For the gold bull market to resume in earnest, we will want to see the recent trend of gold outperforming commodities continue. I’ve posted a daily chart of the ratio, and it shows today (Monday) that GLD is making another new recovery high for this bounce versus the DBC etf, which tracks the DB commodity index. If the trend has changed to going higher once again, there is still lots of potential upside. We might have some resistance in the area of the horizontal trend line, especially considering how sharply the ratio has moved higher, but after a little consolidation period I expect to see this ratio move much higher over time. Note the ratio sits above all moving averages as well, and how easily it cut through them all with little resistance.
Gold vs. commodities shows gold gaining against energy and agriculture, this is also good news for miners that have had rising costs hit affect their profits.
After breaking down last week, and seeing what appears to be false breakdowns in the major miners like NEM and GOLD, I am comfortable adding to EQX assuming it’s breakdown will also reverse. It has already done that the last couple days, but I’m expecting a longer term trend higher to start again soon, so we have added to our EQX holdings, buying the shares at an average cost today of $2.97 and will look to buy more into pullbacks when they occur. Here is a weekly EQX chart, and there is very little doubt in my mind the stock will blow through it’s 200 week MA up near $7.20 per share. Just reaching the 200 week MA would be a 142% gain from where it is trading right now!
Ross Beatty runs the ship over at Equinox, I feel our money is safe parked alongside his own investment, and this stock was up at $13.66 as recently as August 2020. Paying $3/share is alright by me, for a miner already in production with several mines, and a current price-to-book ratio of just .36, and now under a $1 billion market cap!
With the big bounce this week, SLV was up about 8.5%. If it can follow through higher, the 200 week MA is at $19.37, then the 50 week MA at $20.07, which are very achievable being it closed the week at $19.26 and with oversold technicals.
SLV took the first step to turning the trend higher this week, with a strong 8.5% jump pushing it to near its 200 week MA. It looks like SLV should have more upside, let’s see what it can do over the next few weeks.
We are starting to see several miners push higher, back up over their 200 day MAs, such as MAG and CDE shown below. This is important for the miners as they try to change the trend back into bull mode, and we expect to see more of this going forward. Today we see that not only are the metals and miner trading significantly higher, but the general stock market is also weaker, down about half a percent on the day. We expect to see a disconnect between the stock market and miners, one that lasts for several months at least, which will attract investors as more of them realize that real assets are the only game in town, and metals are real money. Let’s take a peek at the charts…
MAG Silver looks ready to leave the bear market behind, back over it’s 200 day MA again, and first time since April.
Coeur Mining was one of the weaker miners in the group, now its become one of the better ones. This stock can really move when it gets attention, like it did back in 2016 when it rallied from $1.70 to $16.40 in 7.5 months! Let’s see what CDE does once it clears that horizontal resistance in the $4.00-$4.15 area.
We did add to a few of our positions this week, but both MAG and CDE are components of the SILJ etf, which we also own.
Lots of news out this Friday morning, and after a tough week for miners with the FOMC talking asset prices lower, we finally see a huge rebound attributed to several things. First, Yamana Gold received another surprise buyout offer from both Pan-American Silver (PAAS) and Agnico-Eagle (AEM), pushing AUY stock up over 20% on the day. This has investors wondering which miners might be next to get scooped up, because both big money and mining executives are buying now, while much of the retail investor class is shunning gold and miners. Another big new event is central banks have done the biggest gold buying last quarter that we have seen in 55 years, so they also think gold is a good place to be going forward. Lastly, somebody stepped in to clean up this 300 tonnes of gold, we always hear about all the sellers, but how about the guy that can write a check for 300 tonnes of gold? I assume he is sharper than the average Robinhood trader.
Yesterday was brutal for the group, as the biggest names NEM and GOLD (Barrack Gold) got hammered to new 52 weeks lows. But just like that they have made all that back and more today, adn I’ve included a daily chart of Newmont Mining (NEM), and a weekly chart of Barrack Gold (GOLD) with some horizontal trend lines that show here is another good area to make a stand, and maybe reverse the trend back to higher. While I am aware that the FOMC will continue to raise rates, at least that is what they say they will do, I would not wait until they stop raising or reverse course and start cutting rates before getting invested. Across the board today, most of our miners are up 10% or more. An investor can’t miss too many of these type days without seriously denting their performance, we need to be in them ahead of time.
Newmont Mining daily chart, was that just a false breakdown to shake out the last of the bulls?
Barrack Gold shows resistance back in 2019 might now be support on the weekly chart.
On both of these charts, we see oversold technicals that look ready to turn and make a trip higher. Time will tell, its been a tough trade but that is always the case with miners, and any group that moves as much as they do. We want to be around for move up, because bull markets in metals and miners are equally spectacular on the upside.
