Jordan Roy-Byrne - Techncial Commentary – Thu 15 Feb, 2018

Gold Needs To Show Strength In Real Terms

With gold and gold stocks rebounding this week Jordan Roy-Byrne, Founder and Editor of shares some nuances that he is watching. He points to the HUI gold bugs index that last week closed at a 14 month low. Combining this with gold up against the dollar but not against US stocks or foreign currencies he really wants to see some more real strength in the metal.

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  1. On February 15, 2018 at 1:22 pm,
    Dave says:

    Gold shares underperformance. Will continue for the foreseeable future.
    Yes they will spike, but smart money knows they are a pure speculation.

    With gold at or above 1250 average for over 1-1/2 years, investors have and will continue to be leary of committing capital to gold/silver shares.

    If a company can not make money at todays price of 1350/oz something is wrong. And that something is dilution of shares, deleting ounces in the ground etc.
    Investors have had enough of the excuses and simply do not believe the management of most gold and silver producers.

    The simple fact that the xau is trading at only double the price (currently at 85.5) when the metal was trading at $255/oz.
    Gold is up 1,100/oz since the bottom in the year 2000, a 431% increase in value. Meanwhile the xau is up a mere 100%.

    Gold and silver companies are one of the worst investments over the last 100 years, with bouts of panic buying during bull cycles.

    I would steer clear even though we are entering a bull phase like we did in the year 2000.
    Better opportunities exist in the metal itself.

    In fact there are some mining shares that have a share price that is lower today than they were at the yr 2000 low.

    • On February 15, 2018 at 1:26 pm,
      Matthew says:

      You haven’t done your homework. There are plenty of very profitable miners at $1350 gold, don’t let the share prices fool you.

      The herd will get it eventually (good and hard).

      • On February 15, 2018 at 1:35 pm,
        Dave says:

        Well I don’t like to mention names, but here it goes. The late Richard Russell used to say gold stocks are to be “bought, sold, bought, sold and bought and sold” never held.

        Thats how I see em….

        • On February 15, 2018 at 1:38 pm,
          Matthew says:

          Well he, and you, are right about that.

        • On February 15, 2018 at 2:33 pm,
          spanky says:

          Well, for 40 years, that has been true. Range bound that entire time. I took a gamble in 2015 that that range was going to be busted this time. Look what happened from about 1960 to 1980. Dreaming, sure I guess maybe.

          Francisco Bobadilla

          • On February 15, 2018 at 2:34 pm,
            spanky says:

            Francisco being a Conquistador, lol. A dreamer too.

    • On February 16, 2018 at 5:32 am,
      OOTB Jerry says:

      Good conversation, from all parties…………..jmo

  2. On February 15, 2018 at 2:42 pm,
    Ozibatla says:

    Real strength is a good term here. And it is needed for gold as this 1360 resistance region shows no signs of abaiting at all. Not chucking the towel in here but gold just cant follow through at the moment. Would be very surprised if it closed the week above 1360.

    • On February 15, 2018 at 3:23 pm,
      spanky says:

      Gold looks fantastic on pretty much every timeframe. It’s the rest of the metals and mining complex that looks sketchy at best.

      • On February 15, 2018 at 3:24 pm,
        Matthew says:

        Nope, nothing sketchy about the long term charts.

      • On February 15, 2018 at 3:28 pm,
        Matthew says:

        This is not net sketchy. It might be soon, but not right now:

        • On February 15, 2018 at 3:41 pm,
          spanky says:

          Fact is when you look at the long term BGMI chart, this consolidation has been very weak (basically lower highs and lower lows, and we haven’t gotten remotely close to the 2016 high during this consolidation–a bad sign IMO). Typically what you will see after this type of weak consolidation is a break sharply and significantly lower below the recent trading range before a low is put in. Now I hope I am wrong, but riight now it seems inevitable. The moonshot rally out of 2016 was clearly unhealthy and expecting any sort of trending market to develop based on that action was unrealistic IMO.

          I also previously stated that no other bull run that I could see on the charts looked this poor. Fact is, all of those other runs rarely dropped below the 20 month MA, and that MA was more or less constantly trending upwards up until 2008. The large long consolidations that took place took place within a context of rising monthly MAs, not flat or declining MAs, like today’s 10, 20 and 50 month MAs. Again, I hope I am wrong and we make a moonshot from here, or at the very least start making higher highs and higher lows on the month and weekly charts. Heck closing over the 20 month MA for GDXJ would be a good start.

          • On February 15, 2018 at 3:54 pm,
            Matthew says:

            This bull market does not look poor at all. It is just very young and you’ve not made an allowance for that. You have also not compared it to the right bull.

            The 2016 action has significant implications for the future of this bull market. It was not a fluke or “one-off” but a very good foreshadowing of action to come. As I’ve said before, you just don’t know what you are looking at.

          • On February 15, 2018 at 4:06 pm,
            spanky says:

            I disagree strongly. This could still be a bull and it will be so long as 2016 lows are not taken out. But so what? look at the BGMI between 1940 and 1960. Sure, it was in a new bull, but no one got rich with buying and holding during that 20 year span.

            Gain, not saying with 100% certainty that is what will play out from here, but to me this action out of 2016 looks more like 1940-1960 so far than 1960 to 1980. Look at the beautiful sideways consolidation between 62 and 64. That is what a bullish and healthy consolidation looks like, not the mess we’ve had since 2016. Again, just IMHO.

      • On February 15, 2018 at 3:43 pm,
        Matthew says:

        You and most others were confidently looking lower when I said that the miners had probably bottomed and SILJ gained 17% in the four sessions since. It is not sketchy in the least right now on the daily chart:

        Quite a few people are perfect contrary indicators.

        • On February 15, 2018 at 3:55 pm,
          spanky says:

          Like I said, wake me when silver breaks $18. I said that months ago. I should still be napping but I got all excited in December that “this was it.” The wait was finally over. Nope. How naive I am. I don’t think we will make a low below the 2016 low, but we could be drifting in a range for years and years, and quite frankly silver looks extremely vulnerable. It’s in no one’s interest to see the metals take off, and so they won’t.

          • On February 15, 2018 at 4:21 pm,
            Matthew says:

            Keep in mind that it is never “finally over” and that there will be very large corrections later in the bull. That’s just the way it is.

          • On February 15, 2018 at 4:25 pm,
            spanky says:

            Well, I was expecting 1960-1980. Like I said, 1940-1960 was still a bull market but it was really just a giant consolidation. And to me, again, I think so far this is shaping up more like a giant consolidation (like 20 years) than a once in a lifetime moonshot like 1960-1980.

  3. On February 15, 2018 at 3:23 pm,
    Matthew says:

    The gold and silver miners look a lot better than the stock market.

    XAU:SPX daily:

    • On February 15, 2018 at 3:47 pm,
      spanky says:

      Dude, a 1 month period of outperformance is not anything to crow about. I mean look at what it has done since 2017. Nothing but lower highs and lower lows. And the MAs are trending down once again. If anything, it makes early 2016 look like nothing more than a shakeout or a mean reversion event to keep stock market bulls honest. After getting absolutely creamed for 5 years, a mean reversion even like that is not entirely unexpected.

  4. On February 15, 2018 at 4:26 pm,
    Matthew says:

    Re: “a 1 month period of outperformance is not anything to crow about.

    Lol DUDE, a short term chart deserves a comment that reflects the short term!

  5. On February 15, 2018 at 7:13 pm,
    Matthew says:

    The dollar is at a new 3+ year low:

    • On February 16, 2018 at 12:08 am,
      Ozibatla says:

      Maybe if the dollar takes a big dive south from here, gold may just take out the 1360 region and hold going into next week. A big IF mind you.

      • On February 16, 2018 at 12:12 am,
        Matthew says:

        I don’t believe that “if” is nearly as big as you think.

  6. On February 15, 2018 at 10:55 pm,
    Matthew says:

    The dollar looks like it has many more weeks to fall…

  7. On February 15, 2018 at 11:41 pm,
    Matthew says:

    GDXJ was capped by the same fork resistance on Wednesday and Thursday but did close both days above the speed lines.
    Between the falling dollar/rising gold and that new MACD buy, GDXJ should be able to power higher tomorrow.

    • On February 16, 2018 at 6:34 am,
      spanky says:

      Not so much power today huh?

      • On February 16, 2018 at 6:53 am,
        Matthew says:

        Really, 4 minutes after the opening bell? Thanks for the comic relief.

        • On February 16, 2018 at 10:22 am,
          spanky says:

          Seems to be generating even more power at mid-day now, to the downside that is.

          • On February 16, 2018 at 10:39 am,
            Matthew says:

            Are you for real? So the dollar is bouncing and GDXJ is taking a break after blasting straight to resistance (13% in 5 days) and you still need to freak out? It’s ridiculous and so is your fixation on black candles. There’s a lot more to charts than you understand which is why you are incapable of being positive on any down day or near any low – important or not.

          • On February 16, 2018 at 10:48 am,
            spanky says:

            It’s unable to close above any of the key MAs on the daily chart. What are the odds that GDXJ just breaks higher here with the confluence of MAs like this (bearishly aligned I might add)? Zero. If GDXJ is going to make a new bull move, its going to be after the life has been smashed out of it and everything looks like death. Also, there is no way that it moves higher into the March FOMC. The odds are it drops from here into late march, pehaps dramatically. And silver looks even worse. the 200 dma has already crossed below the 600 dma and it can’t manage to close above the 200 dma because people are selling the pi$$ out of it. This is not a bullish picture. This is not how bull markets act. Period.

  8. On February 15, 2018 at 11:54 pm,
    Matthew says:

    I wonder if anyone besides spanky thinks this is a bearish (or even slightly unappealing) picture:

    • On February 16, 2018 at 6:30 am,
      spanky says:

      Do you see all of those lower lows and lower highs??? Jeezus

      • On February 16, 2018 at 6:41 am,
        Matthew says:

        Do you see the recent price action (break above short term downtrend, Bollinger bands), MACD, Stos, etc??????? Do you understand why buying low is desirable???

        No wonder you’re having a hard time with your miners!

        • On February 16, 2018 at 7:13 am,
          spanky says:

          No. Like is said, it’s been in a downtrend (lower highs and lower lows) for 19 months. In most people’s book, that is a bear market. You are riding the slope of hope. Look I am not asking for much. It’s called a higher high and a higher low. I am not advocating buying these when they have gone up 500%. Simply waiting for a higher high and a higher low (the bear minimum for a bull market) does not mean buying high if you truly believe this is a mega bull.

          • On February 16, 2018 at 7:26 am,
            Matthew says:

            Your approach is what the herd attempts and is definitely not for me – especially in this sector. You will always be looking for higher prices at a high and lower prices at a low (as we’ve witnessed). In fast moving and thinly traded stocks, that is not good.

            Of course, if that’s all you know, what are you gonna do?

  9. On February 16, 2018 at 7:39 am,
    spanky says:

    There is nothing wrong with buying the *dips* in a *bull market*. Or shorting the rips in a bear market. That is what speculators like Jesse Livermore did to make their fortunes. What you are is a contrarian, willing to sit on losing positions for years because you think the market has gotten it wrong. There is nothing wrong with that approach and you are obviously good at it, but it is far far FAR riskier because you are betting against the tape.

  10. On February 16, 2018 at 8:12 am,
    spanky says:

    The yen just keep ripping higher while the miners languish. Sure, in 2016, similar behavior marked the beginning of a moonshot, but will this time be the same? I think that is a potentially very dangerous assumption.

    • On February 16, 2018 at 8:51 am,
      Matthew says:

      Regardless which one of us is right about the next few weeks, the big picture is technically much improved when compared to 2016.

      The yen might be showing us that gold will probably break out but, until it does, the miners are not likely to add much to the gains this week. Which makes sense given the downside if gold fails again.

      • On February 16, 2018 at 12:10 pm,
        spanky says:

        “Regardless which one of us is right about the next few weeks…”

        Wow, are you actually acknowledging the knife’s edge we are on right now? Gold, silver and miners are perfectly poised to fall apart here into the FOMC meeting in late March (21st iirc). Silver will be tagging the lower monthly bollinger band on the monthly chart in the next few weeks with ease. The miners will likely tag their declining lower monthly BBs too. Which is what I have been saying for 1.5 years. Lower band gets tagged before the upper band.

        • On February 16, 2018 at 12:44 pm,
          Matthew says:

          Sure, a butter knife’s edge. Nothing as dramatic as you envision.

  11. On February 16, 2018 at 8:18 am,
    spanky says:

    I am nearly 100% certain the $HUI will take out February 13th’s closing low at around 180. Beware of the black candle, especially for this index.

    The only black candle that has been left behind on the $HUI since the 2016 low was on the weekly chart, and it was the week the low was put in–January 19th. That candle opened the week up vs the prior week at 107.04 and closed the week positively at 106.84. Every other black candle on the daily and weekly charts has been taken out by lower closing prices eventually.

  12. On February 16, 2018 at 8:31 am,
    spanky says:

    As Jordan pointed out, the $hui is basically GDX minus the streamers. The $HUI outperformed GDX from August 2015 to May 2016, but has been trending lower ever since. The ratio did bottom well before the index actually bottomed–$HUI:GDX hit the low in August 2015 and the index actually bottomed 5 months later. Point being, there is absolutely no sign that the ratio has bottomed, and even if it has, an actual low for the miners could be another 6 months away, based on recent history.