Jordan Roy-Byrne, Founder of The Daily Gold shares his updated technicals on GDX, US long-term yields, and the uranium market. With GDX moving up in the past couple days Jordan is thinking that the short term bottom is in but there are some upper resistance zones that could hold this bounce back. As for yields the uptrend is very much in place and they are close to breaking out. Uranium also continues to be a sector of interest and now Jordan has created a small uranium stock index to help track its movements.
Gold stocks failed to breakout in the spring and then brokedown to multi-year lows by September. As autumn beckons, the precious metals sector at large is very oversold and could be starting a rebound. However, the fundamentals are not yet in place for a new bull market. They will be when the Fed moves to the end of this rate hike cycle. Although gold stocks and most commodity stocks are mired in downtrends, that isn’t the case for uranium stocks which appear to be on the cusp of a new bull market.
According to Trade Tech, the spot price of uranium is $27.70/lb which is a two and a half year high. The price has begun to rise after basing for several years.
In recent months, the announcement of production cuts from the world’s largest uranium producers (Kazatomprom and Cameco) along with the Section 232 investigation into uranium imports has contributed to the recent price rise in both the commodity and the shares.
Below we plot a capitalization-weighted uranium stock basket which consists of 11 junior uranium companies.
The basket, which closed yesterday near 95 is trading above all of the major moving averages but needs to close above 98 to make a new 52-week high. A weekly close above 115 would mark a major breakout and put the index at a 4-year high.
Uranium Juniors Basket
At the top of the chart we plot the uranium index against GDXJ. It’s uranium juniors against gold juniors and uranium is winning. The ratio closed last week at more than a two and a half year high.
Turning to the gold stocks, we see a rebound could be underway. The gold stocks have been extremely oversold and last week started to rebound as they approached very strong support levels. Potential upside targets are GDX $20-$20.50 and GDXJ $30-$30.50.
GDX & GDXJ Weekly
The gold stocks are setup for a rally but one should not confuse a relief rally with a new bull market. The fundamentals are not in place for such. At least not yet. As for uranium, the fundamentals appear to be favorable and recent price action could put the sector in position for a big winter and 2019. To profit from a new uranium bull and prepare for an epic buying opportunity in junior gold and silver stocks in 2019, consider learning more about our premium service.
The 9-page flash update was published and emailed to subscribers late Tuesday night.
The update covers news from two of our companies and notes something we are buying this week.
The 18-page update was published and emailed to subscribers on Sunday.
The update again analyzed the potential for a sustained rebound in precious metals and noted the potential upside for a specific niche in the resource sector. There is a company in that niche we plan to buy this week.
The 7-page flash update was published and emailed to subscribers at 11pm PST Wednesday.
The update covers the rally in the sector as well as notes on two of our companies.
The 20-page update was published and emailed to subscribers Saturday evening.
There is one junior we hold that we are calling a buy right now.
We note the trading opportunity we intend to take advantage of in the days or weeks ahead.
The recent rally attempt of the gold stocks fizzled out as the December 2016 lows failed to hold. Now the miners are making new lows. As they pine for the next support they figure to be even more oversold as more bulls throw in the towel. These are the conditions needed to engender a significant counter-trend rebound. While we aren’t predicting it yet, look for a bullish reversal to begin sometime in the next few weeks.
The gold stocks have lost their December 2016 support but strong support is not too far away. The breakdown in GDX below $21 projects to a measured downside target of roughly $16.50. That aligns with the next strong support level on the chart. The breakdown in GDXJ projects down to the $23-$24 area. That is very close to the next strong support level around $24-$25.
GDX & GDXJ Weekly Candles
Assuming GDX will reach $16.50, then we want to keep an eye out for potential divergences in the breadth indicators. GDX has broken below its August low but note that its advance decline line has yet to test its August low. Also note that the new highs less new lows indicator remains far from the -70% level it hit at the August low. If the current divergences hold as GDX tests $16.50 then it would be a signal that selling pressure has waned.
GDX Breadth Indicators
Sentiment is obviously quite negative and with the gold stocks and Silver breaking their August lows, it should only get worse. In recent weeks the net speculative position for Gold reached its second lowest level in 17 years. In fact, the commercial traders are very close to being long.
Circling back to Silver, the most recent net speculative position hit an all-time low of -1%. For the first time ever, the speculators were net short. Silver is also approaching its 2015 low where it should find good support. A rebound would obviously align with a rebound in the gold stocks.
Silver & Silver Net Spec Position
The gold stocks (and Silver) have broken down below their August lows while already carrying an oversold condition and uber bearish sentiment. GDX and GDXJ have roughly 7% downside to their next strong support targets while Silver has roughly 3% downside to its late 2015 low. It is too early to buy but traders and investors should be ready for the possibility of a bullish reversal around those downside targets. Should these markets approach those levels then it would setup a tradeable opportunity. Potential upside targets could be $19.50 for GDX and $29 for GDXJ. To navigate the volatility ahead and prepare for an epic buying opportunity in 2019, consider learning more about our premium service.
Jordan Roy-Byrne, Founder of The Daily Gold has been calling the down market for metals throughout the summer. That is why I find him updated calls so noteworthy. As we discuss in the interview he is watching some levels slightly lower in the GDX and silver that will provide a good bounce.
The 8-page flash update was emailed to subscribers and published late Tuesday night.
Gold stocks and Silver break to new lows. What’s next?
The 24-page premium update was published and emailed to subscribers early Sunday AM.
The update discussed the immediate outlook for precious metals and among other things a niche in the resource space that could be starting a new bull market.
In this podcast I spoke with Jordan-Roy-Byrne of www.thedailygold.com to get this take on what he sees happening in the gold market now and going forward. Jordan has been spot on in the past few months on the gold action and warned of coming weakness this summer before the August gold price drop break on the technical analysis charts took place. In this discussion Jordan talked about what he expects to happen to bring a final turn around and sustainable bull run in gold to begin.