Technicals Say This Is Not The Time To Buy Gold Miners

March 12, 2017 6:37am NYSE:GDX NYSE:GDXJ

gold-miner-colorado

From Taki Tsaklanos: Is this a time to buy gold mining stocks? Or should gold miners be considered later in 2017 or even in 2018?


Contrary to the overly bullish sentiment of January, we now observe a diverse sentiment. This author on Yahoo Finance for instance remains bullish and believes gold mining stocks are a buy in 2017. However, this more more down-to-earth post on Barron’s is slightly more bearish as it sees gold mining stocks slipping, not yet a buy.

InvestingHaven’s research team was bearish on gold mining stocks as of last summer. The following article written last October features the gold mining stocks forecast for 2017. As seen, the team at InvestingHaven was able to spot a trend right at the early stages, which is, by far, the biggest challenge of each and every analyst. This is a quote from that article:

The chart pattern confirms expected intermarket dynamics, which makes for a bearish 2017 forecast for gold miners. We expect gold miners to test the 2014 lows, and, if those lows give away, the 2015 lows. However, we also believe that will be the ultimate retest, and, after that, the gold bear will finally give up after 6 to 7 years, making place for a renewed secular gold bull market.

Note how gold mining stocks are moving exactly to those targets, with the first target the 2014 lows indicated with the red horizontal line on below chart.

The key in market forecasting is to make a call but continue to follow up the market. InvestingHaven’s analysts follow the trends in the gold market very closely, as evidenced by these two recent articles:

Buy Gold Mining Stocks? Patience Is Required As A Big Move Is Brewing. (published 3 months ago)

Gold Mining Stocks: Spectacular Chart, Bear Market Resistance Test Underway (published 1 month ago)

Gold mining stocks not really a buy at this point in 2017

Let’s review the long term chart of gold miners (GDX) in order to answer the question is the sector should be bought or not at this point in time.

Gold and precious metals miners tend to move up and down within patterns of large channels as seen on the chart. Gold miners (GDX) are trading 50% above their 2015 bottom. With gold still in a downtrend, and showing signs this week of further losses, gold miners have visibly leaded the way lower. So the answer to the question whether gold miners should be bought or not is simple: as gold miners are leading precious metals lower and seem far away from major support.

In other words, both gold and miners are trending lower. Within their chart structures, they are nowhere near major support, nor are they showing signs of consolidation (which typically is a sign of a trend reversal).

When it comes to the gold market in particular, we wrote 3 Gold Charts Showing Major Bear Market Test last week and suggested that Gold Investors Watch Yields As A Gold Price Indication. Indicators are simply not supportive for precious metals.

This may not be a time to buy miners. However, this is a time to follow that market and define a shortlist of outperformers which should be bought later this year. That is why we suggested to follow some hot gold mining stocks which could be a buy later this year or next year: 5 Hot Gold Mining Stock Leaders For 2017 or 2018.

buy gold mining stocks 2017

The VanEck Vectors Gold Miners ETF (NYSE:GDX) closed at $21.73 on Friday, up $0.59 (+2.79%). Year-to-date, GDX has gained 3.87%, versus a 6.33% rise in the benchmark S&P 500 index during the same period.

GDX currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #21 of 33 ETFs in the Precious Metals ETFs category.

Meanwhile, the VanEck Vectors Junior Gold Miners ETF (NYSE:GDXJ) closed at $34.69 on Friday, up $1.71 (+5.18%). Year-to-date, GDXJ has gained 9.95%.

GDXJ currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #22 of 33 ETFs in the Precious Metals ETFs category.


This article is brought to you courtesy of Investing Haven.


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