Chart of The Day: Why I am Giving This Gold Rally The Benefit of The Doubt

With mining investor sentiment at suicidal levels and much of the “twittersphere” being almost arrogantly certain of a coming sharp decline in gold and gold mining shares ATM, I would like to show why I am not giving up on this recent gold rally just yet:

GDX (Weekly).

Notice that (usually) the longer the trend line, the bigger the move after a break in either direction. That coupled with an extremely tight Bollinger Band Width should lead to the next move being a real barn burner (It is even tighter than the lead up to the Q1 2016 rally ). Thus, I am giving the recent gold rally the benefit of the doubt until I see how this chart of the GDX mining index plays out.

I mean I can certainly understand why the majority is very bearish on gold ATM just by simply looking at this next chart:

Gold (Daily).

… The bears have been right an astounding 5 out of 6 times when gold has been in the “same” situation it finds itself in now! No wonder the bearishness has been ingrained.  In essence, the bears have history on their side to say the least. Additionally, if this recent rise is mostly because of tensions regarding North Korea, and those tensions subside, it could indeed prove to be a top one again.

One day this monster greeting us at the $1300 level will be force to tap out (for real), and at that moment, gold and miners should be having the time of their lives.