Q: How do divergences relate to the four criteria for calling the low in gold?
A: They don’t make the top four list but they’re helpful for refining the analysis. Take a look at bigcharts.marketwatch.com. Junior silver mining shares represented by this index have taken a huge plunge over the last 15 trading days. Silver bullion has not even made a new low. This divergence indicates that the least sophisticated investors are now liquidating their holdings. There’s a similar divergence between gold bullion and gold shares and between junior gold miners’ indices and large caps like ABX. All these divergences indicate that the least sophisticated – working class – are throwing in the towel, and the more moneyed – middle class – are turning more positive overall.
Q: Does this also relate to the specialist short covering criterion?
A: Yes, but only tangentially. Specialists make a market in gold and are part of the upper class. They have the best information. Much of their investment is made at the company stock option and bank financing level. If you have good intelligence on what they’re doing at the low, you could possibly call the low to the day.
Q: Have you ever been able to call the low in gold shares to the day?
A: Yes, I was able to in 2012.
Q: Did anything special help you pinpoint the day?
A: Yes, one very negative article in the mining financial press about ABX. I considered ABX a proxy for all the gold mining shares since it was the world’s largest gold mining company. My understanding was that insiders paid for the article to manipulate the price lower and lock in their stock options at a low price favorable to new management. The low happened within 48 hours of the paid-for propaganda journalism.
Q: You remembered that 97% of what is written about economic matters is propaganda deliberately designed to mislead?
A: Yes, knowing why people lie can reveal truth. I do not expect politicians, government economists, or corporate insiders to publicly speak truth. Financial self-interests promote agendas.