There have been more false bottoms in precious metals & mining shares than a 1920s gangster's briefcase. However, today's massive bullish reversal has all the ingredients of a major market low - this one looks like the real McCoy. Due to the confluence of the following factors, May 20th, 2013 has a very good chance of going down in the history books as a major inflection point at the end of one of most grueling bear markets in the history of the metals & resource space:

  • Gold & silver put/call ratios at record highs
  • Gross gold short positions have reached a new record high of 14.3 million ounces (~$19.7 billion)
  • Former gold bulls (large institutions and fund managers such as Soros) have turned bearish
  • Die-hard bulls are despondent
  • Bullish momentum & volume divergences

Gold Miner's ETF (GDX)
GDX_Daily_5.20.2013

Silver Wheaton (SLW)

SLW_Daily_5.20.2013

Gold Daily

Gold_5.20.2013__

Gold Monthly 

Gold_Monthly_5.20.2013

Adding weight to the bullish case is the bizarre action in silver during the last 24 hours, which has all the makings of a final capitulative flush at the end of a brutal 24-month bear market:

Silver

And the icing on the cake comes in the form of the "explanation" for today's metals rally: "short covering and bargain hunting"

This is all very reminiscent of the October 4th, 2011 equity market bottom:

SPX_Daily_5.20.2013

What was the financial media saying when equities reversed higher during the final hour of October 4th, 2011 you ask?

Oct_4_headlines

 

As Bob Moriarty put it so succinctly last week, buy in May and go away.....