Undesirable Currency

Gold and its derivative miners continue to swoon this morning, with the charts of GDX GDXJ and GLD all gapping free and clear their lower respective daily chart Bollinger Bands. In addition, they had all been in recent, multi-week downtrends before last Friday's sharp plunge. And, of course, they all remain mired in multi-year bear markets.

The holdout seems to be silver, still holding over its ETF's July 7th lows of $14.03. It is worth watching to see if that divergence holds, or instead succumbs to pressures, in which case silver would be a good short below those lows. 

Overall, in recent years I have trades the gold miners numerous times on the long side, mostly using NUGT with success for fast gains. But the caveat was always that bear markets usually offer the most explosive counter-trend trades, provided that you can keep your stop-loss and position sizing discipline for when they go against you.

And that remains the case now more than ever for bottom-fishing attempts into this steep sell-off, as a large scale liquidation event in any market is an inherently dangerous circumstance.