Gold - tick tock... tick tock... tick
To be honest, I would prefer that my shorts on gold and silver do not work out and that gold negates this pattern. That is because I want to see the honest monetary barometer shine a light on the big lie that government and Fed officials can engineer their way out of an absolute, unmitigated and historic mess that their own toxic policy helped create. That and the fact that I have not done any significant gold miner selling since HUI's thrust up into the 300's in February and have however, done some adding in the March downturn and nibbling over the last few days. So I have a healthy gold miner portfolio.
While gold miner fundamentals remain excellent (and will remain so even if gold takes a brief - and I expect it to be bought like gangbusters - decline to the 680 measured target on this chart) they have become somewhat counter the stock market and would take a beating if gold falls out of bed.
I remember enduring times like this back before the last bull cycle got perverted by the commodity geniuses, China story heroes and 'buy the resources sector, especially the ones that advertise on my site, it's your only hope to avoid getting wiped out by hyperinflation!' slicksters. We are in Hope '09 and it is supposed to feel hopeful to the majority - which is why it may last a few more weeks (we will as always watch our 'caution indicators' in NFTRH) or who the hell knows, months.
But again, I remember many times when a hopeful stock market was doing well and the gold sector had to endure some pretty protracted declines and consolidations. There is a world of difference now, however. The commodity/inflation mania is done. The commodity bull true believers have long since repudiated their guru leaders who kept them invested with their 'resources' brainwashing. Gold is no longer all caught up with assumptions and inflation sound bites designed to lure in the non-discriminating public. Stocks and commodities are in hope mode and gold is in counter cycle corrective mode.
As for broad stocks, it is a bear market and as I mentioned before, there is a new baby bull market in sound monetary thinking. There are relatively few participants in this bull at this point, just the true believers - and one of 'em at least is short gold and silver ;-). After the current toxic policy manifests itself in ways the policy makers never intended, there will be more riders on this bull market. That may well be the thrust that takes gold to the next major target of 1300. But even then, the bull will not be carrying a full load - a bull market ending load - like the one that finally put an end to the equities secular bull in 2000.
No, after the decline implied by this chart - if said decline comes to be and that's a big if - gold will be held by only the truest of believers after being purged of the unhealthy former casino patrons who came to Jesus during Armageddon '08. This stuff seems to take forever to play out, but it all makes sense in the bigger picture, which is why it is good to go to Radio Shack (if they are still in business), spring for the $19.95 and install one of those noise filters in your trading cap.
Yes, I am short gold and silver and yes I hope the short fails (the parameters are set). I suspect it will not however. I cannot get the nagging issue of gold's historic performance during Armageddon '08 out of my mind and all of the nervous nellies who must be sitting there owning their GLD or SLV and wondering why it's not going 'TO DA MOON!!!'. That class of holder must not be aboard the next up phase, and they won't be.