Shopping For What?

Fridays idea…

Review:  Back in Early October I suspected that an ICL was due, and we were at least seeing a dcl form. I mentioned that I was buying Miners, I said that ” You want to at least get a starter positions then, and then you could decide to add later as we see how things are playing out.”    I also said that I usually dont hold leveraged positions   (JNUG or NUGT) beyond day 12 -15 often, since they can drop quickly into a dcl.  A 10 % drop in Miners can be a 30% drop in a 3x ETF.  I Never said to sell the starter positions, but I think some have since the bottoming process was bumpy.  I did encourage having  stops in place  ( Like under the ICL ) and add on a dcl, maybe add before a surge higher. Bottoms are tricky, so we need to look at this one at this point.

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  I would expect that most here have a starter position and some are asking when they can add. Should they wait for the next DCL , since we are on day 20 and daily cycles usually find a low around day 28-32ish? Does it hurt to add now, without all of the confirmation signs that an ICL is in place?  I want to focus on that right now. Miners are basically confirming that an ICL is in place, and as I have mentioned, quite a few are bullishly set up.  I’ve pointed out stocks like IAG, KGC, HL, TGD, NEM, etc. , some even breaking out and back testing their break outs. Lets take a look at the whole Precious Metals set up now.

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GOLD – Gold Broke out above the 50sma on Wednesday and Thursday closed above it again.  Here I am showing Gold on day 20, and what it might do if it were to fall into a dcl next week. It is at resistance ( shown yesterday). That’s not such a bad, even if it drops back down to the 200sma.

GOLD – Since Miners are breaking out and usually lead, I wanted to show a more bullish picture for Gold. On day 20, Gold can surge higher until (lets say as an estimate) day 26, and then fall into a DCL.  That is 6 more days.  That would be a post -election surge. Here the dcl would just be a back test or handle for another week. NOTE: Buyers would be forced to buy higher.This is why you at least want some positions now.

SILVER – This would be SILVER if the DCL came after the election.  It doesn’t have to be a terrible drop. This would back test the 50sma, and price would be where we are now.

SILVER –  A move higher through the elections could cause Silver to break out from the down trend and then back tst it.  Again, Buyers could be forced to buy higher at the next dcl.

I mention this because I keep hearing that people are afraid of the election results crushing Gold, so they don’t want to hold into next week. I’m trying to show that I believe THE LOWS ARE IN. I have been under the impression that most readers are holding a starter position from early October and have not been stopped out, they may have even been adding.  I would tell some that they could add on the dcl if they want to avoid risk.  Others should add for reasons about to be shown. Newer readers are asking when they can ‘start their positions’.  Fridays report is designed to show why you should have a position at this point (At least a starter position). Own Miners. Own SLV, GLD, GDX Calls, etc.

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GDX – I am seeing several Miners release earnings reports, and they are not dropping, thy are bullish results.  Some Miners reporting are moving higher. That means that GDX can move higher before putting in a dcl. GDX is just about guaranteed to be right translated with a high on day 20.

Look at the May ICL in step 1,2, & 3 .  I see a smaller version of ‘1’ & ‘2’ now. Is ‘3’ next and then a DCL? Consolidations usually lead to a run. Please read the chart.

1. A Pop out of the lows

2.  Sideways consolidation

3.  A run higher.

GDX – This chart shows that if you do not have a position and you add here, but it drops to a dcl now, the dip may not be very big anyway. If you can stand a little drawn down on a starter basket of Miners, the upside potential looks great.

GDX – Notice that at our last 2 ICLs  GDX played around the 50sma , and then broke out and ran higher.  We are seeing that now too. If you buy here and an ICL is in place, you will find your positions higher in the next few weeks/ months. I actually expect GDX to run to former highs for starters. Some think that this is a H&S and are afraid that it will drop. TIME WISE – I EXPECT PRECIOUS METALS TO GRADUALLY RUN HIGHER FOR THE REST OF 2016.

Conclusion :  The elections are coming up on Tuesday, and they are scaring people out of their positions. I am hearing that if XXXX is elected, Gold will crash.  I’m seeing Miners  breaking out and forming bullish set ups everywhere, and they are indicating that an ICL is in place.  Gold & Miners are looking  Right Translated, peaking on at least on day 20, maybe even higher on day 21 Friday or next week.   Lets look at some Miners…

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KGC – KGC released earnings and surged 8% , breaking above the 50 & 200sma. Look at the RSI.  Bearish?

KGC –  What if a dcl comes after the elections? You could get this .

KGC – If the DCL comes after the election, and Gold gets a little election pop? ( Ignore the yellow righting, I forgot to remove that from the above chart).

IAG –  I have been pointing this chart out for weeks actually. This is a 2 week consolidation actually, and these break outs often run back to former highs. THAT IS 0ver 40% from here, 80 % from the Oct lows.

GPL – Earnings were released Thursday and I bought GPL. THis can easily double over time. We see a large base / consolidation and I believe that the lows will not break, since the 200sma has been supportive on the dip into the ICL.   GPL is still at the lows when you think about where this could be in a few weeks.  After earnings, it back tested the 50sma area and took off higher. See the chart.

EXK –  EXK also released their earnings. It shot up over 8% Thursday after gapping down almost 20 cents.  It now closed over the 50sma. That is another sign that if Gold dips into a dcl, these Miners may resist the drop to a degree.  EXK should be back at the August highs soon, and then I’d expect a break out.

EXK – Look at these silver stocks out of the past 2 ICLs.  $1 to $6, it is easy to see that buying here and riding any draw down will pay off in the long run.

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Many still have their core positions from the spring, and that is good. Any upside will be captured by your core over time. Are you currently holding a small basket of Miners, or calls in GDX, SLV, GDX, GDXJ, or another form of investment in this sector? I see that the Miners are saying that an ICL is in place. Gold will play catch up, and whether it is before or after the elections remains to be seen. These would be the lows when you look back at the end of 2016.

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Conclusion: Friday may help us further in seeing how this plays out in the short term, but I am seeing  bullish implications in the miners.  When Monday and Tuesday come, many fear the U.S. Election results will hurt Precious Metals, because of what they have been reading on line. It seems that not many want to buy or hold anything with this election. I believe that the ICL is in place and I will buy any dip that comes our way.

Enjoy your Friday and have a great weekend!

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~ALEX

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RGLD – Another Bullish example of an earnings release. RGLD has tripled since the January lows.

Royal Gold-reports-record-quarterly-revenue-and-earnings-per-share-2016-11-02