Loading ...Bill Cara: PM Prognostication
From Bill Cara:
And this week the gold stocks rallied a lot again instead of pulling back as they had done two weeks earlier after the bullion started rallying. What this means to me is that the traders are nervous that bullion prices could be cut on a heartbeat and so they are reluctant to power up the shares.
I still think this sector is in trouble, but I did explain a week ago, right before this huge rally week that something was up and that I didn’t want you to miss a rally if in fact it came.
What I wrote in this space four weeks ago still applies, “So, yes, I do believe that any pullback to the mid to low 700’s would only be a temporary phenomenon. The reason is, as I wrote two weeks ago, “Only the central banks like to give the stuff away, and pretty soon they will be switching their selling habit for a buying habit because the price of gold is going a whole lot higher. (And) As and when that gold price soars, there will be a return to goldminer equities, and that will be the time to look seriously at the juniors and the miners that are steeply levered to higher gold prices. However, I think that most likely the options and futures on the gold physical will be the next great market play after the cycle has dropped to a bottom. Now I don’t know where that bottom will be, other than by looking at the continuous RSI and MACD data series, and the MA prices I give you, but I do expect it to be much lower than the current price… (This) is my thesis: Fairly soon, there will be a purging of all speculative accounts at ‘Humungous Bank and Brokers’ — both theirs and the clients — and all goods go on sale. In terms of gold and silver, that means a blow-out to come to clean out the weak hands and lay the groundwork for the Gold Bull to return… Nobody knows today how the cycle will play out tomorrow. It could be in harmony with the broad equities market or it could run counter-cyclical. Right now, I’m thinking the latter because I foresee higher $USD prices as the economy slows, and the broad market falls. Moreover, I think most traders now realize the overspending by government problem is not just an American phenomenon. It is all over the world, and all currencies are being depreciated. That means any weakness in the gold market may be short-lived, and a move to the cycle bottom could happen quickly, so don’t stray too far from the Buy button.”
