Gold Miners: Celebration Time

1. Gold Miners: Celebration
Time

2. Points To Be Covered Today:
• Gold And Gold Stocks
• Gold Mining Stocks Continue To Decline
• Junior Gold Miners
• Gold Moves Back To The Previously Broken Lows
• The Most Powerful Tool – Self-similarity
• USD Index And The Precious Metals Market
• Gold Technical Analysis: Forming A Buying Base
• The US Dollar Index (DXY)

3. Gold And Gold Stocks
• Another day, another decline in junior miners – and another increase
in profits from short positions in them. Shouldn’t we expect a
rebound though?
• Well, no. The rebound already happened in late July and early
August, and what we see now is the trend being resumed.
• Consequently, even if it wasn’t for all the long-term analogies to the
2012-2013 declines in gold and gold stocks (HUI Index), one should
expect the current short-term decline to be significantly bigger than
the counter-trend upswing which ended earlier this month.
• At this time, the move lower is just somewhat bigger than the
preceding rally. Thus, it’s not excessive and can easily continue.

4. Gold And Gold Stocks - I
• However, let’s keep in mind that periods of very high
volatility usually need to be followed by periods of
relatively low volatility.
• That’s when investors verify if the “new reality” – the
price levels after the decline – are justified or not.
• If the market votes “no”, we get huge rebounds
and breakdowns’ invalidations.
• So far this week, the markets have been voting “yes”.

5. Gold Mining Stocks Continue To Decline
• Consequently, the current back-and-forth trading is
perfectly normal, and it’s in tune with what I wrote in the
previous days – even in the case of the details.
• While the precious metals are taking a breather, the
gold mining stocks continue to decline, but in a steadier
manner.
• That’s what happened earlier this year (in February and
in late-June / early-July 2021) and during the 2013 slide.

6. Gold Mining Stocks Continue To Decline - I

7. Junior Gold Miners
• While a steady decline might not get as many heads turning as big
daily slides, it also serves a very important purpose.
• You see, the mining stocks (GDX includes both: gold stocks
and silver stocks) are now verifying the breakdown below the neck
level of the head and shoulders pattern.
• Once this breakdown is verified (just one more daily close is
needed), miners will be likely to fall much lower, as the target
resulting from this formation is based on the size of its head.
• In this case, it implies a move to about $28.
• In the case of the junior gold miners, the situation is even more
bearish, as they just moved below the previous yearly lows, and they
are confirming the breakdown.

8. Junior Gold Miners - I

9. Gold Moves Back To The Previously Broken Lows
• Please note how the junior miners lost their momentum right after
declining on relatively big volume.
• In yesterday’s analysis (Aug. 10), I commented on junior miners’
breakdown in the following way:
• This move was not yet confirmed, but with the significant volume on
which it took place, it looks quite believable.
• Therefore, it wouldn’t be surprising to see a few days of
consolidation before senior miners move much lower.
• As I wrote earlier today, gold and silver were not doing much
yesterday (and in today’s pre-market trading at the moment of writing
these words), but it’s a perfectly normal phenomenon.
• In fact, if gold moves back to the previously broken lows at about
$1,750, it won’t invalidate the bearish narrative.

10. Gold Moves Back To The Previously Broken Lows - I

11. The Most Powerful Tool – Self-similarity
• Gold has a triangle-vertex-based reversal close to the end of
the next week, which means that it could continue to
consolidate or move a bit higher in the next several days, and
then slide once again.
• Please note that this would make the current decline very
similar in terms of its pace to the decline that we saw in June.
• While the moves don’t have to be identical, the gold price quite
often moves in similar patterns – I’ve seen this many times in
the past decade (and beyond).
• For example, please note how similar the short-term declines
that we saw between August 2020 and December 2020 were.

12. The Most Powerful Tool – Self-similarity - I
• And while gold is consolidating after breaking below its June
lows, the GDX is doing so after breaking below the neck level of
the head-and-shoulders pattern and the GDXJ is trading
sideways after breaking to new yearly lows, silver is also
consolidating after a breakdown to new yearly lows.
• Unless silver manages to soar back above the March lows
shortly (and it seems unlikely that it does), it will be likely to fall
profoundly once again soon.
• The inverse of the above is likely the USD Index, which is
verifying its second attempt to break above its inverse head-
and-shoulders pattern.

13. The Most Powerful Tool – Self-similarity - II

14. USD Index And The Precious Metals Market
• The August 2020 highs are the next short-term resistance for the
USD Index, but I don’t expect it to decline significantly from there.
• Instead, it seems to me that the USDX will rally to almost 98 based
on the inverse H&S pattern, and then it might consolidate.
• So, while the USD Index and the precious metals market might
consolidate for a few days (or even up to two weeks), they are likely
to continue their most recent sizable moves shortly thereafter.
• Consequently, while I can’t make any promises with regard to the
performance of any asset, it seems that the profits on the short
positions in junior miners are going to increase substantially in the
coming weeks.

15. Gold Markets
• Gold-Eagle has been analyzing gold markets and publishing
gold price forecasts for over 23 years.
• Our staff and contributing analysts include world reknowned
precious metal experts and market analysts.
• The gold price forecast data below represents the average
predictions of a diverse panel of expert gold market analysts.
• Their assessments of gold price trends are based on a variety
of methods including: expert technical analysis, market
fundamentals, current market sentiment, and an analysis of
global economic and political events.

16. Gold Technical Analysis: Forming A Buying
Base
• Gold is still trying to remain stable above the resistance of $1700 to
avoid more violent bearish pressure, which had plunged the price to
$1683 earlier this week.
• This is in light of sharp gains for the US dollar after the
announcement of the US jobs report, which increased expectations
of a tightening monetary policy by the Federal Reserve.
• The dollar's gains coincided with gains for the US Treasury market.
• Gold prices have fallen by more than 5% over the past week,
bringing its decline since the start of the year 2021 to date to nearly
10%.

17. Bullion's Bearish Momentum
• It was reported that the US economy created 934,000 new jobs
in July, spurring positive investor sentiment.
• The glowing data is likely to encourage the Fed to start reducing
its $120 billion per month purchases of bonds and mortgage-
backed securities (MBS) and possibly start preparing for
interest rate normalization.
• This is bullion's bearish momentum as it would reduce inflation
expectations.
• In addition, gold is sensitive to a higher interest environment
because it increases the opportunity cost of holding a non-
yielding metallic commodity.

18. Bullion's Bearish Momentum - I
• Yesterday, St. Louis Federal Reserve Bank President James
Bullard said that last Friday's report, which showed healthy
gains at 943,000 jobs last month, means the US economy is
making enough progress to begin reducing, or curtailing, its
$120 billion monthly bond purchases.
• The purchases, which began last March during the pandemic
recession, are intended to lower long-term interest rates and
support the economy.
• "It's not clear to me that we're really doing anything useful
here," Bullard said of the bond purchases.

19. The US Dollar Index (DXY)
• The US Dollar Index (DXY), which measures the performance of the
US currency against six major competing currencies, rose to 93.06,
and in general, the index rose by 3.5% since the beginning of the
year 2021 to date.
• A strong profit is bad for dollar-priced commodities because it makes
them more expensive to buy for foreign investors.
• The US bond market is reaping gains, with the 10-year bond yield
rising 0.022% to 1.339%. One-year yields rose 0.001% to 0.077%,
while 30-year yields jumped 0.021% to 1.982%.
• In other metals markets, copper futures rose to $4,359 a pound.
Platinum futures rose to $985.30 an ounce. Palladium futures rose to
$2,659.50 an ounce.

20. Gold Miners: Celebration
Time

21. Thanks for listening
Gold Miners: CelebrationTime