Across the short-term we are admittedly frustrated with the scenic route lower, but remain bullish for the fourth quarter in the precious metals sector. Despite the market maintaining downward pressures on spot prices, we are starting to see the tea leaves brew a more bullish performance cocktail.
Even with gold down ~ 3% today, our three key performance benchmarks for the sector have started to turn up. While we recognize you can always torture the data to confess to just about anything, the consensus by these three metrics is a step in the right direction.
Very similar to the volatile and dynamic trading ranges experienced in late 2011 in the equity markets, the precious metals sector is eroding confidences in price while discretely building significant positive momentum divergences. Considering our work with the yen which appears to be the engine car now leaving the station for this reversionary train, we expect to see the caboose pass shortly and make its way up the mountain.
