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

Gold shot up today and junior miners jumped from their 38.2% Fibonacci retracement based on the decline from their 2020 high to the 50% retracement. So, since gold just moved to its 2020 high, it means that junior miners rallied only (about) half of what gold rallied.

Interestingly, when gold rallied to about $2,070 in 2020, it started from the June 2020 low at about $1,670, and the final (parabolic) part of the rally started in July 2020, at about $1,800.

This means that those two rallies are practically identical in terms of price moves. The low from this this rally started formed in August 2021 (at about $1,670), and the parabolic (probably final) part of the rally started in February 2022, at about $1,800.

There is practically no stronger resistance than a given market’s previous all-time highs, so this level is likely to make at least some investors question the validity of the sudden jump in prices.

Yes, the situation in Ukraine is critical.

However, the two key drivers of gold price continue to point to lower gold prices, and at the same time we know that geopolitical-event-based rallies don’t last and very likely to be reversed.

These two key drivers are:

• Real interest rates
• USD Index

The USD Index is already soaring, and real interest rates are likely to increase as the nominal interest rates are about to increase – and given the recent rally in prices they might increase more than most investors expect them to.

Consequently, while – given today’s rally – it might seem like there’s no stopping gold, silver, and mining stocks, please keep the above in mind. This rally is likely to be reversed, and when it reverses, junior gold miners are likely to decline in an epic manner. And lead to epic profits in case of those, who were able not to follow the mania during the parabolic upswing.

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

Thank you.

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