Gold miners just confirmed their short-term breakdown, broke below another important line, and moved to the third of the nearby support lines. The short-term trend is changing and it’s happening almost unnoticed. The price moves may be subtle, but their implications are not. Even relatively small moves confirmed by closing prices or – better yet – a series of them, can have meaningful implications. And this appears to be the case right now.

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The prices of gold and silver and the values of mining stocks increased in the past few months despite the bearish long-term signals and the analogy to 2013. At some point, when something doesn’t work, it’s time to drop it and move to things that do work. The 2013 – now link in gold doesn’t appear to be working anymore as gold deviated from it too much. If we take this factor out of the long-term picture, what will remain? What do the up-to-date signals suggest for the prices of metals and mining stocks?

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The precious metals sector declined yesterday and both: silver and mining stocks closed at new yearly lows. This sounds more spectacular than it really was, because the moves were rather small and in overnight trading, the metals have more or less came back to where they were 24 hours before. Still, something else took place that didn’t get as much publicity as the above-mentioned records. Gold miners moved below their short-term support line. Some may say that this is not a big deal because miners are also right after a breakout above declining resistance line based on the January 2018 and mid-2018 tops. The more long-term signs usually win over the more short-term ones, so the implications of the above should be bullish. But is this really the case?

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The USD Index declined yesterday, just like it was likely to, but precious metals’ reaction was dimmed. Gold and gold stocks moved a bit higher, but even though USD moved to new lows, there were no new highs in the former. Silver didn’t move much higher either. Why would this be the case? Since the USD Index seems to have more downside, will metals and miners soar shortly, like a coiled spring that’s about to be let loose?

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Yesterday's pause may seem irrelevant in case of gold and silver, but it's definitely not in case of one of the most important drivers of PM prices - the USD Index. The recent pause that followed the decline in the USD Index was actually a confirmation of a breakdown below a major support line (based on the key bottoms of 2018), which made declines in the USDX much more likely. Plunging USDX usually means soaring gold and silver - will we see both shortly?

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