Gold and Miners

There was a time about a decade ago or so when gold miners actually led gold, after all they had the goods. That relationship flip-flopped.

Recently 3C has pointed out some signals in miners that appeared to be not so bullish for the group, apparently the South African Gold Miner Strike was to blame. That strike seemed to end when "A" (as in single) Lonmin Maricana mine  negotiated a 22% increase in wages for striking miners sending them back to work. The problem was that was 1 company and it didn't take other miners long to demand the same wages.

Perhaps this is the bigger problem with miners that smart money may have been anticipating, it seems pretty reasonable.

Gold just made a sharp move down along with miners, it's a small move for now, but the problem that caused it may not be so short in duration.

Here's Gold and the move...

 On a very short term 1 min basis, GLD seems to have decent confirmation...

 The same can be said of  the VERY recent 10 min chart as I'm trying to gather data post QE3 announcement, use a longer trend timeframe and the picture is not so bright.

 Here's GDX the gold miners since QE3, in a leading negative divergence on a 10 min chart-all post QE3.

 Here's GDX on a 1 min timeframe this morning, while it seems to follow gold in price action, the underlying action looks very different.

 Here's DUST since QE3 alone... 3x leveraged bear miners.

And 15 in NUGT since QE3 alone - 3x leveraged bull gold miners.

The catalyst for the move in both gold and miners just minutes ago... Bloomberg mentioned wage talks among South African gold miners. The issue has expanded as  was predictable.

Obviously there's a longer term issue here, a 20+% increase in mining companies costs which if you remember how the miners trading system was created, it was based mostly on subtle increases in fuel costs and some currency valuation changes.

Something was obviously not sitting well with the market with regard to miners and it wasn't over a violent strike at a single mine, it appears to be over what looks to be a strike that will engulf all of South Africa's gold miners and likely beyond their borders.

GDX needs to be watched very carefully moving forward as this may be bigger than a trade, this may be a complete trend change.