Loading ...“NO MAS!” THE FINAL CAPITULATION IN THE PRECIOUS METALS.
Chuck Cohen
Bill, I have used the famous quote “No mas!” by the former great boxing champion Roberto Duran as he threw in the towel years ago in a fit of capitulation. If you remember, the sports world was shocked by Roberto’s concession that he couldn’t take it any more in his championship bout. I felt his cry seemed appropriate for the once confident gold community as we have numbly witnessed the ongoing surreal decline in the entire complex.
But in my analysis we should be hitting a very tradable bottom, if not the actual low at any time. I believe everything is now pointing to a massive capitulation, that once reversed, will lead to the greatest financial mania in history.
HERE ARE SOME OF MY REASONS.
One, besides this Bloomberg article, the gold sentiment as reported by the Sentiment Trader is mired at all-time lows for a very long time. Two, the charts below show the HUI closing down at or near its daily low 17 out of the past 19 days, along with what I believe are many exhaustion gaps. Three and very technically significant, are the two nearly 20% declines each occurring in about a 10 day period last October and again this March. I’m not sure anything like this has ever happened in any index but reflects how dire this last selloff has been. Four, the behavior in the stock market has turned increasingly negative, as I have tried to show in a few of the charts. The uniqueness of the markets over the past three or four years has been totally dissimilar to the meltdown in 2008 when both stocks and the gold shares sunk in tandem.
When you tie these all together I strongly believe we are witnesses to an historic capitulation, and with it a turning point in history. Once the financial structure begins to teeter and eventually rupture, as Scripture says, everything that can be shaken will be shaken. Hebrews 12
I have in the past cited the stock market bottom in August 1982 when pessimism was incredibly rife. At that time, the Dow was still 25% under its high of 1966 (that is an amazing 16 years) and over the last 7 days before the bottom at 776 the Dow dropped15%. And then, suddenly and mysteriously, the Dow shot up 50% in about 4 months and doubled in less than a year and a half.
It is possible that gold and the HUI could soon rally sharply and then encounter a final test in the early fall as all assets hit a liquidation phase, but I see gold holding above these current bottoming levels.
I also believe the opposite behavior in the Nasdaq during the past two weeks is a signal that the never-ending good times are coming to a sudden close. Interestingly, even with the Nasdaq up sharply to a new all-time high (notice that it has now topped the previous high from 2000 ) the breadth Friday in the index was actually negative, with almost all of the day’s impressive rise concentrated in the publicly favored high fliers that sell in the hundreds of dollars. Double top? But could anything that happens in the financial markets and in our world shock any of us?
Anyway here are some charts that I believe support my views that an historic turning point is at the door. Chuck ONE YEAR HUI. Look at those two separate sharp drops in October and March, and actually a third one in May. These signify a capitulation rarely ever seen.