Gold update #6

Brian G

Nov 23, 2021

In my last gold update (Nov 10th), I added my final gold miners piece after GDX made a breakout from a 3-month base. I wrote: “My average cost basis for GDX is $31.70. As gold miners are volatile, there could very well be some chop here. However, the cushion on my position lets me sit tight.”

Suffering the same fate as the widely-watched IWM and BTC charts, GDX failed to hold its breakout (see below). This is not surprising as many were excited by that perfect-looking “head and shoulders bottom” pattern.

I still have some profit cushion, and am remaining patient with my position due to both the long- and short-term charts.

Longer-term charts

For all the hate gold gets, you’d think it’s in a massive drawdown or something. But this quarterly chart shows gold coiled above a base within a long-term uptrend:

In my Oct 7th post, we looked at how the monthly charts for Silver, XAU, GDX, and SGDJ all hit major support levels going back 8-12 years. From that major low on Sept 29th to earlier this month, GDX rallied over 20%.

Several of the stocks within GDX are in strong uptrends. Below are quarterly charts for FNV, WPM, WDO, and KL.

And in my last gold update, we also saw monthly charts for several venture stocks (ARTG, ESK, GBR, SLVR) in strong uptrends. More on these names below.

Shorter-term charts

On the weekly chart, GDX stalled at a logical level earlier this month but remains above long-term support.

GDX Daily: Today, miners touched the 50% retracement level of the rally off the Sept 29th lows.

Leading mining stocks (ARTG, ESK, GBR) are using this pullback to retest recent breakouts:

Final comments

Long-term charts give us a very bullish view for the PM miners. In late Sept, miners hit major support levels, before GDX rallied over 20% by earlier this month.

The pullback in the past 2 weeks has shaken out lots of new longs. Volatility was also to be expected as the gold sector awakens from a 15-month slumber. However, the sector now needs to show a rebound ASAP in order for the bullish thesis to remain valid.

Important Disclaimer: This blog is for educational purposes only. I am not a financial advisor and nothing I post is investment advice. The securities I discuss are considered highly risky so do your own due diligence.