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Picture 1: Silver Monthly Candle Chart
Here is Silver's monthly candle chart along with its 20 and 40-month moving averages. If Silver closes March around current levels it would register a bearish engulfing candle. The next strong supports are $15.75 and then the 2016 lows.
In short, I'd be wary of Silver here. Commodities are starting to roll over and Silver is not going to buck that trend. But if Silver forms a strong low around $14 then it could setup a potential move to $27-$28.
Picture 2: Junior Golds vs. Junior Silvers & Gold/Silver Ratio
We plot GDXJ vs. SILJ and at the bottom, Gold vs. Silver.
Looking at SILJ, I see a lot more downside risk relative to the junior gold stocks and that is reflected in the ratio looking quite bullish. Also, the Gold/Silver ratio may have made a false breakdown in recent weeks. In short, I expect Gold and gold stocks to outperform Silver and silver stocks over the next few months.
Late Saturday we emailed subscribers TDG #508, a 34 page update in which we reiterated our medium term bearish and cautious outlook. Although the miners formed a short-term low this past Friday, I would not count on much upside beyond the 50-day moving averages (for GDX, GDXJ).
Last week we mentioned we would be on the sidelines until GDXJ tested its 400-dma or lower. GDXJ traded as low as $32.66. Its 400-dma is near $31. In looking at the metals and commodities charts as well as overall price action I do think GDXJ will test $27 at somepoint this year.
In the meantime we are avoiding silver stocks (we only own one) as we believe they need to correct more and will underperform in the months ahead, and we will hedge if this rebound presents an opportunity. But we are not going to force it.
In the update we commented on a company that is currently at the top of our watch list. The company owns prospective property that is near a major and the company's management team has a very strong track record. Furthermore, a major miner owns a position and the company's enterprise value is below US $30 Million.
Dr. Jeffrey Kern, who we interviewed, had this to say regarding our stock-picking abilities:
I am simply a pure market-timer for a broad basket of gold stocks and precious metals. Jordan, on the other hand, has provided superior STOCK-PICKING abilities over the longer-term. I am familiar with most gold stock subscription services over the past 30 years. I rarely provide endorsements of any kind, but Jordan's ability to analyze individual gold/silver stocks has been among the top 5 services over the past decade. First and foremost, I respect his integrity.
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Disclaimer: This newsletter is intended for informational and educational purposes only and should not be considered
personalized and individualized investment advice. Investment in the precious metals sector contains significant risks. You should consult with an investment advisor and do your own due diligence before making any investment decisions. This email may contain certain forward looking statements which are subject to risks, uncertainties and a multitude of factors that can cause results and outcomes to differ materially from those discussed herein.
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