The build up in gold and especially silver’s CoT commercial net short positions (and corresponding over bullishness by large and small specs) was troubling.  So too was a meeting of interest rate manipulators last week (never goes well for Team Honest Money).  Combine the two and the anticipated correction hit the gold sector.

A problem I have had is that it usually takes weeks to unwind a terrible CoT situation.  Since my tin foil hat is in the shop for repairs I cannot chase around those that may or may not be manipulating gold and silver.  I play it straight.  But it sure did seem like a convenient buildup into the FOMC’s word play and tough guy act and sure enough, we had post-FOMC pukage in the metals and miners.

Now however, GDX has dropped to NFTRH’s target zone (14 to 14.50) in quick time.  The only way CoT is going to have proved (come Friday) to have unwound the bearish alignment that quickly is if indeed gold and silver were purposefully gooned up in what we might call a focused and coordinated operation.  i.e. wax on, wax right the hell off again.

Whatever, for now I covered my silver and gold miner shorts very profitably but am in no hurry to get bullish and add to my small group of ‘relative quality’ miners until I get a better read on the CoT situation.  May even short again.  Who knows?  I am going to let the market tell me, not the other way around.

I understand that the miners can (and should) lead gold in a bullish phase.  Here is the daily view of GDX-GLD looking pretty good.

And it had better look pretty good because the long-term (HUI-Gold) looks pretty horrific.

So maybe the miners are done with their correction and ready to lead the still struggling metals.  Then again, maybe not.  All I can tell you is that if the rally resumes (we have HUI 150’s open) this will have been the quickest smack down and recovery in recent memory.  It would also be a ripple in the bear market’s character.  It’s interesting to say the least.