Gold and silver both scored parabolic moves in 2011, have the parabolic moves finished or are we about to see a dramatic leg up? We shall soon see guys.
Today may or may not be the long promised dawn for the pm miners but there have been interesting price moves as the pm metals have both broken out of their recent 6 week range. This is particularly interesting as to how this new moves affects the HUI. The HUI broke out of her 15 month range 8 weeks ago just as the correction in gold and silver crushed the breakout and the whole sector fell once again, dramatically so in some cases. From ‘failed moves come fast moves’ and so the HUI collapsed down to the bottom of her range. As she had scored a failed break out a range break was the money bet. But with the metals bouncing back due to the horrific monetary events unfolding across the developed world the HUI is starting to offer a technical glimmer of life that should not be ignored given her all historic ratio lows to gold and silver metal prices.
For those hardened fundamental and technical buyers of the pm miners i hesitate to even mention the technical flag that is process of occurring here. The cynic would rightly cry..
‘How many times have i seen this sort of technical flag before only to be smashed by the reversal that will doubtless occur just as capital enters the pm miners’.
The cynic would be correct to state this but the fundamentals improve every day. To become complacent of the pm miners would truely be a foolish thing to do. The price disparity between the precious metal miners and their underlying has been widening every day during this recent pm weakness. History tells us that the ‘snap’ back to fair valuation won’t be sedate. No, much more likely, it will be extremely swift and eventually produce an over valuation in the opposite direction. The opposite of what went before always occurs in the market but only when that market reaches an extreme. If the technical flag forms into a significant trend up and then the technical breakout of the 15 month range is rejoined hang on because fire works are almost certain to occur for monetary and technical reasons.
All the best Rich
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