Category: Gold and Silver Stocks 2021
The analysis published under this category are as follows.
Tuesday, May 11, 2021
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
The GDX and HUI Index are enjoying a blissful moment. With HUI behaving civilly, will the GDX cling to the unrealistic and try to leap to cloud “ten”?
With the GDX ETF punching a hole through its glass ceiling, the senior miners are now witnessing an environment that’s beyond their wildest dreams: sunshine, clear skies and a utopia that’s eluded them since the beginning of the New Year. However, while leaving paradise is often more difficult than arriving, the GDX ETF’s recent vacation is likely coming to an end. And with the senior miners about to resume the daily grind of real life, their optimism will likely fade with the tropical sun.
To explain, while the GDX ETF remains on cloud nine, the HUI Index (a proxy for gold mining stocks ) has already left the resort. With the latter’s long-term outlook still intact and its broad head & shoulders pattern remaining on schedule, I wrote previously that the right shoulder would likely form after the HUI Index reaches 300. And after closing at 301.72 on May 7, the BUGS (after all, HUI is called the Gold Bugs Index) are currently living up to expectations.
Please see below:
Thursday, May 06, 2021
USDX, Gold Miners: The Lion and the Jackals / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
The USD Index let out a roar heard across all markets. The king of the financial jungle arrived, along with the greenback’s largest single-day gain.
Just as the African landscape sometimes needs to show the strongest of its inhabitants, so does the less remote but equally ferocious financial environment. This time, the USDX seems to have won the fight – its fangs and claws turned out to be the sharpest, and so are the rallies. There is nothing left for gold and its acquaintances than to run through the forest… run.
Sometimes, even jackals need to find shelter to lick their wounds in patience, waiting for a better time to come back to fight. However, they will come back eventually – they always do.
Thursday, April 29, 2021
Gold Mining Stock: Were Upswings Just an Exhausting Sprint? / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
Indicators are pointing to gold and mining ETFs running out of breath. They don’t seem to have what it takes to the move to the finish line.
Despite gold, silver and mining stocks’ recent corrective upswings, the precious metals are running out of steam. After bursting off of the lows – while failing to recognize that it’s a marathon and not a sprint – the precious metals’ late-week breather signals that their stamina isn’t what it used to be.
Moreover, with false breakouts and sanguine sentiment causing an adrenaline rush that’s likely to fade, the precious metals’ transformation from stalwart to sloth could leave investors feeling increasingly dejected.
Case in point: with the HUI Index (a proxy for gold mining stocks ) already verifying the breakdown below the neckline of its bearish H&S pattern – which didn’t occur until later in 2008 – the miners’ outlook is actually more bearish now than it was then.
Tuesday, April 27, 2021
Gold Stocks Upleg Accelerates / Commodities / Gold and Silver Stocks 2021
By: Zeal_LLC
This young gold-stock upleg is accelerating, with fast-rising prices enticing in more capital. This sector has surged sharply to multiple major upside breakouts in recent weeks, which is starting to turn skeptics into believers. Despite their strong upside momentum being chased, gold-stock prices remain far from overbought levels warning of impending selloffs. This mounting upleg still has great room to power way higher.
Gold miners’ earnings are highly leveraged to prevailing gold prices, which drive this sector’s upleg and correction cycles. In early March as the last extended gold-stock correction was bottoming, I wrote an essay on gold’s momentum selloff. It concluded with “the gold-futures selling that ignited all this is finite, and is likely nearing exhaustion. After that, gold should rally hard.” We were positioned for a new upleg.
At that major bottoming, the trading books in our newsletters were full of fundamentally-superior gold miners’ stocks. We added and recommended them leading into that at low prices, when they were deeply out of favor. A few weeks later, I wrote another essay analyzing the latest quarterly results from the mid-tier gold miners. They are in the sweet spot for stock-price appreciation potential when gold powers higher.
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Monday, April 12, 2021
Another Gold Stocks Upleg / Commodities / Gold and Silver Stocks 2021
By: Zeal_LLC
The gold miners’ stocks suffered a rocky start to 2021, rolling over into an extended correction after a young upleg prematurely failed. The resulting deeper lows left sentiment overwhelmingly bearish, with this contrarian sector deeply out of favor. But over the last five weeks or so, gold stocks have powered higher again in another young upleg. This one has a far-stronger foundation given the underlying gold setup.
The leading and dominant gold-stock benchmark and trading vehicle remains the GDX VanEck Vectors Gold Miners ETF. It held $14.2b in net assets in the middle of this week, a massive 30.6x bigger than the next-largest 1x-long major-gold-miners-ETF competitor! Several weeks ago I analyzed the top 25 GDX gold miners’ latest quarterly results, which revealed this sector now enjoys incredibly-strong fundamentals.
While gold averaged $1,876 per ounce in the recently-reported Q4’20, the big GDX gold miners reported average all-in sustaining costs of $1,038 per ounce. That implied stellar $838-per-ounce profit margins! That fantastic profitability fueled record revenues, adjusted earnings, operating cash flows, and treasuries at the GDX-top-25 gold miners. That was their sixth quarter in a row of soaring mid-double-digit earnings growth!
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Friday, April 09, 2021
Gold Mining Stocks: A House Built on Shaky Ground / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
It’s tempting to say that miners are showing strength compared to gold based on the GDX’s performance, but other mining proxies say otherwise.
Just because a house is standing doesn't mean its foundations are solid, and that's exactly the case with the miners.
There’s one extra thing that I would like to point out about mining stocks’ technical picture today (Apr. 8), and that’s their performance relative to gold.
Friday, April 02, 2021
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks / Commodities / Gold and Silver Stocks 2021
By: Gary_Tanashian
The Gold Miner correction was well earned, but it was not a bubble
Even today there is some pablum out there talking about how if inflation is good for gold it is especially good for gold miners. I will simply repeat once again that if gold usually does not benefit fundamentally by cyclical inflation (i.e. inflation promoted for and currently working toward economic goals) the gold miners never do, unless they rise against their preferred fundamentals as they did during two separate phases in the last bull market, which were justly resolved with crashes.
Here are a couple charts we used in NFTRH 648 in a segment written to set the record straight. We have also used these charts – especially the first one – since the caution flags went up last summer, visually by the first chart and anecdotally by the usual suspects aggressively pumping the unwitting masses. Buffett buys a gold stock!… okay, well so much for that. Sentiment became off the charts over-bullish and now, as we prepare for the final act of the correction, it’s the opposite. That’s perfect.
HUI had far exceeded the Gold/SPX ratio and so it was very vulnerable from a macro fundamental perspective. Why on earth would players want to focus on miners digging a rock out of the ground that was starting to fail in a price ratio to the stock market? They wouldn’t, and since last summer they didn’t.
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Thursday, April 01, 2021
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation / Commodities / Gold and Silver Stocks 2021
By: Chris_Vermeulen
Precious Metals have continued to slide sideways as the US stock markets have rallied into the FOMC meeting last week. Not by coincidence, metals have continued to base/bottom near recent lows as concerns about the global debt/credit markets, central banks, and precious metal supplies continue to linger. The US Fed indicated it will do whatever is necessary to support the recovering economy. The question my research team asks in relation to the basis for a move in metals/miners is “do the global markets believe the global central banks still have control of the underlying global banking/credit markets well enough to prevent another massive rally in metals?”.
This question should be first and foremost for metals precious metals enthusiasts. Recently, there has been quite a bit of concern related to a Silver Squeeze and COMEX deliveries. Currently, there is some speculation that the Perth Mint has a very limited supply of physical metals on hand and nearly 60x that amount on their balance sheets (Source: https://www.reddit.com/r/Wallstreetsilver/comments/mc18no/perth_mint_unallocated_silver_is_not_backed_by/). We’re no expert related to this lack of physical inventory, but if it is true, then a breakout rally in metals (a true metals SQUEEZE) could be just days or weeks away.
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Sunday, March 28, 2021
Gold Mining ETFs: Headed for Their Next Slide? / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
The mining ETFs (the GDX and GDXJ) have hit resistance and look tired. After their corrective rally, a slide looks promising.
The miners are done correcting and if they were at a water amusement park, would they head for the lazy river? How about the wave pool? Nah… they’d be headed straight for the slides.
If you’ve been waiting for a high-quality sign that the next big move in the precious metals sector is underway – you just got it.
There are days on the markets when nothing happens, there are days when what happens is visible only to some ( like Monday’s session ), and there are days when the market’s signals are crystal-clear – as if the charts were practically screaming at the person examining them. Yesterday, was one of the latter kind of days.
Without further ado, let’s take a look at the key development that we just saw in the precious metals’ world – the big decline in the GDX ETF – proxy for mining stocks.
Friday, March 26, 2021
Gold Miners: Why Apparent Strength is Just a Facade / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
Despite everyone saying the bottom is in, and that gold and miners are set for takeoff, the signs still point south. The real question: how low can they go?
Let’s take a look at some price targets for where the GDX and GDXJ mining ETFs might land up.
With the miners attempting to reclaim Pride Rock, it won’t be long until the GDX ETF is singing Hakuna Matata.
Rising U.S. Treasury yields? No problem.
A reinvigorated USD Index? Who cares.
But while strength is often viewed through the eyes of the beholder, the GDX ETF is far from being The Lion King. Sure, its bravery in the face of familiar foes is reason for optimism. However, we’ve seen this movie before. While the recent rally may resemble Mufasa, beneath the surface, the GDX ETF’s tepid price action looks a lot like Simba.
Monday, March 15, 2021
How the EUR/USD Affects Gold Miners; Which ETF Will Suffer More? / Commodities / Gold and Silver Stocks 2021
By: P_Radomski_CFA
It’s all connected. The Eurozone’s underperformance boosts the USD, thus placing pressure on gold and the ETFs. So, which ETFs will suffer most?
A large part of yesterday’s free version of the analysis focused on the Eurozone’s economic outlook and how it affects the precious metals. We’ll eventually get to Europe again later in today’s analysis, but let’s first examine gold related ETFs, namely the GDX and GDXJ. How low can they go? That will depend on the general moves in the stock market.
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Tuesday, March 02, 2021
Gold Stocks Spring Rally 2021 / Commodities / Gold and Silver Stocks 2021
By: Zeal_LLC
Following a necessary correction, the gold miners’ stocks have spent much of recent months bottoming. This healthy basing process is rebalancing sentiment, preparing the way for this sector’s next bull-market upleg. That is looking to coincide with gold stocks’ spring rally, one of their strongest times of the year seasonally. That stiff tailwind blowing behind bullish technicals and fundamentals should make for big gains.
Seasonality is the tendency for prices to exhibit recurring patterns at certain times during the calendar year. While seasonality doesn’t drive price action, it quantifies annually-repeating behavior driven by sentiment, technicals, and fundamentals. We humans are creatures of habit and herd, which naturally colors our trading decisions. The calendar year’s passage affects the timing and intensity of buying and selling.
Gold stocks exhibit strong seasonality because their price action mirrors that of their dominant primary driver, gold. Gold’s seasonality generally isn’t driven by supply fluctuations like grown commodities see, as its mined supply remains relatively steady year-round. Instead gold’s major seasonality is demand-driven, with global investment demand varying considerably depending on the time in the calendar year.
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