Metals and Miners in Pole Position

Silver may have already bottomed out, given the...

by David Brady via Sprott Money

All of the conditions are in place for a major low and a massive rally to follow. We're just waiting for the confirmation that the bottom is in and the rally to new record highs has truly begun.

Looking at the changes in prices over the past week, little has happened:

So, I'll keep this report brief, focusing on the signals that the bottom is in and the rally to new highs has begun.

GOLD

Despite being extremely oversold following a 2-year sell-off, Gold could still break 1675 to complete its correction. That said, a rebound to prior support at ~1785, followed by a higher low, and then a new higher high, would signal the bottom is in and up we go. Note how the top of the bull flag is converging on that resistance point. A break and close above 1883 would confirm the rally to 2300+ is already under way.

SILVER

Given the pounding that Silver has endured relative to Gold, it may have already bottomed out courtesy of multiple positive divergences. Confirmation is needed with a close above 22 and a break above the intra-day high of 22.57 while establishing a trend of higher lows and higher highs. Above 24 and 40+ is next imho.

GDX

Like Silver, GDX may have already bottomed out. Beyond extreme oversold with multiple positive divergences, GDX is on the brink of breaking downside resistance with the MACDs turning positive. Confirmation that the low is in comes with a break of 33.50. Ahead of that, a break above 30 would be an early warning signal. 50+ is my target on the upside.

SILJ

SILJ is in the same position as GDX but its MACDs have already turned positive. A break of the red resistance line, followed by a higher low and higher high, and a break of the 200MA and key resistance at 12.20, and up we go to 25-30, speaking conservatively.

In summary, fuel tanks are full, the weather is perfect, adrenaline is pumping, we're just waiting for the green light.