The key technical development in the precious metals sector this week continues to be HUI's invalidation of the breakout above the 2016 highs. It will be particularly interesting to see where it closes the week, as an invalidation in weekly closing terms will be a crystal-clear bearish confirmation.

The HUI Index closed at about 270 yesterday, which is visibly below the highest weekly close of 2016 - the 278.61 level. However, since it was a weekly closing price, it should be broken in weekly closing terms. This makes today's closing price particularly important.

Today is not only the end of the week, but also the end of the month, which makes things even more interesting. The highest monthly closing price of 2016 was 274.32, which means that unless the HUI Index rallies today, the odds are that will see also an invalidation of the breakout in monthly closing prices.

This would be a perfectly bearish sign, especially since the HUI Index has been forming an extremely clear monthly shooting star candlestick. If HUI declines today, it might change the name of the candlestick (to gravestone doji if the HUI declines to its monthly opening price), but not its implications. The only way for the HUI Index's chart not to have bearish implications, would be for it to rally strongly today.

Thank you for reading today's free analysis. Please note that it's just a small fraction of today's full Gold & Silver Trading Alert. The latter includes multiple details, but most importantly, it includes the clear discussion of what will be the sign telling one that gold's move lower is almost certainly completely over. That's the detail, we think you might enjoy, want, and need right now.

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Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager

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The key technical development of this week in the precious metals market is HUI's invalidation of the breakout above the 2016 highs. It will be particularly interesting to see where it closes the week, as an invalidation in weekly closing terms will be a crystal-clear bearish confirmation.

Gold miners reversed before the end of yesterday's session, but they didn't manage to take HUI back above the highest weekly close of 2016 - the 278.61 level. The HUI closed at 271.06.

On the daily chart, we see that a short-term breakdown is currently being confirmed.

The GDX ETF moved below the rising support line based on the previous April and May lows and it closed there for two consecutive trading days. If the GDX closes below the rising dashed line once again today, the breakdown will be confirmed.

And based on gold's 4-hour gold chart, it could be the case that the very short-term upswing that started yesterday, is already over.

Gold approached its short-term declining resistance line, and it's currently testing it. This line already held less than a week ago, so it favors lower prices at this time.

Of course, by the time you read this analysis, gold might already be after a breakout. In this case, we wouldn't be surprised to see gold futures at about $1,740 or even $1,760 before the next decline takes place. Again, that is IF the breakout takes place, but the entire point of creating resistance lines for gold is to detect gold's tops - places that are likely NOT to be broken. Or that are going to be broken, but then an invalidation will follow, leading to further declines.

The GLD ETF bounced from the rising support line yesterday, and it then moved to the above-mentioned resistance line - that's a relatively normal course of action. Based on HUI's invalidation of the breakout above the 2016 high, it seems that the top is already in for gold and gold stocks, and the price action yesterday and today in gold doesn't invalidate it.

And what can one forecast for silver?

The white metal is still showing strength on a very short-term basis, which further confirms the toppy nature of the most recent price moves. Silver tends to outperform at the very end of a given upswing, so we could even see more of that phenomenon - especially if the stock market moves even higher from here.

Silver is known (at least it should be known) for its fakeouts. Silver often breaks above certain resistance levels, only to invalidate these breakouts shortly thereafter. If silver's "breakout" is not accompanied by an analogous move in gold or miners, the odds are that it's a fakeout. The odds increase further if this action was preceded by a rally.

Therefore, if silver moves higher from here, and even breaks to new May highs, it might not be a bullish development at all. It could be a fakeout that only takes the white metal to about $18.50 or so - the declining resistance line based on the previous highs - and then starts the next huge downleg. Please keep in mind that silver already launched one huge slide from almost $19 this year, so another big move lower from these levels could definitely take place.

All in all, it seems that we're going to see one more sizable move lower in the precious metals market before they move much higher, and the odds are that the downswing has already begun or it's going to start shortly.

Thank you for reading today's free analysis. Please note that it's just a small fraction of today's full Gold & Silver Trading Alert. The latter includes multiple details, but most importantly, it includes the clear discussion of what will be the sign telling one that gold's move lower is almost certainly completely over. That's the detail, we think you might enjoy, want, and need right now.

Subscribe at a discount today and read today's issue ASAP.

Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager

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The key development of yesterday's session was the decline in gold stocks and decisive invalidation of HUI Index's breakout above its 2016 highs.

We previously commented on the above chart in the following way:

The HUI Index invalidated the breakout above the 300 level, and it also invalidated the breakout above the 2016 high (286.05) in intraday terms by closing at 285.13. This made the bearish picture for gold miners more bearish. The final confirmation of the top being in, will be gold stocks index's close below the highest weekly close of 2016 - 278.61.

The reason we're giving so much attention to the 2016 high right now and so little to anything else - at least in case of the gold stocks - is that what happens with regard to it really is the key to the miners' technical outlook. Confirmed breakout above the 2016 high would be likely to result in a bigger move higher, while its invalidation is likely to result in a bigger move lower.

Given the fact that gold is not moving up despite USD Index's sizable daily decline, it seems that we might see declines in gold and gold miners shortly (as soon as the USDX regains strength), and the decline below HUI's highest weekly close of 2016 will serve as a great bearish confirmation for gold, silver, and miners alike.

The HUI Index just closed at 270.55, which is clearly below the highest weekly close of 2016. This serves as a strong bearish sign, and it will be even more bearish when the HUI manages to close the week below the 2016 weekly high as well. There are only three sessions left (including today) before the end of the week (and month), so it will be very important where the HUI Index closes on Friday.

At this point, you might be asking yourself what's the big deal with the invalidation of the 2016 breakout and why are we placing so much emphasis on it.

One thing is that breakouts above previous highs are an important technical sign and everyone can clearly see them, and so are invalidations. The more profound the previous high is, the more important the implications become. And the 2016 high was indeed profound.

The second thing is that we saw exactly the same thing in the GDX ETF earlier this year. The GDX moved above its 2016 high in late February 2020, and it then invalidated this breakout. Do you know what happened then? The February-March carnage.

The third thing that makes yesterday's decline and invalidation of the breakout so important is that it was accompanied by developments that should have caused gold miners to rally. This shows just how badly miners really want to slide from here.

Thank you for reading today's free analysis. Please note that it's just a small fraction of today's full Gold & Silver Trading Alert. The latter includes multiple details, but most importantly, it includes the clear discussion of what will be the sign telling one that gold's move lower is almost certainly completely over. That's the detail, we think you might enjoy, want, and need right now.

Subscribe at a discount today and read today's issue ASAP.

Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager

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While every year is unique in its own right, looking at a series of them offers quite some tendencies that can be profitably exploited by the astute trader and investor. This is where seasonality comes, and precious metals are no exception. What message does the history send for the PMs complex in June?

Gold (seasonally) and gold miners (seasonally) move tend to top in early June, so it might be the case that we'll see another attempt to move higher here, and then the decline would take place during June.

Interestingly, there were usually two triggers for these moves: one from the USD Index, and the other from the stock market.

The USDX (seasonally) tends to bottom in early June, while stocks (seasonally) tend to form a local top. These moves are not huge, though, and the accuracy for the seasonality-based forecasts is lowest in the entire quarter.

This means that while a bottom in the USD Index and a top in stocks is likely to be "somewhere near", it doesn't have to take place exactly after May ends. In other words, we should already be on the lookout for either bullish or bearish signs, instead of blindly trusting the seasonal factors. They shed some light but the light itself it dimmed, like the one provided by a candle, instead of one being provided by a laser pointer.

Gold Miners' and Their 2016 High

The laser-precision technique that tells us whether the precious metals market is going to move higher or lower, could take form of a confirmation or invalidation of a major breakout. And we currently have this exact make-or-break situation in case of gold mining stocks. We previously described the above HUI Index - flagship proxy for the gold miners - in the following way:

The HUI Index declined significantly, and then it rebounded significantly.

Both are likely linked. Miners first declined more sharply than they did in 2008, so the rebound was also sharper. Based on the stimulus and gold reaching new yearly highs, miners also rallied and tried to move to new yearly highs. It's not surprising.

However, if the general stock market is going to decline significantly one more time, and so will gold - and as you have read above, it is very likely - then miners are likely to slide once again as well. This would be in tune with what happened in 2008.

At this time, it may seem impossible or ridiculous that miners could slide below their 2015 lows, but that's exactly what could take place in the following weeks. With gold below their recent lows and the general stock market at new lows, we would be surprised not to see miners even below their 2020 lows. And once they break below those, their next strong resistance is at the 2016 low. However, please note that miners didn't bottom at their previous lows in 2008 - they moved slightly lower before soaring back up.

Please note that the HUI Index just moved to its 2016 high which serves as a very strong resistance. Given the likelihood of a very short-term (1-2 days?) upswing in stocks and perhaps also in gold (to a rather small extent, but still), it could be the case that gold miners attempt to rally above their 2016 high and... Spectacularly fail, invalidating the move. This would be a great way to start the next huge move lower.

And what happened last week?

The HUI Index invalidated the breakout above the 300 level, and it also invalidated the breakout above the 2016 high (286.05) in intraday terms by closing at 285.13. This made the bearish picture for gold miners more bearish. The final confirmation of the top being in, will be gold stocks index's close below the highest weekly close of 2016 - 278.61.

The reason we're giving so much attention to the 2016 high right now and so little to anything else - at least in case of the gold stocks - is that what happens with regard to it really is the key to the miners' technical outlook. Confirmed breakout above the 2016 high would be likely to result in a bigger move higher, while its invalidation is likely to result in a bigger move lower.

Given the fact that gold is not moving up despite USD Index's sizable daily decline, it seems that we might see declines in gold and gold miners shortly (as soon as the USDX regains strength), and the decline below HUI's highest weekly close of 2016 will serve as a great bearish confirmation for gold, silver, and miners alike.

Thank you for reading today's free analysis. Please note that it's just a small fraction of today's full Gold & Silver Trading Alert. The latter includes multiple details, but most importantly, it includes the clear discussion of what will be the sign telling one that gold's move lower is almost certainly completely over. That's the detail, we think you might enjoy, want, and need right now.

Subscribe at a discount today and read today's issue ASAP.

Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager

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The precious metals market finally turned down yesterday, at least if you focus on silver as the leading indicator of where things are heading. In yesterday's analysis, we wrote that the white metal's tops are usually the most clear ones due to their shape as it's quite often a big, clear spike. It seems we have just seen one.

Yesterday, we wrote the following with regard to silver:

The previous reversal was quickly followed by even higher silver prices, so it's too early to open the champagne and claim that the top is definitely in, but given silver's recent clear outperformance of gold and the verification of the breakout above the 100 in the gold to silver ratio, the above seems quite likely.

Once silver futures break below the $17.17 level (the most recent low), it will be almost crystal-clear that the top is in. The next very short-term target area for silver is between $16.30 and $15.80. Then, after a brief pause, we would expect the decline to continue.

The above is up-to-date. Silver moved lower yesterday, and it moved temporarily lower also today, but it didn't move below the most recent low of $17.17. Consequently, while it's quite likely that silver already topped, it's too early to say that with 100% confidence.

Either way, the crack in the silver dam is widening. How much will it take force it into the very open?

Thank you for reading today's free analysis. Please note that it's just a small fraction of today's full Gold & Silver Trading Alert. It also covers the stock market prospects as they go influencing the miners. They say that the partially informed investor is just as effective as partially trained surgeon... You might want to read the full version of our analysis before making any investment decisions.

Subscribe at a discount today and read today's issue ASAP.

Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager

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