Editor's note: Originally published at tsi-blog.com on Dec. 17.
After gold and the gold mining indices crashed during the final few days of October and the first few days of November, the most likely pattern over the weeks ahead was a rebound and then a successful test of the crash low. Gold bullion successfully tested its crash low on Dec. 1, but the gold mining indices didn't fall far enough at that time to complete a test. The reason is that by the time the North American stock markets opened for trading on Dec. 1, the gold price had already bounced off its early November low and was rocketing upward.
The Dec. 1 price action indicated that the gold mining sector might be able to avoid a test of its crash low, but it wasn't to be. The HUI and the XAU have just closed lower for five days in a row and are now testing their early-November lows. I expect the next up day for the HUI, whether it be Dec. 17, 18 or 19, to mark the completion of a successful test of the early-November low and the start of a larger/longer rally than the initial post-crash rebound.