Carnage vs. Calm

Well, that's it. It's official. The gold bull is over. Dennis Gartman said so, so it must be true, given his outstanding track record. And Jon Nadler agrees, so it's as good as in the bag. Even the perma-bullish blogosphere is full of doom and gloom.

I'd agree that things feel pretty bad. Gold has made a series of lower highs since it hit $1900 back in September, and silver is still suffering from its broken parabola of 2 May. It's not surprising therefore that last week's plunge on the back of disappointment that the FOMC minutes didn't endorse new quantitative easing measures (i.e. 'QE III') has rendered an already bearish community almost without hope.

But do the charts support the thesis that gold's bull run is over? Are we sitting on the precipice awaiting carnage, with our already red positions about to go scarlet? Or are the charts telling us that nothing unusual has happened, and that all is calm. Let's take a look, and - for fun - let's keep score on the Carnage vs Calm points...

Gold and its miners look ready for a big move

This has not been the happiest of weeks for PM investors. The sharp fall in the price of gold was triggered by that most feared of black swan events: Jeanne d'Arc wrote a bullish piece about gold mining stocks.

Literally seconds after hitting the 'publish' button, gold plunged by $35 an ounce, and went on to lose a total of around $70/oz from its pre-JdA-article level.

It's times like this that PM bloggers stare deep into what is left of their soul, throw their pens at the cat in frustration, and swear blind that they'll switch from writing about PMs to penning poems about lovely butterflies or creating daguerreotypes of renaissance sculpture. At least the butterflies won't change their spots seconds after a photo of them is published, and sculpture is harmless (and often armless) enough.

But I soon realised what utter nonsense this attitude was. Because the charts' indications haven't changed. And I still very much believe that we're about to have a big move higher in both gold and its mining stocks. Let me try to convince you again...