Today’s analysis will take a very short form, as practically nothing changed on the precious metals market yesterday – we simply saw another confirmation that our current trading positions are very likely to become more profitable in the following weeks.
The confirmation came from the mining stocks that declined visibly yesterday, even though gold ended the session higher. The GDX was down by 1.40% and the GDXJ was down by 2.30%, which is a very weak performance given that gold futures ended yesterday’s session just 0.26% lower, and the GLD ETF (most comparable to GDX and GDXJ due to analogous opening and closing prices) was down by mere 0.12%.
Gold, silver, and the USD Index ended yesterday’s session relatively unchanged. Silver is moving higher in today’s pre-market trading (up by 0.56%) more visibly than gold (up by 0.34%) and it could be the day when silver outperforms gold visibly on a very short-term basis. As a reminder, if we see something like that, it will serve as yet another sell sign.
I received two questions recently, and I would like to take this opportunity to share my replies also here:
Q: We need a more detailed prediction on this corrective move on Gold and the USD. Are we at a point where we can Short Gold at current prices $1800 and above?
A: In general, yes, but I prefer to short the junior mining stocks. I do think that gold is going to decline soon, though.
Q: PR, I am not sure I understand what you are saying.
For instance, JDST target was 39 now it is 16 (247% difference) but you say this does not mean the decline will be smaller.
You’ve also been saying that we may be switching to sliver shorts sometime during the slide , but I wouldn’t think this would effect the target price of JDST since my understanding is that switching to silver would happen around the JDST target.
If the decline will not be any smaller how can the target price change so much? Are you saying that you're initial target price was a lot more liberal rather than conservative on the target?
A: To clarify: I think that miners will decline substantially, and they will move beyond the targets for the current trading position. The point is that there is likely to be a corrective upswing once gold moves to its previous 2021 lows, and I prefer (based on information available right now) to exit the short position, wait for the correction to be over, and then to get back on the short side of the market to profit on another huge move lower. I hope the above helps. If not, I’ll be happy to explain further.
To sum up, there was practically no other changes on the market yesterday and so far today, so this week’s flagship analysis that we posted over the weekend remains up-to-date. I encourage you to read it today if you haven’t had the chance to do so yesterday.
As always, we’ll keep you - our subscribers - informed.
Thank you.
Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief
