As I have stated before, it appeared that perhaps the easiest way to gauge when gold the was about to turn,on a sustained basis, was to keep an eye on gold mining stocks. I reminded of this today as I look at the daily chart of Randgold Resources (RRS). What can be seen here is a set up very similar to that pointed out inrelation to the infamous Gulf Keystone, where a couple of weeks ago there was a so-called Eve and Adam reversal, one that statistically has a typical upside measure of 35% whenever it occurs. This implied that from the upper 150p’s Gulf Keystone (GKP) could reach a target of more than £2.15 and which, despite recent wobbles, could still be very much on.
In contrast, as far as the case of Rangold Resources is concerned, we are looking at £60 plus as the end destination if the configuration pans out successfully. What helps in the near-term is the way that we have already been treated to a recovery of the former April support at £43.53, with support over the past couple of sessions coming in no lower than £43.70. This failure to overlap with the old support is in itself a buy signal and helped along via the unfilled gap the upside earlier this month as well as the Eve and Adam charting catalyst.
Admittedly, there may be some who are somewhat cynical after all the false dawns in the mining sector in recent months, and for them it may be wise to wait on an end of day close above the 50 day moving average target at £46.31 as their actual buy trigger. At this stage, the first warning that the mega recovery theory is set to receive a “pie in the face” would be if there was an end of day close back below the former April floor. However, given the recent technical stability we have seen with gold around the $1,300 level and especially while the metal holds its former June $1,269 low, it may very well be that the Eve and Adam works its magic for one of the metal’s key FTSE 350 stocks proxies.