The team at Crescat Capital explains the last few months pullback in precious metals miners, and what they think they are really worth at today’s metals prices. I could not agree more, and they explain it better than me, so try the link below and see why many miners are worth 11x today’s prices!

https://www.crescat.net/three-themes-coalescing/

I have a few comments and observations on yesterday’s action, and what I am looking for this morning. Since miners technicals closed in the mid-range, neither overbought or oversold, there shouldn’t be any trade signals for at least the first hour of trading. However, some interesting developments are starting to fall into place so lets get into it.

First, the mining sector was strong today for the first time in awhile, and was able to build on gains throughout the day, only pulling back a little about a half-hour before the close. Better, the miners were gaining ground mid-day when the stock market started to sell off. This is important because many are afraid to touch miners before a stock market decline they see as inevitable. It doesn’t necessarily have to play out that way, and action like today’s suggest miners might be the direct and immediate beneficiary of money leaving stocks. Another positive is that the mining sector was up while the metals themselves were flat or lower on the day. Lastly, I saw trades occurring that are not typical lately, like somebody taking 300 SILJ LEAP call options, the buy cost roughly $75K and all were at the offering price meaning the buyer was not willing to wait for a better price. Of note, this was not a day trade, as the volume only reached 320 or so contracts by the end of the day, the buyer held overnight.

We weren’t super active as we are already loaded up and ready, but still saw a few opportunities to add to SILJ, IRVRF, and GDXJ and took advantage. GDXJ had a very good day, up over 4%, and the type of move we look for when making a turn that will stick. It was good to see all the miner etf and indexes we follow close above their 200 MA’s on their half-hour bar charts, a necessary prerequisite to initiate a new uptrend. Lets look at a few charts, one of mine, and also a couple from Patrick Karim, a silver and gold analyst with some interesting charts he posted on his Twitter channel that does some great work with the long term outlook in the sector.

So things look good for tomorrow. We also should have time to watch things unfold in the morning before getting any buy signals in the mining sector. As far as other setups in things like the KWEB etf, we will examine them and mention if there is anything we might buy or add to in the morning, but for now our major focus remains on the precious metals sector and their miners in particular. Especially the etfs at this point as they are the safest play (SILJ, GDXJ, GDX, etc) until the group really gets moving higher.

Last week was another tough one, as miners resumed their downtrend. I didn’t write a post Friday because there wasn’t much to say, and I wasn’t too active in the markets as I wait for the run higher. However, I did get the chance to add to Irving Resources (IRVRF), and also GDXJ LEAP call options expiring in Jan. 2023. As I type, gold and silver futures have opened Sunday evening electronic trade essentially unchanged.

About the only positives I see right now are that miner etfs are almost oversold on the weekly charts again, and are fully oversold on the daily charts. Sentiment is also rock.bottom, nobody and I mean nobody wants anything to do withy precious metals miners, which is strange being many are currently valued withy PE’s (price to earnings ratios) in the 9 to 11 range, while sporting earnings growth rates of 20%. Adam Hamilton, who posts on Bob Moriarty’s site 321gold.com http://www.321gold.com/editorials/hamilton/hamilton091021.html remains one of the very few bulls and even he is only a recent one!

On the negative side, we are getting due for a Daily Cycle Low (DCL) in gold, and that could imply another week of sideways to lower prices. I am still looking to add into this decline to stocks like IRVRF, MUX, and maybe the miner etfs as well like GDXJ and SILJ, but this trade is testing my fortitude, no doubt. I wll keep it short and leave you with a couple charts, lets see what the new week brings.

Not much to report, but I am going to put this post out now rather than wait until after the close, since the intraday technicals on my stocks have already reached oversold. I followed my plan and have orders in to buy at price limits below the market, there is no need to pay up when we are in the middle of a two day pullback so far. What I expect is soon, either today or tomorrow, we will see the miners start weak but close near unchanged or even positive on the day. That will be the sign the pullback is over and we should look out for how high the next rally can take us.

I have heard people around the internet capitulating. For example, Gary Savage over at Smart Money Tracker in a video interview with GoldCore yesterday said he is disillusioned with miners so won’t trade them again!!! WOW! What a strong statement, and a typical sign of capitulation from a person that has traded them close to 20 years, if I’m not mistaken. I’m not picking on him, but do think public statements like this are almost always a strong sign we are not only closer to the bottom than the top, but maybe near the start of something big!

For now, I will just post a DAILY chart of the GDXJ with fibonacci retracement levels to give us an idea where support might come in. I used GDXJ because I have limit orders out there trying to buy below the bid if it can get a quick drop lower, one I hope won’t last too long, just long enough for us to pick up more shares.

Just a quick update after the long holiday, since I didn’t have much that needed to be said after last week’s nice close on Friday. However, I wanted to lay out today’s game plan before the open, so readers can know what I might buy and when.

Since the mining etfs closed in their middle to upper range in regards to intraday technicals on Friday, there won’t be any trade setups for the first hour, at least. This is welcome since it will allow us to watch out buy list to see which are holding up the best as the technicals pull back to oversold later in the the morning or even the afternoon.

A day or two pull back now will not alter our opinions on the sector at all, we will use it to buy more. Some names we might buy or add to are NGD, PGM.V, AUY, IRVRF, OCGSF, IAG and several others. I will post a couple charts below, but lets see which look best after the group gets sold lower on the market open.

I will mention that the bigger miner etfs like GDX, GDXJ, SIL, and SILJ all traded above their 50 day moving averages for most of the day on Friday, a very positive sign, but they did not hold above the MAs, and chose to pull back just below the line. We expect they will get over and stay over their 50 MA’s soon, even this week, so its something to keep our eyes on.

Here is PGM.V (PureGold Mining)…

And here is NGD (New Gold)…

Lastly, Outcrop Gold is a more speculative junior miner but reported great drill results this morning. When this one gets moving it can really run, so its just a waiting game at this point. We have shares, but are not yet up to a full-risk position size, so will continue to bid for shares below the market.

Not much to report today, it’s pretty quiet before Labor Day on Monday, so it won’t surprise me if tomorrow is similar. While I love the markets, at least when they traded freely, I also have things I would rather do than sit at the computer pecking the keyboard like a monkey when opportunities are limited. In fact, we had only one small trade today, a partial fill on out IRVRF (Irving Resources) buy limit order.

Since I don’t like wasting people’s time or my own, let me just post a weekly chart of IRVRF so you have an idea of the potential this stock has. Irving is an extremely high-grade explorer in Japan, and a favorite of Bob Moriarty over at 321gold.com, and last I knew it was his largest holding. It’s tightly held (most shares in the hands of a few people that are in it for the long haul), and we made a very nice score on this stock our first time around. It’s time to get involved again, in my opinion, so that is what we are doing. I don’t like chasing stocks or paying up, so I just sit on the bid or slightly below, and take in any shares that people cannot stand holding anymore. It’s worked before, it will work again. Here is the WEEKLY chart of IRVRF….

There wasn’t much action today, at least nothing set up or dropped to oversold technicals enough in our charts to warrant any action. We didn’t make any changes, just sat and waited patiently for setups to occur, and saw accounts creep higher in value again. It’s looking to me (Paul), like miners are just digesting the big gains made recently, and fueling up the tank for the next big day or two, which should be this week.

Outside of miners, we had KWEB, the China Internet etf jump 4% today, and now up 5.5% on the week, also looking to me like it wants to make a run higher. On the daily chart, notice the fibonacci retracement to the 50% level is close to the 200 day MA as well? When we see two popular indicators meet in the same area, it means many people are focusing on it, and makes it more likely to be achieved in the future. This means I expect KWEB to get up near $74 at least in this trade, maybe taking 5-9 more months to get there, but possibly much quicker. We will look to add to the KWEB etf when it gets oversold on an intraday basis, or even on a daily chart, though that isn’t likely to happen this week from the looks of the chart below.

Generally speaking, the miners were a decent group today as they managed to close higher by 1-2%, however some of the junior explorers were weaker and pulled back. I might add to some juniors during the rest of the week, but I don’t feel pressed to buy anything heavily or quickly. We can afford to wait now that the trend appears to have turned higher, and we already have large positions. I liked to see EQX (Equinox Gold) get its act together and be strong all day, closing at the highs, up over 5.5% on the day, so it was a standout worth mentioning and we might add at the next opportunity, being our position went into the green today (unrealized P+L when positive). Here is EQX, looking like it could easily make a drive straight to the 200 day MA around $8.60. Importantly, note the gap there created back in mid-June. That gives us another reason to think EQX getting up there is close to a sure bet, it could have much more in it, but I would at least expect we test the 200 MA.

In short, it’s not too late to get involved for what is shaping up to be a big run for the mining sector. If you don’t own them yet, days like we’ve had the last few don’t offer much better opportunities to join the party. Take advantage of the scared traders that can’t hold positions for more than a couple days, and scoop up the shares in which they are taking small profits, because this group can really get flying once momentum kicks in!

After a big week last week, and very strong close on Friday, today was a day of digesting the gains with a very modest pullback. We took advantage by adding to a few positions after waiting for the technical indicators on the 30 min bar charts to come down to oversold levels. Late morning we were able to add to a couple positions, things that haven’t yet gotten away from us on the upside, since we hate to chase prices higher. We bought more SILJ LEAP options that expire in Jan. 2023, and some shares in junior explorer Outcrop Gold (OCGSF), which is a stock we made big gains in 2019-2020, now looking like it might have bottomed out with the sector. We don’t just trade the options on SILJ, as we have a large position in the shares alongside the the options we added to today, but while the ATR’s (average true ranges) of most miners right now is low in comparison to the last year or two, along with the implied volatility being subdued relatively speaking, it makes the options contracts more attractive for a buyer.

We also had several limit orders out there, hoping to add to some miners on the intraday pullback, including MXROF, AUMN, IRVRF, and NGD but were not filled. That’s OK, we will remain patient and try again at the next opportunity, now that the half hour bar charts (intraday) have made a “golden cross” to the upside, where the 50 bar moving average has crossed above the 200 bar MA. We are confident the turn is here for the sector, as the 200 bar MA is also now about to turn and start trending higher, so it’s very much time to be invested if one isn’t already!

A few charts to consider…

Friday was not only a huge up day for our accounts as the miners decided to take off higher to end the week, the more significant event is that the day appears to have confirmed we are in a new intermediate cycle for gold, silver and miners. This suggests we should have around 6 months of higher prices, how much gains could be had we cannot know, but it is very much time to be heavily long precious metals miners. I will not be the least surprised if we take out the highs of last August in the GDX and HUI index, for example, and by a wide margin. The setup seems about as perfect as it can get, and we are betting big on this outcome. Stay tuned and see how we do, members can see just how much we made on Friday alone by accessing our daily account screenshots in the tabs above.

Many would be bulls have not yet bought, after being punished the past 12 months they are scared into inaction, or more common is they are buying way too lightly. Opportunities like this don’t come by often, when they do its important to recognize it as soon as possible and get substantially invested. A trade setup like this can change your whole life, so don’t wait if you see what I see, each day one misses that miners jump 10% really cuts into their overall returns. The way to make the big money is to be in big, and early, so as to benefit from compounding, and there are still many miners that are just leaving the gate. Let’s look at some charts, many are just now jumping back above their 200 day MA (sign of a bull), and taking out recent highs confirming we have an intermediate cycle low behind us now. In addition, long term supports on many weekly and monthly charts held up after being tested recently.

I frequently get asked about my allocation to gold miners versus silver miners as I get invested. I am more heavily into silver miners at this time because I think silver has more upside potential and I want to take part. However, I really like the silver miners for another reason, its because they are almost all 50% or more gold miners too! There are very few purely silver miners, so when we buy in SILJ, for example, we have roughly 35-40% exposure to the silver side, and 55-60% gold miners. The point is stocks like PAAS, HL, MAG, AUY and the other large holdings in the SILJ etf will be flying along with gold miners, even if silver takes some time to take off as a lagger. Of course, later in the move we would expect silver to take the lead, and that is why I want to be sure to have my miners taking silver out of the ground as well.

I also get asked about allocation to junior explorers, miners like MGMLF, BKRRF, IRVRF, MXROF, and similar stocks. While I own each already, at this early stage in the resumption of the bull move higher, we would expect the “bigger juniors” and even the big cap miners to move higher first, and with less risk. It doesn’t have to play out like that, but it is what history suggests, and it can get frustrating to watch things like GDX rise in an uptrend when a junior still isn’t yet finding lots of buyers. I think they will almost all go up a lot in this bull move, but I also like to have a good size position in something like SILJ which will definitely rise if the group and gold/silver rise. My point is we might still have time to buy more into the junior explorers, maybe even after taking some decent profits in the bigger miners first. That said, we did just buy IRVRF this week, but my focus remains on SILJ, GDXJ, and their component stocks.

Not a lot of action today, at least in the markets, though plenty in the news such as the crisis in Afghanistan. I will keep the post short and to the point, as there wasn’t even an intraday buy signal in the mining sector until late in the afternoon. We added to our Wallbridge Mining (WLBMF) shares, but that was our only activity today. We will look to add to this position as we are not yet up to a full-risk size, but there is no rush as we are heading into September which is historically the weakest month of the year (for the general markets). It feels like we are in the “quiet before the storm” period, so will keep some powder dry to take advantage of potentially lower prices, though I still think the lows might already be behind us.

Let’s looks at the WEEKLY chart of Wallbridge Mining, one of Eric Sprott’s largest junior explorer holdings the last time I checked his SEDI holdings here. I’ve included the fibonacci retracement levels from the most recent low of the year-long pullback to the all-time high, which strangely enough occurred after the August 2020 high the sector made, when it made a second and higher high. This was an obvious show of strength, and one reason it was on my buy list. I expect Wallbridge to perform among the best once the group turns around.

Wallbridge Mining’s weekly chart shows a nice uptrend, with plenty of upside and new all-time high in Sept.

Trendlines are very subjective in nature, so some might not agree with how I have drawn the uptrend, but that isn’t the most important takeaway from the chart. Prices don’t lie, and they have been in an overall uptrend for a few years now. With this lengthy pullback time-wise, to old resistance levels which should now be support, when would one buy into this stock if they wouldn’t do so now? 🙂