Tying Gold Miners and USD Signals for What Comes Next / Commodities / Gold and Silver Stocks 2020

The precious metals sector was likely to decline,and it did exactly that. And based on what we just saw, it’s likely to declineeven more.

Once again, the situation yesterday and so fartoday developed quite in tune with what we wroteyesterday, so today’s analysis will take form of a broad update.Let’s take a look at the GLD ETF. In yesterday’s and Monday’s analyses, wedescribed it in the following way:

[Monday] As far as the short-term isconcerned, we have a good indication from the GLD ETF that the rally is about to end today. This is the case due to thetriangle-vertex-based reversal that we have right now. This tradingtechnique has proven to be useful many times in the previous months,so it seems to be worth to pay attention to its indications also this time.

[Tuesday] The GLD ETF has indeed movedhigher yesterday (less than 0.5%, though), and gold futures are moving lower intoday’s pre-market trading (so far declining by about 0.3%). This might haveindeed been the top, especially that silver invalidated its tiny breakout abovethe previous 2020 highs and gold showed weakness relative to declining USDIndex.

GLD ultimately declined by 0.65%, whichmeans that it erased more than Monday’s gains. The triangle-vertex-basedreversal technique seems to have worked once again. This is further confirmedby the fact that gold is once again down in today’s pre-market trading –despite lower USD Index values.

In yesterday’sanalysis, we emphasized that the length of the current decline isvery similar to the length of the February – March decline that we saw rightbefore the big USDX run-up. We also argued that the situation is relativelysimilar on the fundamental front. To clarify, there are obvious differences,but the key similarity is that it’s relatively clear that the Covid-19 casesare going up and the economic implications are going to be more severe than itis currently perceived in general, but the numbers don’t yet reflectthat. Which is probably why the USDX is still not soaring and stocks are notyet declining. Again – it’s a “yet” in my view.

What we would like to add to the abovetoday is that in March, the USDX bottomed on the third day after breaking belowthe previous important support (the January low). Today is also the third daywhen the USD Index moved below the important support in the form of the 61.8%Fibonacci retracement. It could be the case that the big run-up is just aroundthe corner. And since gold is already declining despite the lack of USD’s help,such an USDX rally would likely have a devastating effect on the preciousmetals sector.

As you can see on the above chart, silver is nowvisibly below the previous highs, and it’s now crystal-clear that silver’ssmall attempt to break to new 2020 highs was invalidated. This is somethingthat we often see as a confirmation that the top is already in, and it seemsthat this is the case also this time.

Please note that the huge slide below $12 in silverfutures started from almost the same levels and it took less than a month forthe white metal to move there. If the first part of the slide is similar towhat we saw previously, we can expect to see a decline below $17 shortly.

Miners’ performance also suggests that anotherslide is starting. And it’s not only because of HUI’sprofound monthly reversal, or the invalidation of its breakout abovethe 2016 highs.

Monday’s rally on low volume was followed by abigger decline on visibly bigger volume. GDX has almost erased three days ofgains, declining more on a relative basis than GLD did during the same time.This serves as yet another confirmation that the top is already in.

The thing that we would like to add today is thenote about similarity between the price patterns that we saw betweenmid-February and early March and the last few weeks. The areas marked in redare identical. As you can see the shape of the price moves is very similar, andso is the timing of the price extremes. In fact, the latter is almostidentical. “Almost”, as it seems the move lower started one day earlier thistime.

It's just like the PMs and miners got fed upwaiting for the USD’s rally and stock market’s decline and are moving lowereven without them. This is the perfectly bearish situation, because once we doget the above-mentioned signs, the decline is likely to simply accelerate.

Thank you for reading today’s free analysis. Thereare major trading implications of the new signals that we just got and the fullversion of our report includes them. That’s the detail, we think you mightenjoy, want, and need right now.

Thank you for reading today’s free analysis. Its full version includes details ofour currently open position as well as targets of the upcoming sizable moves ingold, silver and the miners. We encourage you to sign up for our free goldnewsletter – as soon as you do, you'll get 7 days of free access to our premiumdaily Gold & Silver Trading Alerts and you can read the full version of theabove analysis right away. Sign up for our free gold newsletter today!

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Toolsfor Effective Gold & Silver Investments - SunshineProfits.com
Tools für EffektivesGold- und Silber-Investment - SunshineProfits.DE

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