Gold Stocks Breakout Not Confirmed Yet / Commodities / Gold and Silver Stocks 2020
Gold has broken out from a two-month-long consolidation (from $1680 to $1770), but the other precious metals markets have not confirmed Gold’s strength.
The gold stocks (GDX, GDXJ) remain below their May highs while Silver remains below significant, multi-year resistance around $18.75. Silver closed Monday at $18.06.
Furthermore, Gold, when priced against foreign currencies, has not broken out. This move has been driven mostly by dollar weakness.
It is possible other markets could follow Gold higher, but there is work to be done.
Moreover, the breakouts in GDXJ and Silver would be far more significant for the sector.
GDXJ is close to a fresh 7-year high while Silver is close to a new 4-year high.
In addition to the above, we should note Gold’s resistance at $1800, where Gold tried and failed three times (in late 2011 and 2012) to reclaim $1900. Gold closed Monday at $1781.
Upon reviewing Gold, Silver, and GDXJ, we can see that no real sector breakout has occurred yet.
The trend is higher throughout the sector, and the fundamentals are strong, but we should temper our immediate expectations for the entire sector.
That does not mean sell or hedge. It just means adjusting expectations until the market gives us a signal either way.
The senior producers are currently lagging, but the juniors (GDXJ) and explorers (GOEX) are performing best. I expect that to continue during and following the next breakout, whenever it comes.
Regardless of where things move, this remains an excellent time to get into quality juniors with the most upside potential. Once the sector breaks higher, many stocks will no longer be cheap.
We continue to focus on identifying and accumulating those stocks with significant upside potential over the next 12 to 24 months.
To learn the stocks we own and intend to buy during the next correction that have 3x to 5x potential, consider learning more about our premium service.
Good Luck!
Bio: Jordan Roy-Byrne, CMT is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2014 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor. Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.
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