Just a quick update as things are moving quite fast in the… cryptocurrencies. And the precious metals market seems to be reacting in a very peculiar way.

If you haven’t seen the full extent of crypto’s demise:

At the beginning of May, bitcoin was trading just below $60,000, and today, it moved briefly just above $30,000. It’s now at ~$35,180. The fall in Ethereum and dogecoin was even more profound. They are both currently down by about 30% for the day. At its intraday minimum (so far), dogecoin was more than half (!) cheaper than it was yesterday. Yes, the decline is that dramatic.

Crude oil declined by almost 4% and the S&P 500 futures are down by about 1.5% - at least so far. Given the current momentum, it seems that they might test their recent lows any hour now.

The USD Index is up, but only very insignificantly so – it seems to be taking the wait-and-see approach. As you’ve read today and yesterday, it’s likely to rally quite soon.

Anyway, it seems that crypto holders panicked, and they turned to gold as a safe haven asset. And gold rallied… by mere $35 or so, which lasted just a few hours. Gold has already erased a large part of the early gains. It’s currently up by about $15 for the day. The things on the cryptocurrency market are still hectic, so the safe-haven demand is likely still pushing gold higher.

$15 rally from yesterday’s closing prices… And that’s it?! With epic volatility in the cryptocurrencies, one might have expected more capital to move to the gold market and precious metals in general. After all, that was one of the major premises of multiple bullish (for gold) analyses that were published recently. Supposedly, the money was likely to flow from the cryptocurrencies right into PMs. And what’s happening? Gold is barely moving. Yes, a $15 rally might seem significant, but it’s nothing compared to the gargantuan declines in bitcoin, ethereum, dogecoin and the likes.

Now, while gold is up by about 0.8%, silver is down by about 1.2% - slightly below $28, and the GDX ETF is down by 0.43%.

Gold stocks are clearly not willing to rally here, which serves as yet another confirmation that the top is already in. Refusing to rally despite a $15 move higher in gold is a profound bearish statement from the miners.

Consequently, the situation in the precious metals market (especially in the miners) is even more bearish than it was earlier today, and what we saw today already dismisses the decline in cryptos as a valid reason for one to expect a massive rally in the PMs.

All in all, the current short positions in the junior mining stocks continue to be justified from the risk to reward point of view. If I didn’t have any position in them, I would have entered them today.

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

Thank you.

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