While I take most technical analysis with a grain of salt, especially my loosely drawn trend lines, I still find them useful to define areas of support and resistance. They are not lines in the sand, since they are quite subjective, people see what we want to see. But besides showing us general areas to watch, technicals can also tell us when big changes have occurred, especially when they occur on longer term charts, such as this monthly chart of BTG. From our entry price, its paying us a 6% dividend while we wait for price appreciation in this gold miner. The lines I’ve drawn were just thrown up quickly, but they show an area of long term support which has held, and now a sharp rebound that takes out the down trend line, indicating a change of direction longer term. Also note the MACD just turning positive, along withe the PPO crossing higher near the zero line, both signals that this stock wants to go higher for quite awhile. Buy on dips, and remember the time frame of the chart that gets you into a trade, this chart tells us to size properly for a multi-month hold at a minimum, likely much longer.

I have been quiet lately, patiently observing the action in markets. I make it a point not to interrupt the process of traders shoveling money into our accounts as fast as possible. In fact, I often turn off the computers and go do something else for awhile, so I don’t get sucked into making calls day to day, or worse, convinced to sell to early. Today, I just wanted to re-visit the GDXJ monthly chart I posted back on April 14 of this year, not quite six months ago. It has clearly broken out of the triangle and is headed to the $63 area as a next potential rest stop, then onto new all-time highs up at $137. I know its hard to buy after such a sharp move higher, but if one isn’t invested in the precious metals and miners yet, there is still lots of upside to catch. Personally, I don’t like to chase moves higher because more often than not they will reverse. But the times prices keep marching higher are life-changing events, as compounding really starts to kick in!

I also want to point out that silver (using the SLV etf here), is very close to making new 11 year highs. About 20 cents more and it will be there. Silver is still a huge opportunity, it has yet to make new all time highs over $50/oz. Just reaching that level, which seems a given, is a 56% gain from where it sits today, and I expect it will blow by $50 with ease, could even get to $100/oz in the next year. I am not predicting such drastic gains in such a short time, but the point is that silver is going there sooner or later, and the fact this metal can move like a rocket when it gets going, implies the gains will come quickly once it starts. Don’t miss it, buy physical metal first, then miners for investment funds, and stay away from “paper” silver like this SLV etf altogether. If you have to buy silver in a brokerage account, then stick with something like PSLV, where they update ve with serial numbers on a regular basis. I am focused heavily on the miners at this point, and expect them to outperform by a huge margin.

In this post let’s look at the DAILY chart of the GDX vs. SPY. Not only is the ratio in clear uptrend, we can also see it’s trading above all it’s moving averages, which themselves are beginning to turn higher. I put the horizontal trend line on the chart again, and its easier to see how close we are to a real breakout, confirming what the weekly chart suggested, that miners should outperform the general stock market for a long time once solidly over the resistance. The fact the moving averages are all just recently trending higher means we are near the beginning of something big.

Looking back a little over two years ago, we see the GDX vs. SPY chart showing an inverse head and shoulders pattern, and the ratio is trying to break above that horizontal line of resistance. I drew it loosely, because much of technical analysis is subjective, such as where to place a line, or which tops or bottoms to connect. In any case, it looks to me that the ratio is trying to work back up over my trendline, meaning gold miners should be outperforming the S&P 500 going forward. If the ratio can stay above that line, miners should outperform for more than a year, maybe two, as money flows out of the general stock market and into the precious metals sector.

When I say sharp dips are to be bought, we can use a chart like gold and silver miner CDE to illustrate the point. Notice the violent bashing it took over just 4 days in the beginning of the month. Now, it has come back to where it was before the selloff, after rallying 43% the last two weeks. For those that had the nerve to buy or add to their positions, its a very nice return! This stock was the most glaring example I came across, but similar action was seen in many miners, so we added to several of our positions including CDE, SVM, HL, EQX, EXK, BTG, and a few others.

The junior miners, as represented by the GDXJ etf which is really a fund of mid-cap miners, is nearing breakout levels. This chart goes back over three years, and GDXJ isn’t far from taking out the high made in April 2022. This stochastics cross higher has seen a launch in prices, suggesting very strong underlying momentum. Be long, hold strong, buy any sharp dips, and don’t expect them to last very long in this type of action.

Next stop appears to be 338.04, then the 2020 highs up around 374. Many stocks are making new bull-market highs, like NEM and GOLD, but also some mid-caps like SA, and smaller caps like JAGGF, which has rallied 50% in just seven trading days. GDX is only 20 cents away from making a new 52 week high, this is the stuff of which bull markets are made!

In bull markets, dips are to be bought. Get long and hold, proper position-sizing relative to one’s risk tolerance will allow them to stay on the bull.

Stepping back to get the bigger picture, this SLV chart goes back 8 years, the horizontal trend line is my doing. While I don’t trade in or out because of trend lines, mostly because I feel they are more loose areas than lines in the sand, I still find them useful to identify areas where something might find support or resistance. Seeing SLV oversold on the weekly stochastics, combined with coming into a range of possible support going back many years (it was past resistance), helps one pull the trigger.

Bought 3 contracts of the. SI futures December expiry at average price of $28.08. However, below I posted the more active September contract. You can see that stochastics on both the daily and weekly charts are oversold, and silver looks to have pulled back into an area of possible support, after a near 20% correction, all good enough reasons for me to buy here. While the weekly shows a further 40 cent dip to the trend line is possible, more so with the metal coming into support at it’s 200 day MA. If we see silver pull back another 40 cents or so, I will use that a an opportunity to add to the position. On a side note, the Chinese continue to buy silver hand over fist, as reported here https://twitter.com/oriental_ghost.

The weekly ATR (average true range) is $1.82, which I will use as a general area to stop out, so the $26.26 area on the December contract. Keep in mind its trading at about a 40 cent premium to the September contract. So if I had bought the September futures, my stop would be about $25.88.