All Hands on Deck for a Gold Rally

It has been a few months since I touched any of the precious metals miners, as the complex simply buckled under its own weight on top of a firm U.S. Dollar. Gold bugs seem stunned, more than anything else, by the abrupt drop we saw beginning in early-July, a relentless selloff which has laughed off any calls for an imminent rally. For my style of trading, the action simply did not support any working thesis for a rally, so I opted to simply lay off the action. 

However, with the U.S. Dollar finally slowing down and a good two weeks before the all-important September Fed meeting, now seems to be the right time to probe for a relief rally in gold, silver, and their derivative miners. 

To be sure, declaring a major bottom of any kind is akin to tomfoolery here, as we are simply looking to see if the group can muster a respectable oversold bounce. 

And with GDX (ETF for senior gold miners) back to its lowest level since March 2016, there is no time like the present. 

In these situations, we could of course play a levered monster like JNUG, triple-long the GDXJ, ETF for junior gold miners. 

But an individual relative standout like Kirkland Gold, below on the daily chart, seems a bit more compelling in terms of staying sound in our approach. KL is operating above a rising 200-day simple moving average (yellow line) despite its pullback from an outlier-type of rally in the spring and early-summer months as its peer floundered. 

Indeed, KL is one of the very few miners to make the claim it is still trading above a rising 200-day, a fact which ought not be ignored since there was every excuse in the book for this name to get wrecked, too. 

As a result, my thinking is that if gold and her miners can finally sustain relief, KL ought to do quite well. 

To be clear, the expiration date for this new working thesis is the FOMC in two weeks, where I suspect there will be significant macro risks all the way around. But two weeks is also an eternity for the gold complex. And all hands need to be on deck even for a relief rally--That is how dire things have been for gold bugs of late.