by David Kranzler
Investment Research Dynamics
To the surprise of most, mining stocks continued their stunning upward move that began around January 20. Toward the end of last week, financial media goons, chart readers and analysts who rely on the CFTC’s Commitment of Traders report for “insight” into market direction were all calling for a sharp pullback in the precious metals sector. Most market “oracles” were calling for a sharp retreat in the price of gold below $1100 and silver below $14.
Perhaps most amusing about the plethora of “correction time” and “overbought” commentary on the metals sector is: 1) because of the overt and continuous official intervention in the precious metals sector since 2011, it could be argued that the entire sector has been “artificially” oversold for the better part of five years; we don’t know where the true “oversold/overbought” statistical levels should be because natural price discovery in the sector has been completely suffocated; 2) the current stock market, adjusted for bona fide GAAP numbers, is the most overvalued in history; the stock market, by the same intervention/manipulative forces holding down the metals, has been artificially “overbought for at least 3-4 years now; yet, no one writes commentary on the need for a big price correction in the stock market.