Just a quick update as things are moving quite fast in the PMs.

Gold moved to $1,900 while GDX ETF moved to the resistance provided by its late-2021 high. Why would that be the case? Well, it’s simply a continuation of the same thing that we saw recently. The markets still “buy” (both: figuratively and literally) the invasion-on-Ukraine narrative even though it was just clear that the “exact date” didn’t work at all.

The top story on Reuters.com says “US says war appears imminent after shelling on Ukraine front line” and the main topic on Bloomberg.com was just (they are changing the topics quite quickly and I didn’t archive the page before refreshing it) something like this “Biden sees very high probability of the invasion”.

The initial jobless claims report was higher than forecasted, but not significantly so, so the real reason behind PMs’ rally is likely the continuation of the invasion narrative.

And just because the same thing “invasion is likely according to the U.S.” was repeated several additional times, it doesn’t make it any more likely. It just made the markets and traders more emotional about the run-for-the-hills trade.

Since the invasion is exactly as unlikely as it was before, the markets are likely to give away all these tension-based gains, once they subside or at least become smaller. In other words, while it is true that we saw a bigger rally, at the same time, it most likely made the following decline bigger as well. The bigger the emotional high now, the bigger the crash later.

Technically, the $1,900 level in gold and late-2021 highs in GDX are strong resistance levels, and please note that the latter is strengthened by the 38.2% Fibonacci retracement level based on the entire 2020 – 2021 decline. The GDX-based RSI indicator is also in the area (close to 70) where it indicated reversal multiple times in the previous months.

Consequently, I’m not making any adjustments in my short position in junior mining stocks. If I didn’t have any, I would be very happy to enter them right now. Of course, it’s your capital, and you can do with it whatever you wish – I’m simply stating what’s my approach, my opinions, and on what I’m basing them. You will find more detailed explanations (especially regarding the situation in the Ukraine) in the recent regular Gold & Silver Trading Alerts – this message is simply to provide you with a confirmation that my opinion on the market remains unchanged in light of today’s developments.

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

Thank you.

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