In yesterday’s analysis, I focused on stocks and how dangerous the situation in them really is.
Today, I’ll provide some more extra context with regard to the USD Index and the HUI Index (proxy for gold stocks), and I’ll comment on something called “Sahm rule” (named after Claudia Sahm), which has a great track record of predicting recessions.
But first, a quick update on where we are from the short-term point of view, and what’s likely ahead.
In short, I previously wrote that we might expect to see a turnaround close to the end of the month/year, and this remains up-to-date. We still have several sessions left, so there’s room for additional profitable declines.
Yesterday’s and Friday’s breather remains insignificant in all three assets where we have short positions. In today’s free analysis, I’ll focus on just GDXJ (and I will not be featuring specific profit-take levels). The thing about the GDXJ is that we have the triangle-vertex-based reversal in it that’s just around the corner.
The blue and black dashed lines cross in about a week, which suggests that some kind of reversal will take place then.
If the decline continues, that’s when we might see the temporary bottom.
The downside target for the GDXJ remains intact.
On the above chart, you can see that miners’ performance relative to gold and the general stock market remains weak, which continues to confirm that what we saw is just a pause, not the true bottom yet.
Another thing confirming the likely reversal in a week or so is the situation in the USD Index.
Namely, it’s been rising once again, and we have a monthly reversal turning point just around the corner. I marked the previous cases with vertical, blue, dashed lines – as you can see, they worked remarkably well.
Since the current move is up, the turning point is likely to have bearish implications. This, in turn, would be likely to have bullish impact on the prices of precious metals and mining stocks, at least in the short term.
Zooming out allows us to see something not visible otherwise.
In this case, it’s the pace of previous rallies in the USD Index from the current price levels (approximately). About 25 years ago, when the USDX was rallying, it was doing so at a pace that is similar to the pace of the current rally. I marked that using green, dashed lines. This means that the USD Index doesn’t have to correct in a much more meaningful way, and even if it does, this corrective downswing would likely be only temporary – just like what we saw in the 1990s.
The HUI Index chart shows that the pace of the current decline is somewhere between the pace of decline that we saw in 2012 and 2013 and the 2008 slide.
In my view, if we get a slide in the stock market, gold stocks will also accelerate and decline in the 2008 fashion. If stocks continue to perform ok, we’ll likely get the 2012-2013-style decline. Either way, the downside potential remains huge, and well beyond the current trade (which is why we’ll likely get back to the short position after taking profits and the rebound).
Finally, there are three things that I’d like to discuss today. In fact, I already discussed two of them, as I’ll be quoting my comments from below other articles, as I think that reading those would benefit you as well.
The first comment is about the Sahm rule:
And here’s my reply:
Unfortunately (for all those people losing their jobs), I completely agree, especially with regard to the officials pulling off a show to demonstrate that they did whatever they could. It’s more of a spectacle and politics than it is economics and transparency. A pantomime - just like you wrote.
Thanks for reminding me about this rule. We we’ve had it in our Explanations section for a couple of years now, but it was not something that I was actively thinking about.
In the end, this will be positive for gold, as people will likely flock to it when it gets really bad with stocks, but the market’s first reaction is likely to be to sell both. Not necessarily physical metal, but futures contracts, ETFs and so on. We’ve seen this in 2008 and in 2020. PMs are likely to fall hard (especially silver and miners), but they are also likely to bottom earlier and start to rally (with the largest gains being made in miners early in the move). The buying opportunity in the miners will be something for the history books… But why not profit from the slide that comes beforehand as well? :)
Regarding miners’ outperformance in the early part of the rally, several years ago I wrote a bigger piece on the relative performance of miners and silver and I built a long-term investment/trading strategy around it called buy-and-hold-on-steroids (essentially, it was about switching from silver to miners and vice-versa while staying invested). The research that was involved in creating this is what made me focus on miners as the thing to buy when expecting a bottom. That’s where miners tend to be strong, anyway (except for the final fake move down, but that’s an exception confirming the rule). Anyway, I thought that you might find that article interesting.
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The second comment has to do with the recent turmoil regarding data:
And here’s my reply:
Ok, thanks for the extra info. Here’s data from Stockcharts:
GDXJ, Fri 12-20-2024 43.256
GDXJ, Mon 12-23-2024 43.48
JDST, Fri 12-20-2024 30.082
JDST, Mon 12-23-2024 29.86
So, Friday’s data that is not the same. My best guess is that during data revisions, those will be adjusted. It’s rare that the data providers mess something up, but it happens. That’s why we have several systems in place to cross-check if the outlook changed or not - e.g. looking at various markets if the outlooks align (ETFs vs. futures; metals vs. miners), as well as in terms of time - does a given move last more than just one day? More than two?
In this case, it’s almost certainly a data error and not a change in which the ETFs work and not something that changes the current outlook.
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And now for a question that I received regarding the link between profit-taking in the GDXJ vs. the profit-taking in silver.
Q: If miners aka GDXJ reaches profit levels before silver future reaches 27.10 do we take profit for silver futures regardless if it reaches that level ?
A: Yes, in my opinion that would be justified from the risk to reward point of view, however, I can’t say what anyone should do with their money, as I’m not providing investment advice.
I’m not featuring a trade in silver, and I’m providing the targets just in case someone can’t or doesn’t want to use miners, however, in general, I expect the corrective upswing to take place in the entire precious metals sector at the same time; with a slight note that the corrective upswing in [the new asset on which we’re profiting on] might be much smaller, just like it was the case previously, so in this case, I’m keeping the short position intact.
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As always, I’ll keep my subscribers informed.
Also, to make sure everyone had the chance to see the info about Rick Ackerman’s service being available for free right now, I’m pasting the entire announcement below. This time along with our card and my personal (as well as on behalf of the entire Golden Meadow team) wishes of Merry Christmas (and Happy Holidays if you’re celebrating something else; or Happy Week if you’re not celebrating anything) to you and your families.
May this time bring you peace, joy, and connection with those, who you cherish the most. There will be plenty of opportunities to profit in 2025 (and quite likely also this year), but for the next few days, I encourage you to focus on the true wealth that you have around you and within you.
Merry Christmas from Us – Unpack Your Present
The vision of quick gains and taking profits soon is not the only present that I’ve got for you for this Christmas (or Holidays season, if you’re not celebrating Christmas).
Remember how I told you that Rick Ackerman forecasted $2,803.40 as the likely top for gold on September 12, when gold moved past $2,576? (Gold topped at $2801.80 – almost exactly at Rick’s target.) Or when I wrote about Rick’s success with shorting bitcoin well above $100k?
Rick has over 40 years of experience, has his own unique trading system (the Hidden Pivot method) and no less unique writing style, and he’s providing a service called Rick’s Gold & Bitcoin Radar exclusively on Golden Meadow.
The amazing news that I have for you is that Rick agreed to provide his service completely free – no strings attached – for two weeks to everyone on Golden Meadow. You don’t need to do anything to activate it etc. – we’ve set everything up and you can simply access the service and enjoy it. So… Enjoy
Rick’s premium service consists of two premium spaces:
- Rick’s Gold & Bitcoin Radar, which is a space with a list of articles, just like what you’re used to in other spaces,
- Rick’s Trading Room, which is the first chatroom that we publicly launched on Golden Meadow. Perfect for quick Q&A, brief comments on the opportunities, and – most of all – for discussions involving Rick’s Hidden Pivot method. There’s a welcome message from Rick waiting for you there.
A note regarding notifications. You will now get notifications about new posts posted in the Rick’s Gold & Bitcoin Radar, so that you won’t miss the premium details. Rick usually posts there less than once per day, so it shouldn’t take that much space in your email inbox. As for Rick’s Trading Room, the default notification is set to notify you only if you are tagged in the conversation, and not otherwise. If you want you can adjust those settings, so that you are either never notified, or so that you’re notified whenever anything is posted – even if you’re not tagged. Simply click the three dots in the upper right corner and then select your preferred notification setting.
Also, I wasn’t joking around when I wrote about Rick’s unique writing style. He’ direct, to-the-point, and sometimes very vivid when describing how he sees things. I personally love it, but I know it’s not everyone’s cup of tea. Here’s an example from today’s analysis of the bond market by Rick:
„The chart shows interest rates on the Ten-Year Note rising over the next 8-12 months to 5.5% from a current 4.5%.
This will devastate the economy and lay bare the delusion that America’s economy is booming. The 5.5% figure is deceptive, because, presumably, it will be achieved with asset values falling. If we repeat the experience of the Great Financial Crash of 2007-08, that would imply real rates (i.e., adjusted for deflation) rising to as high as 6%-10%.
That would usher in an economic depression at a time when the U.S. economy is in much worse shape to weather adversity than in 1929. Back then, a third of the workforce was tied to the agricultural economy, literally living off the land.
This time, perhaps 80% of the workforce is tied to bullshit. That figure is not invented, by the way; it is simply extrapolated from Musk’s firing 80% of Twitter’s employees without impairing the company’s ability to carry on normally.”
As I wrote earlier, I just love it.
Now, not all gifts are welcome by everyone, so if for any reason you don’t want to get notifications about Rick’s premium analyses, simply navigate to your notifications settings on and disable notification’s for Rick’s Gold & Bitcoin Radar – and that’s it, you won’t be receiving them.
Finally, like I mentioned before, Rick is using the Hidden Pivot methodology, which is not very popular, and which is one of the reasons why it works quite well. I mean, haven’t researched its performance over long periods, but I’ve seen it work multiple times over the course of a few weeks, which is enough to say that it’s worth looking into.
In order to help you become familiar with what Rick is doing, I asked him to record a video explaining it based on the current situation, and that’s exactly what you’ll find below. We’ll add it to a separate page soon, but for now, here it is:
All right, I think that’s it for now, and I hope and trust you’ll enjoy Rick’s Gold & Bitcoin Radar as much as you’re enjoying the current profits. I encourage you to go to the Rick’s Trading Room and say ‘hi’ :).
If you’re not yet on Golden Meadow and you’d like to gain access based on the above gift, you can do so using the following link:
This is also the link that you can share with others, and they will be able to access Rick’s Gold & Bitcoin Radar for free (no credit card required) as well.
And yes, Rick’s Gold & Bitcoin Radar is included in the Diamond Package, so those, who are members of this exclusive club will keep their access beyond this gift access without any further action being required on their part.
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Thank you for reading today’s analysis. If you liked it, and would like to stay notified about new ones being posted completely free, I encourage you to sign up to my free gold newsletter today.
Thank you.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief
P.S. The precise profit-take level for the trade in the GDXJ, as well as the details of the new trade (besides FCX; with even greater potential in the near term) are things that I’ll reserve for my subscribers and I encourage you to join them today.