Gold and gold stocks have refused to correct for more than a few days at a time. Weakness is being bought and quickly. Gold has gained over $200/oz but not corrected by more than 6%. The miners (GDX) have endured three roughly 10% corrections in the past six weeks but nothing greater. A few weeks ago we noted a comparison to the 2008 rally which hinted that miners could correct 20% before moving higher. So far, no dice. Many gold bulls continue to expect a correction while losing sight of the bigger picture: precious metals are in a new bull market.
Many have expected a correction due to the CoT, which shows a net speculative position of 37.6% of open interest. While this figure appears high, we should note that from 2001 through 2012 the net speculative position often peaked from 50% to 60%. Moreover, everyone has completely missed the rise in open interest, which reached a more than 4-year high! Open interest is not a leading indicator but a confirming indicator. Strong increases in open interest validate the strong increases in Gold. The recent increase in open interest mirrors the increases that followed the 2001 and 2008 lows in Gold.
This post was published at GoldSeek on 20 March 2016.