The mining shares finally showed some signs of life in today's session (for a change) but still have some work to do in order to turn the chart pattern more friendly.
Notice that the index managed to CLOSE INTO THE GAP region noted on the chart; it has not, however, managed to close ABOVE that gap. If this index fades and cannot maintain its footing up here, technicians are going to view that as a bearish signal and will be emboldened to come back into the market selling. At least the bulls showed some mettle today which was rather pleasant given the weakness in the broader equity markets.
I do think that the odds are favoring a bottom in this sector based on what I can see thus far. That does not mean these shares are ready to rocket higher as some suggest. What it more likely denotes is some consolidation or sideways movement until the bulls can convincingly seize the initiative.
The metal itself is having trouble clearing $1300, round number resistance that needs to give way before I personally will feel better about gold's prospects for the short term as well as that of the miners.
As mentioned here previously however, I expect more mining companies to be coming on with hedging programs so gold will meet selling resistance on the way higher from the companies that dig it out of the ground. There is no way they should make the mistake of not locking in some profits on future production. Even worse than that would be to end up producing at a loss!
Tomorrow we are going to have to sit around and parse the words that come out of Ben Bernanke's mouth once again, unfortunately. Whether he walks back some of his comments from last Wednesday remains to be seen. Personally, I still believe that his sole purpose in uttering those words was to knock down rising interest rates and send the bond vigilantes scurrying for cover.
The Fed, nor the US government for that matter, DOES NOT WANT higher interest rates. If however, Bernanke sends the US Dollar sharply lower, look for noise to start emerging out of the Eurozone. They do not want a higher Euro over there for the most part. The Swiss do not want a strong Franc either.
Truth be told, I look for him to say what both sides want to hear meaning that we will probably have the same old, same ol'. In other words, "we need accommodative monetary policy to continue but will look at the economic data to determine when and how much to begin scaling back or tapering those bond purchase. Some news flash!
Silver is still struggling to convincingly clear and LEAVE BEHIND the $20 level. Until it does, I am not interested in it.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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