Long-term investors in gold, and bull market traders in gold miners (not an “investment” in my opinion) may well disregard the theme of this update, because the macro is turning ever more favorable to the precious metals and miners.
But there are traders among us and for that reason I continue to note milestones along the way where traders might consider taking profits. It’s important to understand ‘am I investor, or am I trader?’ and I tell you, sometimes I am not sure of the answer to that question myself. But for traders…
GDX has rammed its away upward to the next resistance area defined here (daily chart) by the January and December, 2023 highs and the April, 2023 low (red arrows). It has gapped its way upward as if escaping a house afire. Speaking of escaping, that may well have been escape velocity of a launch to a new bull market leg.
However, traders will realize that GDX is getting overbought again and a pullback will eventually come about. It’s how markets work. They also work this way: an investor lapses and thinks like a trader, takes profit and then FOMOs a sector that improbably keeps going up. That is the argument for not watching too closely if/as the macro aligns positive because there will be much more upside down the road, regardless of short-term volatility.
Just an update to try to define the situation. If a pullback does come about from this resistance area look for the upper gap to fill and a short-term support cluster around the EMA 20 at 30 (+/-). Below that lurk the moving averages. If this truly is a real move (at least to our initial target of the gap just below 40) I would expect any such decline to 28-29 to be a buying opportunity. Of course, that could also come at 30, again qualifying that a pullback even materializes from current levels.
A trader wants profit and doesn’t care how she gets it. An investor uses top-down macro to either stay aboard or abort, looking for opportunities to perhaps add to positions as the macro turns.
