The action in gold and the miners is very encouraging. The overall indices got hammered yesterday and gold did not follow. Nor did the gold miners. Hedge fund selling and leverage unwinding in gold may be complete or nearly complete.
Here is a chart of Goldcorp.
click on chart for sharper image.
The circled candle is a nearly perfect indecision doji. Today there was followthru on the upside.
click on chart for sharper image
The action in gold, gold miners, and the stock market yesterday suggests the bottom is in for gold. Seasonally, gold is favorable through January although seasonal trends in gold have not panned out well this year.
I have often said that gold would decline in the initial stages of deflation as leverage was wiped out everywhere. If that leverage has been wiped out, gold miners have a lot of catching up to do with the price of physical gold.
Finally, gold itself is now free to rise in deflation given its true role as money, even as those in gold for the wrong reason (as an inflation hedge), bail.
Mike “Mish” Shedlock
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