I confess that I am intrigued by DUST, the triple-bearish-on-miners ETF. It is banging against its trendline which, in the past, has been a very reliable bottom. Looking at GDX itself, it doesn’t seem slam-dunk bearish, so I’m actually not going to buy DUST. But I at least wanted to share this chart, since it seems like an interesting speculative play.
A break & hold below 1270/60 on Gold could send it tumbling (quite hard this time) to 1150 or lower (ultimately 1000).
1314 is the near-term resistance level to overcome before running into major resistance at 1550, in my opinion, (based on my analysis of price, Fibonacci, channel, and volume profile data), as shown on the 5-Year Weekly chart below.
The triple-bearish-on-gold-miners ETF, symbol DUST, has a rather interesting property of bouncing hard off the trendline I’ve shown below. If this is true, it would suggest miners are in for some weakness ahead. Don’t get me wrong – – I’m a precious metals booster! – – but I wanted to at least point out this interesting phenomenon.
Improving Macro Backdrop
In light of a shifting global macro backdrop that we can finally sink our teeth into with respect to a bullish orientation on the gold stock sector, I thought it might be a good idea to publicly post some bottom line thoughts from this week’s NFTRH report.
The report went into great detail to explain why more fundamentals that matter are starting to come in line, after the chart below refused to make a signal against our big picture view of global economic contraction, which has been the biggest key for the counter-cyclical gold mining sector.
The title is not meant to declare that this time gold stocks are going to exercise the excellent risk vs. reward stance vs. the US stock market. But it is meant to declare that the stimulus for the recent out performance is much healthier than it was last summer, during the last bounce.
Recall that was a time when Russia was sending armor into Ukraine and the pom poms came out in the gold sector, as if geopolitics have anything to do with investment merit.
A combination of factors — oil & copper prices, sluggish wage growth, weakness in equities today — are pressuring 10-year Yield, which is now at 1.93%, or 10 bps below Friday’s Jobs Report recovery high.
Only a sharp rally above 2.03% will argue technically that Yield has put in a meaningful bottom in and around the 1.90% area.
Conversely, Gold, it is acting extremely well, given the constant headwind of a rising US Dollar (DXY) and otherwise growing deflationary perceptions.
Something is going on in the Gold market that is grinding it higher in an impressive display of relative strength.
My next optimal target zone is $1240-$1244. Key near-term support rests at $1218.00.