Over the last week I was doing exactly what I did last August during the regurgitory festivities; buying high quality gold & silver miners with both hands. Also GLD & SLV for good measure. This relatively small segment of the market is subject to exhilarating up spikes and nauseating drops. It's just the way it is.The question now is, was that THE bottom? One would like to think so but a couple nagging issues remain; 1) The target from the massive topping pattern - the top of the cranium of which was represented by our reverse symmetrical triangle in March - remains in the 260's and 2) This could set up to be a classic breakdown, ABC correction with 'B' testing the broken neckline with a 38% or 50% Fib retrace before a final decline to target.
The miners are again dutifully trading with oil which tells me that the wrong investors - the ones who dumped en mass with the drop in oil - are trying to catch the bottom in both for another swing at the 'inflation trade'. But the gold miners will ultimately be a 'deflation scare' trade so I am going to strongly consider reaping some profits if given a nice opportunity here. It gets tiring trying to anticipate what casino patrons with faulty fundamentals are going to do. I expect some serious damage in all major markets once we get well into September. I expect the USD to have wrapped up any short term correction in a few weeks (see recently posted daily, weekly & monthly charts) and a kick off to the scariest part of Deflation Scare '08. Those brave enough to have been buying gold stocks over the last week might consider these factors.
