Remember how mining stocks soared on Valentine’s Day and how we wrote that a rally was not necessarily bullish? Guess what – this rally has been more than erased. Miners not only closed below the February 14th opening price, but also below the February 13th and 12th closing prices. The mining stocks’ big rally turned out to be nothing more than just a regular 50% retracement during a decline – something that we saw many times in the past and that we had described as likely. But, since the rally was rather inconsequential, then perhaps the decline is inconsequential as well?

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The USD Index moved to new lows on Friday and when almost everyone (not us) assumed that it was breaking below the key support levels, it rallied back up, closing the week above the key long-term support levels. The rally continues also today confirming the bullish nature of Friday's action. Those who paid attention to long-term factors were well positioned for this action and are profiting from today's decline in the precious metals market instead of being surprised by it. Are you?

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“Not much happened yesterday” – one might say after looking briefly on gold, silver and mining stocks’ charts. And they would be correct. But they would probably miss the key three developments that indeed happened yesterday outside of the precious metals sector that can have enormous impact on its short-term direction. What are they?

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Tuesday’s session was accompanied by volume that was the lowest this year, at least in gold. Yesterday’s volume was definitely not in line with that. We saw one of the biggest daily volumes of 2018 in gold, silver and mining stocks as the entire sector soared. It’s a clear buy signal in the eyes of many. But should something that appeals to almost everyone be automatically viewed as appealing?

In the final part of his 7th letter to Lucilius, Seneca writes the following:

Lay these up in your heart, my dear Lucilius, that you may scorn the pleasure that comes from the majority’s approval. The many speak highly of you, but have you really any grounds for satisfaction with yourself if you are the kind of person the many understand? Your merits should not be outward facing.

Answering our previous question: no – in the case of investments, the fact that something is popular or commonly viewed as something is definitely not enough to blindly accept it. We’ll analyze the situation thoroughly without telling the market what it should be doing in light of either popular beliefs, or our own trading positions. This way, we’ll get to the best conclusions. So, what's really in store for gold for the coming days and weeks?

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