Warning On Gold, Silver & Miners

Posted by Bigtrends on November 19, 2013 1:36 AM

Warning On Gold, Silver & Miners
Silver, Gold & Miners About To Sell Off Again (But That Should Be A Buying Opportunity)

Recently we said there was likely a pending breakout (in either direction) with silver, gold and mining stocks.  Fast forwarding to this week, it's clear this sector continues to struggle to rally.  Key support levels are now being tested, and if these levels fail prepare for a sharp correction, with mining stocks showing the most downside potential -- perhaps 25% for the Gold Miners ETF trading fund (GDX).

Let's take a quick look at what is going on:

Gold Chart Analysis:

The chart of Gold (GLD) below shows price being wedged into the apex of the down-sloping resistance trendline and the rising support trendline.  Gold was trading below this level but has since bounced.  But if gold closes the week below this 'line in the sand', the price could start to fall quickly and test the $1200 per ounce within a week or two.

Gold Weekly Chart
gdx18


Silver Chart Analysis:

Silver (SLV) is underperforming gold and trading below its support level currently.  If silver does not recover by Friday's closing bell, then things could get ugly for a few weeks as investors start to exit their positions.  That being said, I need to point out that silver is more of a wild card when using trendlines like this.  Both gold and gold miners should be confirming this breakdown in silver, if it is the real deal. 

Silver Weekly Chart
silver18
 

Gold Mining Chart Analysis:

The chart of gold miners I like the most. I like it because it's pointing to lower prices, roughly 25% lower if the breakdown takes place. Gold mining stocks could be a fantastic long term investment if we see the $17.50 level reached on this GDX ETF. 

GDX Monthly Chart
gdx18


In the big picture on gold, silver, miners and bonds,  they look to be nearing a major bottom ... and once they do bottom, it should be a great buying opportunity for specific stocks or the entire sector.
The next few weeks are going to be crucial for precious metals and we will keep an eye on them as this bottom unfolds. 

Courtesy of Chris Vermeulen, www.GoldAndOilGuy.com

 

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