Loading ...Maybe Plunger is right…
Needless to say, many miners are oversold as can be, and I am expecting a very significant rally soon. But Plunger’s point about the 200 EMA turning down signaling a cyclical bear market is a valid one.
Barring an absolutely monster rally in the next 2 weeks (e.g., HUI getting to 300+), the likelihood of taking out the August 2020 high in the next 6-12 months becomes extremely low. That doesn’t mean we can’t have large rallies, much like the bear period between 2016-2018, but the risk will be in staying long, unfortunately.
Whatever, happens, it could be argued that the miners have never been in a proper trending bull market. All we have had is 3 short spikes (2016, 2018 and now 2020) that have been followed by drawn out multiyear bears (2016-2018) or crashes (2020 covid crash). Basically, if you haven’t bought only extremely oversold conditions, you have gotten burned getting long miners and holding. To make matters worse, during the 2016-2018 bear, US stocks continued moonward.
Excellent analysis Sir Naut.
Investing in PM miners for the last many years has all been for Naut
🙂
That hurst cycle guy someone posted early in the year was spot on. The gold peak last summer was a major 9 year cycle high and we will chop/correct for a few years from that high it seems.
“many miners are oversold as can be”
Not on my work. A few are.
I do expect another tradeable bounce beginning in a week or two.
He is probably right now, unfortunately he was not right a few months ago when he was almost sure than a BIG bull market was in front of us , unfortunately also 2 stocks he did put in his top choices have been destroyed (Americas Silver and Novo).
Hearst cycle is telling us than we have a double top in gold and it will lasts for many years.
So what could we do??????
Hoping that both Plunger and Hearst cycle are wrong or sell everything?
I don’t know, but I am personally willing to wait a couple of more weeks. Some of my silver miners, like AXU, are ridiculously oversold and are sitting on significant long term MAs, like the 600 dma. Of course, it could keep on crashing, but selling now would be a mistake in terms of risk/reward. Might as well wait for a bounce to get out.
If the HUI doesn’t hold here, I think its next target is about 250, which is more or less its 600 dma.
Is the bull market over? It is so hard to square that with the Fed’s monetary policy. That being said, it’s not like the Fed stopped printing after 2012, yet gold dropped by almost 50%.
Time out.. This sector is a unique sector with high risk, especially junior exploration stocks. Mentioning companies like America’s silver and Novo are ideas. They are not buy and put away. I sold both a while back. Lost $ on USAS made money on Novo. That’s the way it goes around here. Some work out some don’t. These are not Microsoft replacements.
BTW I still am “SURE” a big gold bull market lies in front of us, but first we need to get this cyclical bear market over with. At least on the Rambus site I have made it clear that I realized we were in a bear market since late February. Of course it started in August and I finally realized it by late February. Not a single person is out there who has offered this analysis. As I have painstakingly made it clear the rally from early March to Mid May was just a rally within a cyclical bear market (BMR)
As one knows, one hates to be mischaracterized
I would like to address the above comment: “Whatever, happens, it could be argued that the miners have never been in a proper trending bull market”.
Here is my take on it as it is what it is. What’s proper? There are differences in all bull and bear markets. Similarities yes and principles apply as well, but the price action in the gold stocks since January 2016 deserve the classification of a bull market.
I will grant you it’s not the rip roaring run up that would please the crowd, but we don’t get to dictate terms for how Mr. Bull is going to lay out his strategic plan. \
Instead of claiming the action hasn’t been pleasing enough time is better spent attempting to define the meaning of the existing action. I see the two legs up since 2016 as early cyclical bull markets in a long term secular bull market in the gold stocks. I think there is now enough evidence combined with fundamentals to make this claim. If one goes back and rereads my recent bear market essay and thinks about what I said of the price action from Sept 2018-Aug 2020 it goes a long way towards understanding what has been going on since August 2020. Night follows day and when that fully developed bull market ended in August 2020 a bear market slowly unfolded. That’s how it works at first it is very slow. We are now advancing from a mature bear market into the final stages (Phase III). That’s the ugly take no prisoners phase. People don’t respect these things. I have learned to respect it. The damage it can do can be irreparable to many. Don’t get caught up in an annihilation drive at the end if that’s how it ends.
Thanks for weighing in BC. But I will say EMPHATICALLY that from my perspective, the precious metals sector is not in a bull market, nor has it been, since 2011. That conclusion derives from core principles from the EW framework around which I graft my own analysis.
In EW, bull markets advance in FIVE WAVES AT HIGHER DEGREE. We have not seen that since before 2011. Off EW, this is clearly a Secular Bear Market Correction and the rallies have been BMRs, including the (B wave) advance off the 2015 lows. For me, until I see evidence to the contrary, this is not opinion. Its akin to a legal finding of fact. For those of you without specific metrics to guide you, opinion is all you have and definitions are loose and arbitrary. You are free to view the sector this way. BC may have a different analytical perspective, and I respect that. So our differences may well be semantic. We are in OPERATIVE agreement, even if we use different labels.