With gold futures down $50+, it’s difficult not to get into the full “told’ya” mode in today’s analysis.
And I won’t, but what we see today does indeed indicate that the double-top pattern worked once again – just as it did in 2011, 2016, and 2020. Based on those years, we might still see some back-and-forth trading here, but… We might not.
For the record, here’s what gold did in the above-mentioned years:
And here’s what’s happening right now.
Gold is down significantly after forming a lower intraday high on Friday – and after the daily reversal that formed on this day. What’s most bearish about today’s slide in gold is that it’s happening with little help from the USD Index.
Gold was previously rallying without declines in the USDX or even despite dollar’s rallies, and today, gold price is tumbling even though the dollar is up rather insignificantly.
This is important because it indicates that the tide has turned for the precious metals sector.
The slide in stocks is likely to be something that pushes gold, silver and miners (with particular emphasis on junior mining stocks) to much lower price levels.
So much for the stocks-can’t-decline mantra – they’ve been declining for 6 trading days straight. And no, seeing a daily correction here won’t change a thing.
For now, the decline in the general stock market has been moderate, but since the S&P 500 just invalidated its move above 5,000, things could become dramatic very soon.
As the decline accelerated close to the middle of the month, it appears that the analogy to 1929 continues.
If this is to continue, we might expect some quick 1–2-day corrections and a bigger one in early May. And after that – more or less – weekly correction – we might see an enormous slide.
Tech stocks are already indicating that something like that is already underway.
After invalidating their move above the 2021 high, tech stocks (NASDAQ) fell like a stone in the water. Following this analogy, it’s still close to the surface, but it’s gaining downward momentum.
Remember Nvidia? The poster child of the AI craze?
It reversed and topped close to $1,000, and then it declined – at first in a regular manner.
However, on Friday, it declined by 10%! Not only that, it closed the day back below the rising dashed resistance line, thus invalidating the breakout above it.
Oops.
The first – huge – domino piece is starting to fall, and the chain of events that it might be starting is bigger than many think.
And yes, it’s likely to impact the precious metals market as well, in particular junior miners.
Junior miners bounced after moving to their blue support/resistance line, but given today’s slide in gold, it’s very likely that the GDXJ will invalidate its move above this line shortly.
This, in turn, will make the current situation clearly analogous to the 2022 top, once the GDXJ invalidated the move above its orange support/resistance line. And you know what happened then?
A ~$25 slide happened (counting from the top).
Seems unlikely?
And did it seem likely that mining stocks would fall SO MUCH in 2008 or in 2020, when the stock market fell sharply?
Exactly – it seemed unlikely, and yet it still happened. More importantly, those, who were positioned to profit from this slide reaped enormous rewards.
Are you ready to reap the rewards in the current situation? The time to prepare is running out.
It seems that the major tide is here in the case of currencies (USD/YEN!), stocks (tech stocks, broad market), bitcoin, and precious metals. It also seems that junior mining stocks provide an excellent opportunity right now, and I invite you to subscribe and read all key details in my premium Gold Trading Alert (along with trading details). Subscribe today.
Thank you.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief