Gold miners remain exceptionally weak even as stocks rise

A quiet week means I have nothing new to report on the outlook for GDXJ, [new asset where we have a profitable short position]and FCX. The same applies to gold, silver, and the US dollar index.

All three assets in which we have short positions have recently paused, and Since this happens after a big move down, it is a completely normal phenomenon.

In the case of FCX, it is after the breakdown below the head and shoulders pattern, which means that the current small movement is completely in tune with The possible movement of the post-H&S pattern only confirms the very bearish outlook.

In the case of GDXJ (and GDX), we see a backward movement He is Being below the November lows, which means the breakdown below has just been verified.

in case [new asset where we have a profitable short position]We have the same thing, with the added note that it is much weaker as it fell below the November lows and is currently unable to approach them.

Also please note that all of the above is happening (or actually not happening), while the general stock market has been rising recently.

This means that all of the above stocks do not follow the rising stocks immediately after they follow them down, magnifying their declines. This is confirmation that we have chosen the agents correctly to benefit from declines in stocks and the precious metals sector.

Having said that, I think it would be a good time to revisit the weekly chart (based on the weekly candles) featuring Gold and GDXJ to put things into perspective. It’s just one chart, but it’s so rich with signs and clues.

Imminent move down

Well, where do we start…

Let’s start with the breakdowns. Both: Gold and GDXJ fell below rising red support lines. It wouldn’t be as important if we hadn’t checked for those malfunctions. In both cases, we saw prices return to rising support lines, confirm resistance and then decline again. This is a strong indicator that the trend has changed and is now declining.

Another clue is the overall poor performance of mining stocks compared to gold. It’s obvious even at first glance – while gold is hundreds of dollars above its 2022 high, miners have reversed its move above it. In the short term, we see that miners have broken their November lows, while gold has not (yet).

This sign indicates the following:

1. The entire precious metals sector is likely to move lower
2. Miners are likely to move to much lower levels when gold declines

This may also mean that some people may prefer a strategy in which they own gold (and perhaps… Make passive income on it), but short mining stocks to hedge the position mentioned above (just my opinion, not investment advice).

One interesting thing is that miners rose strongly compared to gold at their peak. This is a very specific exception to the rule that few know about. Specifically, miners are vulnerable before the trend changes, but just before that happens, their volatility increases again. We saw this at the bottom of 2016, where miners were initially strong and held up well, but when they finally hit new lows, it was a bear trap.

What we saw at this year’s summit was most likely a bull trap.

The next thing is the way gold has risen recently and at the annual peak. Either way, it was a clear coup. This means tops several times in the past, and you mark it on the chart. Moreover, the recent reversal occurred at relatively high volume, confirming the bearish outlook.

So, yes, there is a bigger move down coming in the case of the precious metals market and GDXJ and [new asset where we have a short position] (And FCX, for its own reasons) is about to fall hard accordingly. The first targets are as I put them, but it is likely that all they will be able to do is trigger a correction, not a new major rally.

If gold moves to $2,500 during this short-term decline, I will be leaning toward opening a long position. Then, but it’s too early to say with 100% certainty which tools I will use. During my previous long trade, I used GDX (We entered on November 14th and Take profit on November 21stAnd we I entered a short position in GDXJ the next day), which may or may not be the case this time.

(Written by Przemyslaw Radomski)