As we know, the precious metals complex enjoyed another very strong week. Gains in the metals were somewhat muted in comparison to the gains in the miners. GDX and GDXJ surged nearly 16% and 11% respectively. Last week we said nothing has changed. This week figures to be the week something did change and definitely so for the miners.
The strong gains in the miners since their January 19 low (31% in GDX and 23% in GDXJ ) typify what could be the start of a new bull market. The current rebound can be compared to the rebounds from the major bottoms in late 2000 and late 2008. We use the HUI gold bugs index for comparison as the ETFs do not go back far enough. The HUI has gained roughly 40% since the January 19 low. That fits well with the analog chart below which puts the three rebounds on the same scale. If the gold stocks are in a new bull market then they should continue to make new highs over the next few months. Turning to Gold , I see less evidence that Gold has established a major bottom. To be blunt, Gold needs a monthly close above $1180/oz, which has been a major since late 2009. First things first, Gold needs to close this month above $1150-$1160/oz. The bear scenario would have Gold making a reversal sometime this month and closing below initial resistance at $1140/oz. The bull scenario would likely have Gold closing above $1160 and testing $1180 fairly soon.