VB Update Notes for September - October 2012 – Help Arrives
HOUSTON – Don’t look now, but we can definitely point an improvement in the Canadian Venture Exchange Index or CDNX. It is still trading where it did in 2003, with gold then challenging $350 and silver was then trading under $5, but since the last full update we can point, proudly, to at least the beginnings of a long overdue rally. There is still a ton of risk which has been extracted/removed from smaller junior miners and explorers – following the second longest and deepest selloff bear market since the Great Gold Bull Market began. But now we can point to and embrace direct evidence that the horrible buyer’s strike and Junior Bear Market From Hell may finally be giving way to some positive money flow. Help has arrived. It’s about time. Here’s the now very familiar long-term monthly chart.
The gold market got oceans of help from the ECB and the Federal Reserve. Unlimited bond buying in Europe and unlimited buying of agency MBS by the Fed put the gold and silver bears into full short-covering retreat. Having a gold and silver rally does help, but The Little Guys had been so severely sold off; they had been so unreasonably pummeled; they had been so shunned by the collective market, they had become collectively what we now call “Idiot Cheap.” The level at which we are pretty sure we might look back at today’s pricing of our Faves and the stocks covered by the popular indexes a year or two hence and say to ourselves, “Man, it was idiotic for them to trade so low back then.”
We won’t crow (even though we have reason to) but we will point out that since that last report we can point to significant improvement in all the indexes we track. Let’s just run the charts and let them do the talking this time, starting with the short term chart for the CDNX.
Note the first significantly higher low in late August.
Compare the CDNX with the Big Cap Miners represented below by the AMEX Gold Bugs Index or HUI just below.
Just for fun let’s put up the chart from last time first, then show it today right under it for dramatic effect.
Let’s do the same thing with the Market Vectors Junior Gold Miners Index ETF or GDXJ. First the GDXJ as it appeared last time.
And, the GDXJ as it appeared September 18.
The chart shows the action of both the GDXJ and the CDNX. Clearly the GDXJ is leading the charge up and out of purgatory, and darn if it doesn’t look like it “means it.” The for-sure thing we are talking about, even though we can’t see the future and don’t really know if this is the beginning of a major bull move for The Little Guys, we know and believe that this is how a major bull move for the little guys MIGHT START.
And man, oh man, do The Little Guys have a long, long way to go just to get back to where they were comfortable before the one-year correction for gold. And that was a discounted level relative to where the smaller issues traded prior to the Lehman collapse.
That’s enough “near-crowing” for now. We wouldn’t want to anger the Trading Gods any more than we have. Let’s pause here and move directly into the Vulture Bargain (VB) Roundup update for September - October, 2012.
As always, the first place to look for new commentary is directly in the charts themselves (available to Subscribers). As we have been saying frequently in these reports, moving forward the charts will become more and more the focus and these formerly too-long written reports less and less the focus.
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