Back in 2011, the market was eagerly waiting for gold to exceed the $2,000 level. Everyone viewed it as a certainty at the time. Yet, we suggested that it was time to sell once we struck the $1,915 level, with the market topping out only 6 dollars higher.

Now in 2016, the great majority of the market was equally certain that gold was going to drop below $1,000. However, our BUY box on our chart – several years ago, and has remained quite consistent – was prominently presented just a bit above the $1,000 mark, with the GDX BUY region just below the 13 level, and silver’s beginning at 14. And, after a 4+ year correction, our BUY boxes have all been struck.

This past week, we experienced the strongest rally in the miners that has been seen in many years. And, some are questioning if this represents the initial rally off the long term bottom, while many others view this as yet another corrective rally. My personal perspective is that this is the best potential we have seen for a true long term bottom since we struck our highs over 4 years ago.

With regard to the GDX, we have been noting for a few weeks that the bottom struck within our long term BUY box has been struck with a completed bottoming 5-wave structure at the 12.40 level. However, we also noted that in order to confirm a long term bottom being in place, not only must we complete the pattern to the downside, we must also complete an initial 5 wave structure off the lows.

Thus far, we have a completed bottoming pattern in place, and seem to be in the heart of the 3^rd wave off that bottoming pattern. Ideally, all 5 waves should be taking us towards the 21/22 region, which is the path we have clearly laid out on our chart for quite a long time. Moreover, we needed certain resistance levels to be broken to dispel the notion of an extended 5^th wave lower. This past week, with the last minute move through the 17.04 level on Friday, all those levels have now been broken.

The price action seen on Friday has opened the door for the market to continue higher to complete a larger degree 5 wave move off the 12.40 level, and take us up towards the 21/22 region target to complete wave I off the lows. The only action which would make me reconsider a bottom being in place for GDX is a break down below 15.50 early in the coming week.