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Picture 1: TDG Junior Gold Index & #2 Junior Index
These are two line charts (use only daily closing prices). The second index is like a junior version of the main index. The median market cap of the main index is around $550 Million while roughly $100 Million for the #2 index.
Although both indices benefitted from news driven gains on the week, they both could not get above their 50-day moving averages. If not for the news-driven gains, each index would have closed around 3% lower on the week. The #2 index is on top, the main index on the bottom.
The #2 index is at a massive confluence of resistance that includes the 50-dma, the 200-dma and the 50% retracement of the 2016 correction. A reversal this coming week would be very bearish and the same can be said for the main index.
Saturday evening we emailed subscribers a 35-page update in which we discussed the bearish outlook for the second quarter. There are numerous technical reasons for that but we also think fundamentals for Gold may go negative for several months before turning back in favor of Gold and gold stocks. For the time being, if the bearish setups in GDX, GDXJ and our junior indices play out then the next buying opportunity could come close to the December lows. Depending on what index you look at
that marks 18%-26% downside potential.
Since the start of the year we've said the way to play this year is to buy value and weakness and not chase strength. We want to buy extreme weakness and technical support in the months ahead and definitely not chase strength. (The time to chase strength is when miners surpass the February highs).
The update also included a report on the latest addition to the model portfolio. It is a company that is stupidly cheap right now given its long-term potential. This company "ticks all the boxes" and I have to emphasize, is a great value right now. It could go a bit lower but we did not want to risk missing out. Management has a track record and a few big investors in the company are top level mining people. This is an example of a value we do want to buy even though we see
downside risk for the sector.
Dr. Jeffrey Kern, who we recently 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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We seek to own the companies with the best fundamentals that have the best risk/reward potential. We want to own the leaders while avoiding laggards with limited potential. We also want to cut our losses. A 20% stop loss on a 5% position limits the loss to 1% of the portfolio.
We are the only credentialed technical analyst (CMT, MFTA) with a gold-stock focused service that utilizes a real model portfolio. We tell you what we are buying and selling. Hence, we are completely transparent.
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Weekly updates are sent on Saturdays while flash updates are sent when we make a trade. Reports are sent sporadically. Upon signup you receive all recent reports and updates. Unlike most other editors, we answer subscriber questions.
Thanks for reading. I wish you all great health and prosperity.
-Jordan
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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