Based on today’s weakness in the mining stocks relative to gold and the fact that they (both: GDX and GDXJ) are almost certainly going to close the week below the neck levels of their respective head-and-shoulders patterns, the outlook became even more bearish than it was before.

The above, combined with the fact that gold is still trading relatively high above the $1,700 level made me reconsider the exit price targets for GDX and DUST.

In short, since gold is about $80 away from its downside target and GDX (at $32.02) is just $0.50 lower than the current price (at the moment of writing these words), it seems that any interim bottom in the GDX would be likely to form lower than that.

Consequently, I’m moving the exit price for the GDX ETF from $32.02 to $31.22.

I’m also adjusting the exit price for DUST – to $24.88.

The exit prices for GDXJ and JDST remain unchanged.

To summarize:

Trading capital (supplementary part of the portfolio; our opinion): Full speculative short positions (300% of the full position) in mining stocks is justified from the risk to reward point of view with the following binding exit profit-take price levels:

Senior mining stocks (price levels for the GDX ETF): binding profit-take exit price: $31.22; stop-loss: none (the volatility is too big to justify a SL order in case of this particular trade); binding profit-take level for the DUST ETF: $24.88; stop-loss for the DUST ETF: none (the volatility is too big to justify a SL order in case of this particular trade)

Junior mining stocks (price levels for the GDXJ ETF): binding profit-take exit price: $42.72; stop-loss: none (the volatility is too big to justify a SL order in case of this particular trade); binding profit-take level for the JDST ETF: $14.19; stop-loss for the JDST ETF: none (the volatility is too big to justify a SL order in case of this particular trade)

For-your-information targets (our opinion; we continue to think that mining stocks are the preferred way of taking advantage of the upcoming price move, but if for whatever reason one wants / has to use silver or gold for this trade, we are providing the details anyway. In our view, silver has greater potential than gold does):

Silver futures downside profit-take exit price: unclear at this time - initially, it might be a good idea to exit, when gold moves to $1,703.

Gold futures downside profit-take exit price: $1,703

Long-term capital (core part of the portfolio; our opinion): No positions (in other words: cash

Insurance capital (core part of the portfolio; our opinion): Full position

As always, we’ll keep you - our subscribers - informed.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief