Gold miners literally crashed today. With a drop of more than 7% the gold market does not look very bullish to say the least.
We have been re-iterating our viewpoint that the 2016 rally did not introduce a new bull market. On the contrary, the breath taking rally of the first months of the year stalled exactly at secular resistance suggesting the gold bear market was still intact in 2016.
Today we got another confirmation of that viewpoint with a significant gold miners crash.
Interestingly, although mainstream media has been very vocal about gold’s rally earlier this year, there was a unanimous silence about the crash in gold miners. The only exception was an article on Nasdaq.com today which pointed out that the gold miners crash was a retracement to the 200 day moving average (in the case of junior miners). The fact that ‘nobody’ is writing about the gold miner crash suggests there is more downside potential.
Gold miners crash, suggesting gold bear market still intact in 2016
Our belief was that both gold miners and gold continued their bear market. Our bearish gold price forecast for 2017 was purely based on chart analysis and sentiment. Gold did not manage to break above its long term downtrend (represented by its secular downtrend line).
As gold miners lead the precious metal space higher in the first months of the year, we now see the opposite direction. We keep on believing that the most likely scenario is that gold will move to a major bottom in 2017. That belief is confirmed once gold drops below $1250 in the coming weeks. Gold miners have been hinting towards that scenario today.