The Fed minutes were dovish and this helped push Gold above $1310 to
$1320. However, the miners, which usually lead the metals did little to
confirm the rise. In fact, the miners have been relatively weak in
recent days and had a bearish reversal on Thursday. Their rebound from
an oversold condition has petered out. Another point is Gold, during
this rebound has made no progress against foreign currencies. It’s
starting to show some strength against the equity market but it needs to
show strength against all currencies and not function only as the
inverse of the US Dollar. Be on alert as the short-term trend for
precious metals (especially the miners) could resume to the downside.
Looking further out, forthcoming weakness shouldn’t last that long in
the big picture. The miners have been basing for quite a while and
started to gain traction in Q1. The next low at worst could be a double
bottom or otherwise would mark the first higher low in this bottoming
process. In the chart below we plot GDX (large caps), GDXJ (juniors),
SIL (silver stocks) and GLDX (explorers). We note how much each would
have to decline to test its December low.
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