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Chart 1: GDM Daily Line Chart (parent index of GDX)
The chart below plots the daily line chart of GDM which is the parent index of the GDX ETF. So think of this as GDX going back 20 years.
Note how GDM has almost tested its 400-day exponential moving average. Note the blue arrows. They show the 400-dema as support during bull markets. The 400-dema, when supporting the market has provided excellent buy opportunities.
Chart 1: Weekly Candle Charts of GDX, GDXJ
The image below contains the weekly candle charts of GDX and GDXJ as well as their simple 80-week moving averages, which is one of my favorite moving averages.
We've discussed the confluence of strong support around $22 in GDX. That also includes $21 as we can see below. That $21-$22 lateral support has not quite been tested yet. It could be this week. Meanwhile, GDXJ has strong lateral support at $33-$34. It might not come down that much. It closed at $38. But I could definitely see it testing $35.
Saturday evening we sent TDG #487, a 38-page update, yes 38 pages, which included a report on one of my favorite optionality plays, charts on numerous companies we are following and charts covering Gold, Silver and the mining indices. We also mentioned the company that is currently number one on our buy list.
We have already touched on some of our views in the above links. We covered the potential for more weakness that could lead to a stronger rebound, as the sector has yet to rebound. Gold could test its 40-month moving average in the $1230s or even test a confluence of support around $1215 before rebounding. The same could be said for the miners and GDX touching $21 or GDXJ testing $35.
The bottom line is two-fold. First, we are very close to a short-term low and a buy point. Second, given history and current technicals the gold stocks figure to remain in a consolidation and will likely have another leg lower (but not necessarily to new lows). So we anticipate another buying opportunity sometime in Q1 2017.
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Since the summer of 2009, our model portfolio is up 354%. During the same period, GDX is down 39.4%, GDXJ is down an estimated 45%, the Tocqueville Gold Fund is up 4% and Gold is up only 33%. This period includes the worst and longest bear market of the past 90
years!
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Jordan focuses nearly exclusively on the gold sector and in my opinion does a good job either being right, or getting right when adjustment is needed. He moves forward without hype, bias or ego.
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