• 2 hours WeWork Sues SoftBank For Withdrawing $3 Billion Insider Payoff
  • 20 hours Solving Transportation’s Biggest Problem
  • 23 hours Big Banks Could Win Big On Fed Small Business Bailout
  • 24 hours Trump Increases Pressure On Venezuela
  • 1 day Researchers Create Organic Battery
  • 2 days Gold Is Still A Safe Haven, But Not Very Alluring
  • 2 days China Is Buying Up Billions Of Barrels Of Cheap Crude Oil
  • 3 days Are Gold Stocks Going To Bounce Back?
  • 3 days The Politics Of A Pandemic
  • 4 days What Does CHina’s EV Slowdown Mean For The Battery Metals Sector?
  • 5 days COVID Report Cards Will Brand Businesses Forever
  • 5 days Trump Tweet Sends Oil Soaring 25%
  • 6 days Why The Coronavirus Economic Crash Is Worse Than You Think
  • 6 days Is A Global Currency Necessary?
  • 7 days America Has Shed 500,000 Millionaires Since The Coronavirus Lockdown Began
  • 7 days Trump Wants Another $2 Trillion Economic Intervention
  • 8 days The Surprising Businesses Deemed “Essential” During The Coronavirus Lockdown
  • 8 days Priceless Van Gogh "Spring Garden" Painting Stolen
  • 8 days Oil Falls To $20 For First Time In Nearly Two Decades
  • 8 days COVID-19 Could Be The End Of U.S. Coal
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

Gold and Gold Stocks Correction Continues

The failure of Gold and gold stocks to sustain recent gains coupled with a strong selloff to close the week dashes any hope that the correction ended last week. The charts and probabilities argue that the sector remains in a larger correction and perhaps has started the C portion of a typical A-B-C (down-up-down) correction.

This week started out strong for the miners but that strength faded and was completely reversed with Friday's selloff. GDX and GDXJ closed down 3%-4% for the week and left nasty bearish candles on the weekly charts. GDXJ, which made a low of $41 last week could test at least $39 while GDX, which tested a low of $25 last week has downside potential to $22.

VanEck Vectors Gold Miners and Junior Gold Miners Weekly Charts

Before I get to Gold, here is an important note on GDX. During bull market corrections, GDM, the parent index of GDX often found support at its 400-day exponential moving average. This happened seven times during 2002-2003, 2006 and 2009-2010. The 400-day exponential moving average for GDX is currently at $22 and rising slowly. Hence, I consider $22-$23 as a potential bottom for GDX.

Turning to Gold, we note that Gold failed at the $1355-$1360 resistance earlier in the week. That coupled with Friday's decline increases the odds that Gold will head lower to the bottom of its channel near $1300. Gold closed at $1334. It has support at $1300-$1310 and $1275-$1280.

Weekly Gold Chart

The negative reversal in miners and metals at the end of this week (and their failure to hold the rebound) signals that a larger and longer correction is playing out and more downside potential is directly ahead. GDX closed at $26.41. It has a very strong confluence of support around $22 which includes its 200-day moving average, its 400-day exponential moving average (noted above) and the 50% retracement of the entire rebound. Do not be surprised if this target is reached quickly, such as in days and not weeks. Remember that fishing line type declines (think of the trajectory of a fishing line) are a buying opportunity.

 


For professional guidance in riding the uptrend in Gold, consider learning more about our premium service including our favorite junior miners which we expect to outperform in the second half of 2016.

 

Back to homepage

Leave a comment

Leave a comment