Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver Stocks Get a Reprieve

Commodities / Gold and Silver Stocks 2015 Aug 14, 2015 - 04:58 PM GMT

By: Jordan_Roy_Byrne

Commodities

The precious metals sector has held recent lows and a rebound is underway. Gold held $1080/oz for three straight weeks and has pushed as high as $1126/oz this week. The gold miners (GDX and GDXJ) surged the first half of the week and Silver has also gained. We believe that this move is more likely to be a relief rally before Gold ultimately tests $1000/oz rather than the start of a new bull market.


Gold's weekly candle chart is posted below and at the bottom it includes the net speculative position in Gold. Over the past two weeks Gold's net speculative position was the lowest in 14 years! Gold pushed through $1100/oz this week after forming hammers during each of the prior three weeks. The near term upside target remains $1140-$1150/oz while near term support is $1100/oz.

Spot Gold Weekly Chart

The gold miners surged at the start of the week. Through Wednesday GDX gained 14% while GDXJ gained 17%. Despite Thursday's sharp reversal, the miners have further near term upside potential. If this rebound has legs then look for GDXJ to test $23-$24 and GDX to test $17.

Market Vectors Junior Gold Miners Daily Chart

In recent weeks and months we have posted a handful of charts showing how cheap and depressed the gold miners are. We have a new one to share. Using the Barron's Gold Mining Index (BGMI) we see that gold stocks relative to the S&P 500 (as of last week) were trading within 2% of the all-time low in 2000. This could be a major double bottom.

Gold Stocks versus S&P500 Since 1940

Though we believe the bear market is not quite over as we think Gold could test $1000/oz, there is an important distinction to make. As of last week the gold stocks to Gold ratio was also trading at all time lows. The gold stocks are not only extremely oversold but historically oversold. The BGMI as of last week was trading at a 13-year low and at the same level as 42 years ago! Simply put, Gold is nowhere near as oversold as the gold mining stocks. Therefore it is possible the gold stocks could bottom before Gold. Recall, this happened during the 2000-2001 lows.

That being said, we will keep all scenarios open and trade accordingly. Be aware of the risk of a Gold reversal at $1140 to $1150 and the risk of a future test $1000/oz. At the same time, consider the historic oversold condition in the gold stocks. I would not be surprised to see the juniors (GDXJ, GLDX) start outperforming Gold before Gold bottoms.

Consider learning more about our premium service including our current favorite junior miners which we expect to outperform in the second half of 2015.

Good Luck!

Email: Jordan@TheDailyGold.com
Service Link: http://thedailygold.com/premium

Bio: Jordan Roy-Byrne, CMT  is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2014 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor.  Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.

Jordan Roy-Byrne Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in