Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks Bull Market End Game Bear Start Strategy - 20th Mar 25
Gold and System Collapse: Charting the Bank Run of the Mighty US Dollar - 20th Mar 25
Tesla's Troubles — Is it Musk or is it More? - 20th Mar 25
The Stock Market Bear / Crash indicator Window - 9th Mar 25
Big US Tech Stocks Fundamentals - 9th Mar 25
No Winners When The Inflation Balloon Pops - 9th Mar 25
Stocks, Crypto and Housing Market Waiting for Trump to Shut His Mouth! - 27th Feb 25
PepeCoin (PEPE): Anticipating Crypto Reversals using Elliott Waves - 27th Feb 25
Audit the Fed, Audit Fort Knox, Audit Everything - 27th Feb 25
There Are Some Bullish Indicators in the Silver Market - 27th Feb 25
These Metrics Identify Only 10 AI Related Stocks That Are Undervalued - 27th Feb 25
Stocks, Bitcoin, Gold and Silver Markets Brief - 18th Feb 25
Harnessing Market Insights to Drive Financial Success - 18th Feb 25
Stock Market Bubble 2025 - 11th Feb 25
Fed Interest Rate Cut Probability - 11th Feb 25
Global Liquidity Prepares to Fire Bull Market Booster Rockets - 11th Feb 25
Stock Market Sentiment Speaks: A Long-Term Bear Market Is Simply Impossible Today - 11th Feb 25
A Stock Market Chart That’s Out of This World - 11th Feb 25
These Are The Banks The Fed Believes Will Fail - 11th Feb 25
S&P 500: Dangerous Fragility Near Record High - 11th Feb 25
Stocks, Bitcoin and Crypto Markets Get High on Donald Trump Pump - 10th Feb 25
Bitcoin Break Out, MSTR Rocket to the Moon! AI Tech Stocks Earnings Season - 10th Feb 25
Liquidity and Inflation - 10th Feb 25
Gold Stocks Valuation Anomaly - 10th Feb 25

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Junior Gold Mining Stocks Have Bottomed

Commodities / Gold and Silver Stocks 2014 Jan 16, 2014 - 07:22 PM GMT

By: Jordan_Roy_Byrne

Commodities

There is no need to beat around the bush. Junior mining stocks have bottomed. The bear market is over. Sure we could be wrong. We’ve been wrong before and will be again. However, the evidence is too compelling and is growing by the day.


The TSX Venture (CDNX) is the market for juniors in Canada. The market consists of exploration companies focused on precious metals and other minerals, energy companies and some technology companies. It’s not a perfect indicator for the junior mining industry but it’s good enough for the experts. On Thursday the CDNX closed at a nine month high. No, that is not a misprint. The junior market reached a nine month high. It bottomed in late June, made a higher low in December and has surged 10% since.

For an American, GDXJ is the proxy for junior gold stocks or junior miners. I like to think of GDXJ as the “senior” or established juniors. The CDNX consists of many stocks trading under $1 and a $100M market cap while GDXJ is mostly comprised of companies in the $100M to $500M market cap range.

GDXJ declined 81% from its April 2011 peak to its December 2013 bottom. As we noted several weeks ago, GDXJ tried to penetrate its December low three times and failed. The market has since rallied back above the previous (June) low. Given the severity of the bear in terms of price and time, extreme negative sentiment and recent bullish price action I believe it is highly likely that the bottom is in.

Our frame of reference for the bear, the gold stock bear analogs chart continues to suggest that the bear market in senior gold stocks is all but over.

The juniors (both CDNX and GDXJ) peaked in April or five months before the senior gold producers. Hence, it makes sense that the juniors would bottom first. The assertion from the analogs chart (that the seniors may have bottomed or are very close) gives us further confidence that the juniors have bottomed.

Most of the stocks that we follow bottomed in June. The following chart, which was sent to premium subscribers is an equal weighted index of 15 of our favorite gold and silver stocks. The index bottomed in late June 2013 and made a strong higher low in December. It would have to decline 26% to test the June low.

Extreme bearish sentiment, compelling valuations and an extreme oversold condition can create a compelling contrarian opportunity. However, that opportunity can remain far fetched without some positive price action. We now have the positive price action that allows us to call a bottom in the mining stocks and strongly so in the junior gold stocks. The CDNX looks to have made a real double bottom and closed at a nine month high. GDXJ reversed course after failing to continue a breakdown when the time was ripe. Moreover, as evidenced by our top 15 index, the stronger and higher quality companies are showing leadership. The risk has shifted from getting caught in a final plunge to missing out on the rebound.

If you'd be interested in professional guidance in this endeavor, then we invite you to learn more about our service.

Good Luck!

Email: Jordan@TheDailyGold.com
Service Link: http://thedailygold.com/premium

Bio: Jordan Roy-Byrne, CMT  is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2013 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor.  Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.

Jordan Roy-Byrne Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in