Wednesday, March 19, 2014

Gold Sector - Consolidation Stage at the Moment

There was quite much a hype in the media about gold sector recovering. Well, as most of my readers know, I am a gold bug so a little bit of my input on that subject would be justified.
But no. I have chosen to be on the sidelines.
Now, when the PM market pulled back quite strongly, here is the appropriate chart:


As you see, there is not too much to say about PM market. Simply put, this market has done really nothing.
Hmmm....maybe not so fast. It has done something - it is not going down which is a very big PLUS.
As can be spotted in the chart, gold, miners shares and juniors shares  - all of them are in the consolidation stage. This stage started in April 2013 so its duration is about one year.
As the theory says, the longer the consolidation stage the more powerful is the the exit from that.
In my opinion this a very good time to focus on finding the best plays in the sector in the expectation of the the break up from this consolidation.
Otherwise, when the pattern is the opposite (break down), well....we'll have to wait for another opportunity.

At the end - one of the older charts.


As you see, the relation between gold and silver is still intact. Silver behaves a little bit better than gold, which is the same pattern as in the late 2008. This indicates that the possibility of the break up is relatively high.