Here are the links from this past week...
 

Gold Stocks Reach Resistance, Continue to Outperform Gold
Penned on Friday. Note how GDX & GDXJ stopped rising at first resistance. 


Video: Why I favor Juniors & not Large Miners
This video includes 3 charts from my book. 
 

The True Meaning of Gold's CoT Data
From Steve Saville. Read this to get a better understanding of CoT data. 


Fund Managers Current Asset Allocation
Great data from the Fat-Pitch blog.   


Fund Managers are a Frightened Lot!
A few charts and thoughts from Tiho Brkan @SSOL on the fund managers data. 









Premium Snippets 



Chart 1: Gold Stocks vs. Gold, 1999-2016

The chart below plots the HUI/Gold ratio, the ratio of our Junior Index/Gold and Gold at the bottom.

In our front page summary in update TDG #461, a 35-page update sent Saturday afternoon, we discussed the importance of the relationship of gold stocks to gold after major sector bottoms. Simply put, most of the leverage from gold stocks as a sector occurs mostly at the start of new bull cycles. That strong outperformance is often a signal that a new bull cycle is underway.

We cannot tell from this picture but there are similarities between now and 2001/2002 with respect to the outperformance from gold stocks and underperformance from Gold itself. Recall that the gold stocks bottomed in November 2000 while Gold made a double bottom in February and April 2001. Gold did not make a new 52-week high until February 2002. Gold did not take out the previous peak until May 2002 and that was not confirmed until November 2002. As we know, the gold stocks ripped higher into 2002. Our Junior Index from late 2001 to mid 2002 made a 5-fold move.

The bears point out that Gold has yet to break above $1308 but they ignore the record strength and leadership in the gold stocks. They also ignore the strength in silver stocks and Silver's breakout. Silver started to move in November 2001 (it has started to move in recent weeks) which was months before Gold took out its previous peak in May 2002.

If the PM sector were about to have a big correction Gold would be leading while everything else lags. Its the complete opposite now. Silver is breaking out. The miners are leading. This is bullish! This is what we want to see!







Chart 2: Top 15 Index Weekly

The Top 15 index gained another 6.8% to close at 209. The index has had a clear breakout and 270-275 remains a very strong upside target. The index could continue to move towards 270 with only short and swift corrections. Or it could snap back to support at 180 and "retest" the breakout. Either way, the primary trend remains bullish and I won't be concerned about a major correction unless we vault to 270 quickly. 







In TDG #461, a 35-page update sent Saturday evening we provided fundamental comments on a few companies and included a report on our favorite Silver company. We projected a potential price target for the stock based on a 12-18 month target for Silver. We looked at Silver's performance history over 18-months (bullish peaks) and applied that to the recent low below $14/oz.

There are quite a few bearish voices out there calling for not just a correction but something more. The gold stocks could certainly correct very soon. They've doubled in the past 3 months. Whether it happens immediately, in a month or later, there will be a +20% correction at somepoint.

However, do note that the gold stocks in January emerged from a 6-month base. Then they advanced for 6 weeks. The breakout at the end of the previous week came after 5+ weeks of consolidation. And don't forget, the bottom of that 6-month base marked the worst bear market in 90 years! Not only that but the gold stocks relative to Gold were at their lowest level in 90 years! 

We know that huge bull markets follow bad bears. We know that the gold stocks outperform Gold most at the start of bull markets. Given the worst bear market in 90 years and their lowest position relative to Gold in 90 years, the gold stocks have a lot of catching up to do and frankly, are unlikely to have a serious correction here. Not unless they first zoom higher for another few months.  

If you are unsure of which companies are the best buys here or which companies have the best risk reward, our research and guidance can help. In addition to our exhaustive technical and sentiment research we usually provide on average nearly one company report per week in each update. These are not fluff reports. These are around 1500 words and we project potential price targets based on valuations and various Gold prices.

Since the summer of 2009 our model portfolio is up 232% while GDX has lost 41% and GDXJ an estimated 53%. Gold is up 30% over that period.

We are the only credentialed technical analyst with a gold-stock focused service that utilizes a real model portfolio. We tell you what we are buying and selling.

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Thanks for reading. I wish you all great health and prosperity. 

-Jordan

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