Time for Caution in Gold Miners

Last week we noted the likely negative impact of a sustained rebound in the US Dollar on Gold. Recent weakness in precious metals has not been much of a surprise considering the sector’s relative weakness months ago amid a weak US Dollar. While the greenback has bottomed, it has yet to push above resistance at 94. Nevertheless, Gold and in particular the gold stocks are threatening more losses even before a push higher in the greenback. It is time to be defensive and cautious.   

Although GDX is holding its 200-day moving average and has yet to pierce its October low, GDXJ already has. The juniors (GDXJ) closed below their October low and broke their uptrend line from May. This, after failing twice at the 200-day moving average. The break below $33.50 projects down to $32.00. The juniors lack strong support until $30 while GDX’s initial support levels are $22 and $21.

Gold, which traded as high as $1308 early last week, closed the week at $1280. Its initial support is at $1255-$1260. If GDXJ joins GDXJ and breaks its October low then we would anticipate Gold does the same. In that case, the next strong support level is around $1215-$1220. Gold’s net speculative position of 41.9% of open interest remains relatively high and suggests potential selling power should traders turn bearish.

The big picture view on miners is they remain in a complex bottoming pattern that began over four years ago. While the multi year outlook favors a break of the 2016 highs and a massive move higher, the near-term outlook is clearly bearish. GDX and GDXJ appear very likely to test their July lows and there is a risk they could even retest their December 2016 lows at $18 (GDX) and $27 (GDXJ).

The near-term outlook for precious metals and gold miners especially is negative and traders and investors should therefore stand aside and wait for more favorable conditions. Readers who follow our work are not surprised as we’ve written about the possibility of a weak fourth quarter since the middle of September. That is the bad news. The good news is those who buy weakness in the months ahead could position themselves for a strong 2018. Find the best companies and wait for the sector to get oversold and test strong support. To follow our guidance and learn our favorite juniors for 2018, consider learning more about our premium service.

Jordan Roy-Byrne CMT, MFTA

Jordan@TheDailyGold.com

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Follow all Junior Financings with OrenInc.com

Kai Hoffmann has been an active member of the junior commodites market for over eight years before acquiring Oreninc in September 2016. He is currently also the Managing Director of Soar Financial Partners, an investor relations and public relations consultancy, based right outside Frankfurt am Main, Germany. Kai is further the publisher and chief editor of one of Germany’s leading financial stock letters for junior resource stocks, “Das Investor Magazin”. Mr. Hoffmann is a frequent guest at leading industry conferences in North America and Europe and intends to use to his extensive network in North America and Europe to turn Oreninc into one of North Americas leading financial websites in the junior commodities space.

Mr. Hoffmann holds a Bachelor of Arts in Business Administration (Hons) from the University of Bedfordshire, UK.

Kai’s Website & Subscription Information 

Kai’s Website

Mining Deal Club

Twitter: @Oreninc

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TheDailyGold Premium Update #539

The 28-page update was published and emailed to subscribers early Sunday AM.

This update includes our short-term outlook on the sector as well as preferred buy targets on most of our companies.

We also introduce two new companies. One is something we are eyeing over the short to medium term while the other is a nanocap that is a 2018 play. It has an enterprise value of only C$6 Million and has terrific people prominently involved.

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Trading Rules Report

In this brief report we cover some rules for selling positions and rules for buying positions. These are rules we have developed over 14 years of investing in the junior resource and junior mining sector. There are obviously exceptions to every rule. However, I have usually been burned when I ignored or avoided following one of these rules. These rules help me and in the past would have helped me the majority of the time more often than not.

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US Dollar Outlook and What it Means for Gold

The US Dollar Index (USDI) bottomed in September a hair below 91.00 and has recently rallied up to 94. We were skeptical Gold would break its 2016 highs as it failed to show strong performance in the wake of the USDI’s decline to new lows. The market was discounting a coming rebound in the USDI and/or future weakness in Gold. In any event, although the USDI broke key levels which leave its bull market in question, it became quite oversold and was due for a sustained rebound.

First let’s look at the big picture with a monthly bar chart and the 40-month moving average. As you can see, the 40-month moving average has been an excellent trend indicator and especially since the mid 1990s. The USDI lost that support in July and in addition, made a lower low. Neither happened during the previous two bull markets.

When comparing the bull market to the recent two bull markets we find that the recent correction began at the point at which the other two bull markets advanced toward their inevitable peaks.

While the longer term trend may have turned bearish, the short-term trend may have turned bullish. The USDI could be forming a reverse head and shoulders bottom. On a close above resistance at 94, the USDI has a measured upside target of 97. That target fits very well with the long-term moving averages which are coalescing around 97. (The aforementioned 40-month moving average should reach +96 in the months ahead).   

We remain cautious on Gold in the near term as Gold’s correction would continue if the US Dollar Index breaks above 94. With that said, if the USDI’s primary trend has turned bearish then that certainly bodes well for precious metals and precious metals shares in 2018. If the greenback does break above 94 then we will be looking at 96 and 97 as potential levels where the rebound could reverse course. Our goal is to buy value with a catalyst or buy very oversold conditions within the junior space. This action has served us well since last December and should the USDI reach 96-97 then it could lead to low risk buying opportunities in juniors by year end. To find out the best buys right now and our favorite juniors for 2018, consider learning more about our premium service.

Jordan Roy-Byrne CMT, MFTA

Jordan@TheDailyGold.com

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Catching up with Mickey Fulp post Beaver Creek

The Mercenary Geologist Michael S. “Mickey” Fulp is a Certified Professional Geologist with a B.Sc. Earth Sciences with honor from the University of Tulsa, and M.Sc. Geology from the University of New Mexico. Mickey has 35 years experience as an exploration geologist and analyst searching for economic deposits of base and precious metals, industrial minerals, coal, uranium, oil and gas, and water in North and South America, Europe, and Asia.

Mickey worked for junior explorers, major mining companies, private companies, and investors as a consulting economic geologist for over 20 years, specializing in geological mapping, property evaluation, and business development. In addition to his professional credentials and experience, Mickey is high-altitude proficient and is bilingual in English and Spanish. From 2003 to 2006, he made four outcrop ore discoveries in Peru, Nevada, Chile, and British Columbia.

Mickey is well-known and highly respected throughout the mining and exploration community for his ongoing work as an analyst, writer, and speaker.

Mickey’s Website & Subscription Information 

Mickey’s Website

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Twitter: @MercenaryGeo

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TheDailyGold Premium Update #538

TDG #538 was published early Saturday evening and emailed to subscribers.

The update is 31 pages long and includes a lengthy Q&A section along with notes on a handful of companies we own. We also list companies and their buy price targets.

Here is a quick table of contents for a portion of the update: Summary (p1), Buy Targets (p2), Portfolio (p3), Q&A (p4-7), Company Notes (p8-9), US Dollar (p10-11)….

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Interview with Korelin Economics Report: Monthly Charts & US Dollar Rally

Founder of The Daily Gold Jordan Roy-Byrne joins me to discuss the overall boring metals market. We look at the longer term charts and focus on the recent monthly closes. With the metals very much in the middle part of the range in 2016 it might take some time for the next advance to happen. We also look at the USD rebound and assess how long that can run.

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