Gold Stocks are Leaving the Station
All aboard and back up the truck. The recovery train is soon to leave the station for higher prices! Obviously, the ideal time for that would have been at the exact bottom. Hours before that bottom we penned an article titled, Epic Opportunity in Gold Stocks. A number of factors came together making a near bulletproof case for a major bottom. Bulletproof is a dangerous word to use and especially for someone (cough, me!) who had anticipated a huge rebound as early as the spring. Last week we used that term again because the gold stocks were only correcting and consolidating which is a typical of a post-bottom rebound. The precious metals complex looked weak to start last week but reversed course to form not only a bullish weekly reversal but the first higher low since the major bottom. Our technical work and historical analysis strongly argue that it’s only a matter of time before this sector begins the next move higher.
The daily chart below shows GDX (large miners), ZJG.to (mid-tiers and juniors) and SIL (silver stocks). All markets have not only put in a higher low but are now trading above their now upward sloping 50-day moving averages. In studying the 1970, 1976, 2000 and 2008 bottoms in gold stocks I found that the recoveries accelerated after the market moved above a flat or upward sloping 50-day moving average. That is currently quite visible in ZJG and SIL. GDX contains the large and most depressed companies so its not a surprise that its lagging. These markets should soon break out from their multi-month bottoming patterns.