…Weak price action, negative divergences and bearish fundamentals are too much for precious metals to overcome for the time being.
- Gold stocks finally cracked this week and have lost another 7%-8% in only the past seven trading sessions.
- Silver and Gold denominated in foreign currencies have joined the breakdown.
- Gold meanwhile has not broken down yet but all indications are that it will soon.
The comments above and below are edited ([ ]) and abridged (…) excerpts from the original article by Jordan Roy Byrne to provide a fast & easy read. For all the latest – and best – financial articles sign up (in the top right corner) to receive munKNEE.com’s free bi-weekly Market Intelligence Report newsletter (see sample here) or visit our Facebook page.
Charts for GDX and GDXJ
The chart below shows the daily candle charts for GDX and GDXJ which began their breakdown on Monday. They have declined sharply over the past seven trading days and are due for a bounce. A ~3% decline would take both GDX and GDXJ down to key support at GDX $21.00 and GDXJ $29.50. The miners are getting oversold and a bounce could begin from those levels.
Unlike the rest of the sector, Gold has yet to crack as it maintains $1260/ozt. As we can see below, Gold/FC lost support and traded down to a 4-month low. This, after Gold/FC tested its 200-day moving average seven times. Gold has held above a confluence of major support that includes lateral support and the 200-day and 400-day moving averages. All indications are that Gold will break below $1250 and if it does, look for support at $1205-$1220.
GDX and GDXJ Charts Revisited
The 30,000 foot, bird’s eye view for miners remains encouraging but they need first to get through the next several months. Initial support levels (for GDX and GDXJ) are $21.00 and $29.50 while future support levels (perhaps in Q1 2018) are around the December 2016 lows…I’d much rather be a buyer around those levels and not current levels.
As we publish this article, Gold has broken below $1250/ozt and the gold stocks have moved quite close to the initial support levels. I would not be surprised to see the gold stocks and Silver begin to bounce as Gold moves closer to strong support at $1220/ozt. That being said, we are not expecting to turn bullish on the sector as a whole until sentiment worsens and the gold stocks approach strong support at their December 2016 lows…