• 19 mins Global Corporate Debt Soars To $9 Trillion
  • 2 hours The Fed’s Slippery Slope
  • 4 hours Precious Metals Pulled Ahead Of The Pack In The First Half Of 2020
  • 5 hours Tesla Faces $20 Billion In Short Interest
  • 6 hours China's Economic Recovery Remains Tepid
  • 8 hours Silver Inches Closer To $20
  • 9 hours The Secret Life Of Lithium
  • 24 hours The Pandemic Proof $53 Billion Industry Wall Street Can’t Ignore
  • 1 day Will Gold Hit $2,000?
  • 1 day Trump’s Proposed Regulation Could Slow The ESG Boom
  • 2 days India To Auction 41 Coal Assets
  • 2 days Eldorado Sees Gold Production Soar In Second Quarte
  • 3 days Do Gold Stocks Still Have Upside Potential?
  • 4 days The S&P 500’s Top Companies Hold $2.5 Trillion In Debt
  • 4 days Electric Vehicle Rebound Bolsters Battery Metal Growth
  • 5 days BlackRock Makes A Run On Asian Stocks
  • 5 days Gold Prices Surge Above $1,800
  • 6 days Chinese Stocks Soar On Bullish Economic Data
  • 6 days Apple’s “Holy Grail Of Data” Leaves Energy Traders Disappointed
  • 6 days Gold Rally Adds $250 Billion To Top 50 Miners' Market Cap
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

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…

  1. Home
  2. Markets
  3. Other

Gold Stocks Leading but Approaching Trump Resistance Levels

Although we expected a rally in the gold mining sector, we have been surprised by its strength and recent buying pressure. From the lowest ticks, Gold has rallied less than 6% but GDX has gained 25% and GDXJ has soared 36%. This rebound adds to the evidence that the gold stocks are leading the metal. That being said, the gold stocks are approaching some strong resistance levels which coincide with Trump's election victory.

Below we plot the weekly line charts of GDXJ (top), GDX and Gold (middle). The weekly closing price is each data point. Note how both GDXJ and GDX (other than for one week) held their 62% retracement and 80-week moving averages while Gold did not. On the monthly charts (not shown) we find that the miners tested but closed above their 20-month moving averages (in November and December) while Gold closed below its 20-month moving average at the end of both months. Furthermore, note that Gold is some $50/oz below its Q1 2016 levels yet both GDX and GDXJ are trading considerably above those levels.

VanEck Vectors Gold Miners, Junior Gold Miners and Gold Weekly Charts

While the gold stocks are showing good progress and have more immediate upside potential, they are approaching strong resistance. The daily candle charts below detail the resistance in GDXJ (at $40-$41) and in GDX (at $25-$25.50). Note the strong selling (thick black candles) immediately prior to and after the election. Also, with respect to GDX, the more  widely followed and traded ETF, the 200-day moving average comes into play near $25 and the 50% retracement is at $25.15. You think GDX's advance might stop at $25?

VanEck Vectors Gold Miners and Junior Gold Miners Daily Charts

We expect the miners will reach these upside targets soon but a correction will follow, which will inform us quite a bit as to how sustainable this rebound is. If Gold is going to rollover again then the miners could end up retesting their December lows. However, if bonds continue to rally and real yields decline then this rebound could push beyond the Trump resistance levels. We bought a few positions recently but are holding some cash as we suspect there will be more buying opportunities before the gold stocks really takeoff.

 


For professional guidance in riding the bull market in Gold, consider learning more about our premium service including our favorite junior miners for 2017.

 

Back to homepage

Leave a comment

Leave a comment