Category Archives: Precious Metals

GDX and GDXJ

By Biiwii

While remaining bearish based on incomplete sector and macro fundamentals and technicals, I only pressed the short side the other day after making this GDXJ bounce post.  GDXJ was do or die and I thought it was worth a shot since, as was noted in the post “Gold stocks (as a sector) are bearish until initial resistance is cleared and then bigger picture bearish until the declining 200 day moving averages are cleared (and held).”

And that was not even including the incomplete fundamental picture.

At that point I added a short against 3x Junior Miner bull JNUG, to go with the existing short against Senior Miner 3x bull NUGT.  Today I covered the NUGT short quite profitably and continue to hold short against JNUG.

Don’t get me wrong, NFTRH’s stance has been to leave the sector the hell alone because I am not a day trader and will not pretend to be one, potentially to other peoples’ harm.  I am just a risk-o-phobe trying to call the turns in the markets, short and long-term.  Traders can do what they wish off of the analysis.

So the NUGT short, which was leveraged against the likes of GDX is covered right at the next support level we have been tracking since way back before the “drop dead gorgeous bull wedge” (that wasn’t) was even a glint in its promoter’s eye.  When this thing lost the MA 50’s in May it was cooked, especially after retesting the EMA 50 and failing on a bear flag at the beginning of June.  GDX had better bounce here or the decline is going to wipe out those who buy promotions instead of reality.

gdx

As for the Junior ETF, it looks much worse as the breakdown continues, but support is well lower.  Since my area of interest in buying the washout is in the junior and exploration space, I retained the JNUG short without as much worry about its profitability, which is good now, could get much better or could put a hurt on with the next sector hype operation.  It does not matter because barring an outright crash to our most bearish levels for the sector, in which case I’d book a great profit, short positions may well be there to oversee a coming acquisition process, assuming fundamentals look like they will come in line. *

gdxj

Regardless, those in cash and looking to buy the sector may finally get the chance fairly soon.  However, it may come from well below the support levels shown above.  Only week-to-week development of the plan will provide answers on that.

* Funda are not nearly all in line, but using the Palladium-Gold ratio as one example, something is beginning to happen on the macro and while the summer can get woogley for bulls and bears (regular stock market bulls and bears, that is), it now seems to be a matter of months before changes will be apparent. 

GDXJ Bounces

By Biiwii

For all you gold stock sports fans…

GDXJ is bouncing, but has a lot of work to do.  I have marked that neckline as resistance, but actually it is support to a very not bullish looking pattern.

gdxj

GDX is similar.  Gold stocks (as a sector) are bearish until initial resistance is cleared and then bigger picture bearish until the declining 200 day moving averages are cleared (and held).

I continue to look for some combination of sector funda, macro funda and technicals as a buy signal.  Alternatively, if the gold stock sector tanks badly and the macro funda come in line (ala Q4 2008), that’s a buy opportunity as well.  Patience my friends.

“Drop Dead Gorgeous”?

By Biiwii

As currently ‘risk OFF’ gold and silver prepare to get thrown out of the bull party (celebrating a bankrupt country’s pending agreement to play ball) once again…

au.ag

…we conjure some stuff that some in the gold “community” were considering last week.

For reasons of decorum I won’t name the source, but the following was written on a chart presented in the weekly free ‘analysis’ of a writer who has somehow managed to do two things all through the gold bear market; 1) remain bullish and 2) always sound authoritative and flat out right.  That is some trick.  Never have I seen a mistake admitted.

“GDX is sporting a drop-dead gorgeous bull wedge pattern.”

NFTRH 348 summed up wedge patterns thusly…

“This is a convenient opportunity for us to be reminded again that Wedges, either bullish
falling or bearish rising, are among the most hyped things in TA. And when they do
work out, they only have relevance for 1-3 days, assuming the chart is a daily like this
one.”

Here is the state of the “drop-dead gorgeous bull wedge pattern” at yesterday’s close.

gdx

NFTRH 348 continued:

Here are some facts…

• HUI lost the key support parameter of 160.

• HUI is below the 50 and 200 day moving averages.

• MACD and RSI are bearish.

• HUI broke out of the “drop dead gorgeous bull wedge pattern” and then soiled
itself the very next day.

• Key support levels now are the November and December lows, just as we noted
last week.

• HUI is bearish until proven bullish, technically. Not the other way around.

I am not trying to be like ‘hey look at me, a genius’.  I am trying to be like ‘hey, this was obvious and I have got to wonder who on earth is still taking the bait in the gold “community”‘.

When there is no more bait and when the fish stop biting, the precious metals will be ready.  I am not bearish gold or silver on a risk vs. reward basis given other factors coming into play, but as we have been noting all along certain indicators and macro fundamentals have just not registered yet.

The way the markets are going, that could change in a flash (today, next week, next month?), but you don’t sit out there spouting dogma with your capital on the line, waiting for the change.  You gather indicators, funda and technical data points and build your case.  The gold “community” may have to wait until the stock mania is fully expressed, again, whether that is today, next week, next month or…

We just don’t have answers, so it pays to just admit as much and do the work in an ongoing way without the need to provide easy answers every step of the way.

[edit]  Durable goods fall 1.8% in May, and gold gets hammered further.  But this is actually a positive to the real, long-term bullish scenario for gold.  The one that ignores cartoons about Indian Weddings, China Demand, strong US economy pushing up prices and sending institutions running for gold’s inflation hedge, etc. etc. etc.  We are of course talking about a counter-cyclical environment.

Silver Had Better do the Heavy Lifting

By Biiwii

The precious metals are wobbling at this moment.  Here is the live view as of 9:00 US Eastern.  Gold is making a negative move in pre-US open.  The drop below April’s low must be reversed quickly or it’s the Ignominy Express once again.  On the plus side, silver still thinks it can it thinks it can…

gold

silverNo

Not completely unrelated, I am leaning toward a possible economic bounce scenario as Uncle Buck settles into Support #1.  ISM is coming at 10:00.  Thoughts on this @ NFTRH.

We noted in an NFTRH update on Monday that this week was full of data and combined with FOMC, was likely to be very volatile.  Check.

Let’s see how the dust has settled at 4:01 US Eastern.

[edit] ISM just out with a flat 51.5%, but a notable bump in exports (ref. USD correction)

Bottom Line Thoughts on the Gold Sector

Improving Macro Backdrop

In light of a shifting global macro backdrop that we can finally sink our teeth into with respect to a bullish orientation on the gold stock sector, I thought it might be a good idea to publicly post some bottom line thoughts from this week’s NFTRH report.

The report went into great detail to explain why more fundamentals that matter are starting to come in line, after the chart below refused to make a signal against our big picture view of global economic contraction, which has been the biggest key for the counter-cyclical gold mining sector.

During the worst of the gold sector cyclical bear market we used Gold vs. Commodities to gauge a higher low to the 2011 low, which despite perceptions of the time, kept our longest-term macro view intact (as noted to subscribers several times, if Au-CCI had broken down we’d have had to admit that the view had failed, no if’s and’s or but’s).

The moving averages have triggered, a higher low has been made and the long-term thesis is being confirmed.

au.cci

Hence, a bullish stance on quality gold mining operations (a unique counter-cyclical sector) has finally come about and the relevance of this chart of HUI vs. the S&P 500 now means more than simply one market crashing in terms of the other.  It means RISK vs. REWARD is on the side of the counter-cyclical gold mining industry vs. the cyclical broad US stock market.

Continue reading Bottom Line Thoughts on the Gold Sector

Gold Sector, it’s Not Just the Pom Pom Brigade

The last post was a little perspective on gold over the long-term.  This post calls attention to a post at NFTRH where the writer pops off a bit on the gold bears in light of today’s… what ever it is.  Festivities?

I would normally be pretty cautious about a short-covering event like this, but coming off of a gold-negative hype event as it did, driving silver down to the low-end depths of my 14-16 target in pre-market, I find it notable.

Anyway, the post linked above goes into the need to use not only technicals in the gold sector, but importantly sector and macro fundamentals along with other indicators.  You don’t friggin’ chart in a vacuum!  Especially in the precious metals.

I swear this sector is filled with hyperbole both from the Pom Pom brigade and their evil twins managing what has become an ‘everybody knows’ situation with respect to how bearish gold is.  Just ask that weirdo, Willem Buiter over at Citi.

Gold Stocks Still Hanging Around

During a week that has had a little bit of everything, the gold stock sector has refused to give up the December 2013 lows (not shown on these charts) and are still hanging around with a potential to put in a short-term bottom*.

GDX smashed its head right up against resistance (May low) on the big FOMC Minutes pump fest, but has turned MACD up and got RSI looking constructive above its EMA 50.

gdx

GDXJ looks better with respect to the May low, but these items are dealing with the EMA 10’s as a very short-term resistance point.

gdxj

* I almost purposely don’t write too much about the gold stocks because it seems that too many people are still way too interested in this sector to the exclusion of so much else going on in the macro markets and that rubs me the wrong way.  People should by now know to treat these things as nothing more than speculations until the macro gets right, fundamentally. 

Stealth Gold Stock Rally

Well, the headlines are rightfully bearish for gold, silver and the major precious metals stock indexes, ETFs and senior gold miners.  The technical damage is real. Today’s burst could be and probably is just short covering.  [edit; post was mostly written before the end of day flop]

But improbably enough, there is a stealth uptrend going on in certain royalties, miners, developers and explorers.  Believe me, if you could hear me talk instead of write you would not hear anything resembling desperation in my tone.  That is because I have worked hard during this bear market to manage risk, stay strong and out of the bear’s way.  So I am not talking any sort of a book here other than my biggest picture view (an economic contraction environment that ultimately benefits the counter cyclical gold sector), which could still be out on the horizon.

Don’t take my word for it, here’s Investopedia’s definition of an uptrend:

“Describes the price movement of a financial asset when the overall direction is upward. A formal uptrend is when each successive peak and trough is higher than the ones found earlier in the trend.”

uptrend
Graphic : Investopedia

Complicated it’s not.

The following charts are what they are (in up trends), and considering that legions of gold bugs have now sworn off the promoters and puked up gold for good, the time is nearing that this sector will again be investment worthy.  At the very least, NFTRH for one is going to point out positives along with the ample negatives.  Just so we keep a level playing field and an unbiased viewpoint.

Continue reading Stealth Gold Stock Rally

Gold and Silver CoT

The gold and silver Commitments of Traders data are out and what do you know, they improved again.  Lot of good it has done precious metals investors thus far, but maybe next time people will take seriously those times when the goons are gathering short while at the same time the promoters are popping off about Ukraine, Chinese demand and Indian Wedding Season.

au.cot

ag.cot

 

Gold & Silver CoT Reports

Yup, improved a gain.  A lot of good it did precious metals bulls today, but we can bet that the goons covered shorts again today (data are only through Tuesday) and I would assume speculators continued to puke.  Got to play the game folks, in the casino at least.  This has nothing what so ever to do with real physical gold.  Note the open interest on silver; that is in line with the power of today’s thumpage.  A coming low in these metals should be very interesting.  Click the graphics to de-minify them.

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SI

HUI Weekly Updated

Here’s the weekly HUI chart grappling with the key parameters we noted yeseterday.  Frankly, I don’t care which way it breaks * because I have been practicing what I have been preaching, which is patience, discipline and positioning for strength.

hui

* Well I do care insofar as some good people have gotten hurt by following some not so good peoples’ faulty analysis, but you get the point.