Last week we reviewed the gold sector from a big picture perspective. The view was one of an incomplete process that should lead to the next big trend trade beginning on a horizon of multiple months on the short end, up to 1-2 years on the longer end. This week, we excerpt NFTRH 346’s fairly brief Precious Metals segment, which shows a more bearish short-term view.
Precious Metals
From NFTRH 345 with respect to this chart: “If at any time you see gold drift below 1180, please consider having extreme caution if you are a ‘price’ player. If you are a long-term holder like me… as you were, sleep well.”
I am going assume that price players are doing what they need to do in the event this situation worsens.
As we have noted all through the bear market, speculators should not care about whether or not they miss the earliest parts of any new bull market. That is because the next cyclical bull market will be an extended and profitable affair. But in the here and now, there is risk.
Silver lost the short-term trend line noted last week and is now below the 50 day averages as well as the SMA 200. This is non-actionable at best.
HUI has dropped to the key 160 support parameter. That is lateral support as well as ‘higher lows’ (to November, December & March) support. It had better hold or else.
Junior Miners ETF GDXJ dropped out of the uptrend channel noted last week and the exploration ETF (GLDX) continued downward after losing its channel.
Finally, the perspective chart on the Gold Miners (GDM) vs. S&P 500. The time to favor the miners is coming. But if past is a prologue, it could still be up to a year or more before the ratio bottoms. A safe signal would be a moving average trigger as in 2001.
The best investment situation in the gold sector is going to be when gold bottoms vs. stock markets, out performs commodities and comes back into favor amidst a risk ‘OFF’ environment. Don’t let them tell you that strong jobs = inflation = a panic for gold. That is promotion. Risk is still ‘ON’ in the financial markets, so gold is still ‘OFF’.
<end excerpt>
The above is just a small portion of NFTRH 346’s 33 pages, which included additional discussion and context on the precious metals, as well as a comprehensive overview of the the economic backdrop, interest rates (the key to most other markets), US and global stock markets and discussion about individual stocks and favored sectors.
I firmly believe that the gold sector should be kept in view as the next big trend trade, but not obsessed upon (to the exclusion of so many other long and short opportunities across several other asset classes) in the interim.
For consistent, high quality analysis (weekly report and in-week updates on markets and individual equities) that keeps subscribers on the right side of markets, consider an affordable premium subscription to NFTRH.
