Gold, Silver, and Miners Just Can't Jump / Commodities / Gold and Silver Stocks 2021
Let’s face it, the metals are nothaving an easy time breaking out. Short-term rallies end up going nowhere andbearish signs are still in abundance.
Yesterday’s session was once again quiteinformative, and so is today’s pre-market trading. In yesterday’s analysis, Iemphasized the importance of the relative weakness that we just saw in miningstocks, so let’s start with taking a look at what mining stocks did yesterday.
At first glance, yesterday’s performancemight look like a bullish reversal, but zooming in clarifies that somethingelse was actually in the works. Let’s take a look at the GDXJ 1-hourcandlestick chart for details.
Yesterday’s “reversal” was actually abreakdown below the previous (mid-October) intraday lows along with theverification thereof. The GDXJ moved below the above-mentioned lows and – whileit moved back up – it ended the session below them.
This is a bearish type of session.
Also, if you were wondering about thehigh volume in the final hour of trading – that’s relatively normal as that’s when bigger trades tend to take place.
And while mining stocks were busyverifying the breakdown, gold tried to break above its declining, redresistance line, and verify that breakout.
While yesterday’s session didn’t bringmuch lower goldprices (and the invalidation), today’s pre-market trading makes itclear that the attempt to break higher failed. Justlike I had indicated yesterday.
This time the rising short-term supportline is not there to prevent further declines as the breakdown below it wasalso confirmed.
What does it mean? It means that gold islikely to fall, and quite likely it’s going to fall hard.
Besides, silverprice is after a major short-term breakdown, too.
After a powerful short-term rally, silverhad reversed, and now it broke below its rising support line. That’s yetanother bearish indication. Please note that at first silver was reluctant todecline while mining stocks moved decisively lower, which was normal during theearly part of a given decline. Silver did some catching-up action yesterday,but since miners are not showing strength, I’d say that we’re getting to theregular part of a short-term move, not close to its end.
And the move lower is likely to continue,just as the move higher is likely to continue in case of the USD Index.
The USDX is after a verification of thebreakout to new 2021 highs and after an about monthly consolidation above them.This is a perfect starting point for a major upswing, and we’re likely to seeone soon.
All in all, while the outlook for theprecious metals sector is very bullish for the following years, it’s verybearish for the following weeks.
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Przemyslaw Radomski, CFA
Founder, Editor-in-chief
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