is that a bell i hear ringing?

Is That A Bell I Hear Ringing?
CIGA Bill Holter.

Dear CIGAs,

Attached is a chart ( www.stockcharts.com) for the HUI index going back 3 years on a weekly basis. I usually do not talk or write about charts because they can and are "painted" to make a picture that the "planners" want us to see. In my opinion, they have painted themselves into a corner where the mining stocks are concerned. So what does this mean to you? It means that IF you have endured and held on to your mining shares and not been scared out, you will FINALLY get paid and get paid BIG! Let me explain.

If you look at the chart, you will see the MACD at the bottom (moving average convergence divergence), these are the two squiggly red and black lines that keep crossing over each other. Whenever the black line crosses over the red line from a high point or low point, it usually tells you the direction of the index for the next couple of months or so. You will notice that the highest crossover point where black crossed red to the downside was back in 2009 (after the ’08 crash). Each successive rally reached a lower height on the MACD’s and the low point crossovers were successively lower. This, while the HUI index is just a little bit higher but has been basically "marking time". During this period, Gold has outperformed the shares in a huge way. Another way of saying this is that the shares are now more undervalued vs. Gold than they have been over these 3 years. In fact, the shares have only been this undervalued twice since the bull market began, 2001 and 2008.

OK, so let’s put this sucker together. The MACD is right now crossing over to the upside from a very low point AFTER Gold has doubled in value and the shares have gone nowhere for 2 to 3 years. The RSI (relative strength) at the top of the chart is nowhere near overbought, the index is above the 200 week moving average and bumping up against the 50 week moving average (after trading below it for much of last year). What I am describing is a coiled spring! I am not saying that we go straight up from here, I am saying that the "trend" should be UP for the next 2-3 years while the weeklies work their way back upwards on a cyclical basis.

Charts can be painted yes, which is why I say the "planners" have painted themselves into a corner! The have "painted" the mining shares into a position where the weak hands have already exited and are now owned by strong hands. Of course, this "painting" that I speak of has been done by "shorts" bombing the shares in the hopes of depressing their prices and "bust" various companies. It has worked to some extent but now the shorts must implement their "exit strategy". The shorts who have painted SUCH a pretty chart for us now must buy! Their own chart says so! Forget charts, the fundamentals say so. Fundamentally there were only 2 previous times in the last 10+ years to buy mining shares as cheaply as they are today relative to Gold.

THIS is exactly what Jim Sinclair was saying last night and this morning on his e blast, the shorts are about to get the daylights squeezed out of them as they compete with the entire list of buyers! This list included everyone, technical traders, fundamental buyers, weak hands looking to get back in, strong hands looking to add, sovereign wealth funds wanting to lock up resources etc.. Last but not least on this list are the shorts themselves, both legal and illegal shorts will now be forced to compete with each other to cover the BILLIONS of shares they have already sold some of which never even borrowed or exist!

Charts are usually "backed up" and explained later by fundamental events. The list of potential Gold/mining share bullish fundamental events today is very, very long indeed. Continued printing on top of already bloated central bank balance sheets and money supplies, defaults of banks, central banks and sovereigns, war, a derivatives meltdown to name just a few obvious ones. The point I am trying to make is that the "setup" is here and now. The possible fundamental events exist at the same time the chart says that something BIG is coming!

Can we go through another "paint job"? Of course we can. Does it take another 6 months before this scenario takes place from a more oversold fundamental and technical position? Of course. …but I don’t think so. I believe here and right now, the mining shares begin to accelerate and we will finally get paid in a huge way for gutting it out! I believed a couple of weeks back that another raid would take place which I do believe "they tried" and failed at. Now, I think I can hear the bell (that they never ring for the masses to hear) ringing! I think right now, you need to be as "long" as you can be, the mania stage is just beginning…finally!
Regards,
CIGA Bill H.

At http://www.jsmineset.com/2012/02/27/jims-mailbox-871/