I thought that you’d appreciate a quick note before the end of the week. Not much is happening today, but what is happening is bearish. Miners are underperforming gold once again on an intraday basis – GLD is up, while GDX and GDXJ are relatively flat.

However, as I plotted GDXJ, GLD and S&P 500 on the same chart, it became obvious that miners are actually underperforming in a few different ways, which make the overall picture even more bearish.

GLD moved to its recent highs, while GDXJ didn’t, and it also moved back to the start of today’s session. That’s significant underperformance on an immediate-term basis.

While the general stock market declined at the beginning of this month and junior miners followed, some said that as stocks recover, miners should recover as well. Stocks recovered and rallied to new monthly highs, and GDXJ didn’t. It’s much closer to its monthly lows than it is to its monthly highs. The implications are bearish.

Finally, please note that while the GLD ETF is trading between its October/November highs and lows, the GDXJ ETF is trading well below its November lows. This is – once again – bearish.

So, all in all, what we see so far today confirms the bearish outlook for the mining stocks. It seems that the profits on our short positions in the junior mining stocks (and/or in silver, if anyone shorts that part of the precious metals market) are likely to be much bigger in the following weeks, and perhaps also days.

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

Thank you.

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