On today’s decline I took the opportunity to add to CDE, EQX, and ORLA, as. the group is down 4 of the last 5 days, after that huge one-day run last week. Here is a daily chart of the GDXJ to give you an idea of what the group is doing.

The biotechnology etf XBI has flashed a buy signal on the monthly chart, suggesting a possibly 6-10 month bounce. We are playing this using the LEAP call options that expire in Jan 2024. Be sure to note the oversold stochastics now crossing higher, the lowest RSI (9) reading in the history of the etf, and the PPO is about to print its first positive bar in 15 months. These longer term signals can take a little while to get started, but so far so good.

Took advantage of today’s dip to add to LEAP call options in CDE and SILJ. These expire in January 2024, with a strike price for the CDE options at $10, and for SILJ we bought both the $14 and $15 strikes.

Today, lets take a look at some ratio charts, as they show us what something is doing versus another. First we see on the daily GDX:SPY chart that the trend in outperformance of of the stock market over gold miners looks to have changed. The ratio remains above the 200 day MA, which is also gently starting an uptrend.

In the second chart, please note I changed it to a weekly setting, so as to get a longer term view. In this one we see the gold futures vs the CRB index, $GOLD vs. $CRB. I am not a huge fan of the CRB as an overall representation of the commodity sector, with weightings of Energy: 39%, Agriculture: 41%, Precious Metals: 7%, Base/Industrial Metals: 13%, but since precious metals are such a small part of the index at 7%, it makes for a better comparison between gold and the group in general. As you can see, gold has been underperforming the other commodities since around the middle of April 2020. However, the ratio is deeply oversold on many technicals such as stochastics, and since the nature of ratios is to normalize over time, we should expect to see either the energy, agriculture, etc come down in price, or gold to rise, or both. And if things like natural gas and oil continue to smash into new highs, that should bring gold higher as well.

I recently bought or added to positions in the following miners:

I added to HL:

Added to AG

Started a position in EXK

Started a position in ORLA

That would be my guess, the precious metals and especially their miners are about to take off higher, possibly as much as 60% in just a few months. First, we are getting near June 13, historically the day of the year that proves to be the low for miners, before embarking on big rallies in July and August. Second, the group has been thoroughly washed out from mid-April until mid-May, only recently beginning to stabilize. My third observation is that gold has held up well in the face of a rocketing dollar (as measured by other trash fiat currencies), a sign of relative strength. Fourth, as the stock market appears to be rolling over and getting hit hard, the miners are starting to decouple as they usually do, when investor realize the fundamentals are strong and getting better, providing them a place to hide during the storm. This crisis, it appears bonds are no longer a safe place to hide as bonds can’t find a bid, many days lately both stocks and bonds get sold off together. There are other reasons to expect a big rally, at least on an intermediate time frame (3-6 months), like the weekly charts being very oversold and starting to find support, or the massive gains and outperformance of the group yesterday, where even the etfs like SILJ were up 7%! Then there are the “advisors” and newsletter writers out there, with my estimate of 90% of them that are usually bullish, now waiting and watching for the central bank (FOMC) to change course and quit raising rates, or at least stop raising them. Anybody paying attention to the economy can see its weakening at the same time we have rampant inflation, otherwise known as “stagflation”, the best of all worlds for precious metals prices. These are the reasons I think the recent sharp drop in silver and miners will turn out to be a false breakdown.

The news has been fast and furious the last couple years, most recently with the Ukraine war and the sanctions against Russia, which are failing miserably. In fact, the sanctions are blowing up in the west’s face, serving only to force prices of commodities higher for their own citizens, if their services aren’t shut off entirely. Meanwhile, Putin governs a commodity based economy, and as such, Russia is raking in money hand over fist. So far, Russia has doubled its sales of gas and oil, so far for putting a dent in their economy. They probably hope the west comes out with more stupid ideas, as Ukraine is getting annihilated in the war, and won’t be allowed to quit until NATO is satisfied enough Ukrainians have lost their lives. No matter what side one takes on the Ukraine conflict, it cannot be denied Russia is coming on firmly on top and in control so far.

I will try once again to keep up with regular posting to the site, I think it will be easier now that we sense a big move coming, one that investors will not want to miss. It is quite common in the mining group to see a big flush lower, before they let prices make a breathtaking move higher, and as this bull matures, we should expect to see new all time highs in the group, substantially higher than anything we have seen before. Basically, the FOMC is hiking rates into an oncoming recession, and on top of debt already being out of control since they used Covid as an excuse to essentially double the currency in circulation. Gold is making highs in just about all other currencies except the US dollar, and we don’t expect that to last. Soon, we should see gold, silver, and their miners fly because of their safe-haven status (now unchallenged by bonds), increasing cash flow, and their lowest valuations in history, even crypto-tokens are seeing the wheels come off! In short, it looks like everybody is just waiting for the Fed to change course, and while the inflation problem might be reason to keep hiking rates (if the economy were strong), that alone does not damage precious metals or miners. In fact, Volcker jacked rates up near 20%, and gold was screaming higher the whole time.

Let’s look at a couple charts, starting with the weekly SILJ etf, its the silver junior miners etf, which isn’t really “juniors”, but more mid-caps, the sweet spot of the group.

Next, lets look at the monthly chart of $TNX, the rate on the US ten year note, its the one most market participants pay attention to, and we see some interesting observations. To start, interest rates have already had a massive rally, and precious metals have held up relatively well overall. We also note that the $TNX is coming into strong resistance, being this chart goes back 20 years! Its worth pointing out that the stochastics are well-overbought, and while relative strength (RSI) has never been this high which some think suggests more strength is likely, we tend to think the message is that its more likely to normalize and come down. Lower rates should again light a fire under the precious metals and miners, and more so in the current environment with out of control inflation.

$TNX- The rate on the 10 year treasury note might run into resistance soon.

We won’t pretend that we haven’t been battered over the last month, as we wait for the investing world to realize miners and their metals are the best place to be, but we hold firm in our conviction, and if anything, our case has grown much stronger. Commodities across the board have been a great place to be, and gold (and silver) have mostly watched from the sidelines as oil, agriculture, and others have rocketed. That often happens, then as the recent standouts take a breather, gold and silver have their time in the sun. Yesterday’s huge gains might be the first confirmation we have that the turn has arrived. As always, members should check the portfolio link above to see what our accounts hold, with position sizes and current unrealized gains and losses. If you don’t have exposure to precious metals, time is running short to acquire them, in our opinion.

I posted some links to some of the more interesting articles I read this weekend, starting with the World Gold Council’s admission that the world’s central banks now hold more gold than any other time in the last 31 years!

Copper boom likely to last for decades, prompting a global hunt for new supply, with some junior explorers mentioned, of which I own some MXROF and DOLLF.

Here is a 45 minute video with Rick Rule, on when he will finally sell his gold.

I try to keep balanced, and that means also posting article in which I don’t agree with the actions taken, like the following. Phil Streible recommended clients take profits this week, telling them to “sell the rip”. Notice he observes silver is performing better than gold, and that he is looking to get back involved, so he is a bull without his positions is how I see it. Its easy to get convinced to take profits, especially the relatively small moves “a rip” higher, but I have found that while cashing out early works 7 or 8 out of 10 times, it leaves one on the sidelines for the biggest and best moves, the ones that change our entire financial future. The old adage is let winners run, and it still applies in my trading, most of the overall gains in a portfolio come from a few big winners, and we have to be in them when they fly. In short, if I am going to try and skim 5% returns here and there, far easier groups to trade can offer up those opportunities, but that is just one man’s opinion. It does seem the biggest, most successful investors don’t jump in and out of their holdings, once they have formed an investment thesis.

I think this week might have changed how metals and miners are being perceived in the markets. Not only were there huge gains one day this week, in the face of weak markets overall, but the volume in things like SILJ has doubled, showing renewed interest in the sector. Thus, I will continue to look for windows to add to positions. Here is SILJ’s weekly chart…

Just a quick chart that could turn out to be important, if the breakout higher out of the triangle can hold, the next leg of the bull in gold will have started. Also note the MACD and PPO technicals having been oversold for a long while now and trying to turn higher, while the stochastics are still far from overbought. All this, on top of the GIANT cup and handle pattern seen as we step out further, like on a 20 year chart. I don’t have to post the cup and handle, its all over the internet now, but here is the. triangle breakout below.

Markets are pulling back sharply on the excuse of Netflix´s earnings, but man things are being dragged down alongside NFLX, including my miners. I took the opportunity to add to my SILJ etf, and will show some charts below. Regarding my shorter term intraday signals, I didn´t take any signals today because the miners are my priority and they were presenting a buy area for me, so they had my focus. However, I got buy signals on both the URNM (Uranium etf) and XBI (Biotechnology etf), and both have worked nicely higher from the paper entry price, so I look forward to using this short term trading system again, while staying invested heavily in precious metals miners.

Below, I will post the URNM daily chart, XBI long term monthly setup, and the SILJ chart I used to add to my positions today.

I haven’t had much to report, being I have been getting shelled and just trying to manage my psychology so that I don’t make mistakes or act out of fear. On that note, I have tried to keep accounts accurate as to positions by reporting when I make transaction, but few have slipped by. Overall, my holdings and stops page on this site is quite accurate, except for a couple small sales I did in SILJ to keep accounts margin compliant, and not in risk of forced liquidations. Yes, it got scary there for a little while, but anybody that knows metals and miners knows they move quickly in both directions, and just a week or two later, we see an 18.8% gain today alone, on top of an already decent week. In short, I did not sell any more than I absolutely had to, because I still think this trade will work out well in time.

I remain in the trade because I am starting to see things fall into place in other areas of the markets, not just up days in the miners. For example, the general stock market now goes down more often than it goes up, and when its up, its either inconsequential or it can’t hold the gains and sells off. Today was another example, while stocks didn’t get clobbered, they couldn’t rally all day, only to sell off sharply into the last few minutes before the close so that the QQQ´s ended down over 1%. Likewise, previous supposed competition for gold, the crypto stocks also cannot hold a bid. Bitcoin used to jump thousands of dollars per day, now it can’t bounce much when it is due to bounce, and if it bounces, the rallies get stymied by selling. Bitcoin keeps hanging around the important $40K level, but acts like it has work to do on the downside before it mounts any serious rallies, likewise with many cryptos. A third note is the US dollar fell out of bed rather quickly, faster than I had anticipated to be honest. Readers know I am not a big fan of using the USD charts to predict where gold is going, mostly because the USD index is just the dollar vs other fiat paper currencies, not gold, so to me it seems of limited use. But since many do watch it, there is a bit of a self-fulfilling item there, and in any case, the US Dollar now has a failed daily cycle which also might lead to an intermediate cycle decline, or some have even said a yearly or 8 year cycle decline. Imagine that, how quickly things change, when just a few weeks ago NOBODY would consider touching a miner, today they appear to be the only game in town!

As far as new positions and closed trades, I took profits on a long-side trade in Vale LEAP options, and have also started a position long in the UNG (Natural Gas etf) LEAPS. I will continue to look to add to my Natural Gas position as it triggered buy signals a week ago on both the MONTHLY and WEEKLY technical charts. I will also look to add to miners on dips, since they arer the group that just came into focus, no need to dump the idea of buying miners so soon, when this move is not only just starting and in the seasonal strong time for the group, but the move could also be huge, if it turns out to be the beginning of the last and biggest leg of the bull market. Its too soon to tell, but we don’t want to leave this idea too soon, just because it put us through some pain for awhile first. It’s just part of the game, and we must do what we have to, in order to stay balanced and focused. I will admit that this setup (miners and precious metals) has tested me more than most, being I am more heavily invested in this group than I usually would go, being I anticipate the Federal Reserve bank to start raising rates soon and that has always proven good for miners, especially in this type environment with low rates and slowly rising to stem inflation. I assume, maybe mistakenly, that they will keep their word, but so far the markets seem to be believing what they say.

Now that we are getting some action, I will once again promise to be more active on this site. Not only should I have plenty of action to report on the miners and metals, but I see some old, short-term trading methods I used in the past starting to work again. These setups are signals off the 30 minute bar charts (intraday), and typically last 3 to 5 hours and can extend into the next morning, at times go as long as a couple days when they really work well. I see these setups presenting themselves once again, so am happy to take the trades as the signals come, I will report all buys and sells here, along with my account statements as always.

I am also see some breakouts form significant levels and patterns on the charts I have been watching most lately. For example, gold is just now breaking out (today) from its triangle pattern going back to the high in made very early in 2021. Silver is also taking out important levels and the next stop should be the 200 day MA just above, while miners made new recent highs, and gold, silver, and miners all made big gains on quite heavy volume, lending credence to the move up. Even better, according to Michael Oliver, whose work I respect greatly, silver is now very close to a weekly close above his trigger levels that would confirm the next big move up is about to begin. Since his is a paid service, I will just say it’s not far away, probably less that 30 cents away from today’s close. We also see gold is back above all three important moving averages, the 10, 50, and 200 day MAs, and broke above the most recent high at 1833, suggesting we are back in an uptrend. Regarding the moving averages, please note they are not only all sitting on top of each other in perfect order, the shortest term above the 50 day, which is above the 200 day MA, they also are starting to spread out from each other. While that is not a guarantee this will be the BIG move, it is how the biggest moves begin. The Volume by Price horizontal bars also suggest gold has just cleared its biggest resistance areas as defined by volumes traded in that range. There are too many charts to show readers to catch up in just one day, so I will leave you with the $Gold futures daily chart since everything else in the group is driven mostly by gold. Over the next few days I will not only post charts of specific miners and etfs, but also other timeframes for both the precious metals and miners, since I am most interested in the longer term setups on this trade idea.

Just a quick extra post of something I noticed as I was going over the charts this weekend, both the SIL (Silver Miners etf) and SILJ (Silver Junior Miner etf) are sitting on their uptrend lines for this cycle on the daily charts. I will post the charts below, but must add that both GDX and GDXJ are not yet testing their trend lines, so we might not get an immediate bounce. However, I would not expect much downside in any of the funds I mentioned above, and the silver miner etfs look even better, in my opinion. Keep in mind, most silver miners are actually near 50/50 in production of both silver and gold, another reason I prefer the so-called “silver miners”, an investor is already exposed to gold as well.