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Silver, Gold & Miners About To Sell Off Again

November 22nd, 2013 · Chris Vermeulen · 16 Comments

A couple weeks ago I posted these same charts talking about the pending breakout (in either direction) with silver, gold and mining stocks. Fast forwarding to this week its clear this sector continues its 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 of roughly 25% for the GDX ETF trading fund.

Let’s take a quick look at what is going on.

Gold Trading Chart:

The chart of gold shows price being wedge into the apex of the down sloping resistance trend line 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.

 

gold18

 

Silver Trading Chart:

Silver is under performing 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 trend lines like this. Both gold and gold miners should be confirming this breakdown in silver if it is the real deal.

 

silver18

 

Gold Mining Stocks ETF:

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.

 

gdx18

 

Last week I talked about ETF trading strategies and 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. Get more reports like this here: www.GoldAndOilGuy.com


16 responses so far ↓

  • 1 Lachlan Scanlan // Nov 30, 2013 at 5:46 am

    NCM seems a good proxy for gold Greg so get your cookies ready for the sell off.

  • 2 Greg Atkinson // Dec 4, 2013 at 2:40 pm

    Newcrest is just above $7 now…unbelievable! The one year chart must bring tears to the eyes of most shareholders. But maybe the sell-off may be getting a touch overdone so I might be tempted to buy a few NCM shares if the stock price hits $7 or below. (which is in no way intended to be a stock tip!)

  • 3 Ned S // Dec 9, 2013 at 6:39 pm

    Yes; Is gold (and Newcrest) a falling knife or a fallen knife? 🙂

  • 4 Biker // Dec 10, 2013 at 7:40 am

    Cutting remarks here: http://www.moneymorning.com.au/20131209/why-gold-and-bitcoin-arent-so-different-after-all.html

  • 5 Greg Atkinson // Dec 13, 2013 at 11:14 am

    Ned I have been bearish about gold for quite a while and have mentioned many times that when investors start selling out of Gold ETF’s things could get nasty. However I am surprised how hard Newcrest has been hit and did not expect it to fall well below $10.

    But I am not particularly skilled at catching “falling knife” type stocks so for now, I will keep both hands in my pockets.

  • 6 Biker // Dec 13, 2013 at 12:09 pm

    But…but…it’s _radioactive_, Greg!

    http://www.moneymorning.com.au/20131211/when-will-this-radioactive-blue-chip-stock-become-a-buy.html

  • 7 Lachlan Scanlan // Dec 13, 2013 at 8:43 pm

    I thought NCM might go a bit lower yet (eg 5-6 dollars) just based on their price action the price action of gold and gold shares. Doesn’t seem right but anyhow. All gold shares have been thoroughly smashed and in most cases regardless of how much profit they were making or finds they had unearthed.

  • 8 Biker // Dec 16, 2013 at 11:23 am

    Well, there are even worse-faring examples among the miners, Lachlan. Imagine paying $2.50+ for PRU, for example… and losing 90% of that investment. You commented elsewhere that some of the small cap PM companies might disappear completely. That may well be the case.

  • 9 Lachlan Scanlan // Dec 17, 2013 at 4:00 am

    My father has lost out on one of them that way BP and I expect high chances of losing some. Only consolation will be a tax deduction. Anyhow you can bet the mineral deposits ain’t going nowhere…just my money…gurgle, gurgle. There is no point me selling out anything though and it’s not what I set out to do. I’d rather stick to my guns even if I take a hit here.

    You know we have a fair size town not too far away on the Bruce Hwy. Mitre Ten grew up and overtook all the little hardware stores, as is the way of things. And then they built a huge, Bunnings style shop and moved into it just a year or so back. Today, if you go there you will see a large development in progress just 2-300m or so from their back door. It’s a new Bunnings store. I have come to the conclusion the Chinese must be about to buy into real estate here (not sure whether to wink here or not). Maybe that’s where DRA get their 14 year boom idea from (which i did not bother reading into). In any event these are amazing days. It appears there is no reason for two mega shops to behave like this. The local economy is quite slow this year and the average Joe can’t see too much sunshine ahead…as is also the way of things at times.

  • 10 Greg Atkinson // Dec 21, 2013 at 7:53 am

    Lachlan gold prices and some gold miners have fallen to levels now that make even a long term gold bear like me interested. The trick is knowing when the exit from gold ETF’s will slow and then reverse. Still it must be tough for many of the small gold miners especially those with higher production costs. I guess at $1200 USD/Oz many of them are racking up losses.

  • 11 Lachlan Scanlan // Dec 23, 2013 at 6:39 pm

    I wont be going in for the kill Greg but if gold dips down another hundred or so i will accumulate a little of that or some silver. I have a feeling the commodities rout will end sometime next year…the market feels despondent and shaken out.

  • 12 NextOptions // Dec 23, 2013 at 7:41 pm

    Great review on Gold Mining Stocks ETF. Thanks for sharing the news.

  • 13 Lachlan Scanlan // Dec 24, 2013 at 5:46 am

    Was not taking much notice of USD gold but it has traded down to 1191 over night. AUD gold looks ready for some downside below support too but I’ve waited for a while now already….still think it go for dip though.

  • 14 Lachlan Scanlan // Dec 24, 2013 at 6:05 am

    One of the greatest reasons these metals have been a good short call in the last few years is because the general resolve of gold bugs for the resumption of the bull market is so high. But as Louis James says now, “many gold investors have grown rather quiet as 2013 comes to a close”, which is a better sign of things for gold. The squid bank while publicly bashing gold this year has bought a 3.7M shares in GLD. Russia, Turkey, China and others continue to accumulate very significant amounts….the key point being the price has suffered anyhow which shows a disconnect in the market. The main reason I have been bearish for some time actually. It is obvious to anybody without bias that gold can change hands in very very large amounts and still tumble in price. A good reason to allow oneself to view very low key support areas like approx $1050 USD with an open mind.

  • 15 Lachlan Scanlan // Dec 24, 2013 at 6:14 am

    Turkey alone bought 13M tonnes of gold in November. You have to wonder then what will make this market go up? And yet I suspect it will as economic factors change down the track. Turkey has a new policy to accept gold in its reserve requirements from commercial banks. We are watching a recapitalisation process which includes a gold element. The system is reforming itself.

  • 16 Greg Atkinson // Dec 26, 2013 at 9:54 am

    Lachlan at current levels I am starting to think that the sell-off across the gold miners has run it’s course. However I am not optimistic regarding commodities in general especially coal & iron ore.

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