What an exciting day in the precious metals markets. We’ll look at gold first …
This is a a chart of the front-month gold futures contract. You can see it is challenging its recent downtrend. We need confirmation of this move on Friday. Volume was good, not great, so I expect a lot of this was protective stops getting hit. That will give the shorts a bad mood.
Now, let’s look at the Market Vectors Gold Miners ETF (GDX: 46.12 +1.18 +2.63%), which holds a basket of leading precious metals miners …
Now THAT’S a breakout! And on enormous volume, too. You have to remember that the miners in the GDX are leveraged to the price of gold, so they do extremely well when gold goes higher.
The GDX was one of the picks in my recent gold report, “Gold Fever — to $1,300 and Beyond”. All those picks are doing well. Likewise, the small-cap and micro-cap picks in Red-Hot Global Small-Caps took off like rockets today. Go, gold miners!
I do remember that a bunch of prominent analysts used Elliot Wave recently to show us that gold was headed for a tremendous fall. I’m not going to call anyone out by name — I think that’s a cheap trick, and anyone who puts their neck on the line to make predictions runs a risk; they don’t need me heckling them. We don’t know how the week will close. But certainly, the people who made those predictions have to be ready to be wrong . I’m always ready to be wrong. It doesn’t hurt so much that way, and you retain some shreds of dignity.
Good luck to all gold traders out there.
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- Charts of Gold, Gold Miners, Brazil and More (10/02/09)
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Just a reminder of GDX’s upside potential, on November 21, 2008, it closed up 26.5% from its prior day’s close; and on March 18, 2009, it made a 10% gain on the day! Run GDX run!
Thanks for a thoughtful writeup, Sean.
Sean: Thanks for the report on gold. Now if the gov will stop manipulating its price! Been looking at companies in S. America. Found BVN (metals miner) and also a good bank BAP. Can you give us more comments about companies on this continent ? If so, thanks! Dragon-land may be growing, but it’s still communist and in control of everything Chinese. Not a good thing.