Hello and good day to you. Here are the few links of the week.... 
 

Silver & Gold Stocks Dangerously Close to Breakdown
Article penned Thursday. These markets are on the cusp of accelerated declines while Gold would likely follow. 
 

Key Charts to Watch
Very useful post with good charts from economic blog Calafia Beach Pundit. 
 

Weekly Market Summary
Post from the Fat Pitch Blog. Great info on the stock market.   


Another Way to Look at a Boom/Bust Indicator
Steve Saville covers the Gold/Industrial Metals ratio and its usefulness as an indicator.


Bear Market Risks Increasing at a Rapid Rate
Video is from Chris Ciovacco who is very balanced and neutral in his process.


Note: If you come across anything worthy of being included, feel free to send it my way!





Premium Snippets 



Chart 1 shows a weekly chart of our Top 15 Index in US$. 

The index lost nearly 10% last week and is on the cusp of breaking a weak uptrend. The major support is at 90 to 95. A 20% decline takes the index to 92. If Gold is going to test $970 (roughly a 10% decline) then the Top 15 index very well could decline 20%.

The potential measured downside targets for GDX and GDXJ imply ~27% downside. That fits with a 20% potential decline in the best stocks.  
 

Chart 2 shows a daily chart of GDX with 50-day oscillators for rate of change (rolling performance) and distance from the 50-day exponential moving average.  

We have downside targets for the ETFs but these simple oscillators can help us decide when to take profits on hedges. These oscillators have a long way to go before they become truly oversold. They are at -6% and -12%. In my book they would become oversold at -15% and -20%. Even then they could become more oversold. 



 


Chart 3 shows our updated Gold Bull Analog.

The chart begins at a potential weekly low price of $970 three months from now. Keep in mind that the daily low and intraday low would be lower and perhaps $20-$30/oz lower as they were in October 2008. That would give Gold room for as much as a 13% decline. 

If the recovery matches the average of the 1976 and 2008 recoveries then Gold would peak near $1380/oz before the end of the year. Take the average of the two plots and Gold would get to $1300/oz in early November. 







Certainly the bearish potential is strong. The US$ index is primed for breakout, markets are rolling over and precious metals are at risk of breaking to new lows. The gold stocks could decline substantially before a real bottom is in place. There is a risk of bankruptcies in the sector which, along with a surging US$ index can exacerbate losses.

The good news is Gold is outperforming stocks and that is a precursor to a real recovery. Those ratios (Gold/NYSE, Gold/ACWI) are nearing major breakouts. (My guess is the ratios will correct over the next few weeks because the stock market should rebound and Gold could test its lows). Gold could decline to $950 and if it recovers with history it would likely reach $1300/oz before the end of the year.

It could be a boomerang type of year for precious metals and specifically for quality junior companies. There is potential for 20% to 30% losses over the next few months but that could be followed by 50% to 100% gains within two months. The bigger this breakdown, the higher the sector (and quality) will bounce later.

Nevertheless, it is extremely important to be invested in the right companies. Invest in the ones that can survive a potential wipeout and flourish when Gold goes to $1300/oz and higher. There aren't many of those out there but we cover them. We've updated reports on 6 of our favorites in recent weeks including one yesterday on a company that owns one of the best undeveloped deposits in the world. This stock could fall another 20% and become a potential 5-10 bagger if Gold recovers to $1250 and $1500/oz.    

Whether you are accumulating Gold and Silver or want to speculate on promising juniors, our service can help you. We provide objective and actionable research on Gold, Silver and the companies. And we provide fundamental analysis reports of the companies. We also keep our eye on other markets. We are one of the only newsletters in the space that trades a real portfolio. That means our goals are aligned with yours. And we are one of the only editors who is a professionally credentialed analyst.

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