It’s been a few weeks since I wrote anything here, so I apologize for that, but I have a good excuse as I have been on vacation on the southern coast of Spain, and expect to be here around 3 more weeks. To pick up where I left off, the miners were getting sold lower and many were calling for a significant move lower in gold to levels that would test the multi-year breakout in the $1375-$1400 range, and for GDX and GDXJ to get down to test their 200 MA’s, neither of which has materialized as yet. I know many who are looking to get long, waiting to buy into a larger pullback than we have already seen, but my hunch is they might not get that opportunity. Bull markets are funny like that, the stronger they are and the more you want to be in them, the less they give you the chance to buy. So the question is, does this remain a bull market?

By the classic definition of rising 50 and 200 day moving averages, yes this is still bull market, and not even a mature, tired one. I like the looks of these next two weekly charts, it helps to step back and get the big picture. First is the GDX etf, then the GDXJ.

Both charts look like they have clearly made up their mind to move higher, and did so, since around May of 2019. Now they seem to be catching their breath and going mostly sideways after a small pullback since September. Anybody loaded up in the miners through September through November will feel it has been hell, but only if they are not stepping back to look at the big picture as we are here. This is all normal, and the “big” pullback has to be enough to change some minds, get bulls to sell, then bring out the naysayers and even new bears on the group. Sure, prices might correct lower and for longer, but the last few weeks have been very kind to the miners and they look again like they have picked a direction and are just waiting for an excuse to turn on the jets. How do we know it is a bull and that we should stay long, well we can never know anything for sure, but take a look at the moving averages in both charts and they will tell the story. After many years heading lower, they now have not only turned higher, but they both have also made a “golden cross”, where the 50 MA crosses above the 200MA. This suggests we are likely still early in the bull market, so own some miners before it gets fashionable.

I did make some recent changes and always promised to let readers know when I do so. Last week I sold MUX around $1.61 because it failed to partake in the rally the group was enjoying. That turned out to be a good decision, as today the company announced a stock offering which knocked it back 18% on the market opening! I also trimmed some SILJ from the accounts I manage, to the tune of 12 or 14%, because it has enjoyed a handsome rally and being we are still not out of the woods seasonally, I would like to see a pullback over the next few weeks to put the money back to work at lower prices. If the miners just keep moving higher, I’m still heavily invested at around 150% as I am using margin as previously mentioned.

I am also circling around the XOP oil and gas exploration etf, which made another new 52 week low just today. It is still too early on this one, and poor earnings and bankruptcies still rule the day, so I will not take my focus of the metals bull and its uptrend treading me so well. I just point out that there will be some great opportunities at some point in the XOP and its components, and I intend to capitalize, but just be warned that it bear market maulings like the energy sector has seen (-80% over 5 years) take quite a long time to turn around. For proof, just look at the gold and silver miner charts since 2011, down a similar amount as the XOP at the lows, and only briefly turned it around in 2016 with a rip, roaring move higher, that was sold off the following three years once again, only to slowly start rebuilding (from a higher low that 2016’s) the bull slowly once again, step by step. Stick with miners for now, maybe big profits will be moved over to energy stocks before they do the same thing and slowly turn their ship around. Bonus chart of chart of the OIH is enough to make one sea-sick!