This is a post that we received today from taki tsaklanos of GoldSilverWorlds:
Precious metals and miners are all simultaneously at a rarely seen juncture, at least from a price perspective.
Today, the miners showed a very strong performance. It is a remarkable fact as the stock market closed without a particular gain (the S&P 500 in the US closed the trading session with a modest gain of 0.17%).
- The HUI gold mining index closed 3.12% higher
- The GDX gold mining index closed 3.30% higher
- The GDXJ junior miners closed 4.20% higher
- SIL silver miners closed 4.17% higher
This feels like the gold miners are about to lead the metals higher. If that would occur, our presumption is that the metals will perform a strong break out. The following charts explain why we think so.
Purely from a chart perspective, price patterns show that the whole precious metals complex, i.e. the four metals and the mining indexes, are all simultaneously trading at key resistance levels or at the end stages of a trading range. Let’s look at the different price charts.
The gold price is trading at a major resistance line. One could argue it is slightly above resistance. However, the daily chart shows that gold is still in a downtrend. A consistent break about resistance would result in a trend change. The key price level to watch is $1250 – $1260; gold should not fall below this price before the daily chart turns bullish. It would be a strong signal if gold would test $1250 – $1260 but not breach it.
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In September 2011 the Gold Bugs index, the HUI stood at 630 as gold prices peaked, since then both have trended lower with the HUI losing about 65% of its value. The bottom has been called a number of times and after such a dramatic decline its difficult not to think that we are there now. However, as we all know the timing of any investment is crucial to its success and that is exactly what we are trying to do here, trying to pick advantageous entry and exit points. If you would like to know which stocks we are buying and selling please join us at ‘Stock Trader’ our premium investment service.
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