Saturday, September 09, 2006


Sometimes the market has messages in things that seem to be out of sync. For example, you generally expect to see certain shared characteristics in the behavior of the mining stocks and the metals, for example. Or the junior mining stocks and the seniors. Sometimes when things are not behaving in the manner 0ne expects, there is a signal for what is next. Last night, my friend sent me a note with these observations:

Just done my weekly update of my "mythical portfolio" -- a basket of 10 junior mining stocks I've been following since 2001. My conclusion... stay Long and Strong!

Over the last 5 weeks (since August 4th) a very unusual thing has happened.

The POG has fallen 1.8%, but the PF has *gained* by 5.1%. This is *not* the normal behaviour. In fact with a POG drop of 2% say I would normally expect a PF drop of 4% or so. Instead the PF has gained 5%.

i.e., We have a *strong* divergence, with the junior stocks leading the POG strongly.

This tells me that we should expect a major move in both the POG and the junior mining stocks over the next 2 to 3 months. JMHO, and it would be nice if I was right! :^)

1 comment:

Titan_of_Metals said...

Alas, with gold unable to confirm the breakout in the miners, a vicious reversal has developed, leaving the next few weeks uncertain (and probably crappy).

Great blog by the way. I'll have to dig around here a bit when I get a chance. I especially like how you comment on particular drill results.