Christmas week trading is usually dull and low volume, but not this year! The miners took off to the upside, creating a “recognition week” on the charts, basically a standout move that is easy to spot on a chart from across the room.

SILJ was up over 10%, and even the slower moving GDX was up over 7%, and they had big volume as well. Let’s take a look at the charts.

I like to focus on the weekly charts because I am longer term focused in my trading, but now let’s check out the daily chart to feel how dramatic the moves were.

The daily chart above is simply splendid, I can’t envision a better confirmation that my betting long on miners is correct, not to mention being up around 40% on the position is the greatest confirmation of all. A clear breakout, huge volume in a typically low volume week due to it being holiday shortened with markets closed a day and a half. Simply put, nothing has changed except my adding slightly to my positions recently on the weak days (see account activity to confirm). I will continue to hold long and strong as we are now beginning the best time of the year seasonally for silver, and the miners in general. Several sites cover seasonality, such as Seasonax or Mish Shedlock wrote an article quoting a study where the average gain for the metal is 17% between now and the end of February each year. Of course, if the metal moves 17%, we can expect the miners to move at least twice that amount, so I will stay heavily invested for quite awhile longer.

I will report any portfolio changes as they are made, and you can verify holdings for yourself on my accounts or portfolio pages. It’s been a Merry Christmas, perhaps we will see a Happy New Year as well!

If you look back to the sharp 2016 move higher in the charts above, you will recall it looks exactly like the rally in gold, silver and miners back then. Miners often outperform in bull markets, which they are doing now so this must be a bull, and underperform (go down more than the metal) in bear markets.

Sure enough, our hunch that miners were just testing the bulls before moving higher has now been confirmed with conviction, as the whole group is blasting higher. Note that many of the silver miners are already making new 52 week highs, and while most miners are doing well, including gold miners, they are not as strong as the silver miners as they charts below will show. The SILJ etf is closer to making new 52 week highs than the GDXJ etf, though both are rising in tandem. What’s better, we are heading into the seasonally strongest time of the year for precious metals and their miners, so stay long and hold strong.

In addition, we the US dollar and the stock market appear to be rolling over, which could put added wind in our sails. I did add to SILJ a few days ago and forgot to post because it wasn’t a large buy order as I am already very heavy and on margin in all the accounts I manage for friends and family. As always, I tell the truth and you can verify these “after the fact” statements by simply going through the account statements posted on this site. After all, claims mean absolutely nothing in this world, if they cannot be independently verified.

Potentially more fuel for the fire, I still see lots of bulls on the group that are either uninvested, or have ver small positions compared to what they wanted to buy on a further dip in gold that never came. I think after a few weeks of disbelief and waiting, they might also decide to chase prices higher as miners now appear to be the only game in town. In short, I’am looking forward to very good gains over the next several months, at the least, for my miners, gold, and silver.

Regarding other opportunities, my system has luckily kept me out of the XOP and energy stocks, despite my having interest from a value perspective. I will discuss this more in future posts, but suffice to say that as soon as my indicators flash a buy signal, I will be getting involved there as well. I mention it now because this could happen soon, then again I was getting prepared a couple months ago for a signal that never came, so we will just wait patiently. I fully realize the fundamentals are terrible and worsening in the oil and gas sector, but the real question is how much of this is already factored into the stock prices. We cannot know for sure, so will let the charts tell us when some more well-connected investors and insiders believe the upside is worth the risk. My hunch is we are close, but keep in mind I am also a longer term trader and often have to wait a month or two, or more to start making the big gains. No problem for me, as long as they materialize.

For now, I’m staying laser focused on silver miners, gold stocks (juniors), and the metals, in that order. It’s still early enough in the intermediate cycle (lasting several months), that I will continue to look to add on dips and pullbacks.

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!

Just a quick post to point out miners might be resuming their trend higher soon, maybe as soon as today. Above we see the $HUI gold bugs index breaking it’s two month downtrend, as while this is no guarantee we are headed back up again, when it does occur, this is how it will start. Now let’s take a look at some individual mining stocks, and note how they are acting similarly. First, CDE…

How about SAND…

Or the larger streaming company WPM…

So we see the index and several miners all moving together, only a step or two in front or behind of the others. While we have stayed long throughout this correction, we did manage to add shares here and there into the sharp down days, so now we have the most shares we have had in the trade just ahead of them starting higher again. If for some reason they head lower first, I will use that as an opportunity to add more, as action like today’s is tipping their hand, they want to go higher.

As the charts will confirm, metals and miners have been moving lower again, testing my intestinal fortitude. While it can be uncomfortable, I try to focus on the things I can control, vs. the ebb and flow of markets, they give and they take. I have seen a good portion of my unrealized gains get forfeited, for the time being. People will ask, why not sell at the top and buy back lower, like where the miners are now? Well, if I knew it was a top I would sell, but nobody can know that, and if we see how many times I chose to stay in a trade that looked “toppy”, but kept on moving higher, we would see how the numbers work better by staying in a winning trade until you get your signal to exit. Anything short of your full signal to exit, will find you leaving more money on the table than you would like. In short, it’s costly to the bottom line trying to sidestep what seem like obvious areas to pull back. If it were that easy, all traders would be rich, but we know that is not the case!

Let’s look at a few charts, and start with SILJ, which is now coming back down to it’s 200 day MA, which should be a relatively low risk buy zone. I have funds to put to work down there, but have already started nibbling again today in the $9.20 area, give or take a few pennies.

I like this setup, the only thing that I am keeping a skeptical eye on is the fact stocks like CDE, a component of the SILJ etf, didn’t even stop for coffee at it’s 200 MA, instead it blew right through it today. We also see similar action in MAG, another component of SILJ. While one day is not a huge worry, I would like to see these two snap back soon above their 200 MA’s.

One other small concern is that GDX might not be done making it’s trip lower, and being its the largest mining etf, it can weigh on prices in the group if it wants to go lower before finding a bottom. Still, I see the $26 area as a potential pit stop, then $25.50 as another support, and lastly the 200 MA down in the $24+ area. Let’s hope it doesn’t have to visit $24 before turning higher, but it might so we need to be prepared.

And a quick look at GDXJ has me itching to buy. Yes, excited to start adding to miners in the face of all the negativity I am reading now on the group. So many people are looking for $1340-$1370 on gold to be tested that I feel it is unlikely to happen, even if it is a logical area. The fundamentals or new QE money printing, geopolitical risks, and a weakening world economy all support higher gold prices. In addition, my reading on the internet forums shows many of the smaller players not only shorting miners or looking to add to the short side, they have almost abandoned the search for an area to buy and get back on the side of the longer term trend. While many groups appear washed out, like the MJ etf or XOP (energy stocks), they are not yet in uptrends like the metals and miners, as defined by the 50 day MA above the 200 MA, and both sloping upwards. For that reason alone, I will stick with miners and buy/add into these dips. The goal is to have more shares than at any other point in the trade, with positive marks (unrealized gains) so can hold strong, for the next leg up in a bull market.

The general stock market continues to close in on new highs, but if it doesn’t respond to QE like it did the first three times, a weaker market could send miners flying. Not to mention the dollar is starting to wobble up here after a run lasting several years. Lastly, bonds are a flight to safety like gold typically, but even the treasury market seems to be tired running higher after a 30 year bull market. We can’t know what day things change, but we can be positioned in front of it, then enjoy the ride. So while I am getting tested, bruised up a bit and wishing I had sold a bunch of my holdings over a month ago, I still know that feeling is an impediment to greater gains if I let it rule my decision-making. I will stay long and am eagerly waiting to add some sizable positions in the very near term. I did add today very lightly, buying some more SILJ and long term LEAP options on SLV out to 2021, but the sizes are nothing compared to the orders I am readying should we get GDX down to $25 and change.

While waiting for this correction play out, I pulled up the GLD:SLV ratio going back to the 2016 bull rally, mostly because I am seeing signs that this pullback either might not go too deep, or last too long. We can see that after the initial move lower in the ratio (pushing miners higher), we still had another drop, which let the miners make another big leg up. Importantly, the second drop in the ratio occurred just after the “death cross” in the moving averages, which is exactly where we stand right now, complete with the rebound higher to kiss the 200 MA. If this played out again, we would see around 3 months higher in another strong upleg for miners. I am not sure where that would put us cycle-wise, especially since Jan to March is the strongest time of the year for silver, I suppose it might imply we could extend the move through March 2020 which would make the move that much larger, but that is just a guess. One last note, if we are indeed in a longer term bull market resumption, that ratio might trend lower for much longer than occurred in 2016. In any case, the worst to happen if we see similar action to 2016 would be a roughly doubling of the gains already made in the most recent run we have enjoyed.

In short, the risk now seems in being out of metals and miners waiting for a deeper pullback to buy. If one is a bull, it might be best to start or add other positions in here, as lots of individual miners are performing very well, and gold doesn’t seem to want to stay below $1500 very long. Regarding the more volatile silver market, the metal has already corrected 50% of it’s gains, landed in an obvious support zone, and bounced with force the last few days, even outpacing gold to turn the GLD:SLV ration lower once again. We also see the miners starting to outperform the metals again, indicating a low is near, or is already behind us.

All joking aside, this pullback in the metals and their miners has been quick and sharp, and we looked to be resuming the upside just before another drop back to the most recent lows. What does it all mean? Probably not much, and here is why. First, we are now in the Chinese Golden Week holiday, and since the Chinese are big players in the gold market and not going back to work until October 9, gold more often than not pulls back or goes nowhere until they return. Second, Monday was the 3rd quarter end, so there is some degree of ¨painting the tape¨ for shareholders of mutual funds and other investment vehicles. After these items pass, it’s back to business as usual. For example, the stock market held up and could not get much downside traction before they closed the books for the third quarter, but just today (Wednesday), the general stock market etfs in the US closed down 2%. Maybe it’s a turn to last for awhile, I don’t know, but nevertheless these things do affect markets in near term. I typically don´t try to sidestep these tendencies because there is always another one around the corner and trying to do so would require constant in and out trading that is very costly over time, especially if it causes one to lose focus of the big trade they are pursuing.

Let’s go to the charts. If we step back a little further than our usual timeframes, we can better see long term support and resistance zones. Here is GDXJ, the junior miner gold stock etf.

In the above charts we see both of the biggest gold mining etfs have come down to areas that might provide support, and should do so, if we continue to be in a bull market. I read all over the internet lately that short term ¨traders¨ have booked profits and are waiting for even deeper pullbacks that what I suggest might occur above, before jumping back in with both feet. Further, many are now entertaining the short side of these stocks, which is where I think they go terribly wrong. It’s not just the money they might lose being they are counter trend trading, but they will lose sight of the big picture and even if they can switch back to the long side and trend, will they be able to buy with conviction so that they can load the boat. In my experience it is very difficult to do, but don’t take my work for it, just look at the big fish and how often they jump in and out. I’ll save you some time, they don’t do it very often. Mostly because the big money is made by identifying emerging monster trends early, buying a good amount near the lows, then when they have confirmation they might be correct, they add heavily into the pullbacks like we are seeing now. So what am I doing, well I have nibbled here and there over the last week, but since I am very heavily invested already and sitting on big unrealized gains (albeit not as big as 2 weeks ago), I will wait until either we have violent down days to buy into, or the Chinese Golden Week passes. The third quarter close is already behind us, so I am only looking for places to buy down here, and anybody looking to ring the register on gains has already missed that window, in my opinion. It is time to buy, or sit tight, but definitely not sell if one thinks this is a bull trend that remains intact.

And what about my SILJ? Let’s take a look…

Second, let’s look at the weekly chart like we did with GDX nad GDXJ above.

While SILJ is not as clear about its trend on the weekly charts, if you compare it first to GDXJ, then to GDX, you can see it is very similar, just late. Both GDX and GDXJ have already turned their long term weekly moving averages to the upside, and GDX has already made it’s ¨golden cross¨ where the 50 MA crosses above the 200 MA. These are not only in uptrends that remain intact, so far, there are relatively early in that bull trend. These are markets where one wants to buy or add into pullbacks, not focus on selling rallies yet, if they wish to make and keep the big money.

All in all, while I agree we might go lower for awhile, from here the downside should be contained. We might not rocket higher just yet, but that is not important, what is important is that we are on for the ride when it occurs, and we have more shares than at any other time in the trade. Check!

It appears the bull market in precious metals and their miners is back on track, after a short correction of a few weeks, in which I did add to positions, albeit lightly as I’m already very heavily invested. SILJ in particular is very close to it’s bull market highs, and even GDX is not too far away from breaking out again.

Today and yesterday were notable in that silver was up 5% yesterday, then after opening lower by 1.5%, closed the today about unchanged. Miners had similar action, though not as pronounced. This is typical bull market behavior, bucking people off after sprinting higher, only to finish strongly again. I like where I sit, and continue to press the long side, realizing it will get more volatile as the bull matures. I am keeping an eye out for my technicals to flash a sell signal and when they do, I will sell with no questions asked. There are great fundamental arguments to stay in the trade, like QE4 around the bend, repo markets freezing up last week needing Fed bailout, even the stock market seems to be finally weakening, which should help gold and silver miners. Every time the media whispers about a trade deal, the stock market bounced, until the last few days where I have noticed good news is being ignored. In fact, today was the first weak day (-1.3% on the QQQ’s) that closed near the lows in many weeks, and during the weakest time of year historically.

Also of note, Bitcoin got smacked for a 15% loss. MJ is the marijuana etf, it continues to break into new yearly lows, dropping another 4.5% today, and even oil can’t hold that war premium it gained from the Saudi oil refiner attack, it lost another 3% today and the OIH oil services etf is not far from making new multi year lows again. In short, metals and miners were the only green (UP) group today, and that despite a very weak start, they remain the only game in town, unless somebody wants to buy a negative yielding bond, which I do not! See the charts below…

To sum up, my biggest concern right now is that my signals get me out of this mining trade too soon, because everything else is firing on all cylinders and they clearly want to go higher. I’ve learned to ignore the noise and day to day news items as far as investing, but I don’t ever ignore my signals. I will keep you posted when I make any changes, or have something else to share.

The 50 day MA for SLV is at $15.92 today, about 60 cents away from the current price. At typical sharp pullback, like the one that occurred in May 2016 (in the middle or a rip-roaring rally in metals and miners), saw SLV go 11.7% lower before it turned up again. In today’s prices, that same pullback would put SLV at around $16.20, so only 30 cents away, and I would be fine buying there. It’s important to know that after the correction of almost 12%, the next month of June 2016, SLV rallied 17%, dna gained again the month after, bringing the total gain to 27% after the correction, well worth trying to catch. The past is no guarantee, but nothing in trading and investing is truly guaranteed, it´s all just making wise bets based on probabilities.

I don’t know when or from where my miners will turn higher again, but I am confident that they will.