Clive P. Maund

Further to the very positive observations on the silver and SLV charts posted on the site yesterday, I want to draw your attention to GDX which now looks like it’s ready to embark on another major upleg. The past few days were tricky with gold and GLD verging on breaking down from a small Head-and-Shoulders top but as we observed yesterday, the larger picture looks bullish and it now appears that the small H&S top was a phony, a curve ball, especially with gold up significantly this morning.

It was pointed out in yesterday’s article that a bearish “shooting star” candle had appeared on the rates chart and this was compounded yesterday by another bearish candle on this chart, a so-called “hanging man” so it is now looking increasingly likely that, beneath the camouflage of yesterday’s diminutive qurter point rate rise by the Fed, rates may actually have peaked for now. Hence the market’s looking risk onish again this morning.

We can therefore look forward to another significant upleg getting going in the Precious Metals sector right away, and as we saw on the silver chart yesterday, it is in position for it with a lot of upside from here.

So, on the 11-month chart for GDX shown below, this time period being chosen to optimise the chart’s utility, we see that it had broken out of its corrective downtrend from January to start a major new uptrend early last month with the initial strong upleg being followed by what now appears to be a normal correction over the past several weeks that has brought it back close to support near to its increasingly bullishly aligned moving averages, in the process unwinding its earlier short-term overbought condition and in light of developments yesterday and this morning, this now looks like a great point to buy the sector, buy back or add to positions.

The 3-month chart for GDX allows us to comfortably view recent action in detail. Of particular note on this chart are the high volume gaps as GDX ran up early last month which are quite strongly bullish and the way that the price and its moving averages have converged in recent weeks on the correction with the latter swinging into increasingly bullish alignment so that another upleg will quickly lead to a bullish cross of the moving averages.

Incidentally, this looks like an excellent point to buy TRX Gold following its minor dip that we had anticipated in the article on it posted on the site a couple of days ago and a quick scan of various big silver stocks’ charts reveals that many of them are at favorable entry points now, such as AG, CDE, HL and PAAS.

This is now believed to be a great point to buy the Precious Metals sector, buy back or add to positions in the reasonable expectation that the upleg now just starting will prove to be BIG.

End of update.

Posted at 8.40 am EDT on 17th September 26.