Good Morning,
While the Gold price has retraced to $1276:
The American gold miners have done the opposite.
Direxion Daily Junior Gold Miners Bull 3X Shares (NYSE:JNUG) which is extremely sensitive to Gold price movements has ended up 7%:
ARCA Gold BUGS has done the same:
VanEck Vectors Gold Miners (NYSE:GDX) is also up:
In addition one can see that the gold miners have solid green purchasing volume.
Merchant’s Insight
Silver is the most sensitive to Dollar appreciation, yet it has remained above $18.4:
There was a sell-off in all these EFT’s during New York trading. However, as the market neared the close, these Gold funds caught a bid and all ended in positive territory.
Let’s look at the dollar:
There is a major rally in the Dollar, sending it above the price channel, but not quite touching the downward trend line.
Interesting?
Gold is down to $1277, but a lot of money just poured into gold miners. The dollar is up to everyone’s surprise, yet Silver is also up (it should be down.)
The Dollar has rallied in a most unnatural way, beyond the price channel but not high enough to get people negative.
I recall the previous December rate hike. We have actually had a few days after the rate hike where the market rallied like crazy.
That was 5 days before the worst January in stock market history.
I cannot say with certainty, but the fact that precious metal miners are being purchased when they shouldn’t, tells me that I don’t have all the information about what is unfolding.
Are we heading for a major correction in the market? Maybe.
Is the Dollar going to stay high? If it was then the Gold miners should be lower, not higher.
When I saw the Gold price this morning, I did consider selling my gold miners and getting back in later once the pull back is complete.
However, after seeing the action on the American gold miners, I am confident to remain in my gold and silver miners while something bigger unfolds. What is “something bigger”?
I can’t say. I could be misreading the market. But while there could have been profit taking (and there was, temporarily) the American gold miners were all bought up at the close of market.
So in this morning I am faced with a strange set of clues that lead me to have confidence that whatever is unfolding, it will be good for gold.
See you around the precious metals.