My dream chart for miners - we'll know soon enough.

It's no secret that I have built a significant position in physical metals.  I have no intention of ever selling it until I retire.  I don't care if silver goes back to $5 and in fact I will be rejoicing if it does because I have a good number of years before retirement and I would like to load a lot more if the price goes significantly lower.  Unfortunately I don't see it happening for many reasons including massive increases in the monetary bases of all countries in the world.  Unlike credit which can be created and then paid back, once that monetary base is in there is little that can be done to shrink it.  Doing so would cause massive deflation on top of the credit deflation.  That is not the Fed's plan.  The monetary base will be increased in order to fight off the credit deflation.

Because of these views I would like to take advantage of another wave down in the miners should we be fortunate to receive it. It would be a massive buy signal according to my model which you can see below.

Right now the herd is literally piled up at the banks!  It is trying to determine if it is time to commit to going north or if there is southing left to do before a real bottom is in place.  Because of the 3 wave structures that we have been seeing since June, I have to model this as an ending diagonal.  A break out above the top green line at this point would make me reconsider and a break above the August highs, especially if it had a 3rd wave energy to it, would tip the scales toward saying the bottom was in as of the December lows.

But that's a lot of "iffs".  I still count the internal structure of the current wave as 5-3-5.  So, unless it breaks above the green line to a higher high then I would just wait for the real bottom as shown in red.  Patience will be a virtue here.  Patience and then courage to buy if this goes down per the red model.  Most people will be running away right when they should be buying.

So, to recap, the chart is expected to turn down here but if it instead breaks out, I will buy the breakout and then set stops just below that topmost green line.  If it breaks down then I'll watch for a reversal either in the middle of the channel, bottom of the channel or, HOPEFULLY, a throw under as shown below.

During the last peak in metals, GDXJ was $180.  I expect it to beat that handily during the next up cycle for metals and miners.  And YES, there will be another up cycle.  That's why they call it a cycle.  Wall St. can't make money unless these things go up and down.