PRECIOUS METALS WERE RIPE FOR A PULLBACK

PRECIOUS METALS WERE RIPE FOR A PULLBACK by Gary for Notes from the Rabbit Hole

If you hear one peep out of the gold community about a precious metals “take down”, “attack” or any other such aggressive or war-like language you will then be hearing some old fashioned and promotional gold bug orthodoxy. Fortunately, a casual look around the Bug-o-Sphere does not yield too many obvious conspiracy theorists or importantly, cheerleaders.

Indeed, it seems that all too many bugs expected this correction in gold, silver and the miners. That is a good thing because when the real top comes these ladies are going to be out front and greed will be running rampant (quite possibly against a negative fundamental or valuation backdrop as in 2008).

Instead, everybody it seems knew about the high risk Commitments of Traders situation for gold and silver. The CoT is not a timer, but for weeks now it had been a condition that’s been in place for a correction. It’s not a “take down”, it’s a condition of too much speculation that had to be addressed. Now it is. Other CoT data available here.

gold cot

silver cot

As the CoT, Hulbert’s HGNSI and the extreme overbought readings first in the gold price, but then dynamically in the silver price and the miners gathered to form a high risk situation, the time to take some profits was over the last couple of weeks, not now. Gold oriented newsletters appear to have jerked over bullish with the latest headfake rise in the gold price.

hulbert hgnsi

Now is the time for prepared players to be thinking like buyers once again. Personally, it’s been a while (May-June) since I’ve had similar thoughts. The initial price target for gold has been the mid to high 1500s and folks, gold is not only not obligated to go any higher in the near-term, it shouldn’t go higher unless it would create a more dangerous blow off type situation.

In line with other markers shown above, it’s a very normal point for a pullback from an extreme overbought situation. Early in the precious metals rally we noted it was a “launch”, not a blow off as some gold perma-bears were calling it. But now we’ve likely had a mini blow off of the launch phase, if that makes any sense.

gold

After gold crossed its bull/bear line at 1378 back in June, silver stored up all that energy and went nearly vertical over the last 1.5 months. It took out the NFTRH ‘best’ target for the move, which was in the 18.60s. I had no sooner noted that I was wrong on the exact target when on the weekly candle I turned out to be right again. Funny how these things work.

silver

Bottom Line

Gold, silver and the miners needed a pullback from extremely overbought readings. Just as bear market rallies can be pretty intense, so too can bull market pullbacks. That is not to say the precious metals are in a major bull market. For several valid reasons that assertion is far from proven. So for now we’ll let the ladies above do the cheering and go about carrying a rational narrative forward (to be continued in this weekend’s NFTRH 567).

Continue Reading / Notes from the Rabbit Hole >>>

Sharing is caring!

The Daily Coin

Rory Hall, The Daily Coin and Gospel News Network. Beginning in 1987 Rory has written over 1,400 articles and produced more than 500 videos on topics ranging from the precious metals market, economic and monetary policies, preparedness as well as geopolitical events. His articles have been published by Zerohedge, SHTFPlan, Sprott Money, GoldSilver, Gold Seek, SGTReport, and a great many more. Rory was a producer and daily contributor at SGTReport between 2012 and 2014. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Dr. Warren Coates and Peter Schiff, to name but a few. Don't forget to visit The Daily Coin and Gospel News Network to enjoy some of the best economic, precious metals, geopolitical and preparedness news from around the world.