I’ve always said that gold built out one of the most beautiful bull markets of all time between the 2001 low and 2011 high. From a Chartology perspective it just doesn’t get any better. During the bull market years I called this weekly bar chart, “JUST ANOTHER BRICK IN THE WALL, because each consolidation pattern marked another brick in the wall.

The reason I’m posting this chart tonight is because we could be embarking on a similar bull market starting at the 2001 low. Take a minute and put yourself back at the 2001 low not knowing what lies ahead. As gold began to rally the first thing one would look for in a new bull market is a consolidation pattern which gold produced in 2002 that was the blue triangle. Once the price action broke out of that small blue triangle the next impulse began confirming the new bull market. From that point one had to believe in the Chartology that the major trend was up until a new lower low was put in place. As long as each consolidation pattern was followed by an impulse move up the bull market remained intact, rinse and repeat.

When you study the bull market you will see the price action always made a higher low except for the major correction in 2008 which was the blue expanding falling wedge that  led to the crash in the PM complex. That 2008 blue expanding falling wedge doesn’t look like a big deal in the overall bull market but it was a big deal for the PM stocks which took a beating.

If you look real close you can see a small green triangle that formed in the middle of each impulse move up as a halfway pattern. Again classic Chartology. You can also see the thin black rectangles that measured the impulse move on the breakout from the previous large consolidation pattern labeled 1,2,3,4.

The official end of the bull market came when the price action built out the blue 2 1/2 year rectangle consolidation pattern that formed just below the all time high in September of 2011. The breakdown from that blue rectangle ushered in the great decline in 2013 confirming a new bear market had begun in earnest. There was no way to know back then how long or how low the new bear market would go only that a new bear market was in place and it was time to play by bear market rules.

When I look at the Chartology on this chart it shows me a market that is free of manipulation. Gold bugs are known for their manipulation theories on the PM complex but when I see such a beautiful bull market filled with perfect chart patterns this shows me a free market with millions of investors making a decision to either buy or sell gold and gold related assets. Manipulators would have to manipulate currencies as well to get their desired results It would be impossible to manipulate all the major currencies of the world in concert. It’s always nice to have someone or something to blame when the markets don’t go the way we think they should so we create manipulation as the scapegoat. If I thought the PM complex was manipulated there is no way I would trade this area of the markets. It would be a fools game to do so. With that said I won’t bring up the subject again. Have a great weekend and all the best…Rambus

I have just enough time to post this combo chart for the UUP and the HUI we’ve been following very closely. The HUI is now in day four of the breakout from its bullish expanding falling wedge.

The HUI is now in day 5 of its breakout from the small H&S bottom / right shoulder.

The HUI is now attempting to breakout from its year and a half H&S neckline.

We are having a big family cookout today so this Weekend Report will be an abbreviated version.

I haven’t posted this combo ratio chart in several years but it was one that we followed very close back in the day. This ratio combo chart has the HUI:GOLD ratio on top with GOLD on the bottom. During the initial rally phase of the PM complex bull market starting back in 2000 the gold stocks kicked gold’s butt for the first three years or so into the December 2003 high on the ratio. Believe it or not that marked the end of the PM stocks outperformance vs gold. It’s been one long term downtrend for the ratio that still hasn’t completely reversed back up in favor of the HUI.

The ratio chart on top produced some very nice chart patterns on the way down including some reverse symmetry as shown by the red arrows. Note the big S&R line that produced the small red bull flag in 2001 and the reverse symmetry red bear flag that formed in 2012 on the way down. When the 2012 bear flag broke to the downside I suggested we could see .13 that was the all time low for the ratio which was also the measured move. You can see the price action undercut .13 during the 2015 – 2016 low which actually marked the all time low for the ratio. From that all time low the ratio began to rally where the HUI outperformed gold during that 2016 impulse move higher.

After that strong impulse move ended in August of 2016 the PM stocks began to underperform gold once again this time building out the 2016 falling wedge that is so prevalent across many of the PM stock indexes and individual PM stocks. It’s now been about 4 1/2 years later when the ratio first hit .13 and this week the ratio closed at .13 or no change. What the ratio does have going for it is the 2016 falling wedge has completed the breakout with the backtest now underway.

One thing we know absolutely 100% for sure is that the HUI is massively undervalued to the price of gold. At some point there has to be a revision to the means where the HUI and PM stocks in general should start to outperform gold in a meaningful way like in the initial first three years of the bull market earlier this century.

Have a great Father’s Day to all the dads out there. All the best…Rambus

It’s hard to believe that the massive H&S consolidation pattern we’ve been following for several years began to develop all the way back in 2013 during the initial crash off the 2011 high. This weekly line chart shows the price action closing this week right on the neckline at 1350. Note how many touches the neckline has experienced from below with each one backing off. Now the question remains, how may bears are left to defend the 2013 neckline? There is a good chance that if they are exhausted that the price action could just spike right through the neckline this time around completing the massive H&S base which would be long term bullish. Big patterns lead to big moves.

This monthly chart shows how the H&S consolidation pattern fits into the bigger picture.

The reason I call this H&S bottom a consolidation pattern is because of the way it fits into the major bull market uptrend channel.

If gold can closeout the month of June, on this quarterly line chart above 1330, it will show a breakout above the neckline.

It’s been awhile since we last looked at this long term weekly line chart for gold which shows its 2011 bear market downtrend channel along with the 65 week ema. It is common to see a rectangle or triangle form between the top and bottom trendlines of an uptrend or downtrend channel. Here we can see the massive 2013 H&S consolidation pattern doing the same thing between the top and bottom trendlines of its 2011 bear market downtrend channel.

The breaking out and backtesting process looks a little cleaner on this weekly line chart. It was last April of 2018 that the price action touched the top rail of the 2011 downtrend channel and the H&S neckline. It was disappointing that the price action couldn’t takeout those two very important resistance lines which led to one more year of sideways chopping action. Gold is ever so close to establishing the start of the next bull cycle and by the size of the H&S base it should last for many years.

Sir Plunger will be doing the Weekend Report so stay tuned. All the best…Rambus

We’ve been following a possible positive divergence between the $BPGDM gold miners bullish percent index and the GDX. Back in December of 2016 both the $BPGDM and the GDX put in a short term bottom. The positive divergence began to show itself in September of 2018 when the GDX made a lower low vs its 2016 low while the $BPGDM made a higher low vs its 2016 low thus a positive divergence. Since the 2018 low both have been moving up together. During the December 2016 low on the $BPGDM there were 7.14 gold stocks on a buy signal. Then at the September 2018 low there were 16.67 gold stocks on a buy signal. At its most recent low the $BPGDM had 23.08 gold stocks on a buy signal.

On Friday of this week the $BPGDM gave us a new buy signal when the $BPGDM crossed above the 5 day sma and the 5 day sma crossed above the 8 day sma. Have a great weekend. All the best…Rambus

Tonight I would like to update some ratio combo charts which may give us a sense of the bigger picture. Its like putting the pieces of a puzzle together where the small pieces don’t look like much by themselves but when they’re all added together it paints a clear picture. These ratio combo charts are just a piece of the puzzle that may add some clarity to some of the individual sectors.

Lets start with the TIP:TLT ratio chart in black with the TLT in red, which I use for the inflation/deflation debate. Most investors have their own individual stocks they like to look at in trying to answer the age old question, are we in an inflationary or deflationary cycle? When the ratio in black is rising it shows signs of inflation and when it’s falling deflation becomes possible.

On the left hand side of the chart you can see how the ratio in black topped out while the TLT was bottoming in 2011. Also at the bottom of the chart I have added the GDX and the CRB index with the 30 week ema which also topped out in 2011. Since the 2011 high the main trend has been down for the ratio chart in black which shows deflation. In July of 2016 both the ratio and the TLT topped out beginning a consolidation phase that would last for about 2 1/2 years with each forming a triangle consolidation pattern. In November of 2018 both broke out of their respective triangles signaling that we may see some deflation in our future. Again, at the bottom of the chart you can see the CRB index along with the GDX are currently trading below their 30 week ema which is not the end of the world but short term negative. The bottom line is that as long as the ratio in black keeps falling the odds favor a possible deflationary event maybe in the cards in the future.

This next ratio combo chart has the TLT:GLD ratio on top with GLD on the bottom. Remember correlations are never perfect but it is the general trend we want to focus in on.  When the ratio chart on top is rising it generally means GLD is falling. During the 2008 crash in GLD the ratio was topping while GLD was bottoming. Then in 2011 GLD was topping while the ratio was bottoming as shown by the red arrows. From that point in 2011 the ratio has been rising while GLD has been declining.

In June of 2018 the ratio broke out above the top rail of its 2016 falling wedge formation while GLD broke below the bottom rail of its 2016 triangle which was technically a sell signal for GLD. The thin black dashed arrow starting in 2011 shows the uptrend for the ratio and the downtrend for GLD. There is a bit of an aberration taking place currently where GLD is trading right on its 2011 downtrend line while the ratio is trading significantly above its 2011 uptrend line. It will be interesting to see how this divergent plays out in the coming weeks and months. Some of you may recall the 2016 bearish rising wedge on the ratio chart which led to that rally phase in GLD when the bottom rail was broken to the downside. That was one of our clues to get long the PM stocks back in January of 2016 which ended up being a short lived buy signal of only eight months, no big trend change.

This next chart is a combo chart which has the GDX on top with the $BPGDM on the bottom. Buy signals are given when the price action is above the 5 day sma and the 5 day sma is above the 8 day sma and just the opposite for a sell signal. The $BPGDM is currently on a sell signal. There is another way I like to use this combo chart and that is to look for either a positive or negative divergence between the GDX and the $BPGDM as shown by the red arrows. Note the negative divergence at the 2016 high for the GDX vs the $BPGDM which was another signal I used to help get me out of the PM stocks before too much damage was done.

It’s possible we could be seeing a positive divergence taking place between the GDX and the $BPGDM since the December 2016 low. As you can see the GDX has made a lower low vs the $BPGDM in September of 2018 as shown by the red arrows. If both the GDX and the $BPGDM touch their respective trendiness at the same time there will be more PM stocks on a point and figure buy signal vs the 2016 and 2018 lows while the GDX is making a lower low. This would support a bullish setup for the PM stocks.

This next ratio combo chart we’ve looked at fairly recently which has the GOLD:XAU ratio on top with the XAU on the bottom. After the 2016 rally phase on the XAU I was looking for the ratio chart on top to have a small countertrend rally into the brown shaded S&R zone to form a possible H&S top. At the same time it looked like the XAU could also form a H&S bottom. We got the countertrend rally and much more which negated the H&S top on the ratio and the potential H&S bottom on the XAU. Instead of building out a H&S top the ratio has been building out the blue rising flag formation which is not what the PM bulls want to see. That in turn is causing the XAU to decline in its 2016 falling wedge formation. The bottom line is that a break below the bottom rail on the ratio chart on top, would be very constructive for the XAU and PM stocks in general. Until then the better part of valor is to stay on the sidelines.

Below is a shorter term weekly combo chart for the combo ratio chart above which brings into focus the last six years or so of price action. Again, what we want to see is for the ratio chart on top to break below the bottom rail of its rising flag formation which in turn will cause the XAU to rally.

This next ratio chart compares GOLD to the SPX going back 50 years. When the ratio is falling GOLD is in a bear market vs the SPX and vise versa. As you can see the big trends can last a very long time before a reversal is seen. As long as the price action trades below the 200 week sma GOLD is in a bear market vs the SPX.

Below is just a 15 year weekly chart for the GOLD:SPX ratio along with its 200 week sma, which shows just one sell signal for gold vs the SPX in 2013. Earlier this year the ratio made it almost all the way up to the 200 week sma but turned down before breaking out. A breakout above the 200 week sma would be a very bullish development for gold and the PM complex in general.

I had a couple of more ratio charts I was going to show you tonight but for some reason I’ve been unable to download charts from Stock Charts as of about 10 minutes ago. These charts above show you what to look for in regards to seeing confirmation that a new bull market in PM complex is truly underway. All the best…Rambus

Before we look at the longer term weekly and monthly charts lets review the daily chart for the GDX we’ve been following which shows the rally from the September 2018 low to the February 2019 high. That five month rally looked promising but it failed to deliver a new impulse move higher to break the back of the bear market that has been in place since the 2011 high.

Below is the daily chart for the GDX that showed the potential to change the character of the bear market and set the tone for a new and strong impulse move out of the 2018 low. If you recall there was a lot of chopping action at the 2018 low which didn’t make a whole lot of sense in the beginning but as time passed by a reversal pattern began to show its self which turned out to be that seven point diamond reversal pattern. Since the price action had been declining into the 2018 low we need to see some type of an odd number of reversal points pattern buildout to reverse the downtrend. The reversal pattern we got was the seven point diamond.

After the breakout above the top rail of the seven point diamond the price action had a mediocre rally which topped out at the first reversal point in the blue rectangle, which turned out to be a halfway pattern to the upside. After chopping around for about three weeks the GDX broke out above the top rail of the blue rectangle halfway pattern which ended at the first reversal point in the blue five point triangle reversal pattern top. On the way to the February top the price action formed a small blue flag halfway pattern which measured almost exactly to the February high.

The Chartology still looked pretty good when the 5 point triangle began to buildout. This was a critical area to watch because if the new bull market was really going to take off we should see some type of consolidation pattern buildout and carry prices to a new rally high. The sideways chopping action began on February 20th at reversal point #1. All looked good until April 10th when the GDX failed to make it all the way up to the top rail at reversal point #5. It still was’t the end of the world but a warning flag went up. Many times the last rally during a 5 point reversal pattern will fail to reach the top rail which strongly suggests weakness and in this case it meant the bulls were running out of gas.

Once the price action broke below the bottom rail of the blue 5 point triangle reversal pattern the uptrend off the September 2018 low was officially over. What we ended up with out of the September 2018 low were two reversal patterns with two small considation patterns in between. A true impulse move failed to take hold which was another red flag that the new bull market for the GDX wasn’t ready yet for prime time.

Now we’ll look the exact same chart in which I will put a top and bottom trend line to define the September to February rally phase. What the price action now shows is the black expanding rising wedge which was most likely confirmed at the breakout and backtest point on the bottom rail. What we have is nothing more than a bear market rally in the secular bear market. For some folks it may be a hard pill to swallow but for others it can be an opportunity to play the downside. For those that maybe long the PM stocks they could put on a hedge to protect their losses. There is always a positive element if you know where to look.

Now that we are armed with new information about the September to February bear market rally, how does that fit into the bigger picture? As you know I’ve been looking at the 2016 trading range as a falling wedge formation for quite sometime. I’ve shown you recently how the top rail on the 2016 falling wedge for the HUI is failing to hold support which is not what you want to see if the pattern is valid. When you see a failure like that it  means you have to go back to the drawing board to find out why the pattern is failing. The bearish expanding rising wedge on the daily chart above gives us some very important information we can put on the longer term weekly chart.

Instead of starting my top trendline from the 2016 high I started it from the first reaction high at reversal point #2. From reversal point #2 you can still see that slow and painful chopping action to the downside ending at reversal point #3. The rally that began at the September 2018 low to the February high now gives us a very symmetrical parallel falling flag formation with the blue bearish expanding rising wedge being the 3rd and 4th reversal points. A touch of the bottom rail of the 2016 parallel falling flag at 16.75 will complete the fourth reversal point in what I think could be a halfway pattern to the downside. If that is the case the two plus year parallel falling flag halfway pattern will have a price objective down to the 13.85 area as shown by the blue arrows which shows the impulse measuring technique.

Note the difference between the 2016 impulse move up and our September to February rally phase. That strong impulse move in 2016 shows two small consolidation pattens which is common is strong impulse moves. The September to February rally looks nothing like the 2016 rally but more like a bear market rally inside of a trading range.

Now we need to put the daily and weekly patterns on the charts above on a long term monthly chart to see how they fit into the very big picture. Since the parallel falling flag is forming below the 2016 high it needs just four reversal points to be a consolidation pattern to the downside. As you can see the price objective for the falling flag is down to the 13.85 area which is just a point or so above the 2015 double bottom low.

This last chart is a, What If Chart, that is only speculation right now. I’ve added the two black trednlines which are parallel that could show the 2016 downtrend channel with the blue falling flag being the halfway pattern. We know that big patterns lead to big moves. What if the price action is going to build out a massive double bottom as shown by the red arrows? The Chartology is there for that to happen. It would be a fitting end to the 2011 bear market if we do get a massive double bottom to launch the next secular bull market. We now have the big picture to watch and as long as the price action keeps confirming the big picture it is what it is. Happy Mother’s Day tomorrow and all the best…Rambus