Capitulation Selling-A Real-Time Case Study

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The chart above shows an index of gold and silver miners relative to the S&P 500, breaking now to a new extreme. Will the world need to produce and find more minerals and metals or will the world just need health care and bio-tech?

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The read line is the co-basis that is rising as the dollar rises relative to gold. This indicates rising demand for physical and more futures selling. Bullish.

So who is selling?

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Who knows, perhaps money managers are funding their long equity positions with short gold positions.

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About the Author

csinvesting
In my peripatetic life I have been a ruby smuggler, commodity trader, securities analyst, investment banker, and entrepreneur. Each role taught me more about value investing. - John Chew - The Editor