Silver was just breaking to new highs, gold stocks (HUI) were above the 205 level and gold was at levels not seen since August 2016. Gold and silver bulls were cheering. They are not cheering anymore. Even though the above was the case just several days ago, it was all invalidated, just like we expected it to be. Based on what happened on Friday, silver and mining stocks are at their new 2018 lows and their entire 2018 performance is a one huge bearish reversal. Where do precious metals go from here and how to profit from it?

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All eyes are on Bitcoin which decisively broke below the $10,000 mark (we are profiting on this decline, by the way), but it doesn’t mean that the situation in the precious metals market is dull. In today’s analysis we have two interesting developments to comment on. The first one is the USD’s move lower, its implications and the strength of the reaction in the metals and miners. The second thing is putting yesterday’s moves into proper perspective – and checking if anything changed regarding breakouts and breakdowns. Is the USD Index about to resume its 2018 slide and will gold soar above its 2018 high shortly?

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During yesterday’s session, we saw the final interest rate decision during Janet Yellen’s term as Fed’s Chair. The rates were kept intact, just as the markets expected. Gold, silver and miners were up, but just a little. Does it mean that nothing changed? No. It means that something is about to start.

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The bearish case for gold continues as fresh new bearish confirmations have just emerged. You have already read about gold’s huge weekly volume, gold stocks’ underperformance and many other factors. Yesterday’s session provides us with even more bearish details. But, there’s one thing that looks promising for gold bulls – the possibility of a big and sharp decline in the stock market. Some expect money coming out of the stock market to flow into precious metals, thus pushing their prices higher. As much as we love gold (and silver even more) as a very long-term investment, in today’s analysis, we dismiss the above stock-based hope.

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If there’s one word that can summarize yesterday’s gold stock performance, it’s “disappointment”. The HUI Index declined by almost as many index points as an ounce of gold declined in dollars. The Index broke below the mid-January high, the early-January high, the declining support/resistance line (thus invalidating the breakout), the rising support lines and it closed the session at levels not seen since January 11th. The HUI to gold ratio broke below the previous 2018 low and closed at levels not seen since December 19, 2017. All in one day. What does this shocking underperformance tell us?

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