Monday morning we sent subscribers a brief, 20-page update as we are in Vancouver at the Cambridge House conference. We remain cautious and bearish on the sector and are actively looking for new prospects. We have found a few which we will discuss in the next few weeks. Below we share part of the summary which is on page 1 of every weekend update.
The same applies to the miners. In looking at GDX, GDXJ and our
55-stock junior index (p18), it is possible they could see a few days
of gains before touching strong resistance again. There have been huge
outflows in the ETFs in recent weeks and that could support the stocks
“holding up” a bit longer than expected as it is bullish from a
contrarian perspective. However, when GDX had huge outflows at the end
of 2012 and middle of 2013 it did not mark major market lows then.
I do not see a major bullish catalyst for precious metals until the
Fed’s done with rate hikes. Inflation has peaked for the year and
commodity prices have clearly rolled over. Even with the weak US$,
commodity prices have rolled over and precious metals remain below
important resistance. Furthermore, Gold has climbed back above $1260
but GLD continues to show no real increase in demand. In addition,
note the chart of a producer index of 11 stocks (p20). Its trading
near a 52-week low. Producers are anticipating a lower Gold price. I
did not have time to create an optionality index but I’m sure it would
look similar.
My hope is that the sector trades lower over the next 4-6 weeks,
creating a buying opportunity in July. The miners continue to be not
so oversold. GDX’s bullish percentage index remains at 39% and as of
Thursday, 37% of our 55-stock junior index was trading above both the
50-dma and 200-dma. Again, when these figures go to 15% or below we
will be nearing a low risk buying opportunity.
Consider a subscription today as we can help you get positioned in the junior companies with significant upside potential at reasonable entry points. This is exactly our plan in the months ahead.
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