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Gene Arensberg: Divergence between gold and junior shares is contrarian's delight

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Published : August 13th, 2012
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At the Got Gold Report, Gene Arensberg has posted in the clear his new analysis of junior gold and silver mining stocks, which have been nearly destroyed over the last couple of years but which, Arensberg finds, are showing signs of life. The divergence between the price of gold and the price of the juniors is now so great, Arensberg says, that contrarians should be springing into action. Arensberg writes of the chart of the Canadian Venture Exchange, home of many juniors:

"The chart just above is the kind of chart that makes a contrarian salivate with great anticipation. Consider that prior to the Lehman collapse the CDNX traded at a multiple of the price of gold -- up to five times the gold price. Today it has fallen all the way to less than .75 times the price of gold. Simply amazing volatility on display in the chart above. And contrarians know that volatility works in both directions. The market first creates, or rather, is driven into huge divergences and gargantuan imbalances -- which it abhors -- and then gets busy correcting them, given enough time and patience. For many gamers it is the pace or frequency and the amplitude (size) of the giant moves that are out of phase with their own tolerances and psychology/comfort levels -- so they end up missing them completely."

Arensberg's commentary is headlined "Vulture Bargain Update Notes for August-September 2012 -- Seller Exhaustion" and it's posted at the Got Gold Report here:



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