Gold stocks have been declining significantly even as gold prices increase, indicating something is fundamentally wrong in the precious metals market. This extreme divergence between gold prices and gold stock prices is a critical sell signal. The author believes the precious metals sector has yet to see its final decline and expects gold and precious metals stocks to fall substantially in the coming weeks and months, which will provide profitable shorting opportunities. Technical indicators like head and shoulder patterns in gold and USD indexes further support the outlook for lower gold and precious metals prices ahead.

1. Something Is Very Wrong
With Gold Miners…….
Good For Us!

2. Points To Be Covered Today:
• Gold Stocks Completely Ignoring Gold’s Gains
• GDX ETF & GDXJ ETF
• Gold Miners
• The Precious Metals Market
• Fundamental Situation For Gold
• Head & Shoulders Pattern
• Bullish Cup-And-Handle Pattern
• Gold Is Trading At $1,795 After Having Moved To $1797.15

3. Gold Stocks Completely Ignoring Gold’s Gains
• With gold stocks completely ignoring gold’s gains, the myriads
of factors that I’ve been discussing for weeks might not have
been in place, and the outlook for the precious metals sector
would be bearish anyway.
• Gold stocks’ weakness is so ubiquitous and so extreme that it’s
a critical sell signal on its own.
• It was just yesterday when I emphasized that it was yet another
week when the HUI Index – the flagship proxy for the gold –
declined by about 5 points while gold moved higher by about
$15, and yesterday we saw exactly the same kind of
performance.

4. GDX ETF & GDXJ ETF
• Gold ended yesterday’s session $11.60 higher, and what did
gold stocks do?
• The HUI Index was down by 1.21 (0.48%), the GDX ETF was
down by $0.18 (0.55%), and the GDXJ ETF was down by 0.45
(1.05% – so, profits on our short position have increased
further).
• Sometimes gold stocks take the lead of the general stock
market, which… makes yesterday’s decline even more bearish
because the general stock market ended yesterday’s session
higher.

5. Gold Miners
• Gold miners sell gold and/or discover it to develop a given
property and sell gold later.
• If the price of gold increases, it’s obvious that the prices of gold
stocks’ shares should increase, as their current or future profits
depend on gold’s price.
• Sure, miners will sell gold at a future price, not today’s price, but
a higher price today means higher price expectations in the
future, so it doesn’t really matter that there’s this delay.
• Gold price up should equal gold stocks’ prices up. If it doesn’t,
it means that something is very wrong.

6. The Precious Metals Market
• The thing that’s very wrong is that the precious metals
market hasn’t yet completed its final decline and therefore
it’s reluctant to respond to bullish indications.
• What we’re seeing in gold stocks is a screaming and
extreme sign that the sector is going to decline in the
following weeks and months.
• And it’s not the first time we’ve seen something like that!
We saw exactly the same thing in 2013 before a massive
slide.

7. Fundamental Situation For Gold
• Yes, the fundamental situation for gold, in the long run, is very
positive. Yes, it’s even more positive for silver.
• And yes – right after the bottom, gold stocks are likely
to outperform gold and soar profoundly.
• BUT.
• It’s not likely to happen until we see a huge price decline first.
• And it’s this huge price decline that we’re very likely to profit from
even before we get to this mother-of-all-buying-opportunities.
• And what’s best is that thanks to the profits on the short position,
we’ll most likely be able to buy even more extremely discounted
gold, silver, and mining stocks.

8. Senior Mining Stock

9. Junior Mining Stock

10. Junior Mining Stock - I
• The same goes for the junior gold miners, which declined even
more than seniors.
• Please note how perfect the verification of the breakdown to
new yearly lows was.
• The GDXJ moved back and forth in a classic ABC format and
thus created a flag pattern right below the previously
broken support level which –this way – was verified
as resistance.
• The volume was low, which means that the market is simply
waiting for another downleg.

11. $USD

12. $ Gold

13. Head & Shoulders Pattern
• After surging above the neckline of its inverse (bullish) head
& shoulders pattern.
• The USD Index back tested the breakout last week.
• In other words, the breakout was confirmed, and, so far this
week.
• The USD Index has been moving slightly higher, further
validating the above

14. Bullish Cup-And-Handle Pattern
• Please note that in addition to the inverse head-and-
shoulders pattern in the USD Index.
• We can also see a bullish cup-and-handle pattern that I
marked with a grey rectangle.
• This pattern confirms the bullish outlook for the US
currency.
• Once the index gets above the previous 2021 highs.
• It’s likely to soar visibly once again – quite likely to the
97-98 range.

15. Bullish Cup-And-Handle Pattern - I

16. Gold Ended Yesterday’s Session
• Gold ended yesterday’s session $11.60 higher, and it has moved up
by $6 so far today.
• Does it change much? While I honestly admit that this correction is a
bit bigger than I expected it to be, it doesn’t change anything with
regard to the outlook.
• It’s still just a corrective upswing within a bigger downtrend, in my
view.
• And since the next triangle-vertex-based reversal is just around the
corner (early next week), it wouldn’t be surprising to see a back and
forth movement this week or even slightly higher gold prices.
• I don’t think it would change much though.

17. Short-term Resistance
• The short-term resistance is provided by the declining black
line, as well as the mid-July lows and the $1,800 level, which is
natural resistance, as it’s a round number.
• Also, please note that gold has been mostly repeating its early-
2021 performance.
• After declining sharply (January and June) and forming a
double bottom with the second bottom slightly lower, it then
corrected half of the decline forming more than one top close to
the 50% retracement, and then declined sharply once again.

18. Short-term Resistance - I

19. Gold Is Trading At $1,795 After Having
Moved To $1797.15
• Back in February 2021, gold corrected about 76.4% of the
decline (which is a less popular but still a Fibonacci retracement
level – marked with blue).
• Right now, this retracement is just below the $1,800 mark. So,
if history rhymes once again, gold will be likely to move close to
$1,800 and then decline once again.
• At the moment of writing these words, gold is trading at $1,795
after having moved to $1797.15.
• So, the top could be in, and even if it’s not, it seems that it’s at
hand.

20. Something Is Very Wrong
With Gold Miners…….
Good For Us!

21. Thanks for listening
Something Is Very Wrong With Gold Miners