You can also see it here on this chart of the Market Vectors Junior Gold Miners ETF (GDXJ). Again, notice the fake out move into a low followed by an amazing 15.35% single day surge in the most speculative junior miners.
A close above the downtrend line on this chart, and junior miners are off to the races.
So the two most important questions now are:
First, is this the MAJOR bottom for mining shares, and if so, what kind of upside potential could there be over the short and long term? And …
Second, if gold and silver remain weak and head lower into September — as I’ve been warning — won’t that destroy the potential for a major bottom forming now in mining shares?
Yes, we indeed have the potential for a MAJOR low in the mining sector. As noted above, the only remaining confirmation would be a close above the downtrend lines shown on each chart, for each of those mining share ETFs.
Assuming that happens, the short-term potential — say over the next six months — is as much as a 50 percent move. That’s not chicken feed.
Over the long-term — the next three years — I think the potential is extraordinary. The right mining shares should double, triple and even quadruple. Select explorers and junior miners should do even better, and multiply your money several times over.
|Mining stocks could multiply your money several times over during the next three years. But you must be patient before buying.|
As to the second question, my models do indeed still show the potential for gold and silver to slide going into September and test the prior major lows or even spike lower to new lows.
But here’s the key you need to know: Don’t buy into the conventional wisdom that mining shares and gold and silver have to bottom — or top — at the same time. More often than not, they don’t parallel each other at important bottoms or tops. Instead, they do their own thing.
This is very important to understand. But not in the way you’re expecting to answer. Let me explain.