Following from my recent post about the shape and and nature of a typical 4-5 month gold cycle, I thought Id update you with the recent amazing move in the junior gold stocks on the US market. The weekly chart below tells us something big is coming. The first point to note is that volume for this year has been astounding in comparison to last year. This indicates big money is flowing into the sector. The second point to note is that the shape of this move since December is a classic gold up cycle…sharp move up in December, consolidation in late January, spike top and decline in March, small rally in April, and waterfall low in May. Third, and most important, is the record volume this last week. This is the highest weekly volume in the last 14 years, and it is all buying!
That is why I was buying back into the sector the week before last. I bought two companies whose RSI was under 30 but whose 12 month story is good. One has rallied hard already, one is still consolidating. I will hold them until October, when this next 4-5 month gold cycle should top out. Buying in was nerve racking as it was the first test of my new system of buying at the crash, but so far it is working.