Gold and silver stocks have held up decently during the correction in precious metals, which is now in its 3rd month. However, as we mentioned last week, the bugaboo has been the relatively high net speculative position in Gold, which has not changed much despite recent weakness in the sector.

Technically Gold cracked last week and the downside momentum coupled with the relatively high net spec position argues that Gold is headed for a retest of the summer breakout.

Gold closed the week at $1463 with a net speculative position (as a percentage of open interest) of 45.9%.

As the chart below shows, the net speculative position often hit lows at or below 30% during corrections in bull years. Look for Gold to test support at $1370 to $1400 as more spec longs cut their long positions.

Gold & Gold CoT

A retest for Gold means a retest for the gold stocks too.

Below we chart GDX and GDXJ.

GDX has a confluence of strong support at $24.50 to $25.00, which was the breakout point. GDXJ has a confluence of strong support in the $34s.

GDX & GDXJ

As I touched on last week, the relative strength in the silver stocks (SIL) and the strong breadth in GDX (its advance decline line made a higher high on Oct 31) has been encouraging. Time will tell if these positives remain in place should the sector retest these key support levels.

Pay attention, because the market should provide us with some good, low risk opportunities over the next few weeks. There is one junior producer we have our eyes on buying very soon.

We have been focusing on identifying and accumulating quality juniors with significant upside potential in 2020. To learn the stocks we own and intend to buy during the next correction that have 3x to 5x potential, consider learning more about our premium 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 2010-2014 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

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

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.