Gold Stocks Break To New Yearly Lows

1. Gold Stocks Break To New Yearly
Lows!

2. Points To Be Covered Today:
• Gold Stocks Underperformed
• The Long-Term HUI Index Chart
• How Is XAU/USD Positioned On The Charts
• XAU/USD Resistance And Support Levels
• Gold Technical Overview

3. Gold Stocks Underperformed
• Gold stocks underperformed the yellow metal so
much that they reached the lowest levels seen
this year…
• The HUI Index (gold stocks) broke to new 2021
lows while the USD Index broke to new 2021
highs. Just as I’ve been warning you.
• Mining stocks’ extreme weakness relative to gold
continued yesterday, and while it may seem like
the weakness has to have a limit, this limit is
likely still quite far from the markets right now.

4. The Long-Term HUI Index Chart

5. The Stochastic Indicator
• Remember when I told you that the tiny buy signal
from the stochastic indicator was unlikely to trigger
anything more than a brief pause?
• That was based on the analogy to what happened in
late 2012 when miners paused, and then the decline
simply continued.
• Well, gold stocks did exactly that and gold stocks
declined once again.
• Right now, they are right after the breakdown to new
yearly lows, and this has profound implications in light
of the analogy to the 2012 – 2013 decline.

6. The HUI Index
• You see, when the HUI Index declined below
the previous lows back in 2013, it meant that
the biggest part of the slide was underway.
• The profit potential was still there, as it was
still the first half of the biggest decline, but it
meant that waiting for another big rebound in
order to add to one’s short positions was not a
good idea.

7. The HUI Index - I
• To clarify, there were two short-term
consolidations soon after the breakdown in
2013.
• One of them took the HUI about 4% higher (in
February 2013) and then we saw a decline.
• Afterwards, about 7%-8% correction (in March
2013) followed and then the biggest part of
the decline took place.

8. The GDXJ
• Consequently, we might see a consolidation in
gold stocks quite soon, but I wouldn’t expect it
to be anything to write home about.
• At the current price levels, 4% – 8% means a
decline of about 9 – 19 index. In the case of
the GDXJ (if it moved in tune with the HUI), it
would imply a move up by $1.5 - $3.

9. Gold Stocks
• Of course, this is a hypothetical discussion of
what might happen when gold stocks correct,
but it doesn’t imply that they are likely to
correct now.
• Actually, the opposite seems likely because of
the HUI’s breakdown and the USD’s breakout.
• Again, forecasting gold stocks at higher levels
in the near term might be a dangerous thing
to do.

10. The GDXJ Bottoms
• So, to clarify, the above-mentioned corrective
upswing is likely to take place after another
short-term move lower.
• If the GDXJ bottoms at about $35, then seeing
it correct to about $36.5 - $38 will be quite
normal.
• As far as the short-term price moves in the
mining stocks are concerned, my previous
comments remain up-to-date.

11. The GDXJ Bottoms - I

12. Senior gold miners
• Senior gold miners finally broke decisively below the neck level of
their head-and-shoulders formation, while juniors’ freefall
continued.
• Yesterday, senior miners closed below the neck level of the pattern
for the second day, which means that the breakdown is almost
confirmed.
• The GDX has encountered strong support provided by the previous
2021 lows, but it doesn’t mean that we have to see a rebound here.
• Why? Because other proxies for mining stocks are already after the
breakdown.
• This is the case with the GDXJ ETF, the HUI Index, and also the XAU
Index.
• Even silver stocks – the SIL ETF –closed below the previous 2021
lows for the second day in a row.

13. GDX ETF
• So, did mining stocks encounter strong
support here?
• Not really, only one of the proxies did – the
GDX ETF.
• The remaining ones are already after a
breakdown to new 2021 lows, and if we get a
weekly close below them as well, the
breakdown will be confirmed.

14. XAU/USD Needs To Top $1,792 To
Regain Bullish Bias
• Gold has been struggling around $1,780 as
markets reel from Delta and Fed fears.
• The Confluence Detector is showing XAU/USD
needs to surpass $1792 to advance.
• Where next after the downfall?
• US stock markets have been making an
attempt to recover and seem gripped
between fears that the Fed would taper its
bond-buying scheme and coronavirus.

15. XAU/USD Needs To Top $1,792 To
Regain Bullish Bias - I
• The Delta COVID-19 variant continues raging
through the US and while it is dampening the
mood for markets, it could push gold higher.
• The precious metal needs the Fed to keep on
printing dollars and delay the potential
reduction of its purchase program.
• The bank currently creates $120 billion every
month.
• In the meantime, technicals have their say.

16. How Is XAU/USD Positioned On The
Charts
• The Technical Confluences Detector is showing
that gold still needs to break above $1,783, which
is a dense cluster of indicators, including the 100-
4h Simple Moving Average, the SMA 200-15m,
the Bollinger Band 15min-Middle and the
Fibonacci 61.8% one-day to name a few.
• It is followed by $1,792 mentioned earlier, which
is the convergence of the Fibonacci 61.8% one-
month, the previous daily high and the BB 4h-
Upper.

17. How Is XAU/USD Positioned On The
Charts - I
• The upside target for gold bulls is $1,805,
which is where the Fibonacci 161.8% one-day
hits the price.
• Looking down, some support awaits at $1,775,
which is the confluence of the Pivot Point one-
month Support 1 and the previous daily low.
• It is followed by $1,766, which is where the
previous month's trough and the 10-day SMA
hit the price together.

18. XAU/USD Resistance And Support
Levels

19. Gold Technical Overview
• Gold (XAU/USD) prints a bullish flag chart pattern on the four-hour (4H)
play amid the receding bearish bias of the MACD.
• Although odds favoring gold’s further recovery increase of late,
confirmation of the bullish flag formation, by crossing $1,790, won’t be
enough to recall the gold buyers.
• The reason could be linked to the existence of 200-SMA around $1,795
and the $1,800 threshold.
• Should the gold buyers keep reins past $1,800, a one-month-old horizontal
resistance near $1,835 will return to the chart.
• Meanwhile, a downside break of the stated flag’s support, around $1,773
will quickly fetch the quote to $1,750 and the $1,727 support levels before
highlighting the $1,700 for gold bears.
• In a case where the precious metal drops below $1,700, the monthly low,
also the lowest since March, around $1,676, will be in focus.

20. Gold Stocks Break To New Yearly
Lows!

21. Thanks for listening
Gold Stocks Break To New Yearly
Lows!