Precious Metals and Miners Trigger Technical Buys

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Tickers discussed:  GLD, GDX, SLV, SIL

The post discusses the technical posture of the precious metals and miners which look poised to run.

Technical backdrop for precious metals and miners

In May and early June gold, silver and their miners broke out of long bases and made an impulsive move higher. As you likely know, gold has been wandering in the wilderness for nearly 6 years prior to this breakout. The technical trader adage “the longer the base, the higher in space” hopefully applies here. The impulsive nature of the buying lends me to believe this is the real deal.  The initial move brought the technical indicators to over bought conditions that were not sustainable.  Now after 2 months of backing, filling, and generally resting, bull flags have formed and now price has emerging breakouts working.

The thing I most like about these set ups is that stops can be placed near by in addition to the fact that we are not late to the party.  Let’s look at the charts.

Gold and the gold miners

For $GLD traders can be long against $140.50. If / when the trade begins to work, the rising 20 and 50ema’s  should act as support on the way up. I really like how the PPO indicator ( 2nd panel ) has reset near the zero line. I expect the PPO to rise above zero in the coming days and for RSI to break out as well.

$GDX – Gold Miners

Price has broken above the bull flag with RSI breaking out and PPO momentum resetting as well.  Stay long against the down trend line.  The last line in the sand is $26.25

 

$SLV – Silver
Price made a very nice base at $16.25 and has now broken out of the bull flag. Also notice the breakout of RSI and the PPO reset near the zero line. I think traders can be long against $16.25.  This is heading higher in my opinion.
$SIL – Silver miners
I have drawn a generous flag here. A move above $29.50 seals the deal. Like the other charts, the RSI and PPO indicators look constructive.  Once the breakout comes, traders can use the downtrend line as a stop.
Final Thoughts
I think we are in a new bull market for gold and silver. If you look around the world, gold is breaking out against all currencies. Keep in mind, this advance has been in the face of a strong $USD.  If the $USD backs off or simply stops going up, it should be a tail wind for the metals.
I think its prudent to have at least some exposure in this sector. I am not a gold bug. Simply trading the charts and for me they look bullish after the recent correction and the downside looks limited with stop locations near by.
As you consider your options, keep in mind that the miners usually will outperform the metal. That out-performance comes at the expense of volatility.  Also, I think silver should out-perform gold.  Again, silver and their miners will be more volatile than their gold counterparts.

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Notes:

The charts are and levels are provided as well-informed guidelines. That said, please be aware that exogenous events like surprise tariffs or other events can easily move price through support / resistance zones.

Also, set you stops according to your own risk tolerance. The ones I have provided are to be used only as a guide. The most important aspect of your stop is to honor them. Some trades work, some don’t. Honoring your stop will ensure your loss on a failed trade will be minimal.

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