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Precious Metals, Miners Making Waves and New Trends

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Metals could start to rally this week or in a few months. The best thing to do is wait for a reversal to the upside before you get active.

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The precious metals sector has been dormant since both gold and silver topped in 2011. But the long term bull market remains intact. As long as we do not have the price of gold close below the lower yellow box on the monthly chart then technically speaking precious metals should continue much higher.

Large consolidation periods (yellow boxes) provide investors with great insight for investments looking forward six to 18 months upon a breakout in either direction (up or down). The issue with investing during these times is the passage of time. One can hold a position for months, and sometimes years, and have their investments fluctuate. This adds extra unnecessary stress.

Once a breakout takes place, a powerful rally or decline will start putting an investor's money to work within days of committing to that particular investment compared to money invested waiting months for the breakout and new capital gains to occur.

Gold Price Chart - Monthly



Gold Price Chart - Daily

The chart of gold continues to form a large bull flag pattern with a potential 3 or 5 wave correction. If price reverses this week and breaks above the upper resistance trend line then it will be a 3 (ABC) wave correction, which is very bullish. But there is potential for a full 5 wave correction which is still bullish, but it just means we have another month or two before metals bottom.



Gold Miner Stocks – Market Vectors Gold Miners ETF (NYSEARCA:GDX) Chart – Daily

Gold miners do not have the best looking chart. A strong looking bull flag was formed, but it has continued to correct and is not nearing a key support level. This level could act as a triple bottom (bullish), or if price breaks below then it would be breaking the neckline of a massive head and shoulders pattern. This points to 50% decline. I remain bullish with the longer term gold trend until I'm proven wrong.


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No positions in stocks mentioned.

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