The Technicals Are Impressive But Gold Sentiment is Getting Frothy

posted in: Charts, Gold, Gold Stocks | 0

A lot happened this week in the precious metals & mining space. A quick summary of the big events:

  • Gold finished the week $65/oz higher and rallied as high as $1263.90/oz on Thursday, reaching its highest level in US dollar terms in a year.
  • Gold mining shares as represented by the GDX rallied 10.5% on all-time record weekly volume

GDX (Weekly)

GDX_Weekly

Breakout from 7-month bottom on massive volume targeting ~$21

  • A significant acquisition in the gold mining space took place earlier in the week with Tahoe Resources purchasing Lake Shore Gold in an all-stock deal at what is now a roughly 30% premium to where LSG shares were trading before news of the acquisition leaked.
  • Largest weekly inflow into gold exchange-traded products (as % of AUM) in nearly six years.
  • Individual mid/large cap mining stocks continue to break out from well developed basing patterns – Friday’s huge rally in TCK was an impressive example of this phenomenon:

TCK (Daily)

TCK

 Breaking from 3-month+ rounding bottom pattern (a H&S bottom is also present) targets $6+

  • Futures speculators have piled back into gold to the tune of more than $3 billion in net notional long exposure in just the last week (not including Thursday’s huge rally).

 

Gold_CoT_2.12.2016

 

  • GLD options activity was off the charts this week.
  •  And Jose Canseco is really bullish on gold…

 

Canseco_Gold

In summary this week’s action in the precious metals space adds a tremendous amount of weight to the case for a long-term bottom being in place. However, bullish sentiment has probably gotten a little bit out of hand. We will continue to monitor Jose Canseco’s Twitter feed for further developments…