During yesterday’s session, gold moved slightly above its previous local high, but then quickly invalidated this small breakout.
However, given that the reversal took place on relatively high volume, the odds are that this breakout will be invalidated shortly.
At first, in late-September 2012 and early-October 2012, junior miners consolidated, and then they declined, thus entering the back-and-forth decline mode.
Months later, it closed at $29.59, or roughly one third of its initial price.
Even though the short-term outlook is somewhat unclear, the medium-term outlook for the precious metals sector remains very bearish, and the upside potential for the short positions in junior mining stocks remains enormous, in my opinion.