As you'll see in the forthcoming post by Toby Connor, it looks like the markets are in the process of forming a top. On the other hand, precious metals and their producers are being mercilessly hammered. The GDX is at a 52 week low, and is at an oversold point on the RSI (weekly). I plan on scooping up PM shares in the near future using the army chest of cash I've been saving for such an occasion. I'm watching for a sell-off in the broader markets to add fire to the sell-off in precious metals.
Gold gapped down below it's 600 day moving average. That hurts! We're in difficult territory, but a really nice buying opportunity might be coming as world governments keep printing. This ruse of security in paper currency of western governments can't last forever, but there's also no telling how long it will last. US dollar denominated gold is going to soar when the lid gets blown off of this thing.
The Gold/Dow Ratio today spiked ... but historically the ratio is actually close to the mean of 5. Buying and holding gold now means hedging your bets that the ratio will over correct to less than 5, and perhaps to 1 or even less than 1.
Not much to report in Dow Theory. Things are pretty well as expected, and the averages are confirming minor moves, but are still not confirming long-term movements. If there is a big correction in the industrial, I'd still be looking for a 1000 point decline. If the correction is small, then it's up and onward. IF the Dow breaks its all time highs, we could be in a new primary bull market. I suspect that there is too much headwind for the Dow to get there, but ... I could be wrong!
(click to enlarge)
Source: Marcotrends.org
