Gold is experiencing a clean breakout with upside targets of $3730 and $4100, representing potential gains of 6-15% and 15-18% respectively based on Fibonacci extensions.
Silver’s daily chart shows a consistent upward channel since April lows, now extending above it, while its monthly chart indicates a potential final blowoff and squeeze.
The Magnificent 7 top assets are showing signs of selling, with a possible shoulder-head-shoulder pattern that could lead to a significant market downturn if they break down.
Fibonacci extensions and retracements are crucial tools for projecting upside targets and support levels, enabling traders to manage risk and lock in profits effectively.
Large cap miners like GDX are leading the rally, closing at new monthly all-time highs for the first time in over 14 years, signaling strong investor confidence.
Silver miners are outperforming, with GDXJ and SILJ projecting even higher, indicating a robust combined rally in precious metals.
The current rally in precious metals is supported by favorable seasonality and represents a global safe haven play during a major economic topping phase.
The leadership of miners over physical metals suggests a shift towards stable large caps, with the potential for gold miner juniors to take the lead next.
Gold’s technical pattern suggests potential for a $200-$300 run higher before topping out, or possibly breaking past $4,000-$4,200 to complete the 13-year cup and handle pattern breakout.
Silver’s measured upside target from the 9-10 month consolidation breakout is approximately $41, with the next significant resistance at $42-$43.
Gold stocks (GDX and GDXJ) show 75% making new 52-week highs, indicating potential peak in coming days or weeks, with overbought conditions on longer duration charts.
Silver stocks are experiencing “rhino horn” moves, particularly in lower quality companies, but investors should be cautious as many base metals companies are masquerading as silver stocks.
The gold stocks’ breakout against the 60/40 portfolio of equities and bonds suggests pullbacks may be quickly bought up, potentially preventing corrective targets from being hit.
Jordan Roy-Byrne advises long-term holding of gold and silver stocks in this bull market, only trimming positions when individual stocks become overvalued or experience extreme moves.
The mining stock market is in a confirmed bull market with years to go, as evidenced by the GDX and GDXJ up 80% on average last year.
Despite high inflation, gold producers are seeing higher margins due to the gold price rising more than all-in sustaining costs, which are up around $1,400 for the average industry cost.
The current bull market is still in its infancy, with investors attracted to the industry’s capital discipline and balance sheet strength, which has improved since the last bull market in 2011-2012.
The mining industry faces a structural shortage of new supply due to decades of underinvestment, with virtually no significant new mines coming online to meaningfully change the supply curve.
The average reserve life for major producers has declined below 10 years, with strategic implications for the industry’s future output and potential for gradual contraction.
This is the time to speculate in mining stocks, especially juniors, as they are still undervalued despite doubling or tripling year-to-date.
The industry is expected to see a healthy cycle in M&A as seniors and producers need to acquire ounces to meet demand, with juniors potentially getting bought out.
The current bull market is evidenced by GDXJ rising more than GDX, which has risen more than gold, indicating heavy investment in juniors with discovery or production potential.
Buying on dips is crucial in a bull market, with the media largely ignoring the mining sector’s performance.
Silver’s growing importance in industrial applications and green technologies is contributing to its demand and market dynamics.
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