The gold mining sector rallied as if on cue after our update highlighted some positives.
While noting that nothing other than an oversold condition was technically actionable (a strong argument for my assertion that TA should not be viewed as whole analysis; it’s only one tool and anyone stating otherwise is a carnival barker in my less than humble opinion), an NFTRH+ update (now public) posted in pre-market last Friday did show some positives in play.
While the larger macro has not yet flipped positive for the gold mining sector, a) that flip is not needed for a strong rally and b) the macro may well be in a slow process of changing now. Anyway, here’s the chart that bugged my eyes out when I looked at it and I wanted to be sure that subscribers were well apprised of it as well, ahead of time.
From the update:
Referring back to the first paragraph, the miners are under the pressure of the Gold/SPX ratio and indicators similar to it. However, check out this positive divergence by the Gold/RINF ratio to HUI. Gold/RINF and HUI had been a reliable correlation since mid/late 2022. In essence, it’s a view of gold vs. a gauge of inflation expectations.
Far be it from me to cherry pick and cheer lead positive indicators. But also it be me to look for positive indications amid utter ignominious and bearish market activity (i.e. contrarian opportunity).
Here is the chart as it exists this afternoon. HUI is making its move per the divergence implications.
Consider this divergence in Gold/RINF to gold stocks to be playing out perfectly as a positive indicator against a backdrop that had become over-bearish for the sector sentiment-wise, and oversold, technically (Ref. BPGDM chart in the linked update).
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