I don’t need to tell any of you who were paying attention about Friday’s crater job on the precious. Coming about on the Friday before options expiration week, at at the end of a long and dreary down cycle, it certainly looked nicely timed to shake the trees loose of many golden and silver ducats. Friday was a nice day to make that first physical purchase and tomorrow morning may be even better as a result of the follow through.
I’m holding on to what I’ve got for the almost inevitable mean reversion play here. The precious miner bullish percentage index (“$BPGDM“) is at absolute ZERO. The last time we hit zero on that scale was in December of ’08, at the very nadir of the financial meltdown. What’s more the Hulbert gold sentiment rating is off the chart completely (yes, below -20, otherwise known as “uncharted territory.”) We lost another $50 tonight before the rebound, and we could even see $1400 tomorrow. Is this the time to give up the ghost? No, it’s blood in the streets time. You know what Mr. Rothschild said about the time to be looking to buy, right? Consider that the Buying on Weakness number for GLD was its highest ever on Friday at $144 mm in block trades. That’s the big boys out collecting.
The best bet right now is physical, and or waiting for the turn, with wariness and apt cunning. Fly got some AG on Friday, and while he may have been a touch early, I think he’s got the right idea. The fast flyers will rebound 20+% when this plunge is over. I also like the fat dividend alpha males like AEM and NEM here… they too have been beaten down over-harshly.
Hang on, folks, we’ve been through these before.
Best to you all.
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