The process of finding and confirming a bottom in the gold sector is now front and center as more of the fundamentals that actually matter come into place. To those fundamentals, we need to marry the technicals.

We have consistently worked a theme that sees a comparison to the 1999-2001 bottoming phase in the gold sector. That was a time when stock markets topped out, an economic counter cycle took hold and gold began out performing most other items. Within this, we have also been considering the possibility of a final washout within the sector, whereby prices decline despite continually improving fundamentals. This condition was in play in Q4 2008, which was the last great buying opportunity.

If the sector moves high enough in the near-term it will negate the final washout prospect by changing the intermediate trend to up. So where are we at? Let’s look at a simple daily chart, as used in NFTRH 380. We followed HUI as it broke resistance, hit the 200 day moving average and now, hits the final parameter at 140. As the chart states, this is the key to changing the intermediate trend to up; and I don’t mean by simply closing a day at or above 140. A weekly close and then some successful back testing are needed.

So this is HUI’s technical rubber that needs to meet the fundamental road in order to distinguish this bounce, as impressive as it has been, from those that came previously. Since both sector and macro fundamentals continue to improve, I for one am now interested in the sector to a degree well beyond any of the myriad bounces that have taken place to date in this bear market. As one ill-fated example of those, recall the disaster that the hype fueled summer 2014 bounce ended up being. Ukraine or Bird Flu, anyone?Those were promoted as fundamentals but in reality, they were phony baloney.

Above we see the daily situation.What about the weekly time frame?Well, we have been using these two charts in order to display why the bears were wishfully thinking in using a log scale chart to see what they wanted to see (a breakdown from a trend channel).For months, the gold bear cottage industry obsessed on (and shorted per) a breakdown that did not exist…