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Here are the links of the week for you....
Are Precious Metals Breaking out?
My editorial penned Friday. I take a look at Gold, Silver as well as GDX and GDXJ.
The Gold Sector: Close but No Cigar Yet
Comments on the PM sector from Steve Saville, one of my favorites.
Gold Miners Test the 200-dma
Tiho Brkan's latest thoughts on the gold miners.
Can Europe Save China & Vice Versa?
The latest from Market Anthropology. Great thoughts as usual.
Worry About the Divergence between Transports & Industrials?
A few very interesting charts. It is a strong warning signal for the stock market but that isn't necessarily an imminent warning.
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Moving on, to answer the question, I conclude no or at least not yet. GDX has about 8% upside to that strong confluence of resistance while GDXJ has a bit more upside. Gold has a confluence of resistance around $1250. For a real breakout in the sector, GDX needs to surpass its 80-week moving average and Gold needs to takeout $1250 convincingly.
In other words, whether its nominal or ratio charts, precious metals need to take out their January highs.
Below is a weekly chart of our top 40 index which was up 3.8% last week. It tested its 80-wma and backed off a bit. I could see it rising to 350, which is an 8% gain. If the sector is going to make a real breakout then this index would make a strong weekly close above 350. A weekly close above 330-335 would certainly be bullish but perhaps not beyond the short-term. 350 looks like the key.
Currencies are playing an important role. While Gold/FC put in a strong week, this move is being driven by US$ weakness. We plot the US$ and the Euro. The US$ closed at 93 and has a confluence of support around 90. The Euro closed at 114.6 and has a confluence of resistance around 120.
The US$ has more downside ahead and that would support more near term gains. Yet the US$ will run into strong support (~90) and the Euro will run into major resistance (~120) at somepoint soon. Be wary of that before you get bulled up.
Things are aligned for more short-term gains in the sector but the sector will have to prove itself before we think the gains are immediately sustainable.
In TDG #413, a 27 page update, we provided an updated company report on a junior producer which contained potential price targets for 12-18 months and beyond. We also covered recent developments in two of other holdings. In addition, we mused over the short-term outlook and potential summer outlook for the sector.
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