Gold Bull-Phase I Continues To Confound (The Trek To “Known Values”)

Since January 20th the precious metal stocks have been in an upward impulse. I have classified this impulse as phase I of a new bull market. My essay “The three phases of a bull market” explains this in further detail.

In short, phase I is the move off bear market lows to “known values”. Just prior to this move stocks were left on the bargain table and farsighted, wise investors picked them up from discouraged and distressed sellers. I have described this impulse move toward known values as analogous to a beach ball held under water then released.

With the exception of Rambus, Spock and myself virtually all Precious Metals newsletter writers have advised their subscribers and flocks to take profits and head for the sidelines. No move like this can continue without a major and violent “correction” is what they have advised. They caution we are past due for a severe pullback, staying positioned in these stretched issues is nothing short of reckless.
I have observed otherwise however, and have sat tight in my positions judging that “known values” are still somewhat above us. That exalted level is now starting to come into clearer view as is shown in the following charts:

The Battle for the Matterhorn

This is the current battle between the gold bulls vs bears. It is an outstanding portrayal of the visual picture of accumulation of stronger hands over weaker ones. Saucer shaped bowls are text book patterns of accumulation and we see two prominent depictions here. We also see a rare double stack of two Cup & Handle formations. The higher is a fractal of the first and its handle takes the form of a classic bull flag. Last weeks shake-out action only served to fill out the handle, a case of weaker hands surrendering to stronger hands. This is a bullish picture and appears to be positioning to make a run at the Matterhorn. If it can bust that level the implications of that move are impressive.