Another day, another decline in junior mining stocks.
The big decline appears to have re-started - congratulations on your patience. This is one of the virtues that pays particularly well on the markets, and I expect it be the case also this time – I’m expecting a huge payout.
What’s happening in the miners at this time seems to confirm what I’ve been writing – they continue to move to new monthly lows. That happened yesterday, too.
After almost touching their 61.8% retracement based on the 2020-2022 decline, and moving above its 2023 high, junior miners declined profoundly. And they keep on declining almost each day.
The tiny corrections are visible from the hourly perspective, but not so from the daily one.
It seems that the GDXJ is about to break below its May lows any day (or hour) now.
The invalidation of the move above the previous important, medium-term high is profoundly bearish. As you can see on the above XAU Index chart, those events meant that mining stocks were about to slide.
Seeing it once again suggests a major downturn in the following months.
Speaking of months, let’s move to silver and its monthly volume.
What I didn’t emphasize before, but what really matters, is what kind of volume accompanied silver’s recent upswing. I was not only big, but it was really significant on a relative basis – in comparison to what we saw in the previous months.
When we saw something like that previously, it meant that rallies have ended and now big moves lower were to be expected – either immediately, or soon.
Also, please note that silver invalidated its attempt to move above its 50% retracement based on the 2011 – 2020 decline.
Let’s zoom in on the weekly perspective and shift our focus to gold.
Something very particular has been taking place in gold, when we look at it from a weekly point of view.
Namely, gold has been forming weekly reversals for several weeks now. Each of the last few weeks was similar in a way – gold tried to move higher, and then it either erased those gains or erased them and it declined some more. Each of those weekly reversals had bearish implications on their own, and together they create a broad top pattern.
Same with bitcoin – it also appears to be forming a broad top here.
Based on its halving, bitcoin was supposed to (“sure bet” as it was proclaimed) rally and it’s clearly not taking place.
Bitcoin tried to move above its 2021 highs and failed – twice. It even formed weekly reversals on its own.
It seems that the USD alternatives had a good run but that the tide has turned.
The U.S. dollar is rallying despite sharp pullbacks. The move below the rising support line was invalidated as the USDX soared back up. This is similar to what we saw in March, after the previous short-term bottom. But that’s just the short term, and the really bullish things can be seen on the USD Index’s long-term chart.
The U.S. currency is after a medium-term breakout, and it even corrected after that breakout which didn’t trigger waterfall selling – the USD rose back like phoenix from the ashes.
The area that I marked with orange use to serve as resistance for years. Now it served as a bottom – a launchpad for a new, powerful, medium-term rally.
And while gold soared during USD’s medium-term correction and consolidation, it’s likely to decline given’ USD’s very bullish potential.
Please note that mining stocks and silver were likely to decline along with falling stocks (mining stocks are, well, stocks, and silver has multiple industrial uses), and while the declines in stocks magnified the declines in the former, the thing that I want to emphasize is that miners and silver are moving decisively (!) lower while stocks are still rallying.
This tells us that when stocks finally do decline, the decline in silver and miners could be particularly dramatic.
All in all, the potential for the decline in the junior mining stocks remains enormous as they are likely to slide based on multiple factors – including rising USD Index, falling gold, and declining stocks (including world stocks). We’ll see corrections within the decline, but it’s likely that it will make the most sense to use gold as a proxy to profit from the long positions, just like we did last time.
As always, I’ll keep my subscribers informed.
Also, keeping in mind that June is Men’s Health Month, I encourage you to really enjoy the weekend without looking at the charts. There will be there on Monday, and I’ll be here providing analysis. In the meantime, there’s life to enjoy, there are important people in your life to meet and to talk to. Maybe calling an old friend would be a good idea? Or taking that walk in the forest or hitting the beach that was postponed too many times? Or maybe just planning that medical check-up (are you doing check-ups on your own body at least as frequently as you’re doing check-ups on your car? The former is a much more important vehicle…).
And if you’re not a man, perhaps it would be a good idea to suggest one or two things from the above to the men around you?
Have a great weekend, everyone.
If you’d like to join my premium subscribers, I encourage you to do so today, while the big part of the profitable decline is still ahead. And if you’re looking for a buy signal for gold, it might appear soon, and as my subscribers, I’ll keep you informed, also through intraday Gold Trading Alerts, whenever required. Sign up today.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief