Like feeling an earthquake while riding a bus, when you pass over a tsunami swell in the deep ocean, its unremarkable. When it is forced higher by the rising ocean floor it turns into a raging tidal wave, smashing everything before it. IMO, we have just passed over a GOLD Stock Tsunami wave that HAS been triggered but not broken into shallow water.
Courtesy of the same people who brought you the April 15 Tax-Day Massacre in Gold Miner stocks, the Gold Bugs Index was jammed into a falling wedge until it broke out over HUI 244 Aug 12. Closing at 253, HUI confirmed the breakout and kept closing higher, as high as 283, and may well close above the Wedge boundary on Friday of this week.
Since I followed BPGDM I have never seen a Power Surge of this Breadth and Height. Starting down in Nov 0f 2012, the Index Zero'd out for what seemed an interminable time from Apr 15, to Jul 15, 2013, a Hell for PM Investors if there ever was........Until, it pivoted and reversed course, climbing to and standing at 55% today. Incredibly it doubled itself twice in two 4 day stints, and in the course of this 41 day rally turned into a majority of GDM stocks in Bull P & F formations. IMO, the immense power and incredible speed with which it reversed the fortune of Hard Money Investors, foreshadows even more power lurking underneath.
HELL ON WHEELS
Abandoned and left for dead, as unloved as Detroit in Bankruptcy, the GOLDBUGS and INDEX were all but pronounced dead, and it was hell.
“Hell On Wheels” is going to turn out to be, imo a lot of shorts and frauds feeling as if they were run over by steel tank treads of the
2nd Armored Division. Madam Karma, being the sweet lady she is, is going to make payback quite enjoyable for Goldbugs.
WHY DIFFERENT THIS TIME ?
Lets see what we are looking at, in the HUI Abandoned Baby Graphic. We have a “Runaway Gap” on the Left side of a completed Inverted Head & Shoulders formation, so lets see RUNAWAY GAP defined:' (courtesy of Investopedia)
Now imagine that GAP Upside Down in the LEFT Shoulder of an Inverted Head & Shoulders Formation >? !
Now again, courtesy of Investopedia, we have an INVERSE HEAD & SHOULDERS formation:
GASOLINE FOR THIS FIRE
Now in Martin Armstrong's words: " the energy of an advance is stored in
the intensity and measure of its previous decline". Since the April 15 Tax-Day Massacre was orchestrated and fueled with an un-imaginable amount of paper contracts sold pell-mell as fast as could be into a thin market, I should expect that kind of intensity to accompany a corresponding advance.
Thus the measure and intensity of this decline that created this Inverse Head & Shoulders, may well be the measure and intensity of this next leg up, even if things are not perfectly symmetrical.
So where might the igniter be for this next explosive move ?
Well, the explosive mixture of a RUNAWAY GAP + Inverse Head & Shoulders in the HUI awaits the sparks of some unforseeable error on the part of some unknown person. Maybe the guy in Syria who pushed the wrong button did it? We will never know who, or why, but we do know WHAT.
THAT RED-GREEN GAP STARING YOU RIGHT IN THE FACE
is likely the sparking electrical wire knocked loose by the Quake and Tsunami, that threatens to ignite the fuel air mixture provided by the Five Month long Inverted Head & Shoulders form so prominent as to not even be seen, hiding in plain sight.
IMO, there will be “Hell to Pay” to the extent that either of the RED-GREEN gaps fail to fill on the GDX, from 31.25 to 32.00 and the HUI from 294 to 301. Should this abyss be jumped over to continue a gap, it would be both classic and historic, IMO, as a demonstration of the power under this Seasonal Summer Rally in Gold, Silver and their equities.
WHAT OUTCOME COULD WE EXPECT ?
Always willing to take a “Gambler's Bet”, that is one with calculated risk and potentially discernable odds, I would wager that at least the first of these projected objectives are reached before end of 2013:
NONE means that this MUST come true by any stretch of the imagination, any more than being in a Super-Cell thunderstorm in Tornado Alley means you will have a tornado, but it does mean the necessary conditions are in place..........
- Falling Wedge Breakout Accomplished (8/12)
- BPGDM Sentiment turned Bullish (Jul 17) +50% (Aug 15)
- Five (5) Mo. Inverted H & S still in place + Runaway LS Gap
- Resulted in Potential ABANDONED 5+ mo form in both HUI and GDX
- Multiple Potential Upside Targets in Place
- DangerZone is 31.25-32 Gap in GDX, 294-301 in HUI. Any Gap of the Right Hand Inverse Head & Shoulders would be set to kick off an explosive rally to the HUI 360-400 region as the first stop
- Should the RS gap fill, an almost normal rally can happy.Those are my observations and conclusions. Observe and do your due diligence.OBSERVE THE GAP AT 31.25 – 32.00 !! IF PRICE jumps THIS GAP, I AM EXPECTINGIT WILL SIGNAL A VERY ROBUST, POSSIBLY RAPID OR EXPLOSIVE ADVANCE.
TO SUM UP: