a defense posture. I continue to be defensive and will lighten up even into my core next week. I do still play opportune longs however. Note I took a major position this week in CCJ and I bought Cornerstone resources at 0.11 last week in size. (CGP.V)