Dave Erfle, Founder of The Junior Miner Junky, joins us to review the big corrective move we’ve seen in the precious metals sector as the geopolitical premium came out of the markets since the end of last week. We start off by reviewing the generally bullish longer-term technical setup despite the recent pullback, and that Dave would ultimately like to see a quarterly close in gold above $1975 to confirm the breakout on the longer duration Cup & Handle Pattern on the chart, which is still unclear here in mid-March whether that will still be possible.
We then pivot over to look at how the mining stocks have not moved to valuations even close to prior cycles when metals prices got to levels we saw just last week, and look at what it will take for them to catch up with the moves in the underlying metals. Dave is still encouraged by the upward trends on the GDX:GLD and GDXJ:GLD ratio charts, and believes the strength in the mining stocks today, in the face of falling gold and silver prices, is another indicator that the stocks are sniffing out another turn higher in anticipation of the Fed rate hiking cycle set to begin tomorrow. Next we shift over to how the mining stocks may be correlated recently with the moves in the general us equities markets, and Dave is still expecting that trend to diverge like we saw for most of the year until recently, and feels this further divergence is what will drive new buying into the PM sector. We wrap up with the unusual news of the movie theater chain company AMC Entertainment (AMC) buying a stake in a gold mining company along with Eric Sprott, and how this may be an early indication of more speculative money starting to follow the mining sector.
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