Dave Erfle – Precious Metals Mining Stocks Are Oversold, But Key Support in Gold Could Still Break Lower
Dave Erfle, Founder of the Junior Miner Junky, joins us to review the oversold levels in the precious mining stocks and the technical support levels he is watching in gold, GDX, and GDXJ. The markets have remained transfixed on the CPI and PPI inflation readings from last week and continue to speculate on how this data may impact the ongoing Fed rate hiking cycle.
We discussed the mild bounce we’ve seen in mining stocks so far this week, and Dave outlines that we are within range to see at least a short-term bounce from oversold levels in GDXJ, and that the miners and silver have just started to outperform gold, but that we’d need to see a lot more follow through to get a more bullish reversal going. On the downside he still sees risk to gold breaking down through the $1675 support that was tested 3 times last year, and if there was a quick break below that down to $1650, then it could mark a capitulative low for the sector. Dave still has a lot of cash set aside in his portfolio to be able to take advantage of any further pressure over the next few months.