I’m long-term bullish on metals and miners. However, the short-to-medium term picture supports lower prices – especially with what appears to be another failed cycle in gold.
The senior mining index (GDX) resisted today’s decline in gold. I’m not sure what it means just yet…we should know by tomorrow or Monday. Significant upside follow-through would cast a shadow on the bearish case. Whereas, breaking sharply lower would support a decline to new lows.
I added to JDST and DSLV today. The trend is complicated; I may exit these positions quickly if I don’t like what I see tomorrow or Monday.
Expect multiple updates again tomorrow.
US Dollar – It looks like the ABC correction is over, and the dollar is starting a new cycle higher.
Gold – Prices broke clearly below the 1-month consolidation zone. Today’s close below the lower Bollinger band also recommends a breakdown. We are 29-days into a cycle that’s been averaging 45-60 trading days. So if this is another failed cycle (becoming likely), prices could trend lower for an additional 3-6 weeks. To validate a failed daily cycle gold must close decisively below $1167.
Silver – Prices broke but managed to close above the lower boundary. To establish the bearish case, we need to see a sharp decline within the next 1-3 trading days.
GDX – The strength in the senior ming index was somewhat surprising. I’m not sure what it means just yet. To support a breakdown, prices need to slash through the $18.00 in the coming days. Whereas, closing above the Fed day spike high ($18.83) would recommend a bullish reversal and aid the potential inverse head and should bottoming pattern.
GDXJ – Juniors didn’t show equal relative strength. Nevertheless, closing back above the $27.75 level would support a bullish reversal. I’ll keep a close eye on things, but for the moment I’m content with my net-short status.
