Alex Barrow 🪶 Profile picture
Founder of https://t.co/4VCCRiFxm6 a macro research & trading service devoted to mastery in the game of investing. PM at Foundation Capital. Fmr USMC, DIA, FBI

May 6, 2021, 10 tweets

On Aug 7th I noted the EXTREME conditions (technical, sentiment, positioning) in gold & made the case for an extended pullback

That take got a TON of flack but ended up marking the top

The reverse is now true. Here's my bull case for $GC_F

1/

2/ Gold has completed a classic bull market correction from extreme overextension. I wrote about this on Sep 23rd where I talked about the historical tendencies of these types of pullbacks, and why gold would continue to sell off.

A screenshot of that report is below.

3/ We've now seen a:
- Peak to trough drawdown of 20% vs avg of 21%
- We're in the 187th trading day of the correction vs
avg of 255 before new highs
- A dip below the $1,700 level
We bought back in on March 31st after completion of the double-bottom

4/ The EXTREMES in sentiment and positioning that we saw over 8-months ago, have not only been reversed but are now showing EXTREME levels of pessimism.

This is what you want to see for a durable bottom to form.

5/ We've seen massive outflows from gold ETFs since December.

6/ The % of miners trading above their 200-day is turning up from DEEPLY oversold levels (sub 20%).

These types of oversold conditions WHILE in an uptrend tend to be powerful buy signals.

7/ Our Precious Metals Extreme Buy/Sell Signal triggered two back-to-back buy signals last month, which has so far marked the bottom.

8/ Silver continues to outperform gold which is exactly what you want to see in a cyclical PM bull market.

9/ PMs tend to be great technical trading markets. They have high fidelity to their setups

The monthly chart in $SI_F is textbook

This is similar to the compression regime I wrote about in March 2019, when we first turned bullish on precious metals.

macro-ops.com/a-golden-macro…

10/ Enduring technical bases can take a while to form & there's still a # of things we need to see fall into place

We're long PMs & will keep building positioning as long as the technicals confirm the thesis

U can read about how we're doing this here 👇
macro-ops.com/the-bull-case-…

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