Friday, November 11, 2016 2:45 AM EDT
Gold miners literally crashed yesterday. With a drop of more than 7% the gold market does not look very bullish to say the least.
We have been re-iterating our viewpoint that the 2016 rally did not introduce a new bull market. On the contrary, the breath taking rally of the first months of the year stalled exactly at secular resistance suggesting the gold bear market was still intact in 2016.
Yesterday we got another confirmation of that viewpoint with a significant gold miners crash.
Interestingly, although mainstream media has been very vocal about gold’s rally earlier this year, there was a unanimous silence about the crash in gold miners. The only exception was an article on Nasdaq.com yesterday which pointed out that the gold miners crash was a retracement to the 200 day moving average (in the case of junior miners). The fact that ‘nobody’ is writing about the gold miner crash suggests there is more downside potential.
Similar to gold miners we kept on believing that gold itself is still in a bear market with a bearish gold price forecast for 2017 purely based on chart analysis and sentiment. Gold did not manage to break above its long term downtrend (represented by its secular downtrend line).
As gold miners lead the precious metal space higher in the first months of the year, we now see the opposite direction. We keep on believing that the most likely scenario is that gold will move to a major bottom in 2017, and our belief will be confirmed if gold drops below $1250 in the coming weeks. Gold miners have been hinting towards that scenario today.
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