http://goldstocktrades.com/blog
Precious metals investors have been sitting through a healthy correction for four months after a great run since January of 2016. Downside targets have already been exceeded below the 200 Day moving average. We expect a bounce higher from these oversold levels and for gold/silver to regain their 200 DMA which are still sloping higher. We may have overshot in the beginning of the year which is why this correction is a little more severe than most. Don’t give up…the fear now is the exact opposite of the exuberance seen this past summer and may actually be a better time to add to your long term hard asset positions. I couldn’t even get hotels for resource conferences this year as it was so crowded which is usually a sign we need a healthy pullback. Other than a few new situations which are relatively unknown I have been pretty quiet as I have been cautious waiting for a second buying opportunity which I am still waiting for. I hope to see gold and silver jump above the 200 Day and see some bullish reversals. It may occur before 2016 ends. The GDXJ and SIL is going through a shakeout now and we may even see a little more capitulation going into year end tax loss selling. I don’t believe we will break through 2015 lows of last year though. We may make a higher low and may actually be near a turning point as we have had three down waves of selling pressure and the GDXJ may actually reverse around .50 or its 50% retracement of the prior up move. M&A is already increasing as producers look for resource growth past 2018. Look at the recent Kirkland Lake-Newmarket Deal and the Centerra-Thompson Creek deal as signs for more to come in 2017 and 2018. I also think a lot of the speculative capital from junior miners was parlayed into weed stocks which may have topped out recently. I expect some people who made money over there in pot stock to reinvest some profits into the junior miners. Especially small caps which have exposure to infrastructure metals most notably copper, niobium, vanadium, molybdenum, graphite, lithium, uranium and rare earths. China is desperate for these metals and a Trump election could change the forces of supply and demand for these metals. Already copper is making a huge breakout. I expect silver to take off and I especially like high grade silver in friendly jurisdictions like Canada. Interest rates are moving higher and I expect that to continue as inflation picks up. However, hard asset investors such as ourselves will be prepared for such a scenario with stocks backed by economics and technical reports with confirmed wealth in the earth. A more pro business regulatory regime in the US under Trump could be a huge boom to mining and manufacturing in this country.