On The Race To The Bottom, Miners Beat Gold

1. On The Race To The Bottom, Miners
Beat Gold

2. Points To Be Discussed Today:
• Medium-Term Outlook For Gold
• Junior Mining Stocks
• The GDX ETF
• Gold Was Likely To Reverse In September
• XAU/USD –Gold Spot US Dollar
• XAUUSD Chart

3. Medium-Term Outlook For Gold
• The medium-term outlook for precious metals
is a bearish one, and as gold moves lower, the
miners will move lower faster.
• Small price jumps don’t count.
• Let’s get this straight, we’re not day traders,
and getting excited about an occasional
bounce is much ado about nothing.

4. Gold Moved Higher But Not The Gold
Stocks
• Remember when I told you yesterday that the
“strength” of gold stocks was likely more or
less random and not a true sign of strength?
• Yesterday’s lack thereof confirmed it.
• Gold moved higher, but gold stocks almost
didn’t. Implications?
• That was just a tiny, inconsequential, counter-
trend upswing within a bigger decline.

5. Junior Mining Stocks

6. The GDX ETF
• The GDX ETF was up by a mere $0.16 and it
closed the day very close to where it had closed
on Aug. 23 – just a day after it rallied from its
recent lows.
• In other words, the current GDX ETF price is
practically just a single-day rally above the yearly
lows.
• At the same time, gold is trading over $130 above
its yearly lows.
• Are senior gold stocks really showing strength?
Absolutely not.

7. Senior Gold Stocks

8. Concern Of Junior Miners
• As far as junior miners are concerned, the
situation is similar, but even more bearish.
• In GDXJ, we have another sell signal coming
from volume.
• It spiked, and the last time we saw the
volume this high, was in mid-May.
• And what happened in mid-May? It was not
the exact top, but it was very close to it, and
shortly before a $15+ decline started.

9. A Short Position In The Junior Miners
• It was a perfect time to enter a short position in
the junior miners, or one could use this indication
as reassurance that this position is justified from
the risk to reward point of view.
• (Of course, there are many more factors that
point to this direction, not just the volume spike
in the GDXJ ETF.)
• Overall, juniors are verifying their previous
breakdown to new yearly lows, and they are
successful in this verification.
• This opens the door to huge declines wide open.

10. Two-Triangle-Vertex-Based Reversals

11. Gold Moved Higher
• Just like I wrote earlier today, gold moved
higher yesterday (it’s down in today’s pre-
market trading, though), but it didn’t break
any important resistance level, so this move
was rather inconsequential.
• The outlook for gold and gold stocks remains
bearish.

12. Gold Was Likely To Reverse In
September
• By the way, do you recall when I wrote that
gold was likely to reverse in the second half of
September or in the middle thereof, but that
we’ll know more when we get closer to this
date?
• Well, it’s the middle of the month today, and
it’s obvious that we didn’t see a major decline
in the recent days, just a relatively small one.

13. Gold Was Likely To Reverse In
September - I
• Consequently, it seems that the reversal that I
mentioned previously will not be an important
bottom, but an important top.
• This makes sense in light of the upcoming
FOMC (in one week), which is likely to trigger
some short-term volatility. Will the PMs and
miners rally until the Fed speaks?
• It’s unclear, and not that likely.

14. Mid Term Is Clear For Gold
• They could decline beforehand, or they could do
nothing.
• The very near term is unclear, but that doesn’t
matter that much, as the medium-term is very
clear – the gold, silver, and mining stocks are
going down.
• One of the reasons is the more-than-confirmed
breakout above the neck level in the USD Index’s
inverse head and shoulders pattern.

15. Huge Comeback From The Brief

16. The USDX Has Been Moving Back
• It took about a year for this bullish pattern to
form, so it’s likely that its consequences will
also be of medium-term nature.
• So far, the USDX has been moving back and
forth, but when it finally moves, it’s likely to
rally above 97, as the targets based on this
formation are based on the size of its “head”
(marked with green, dashed lines).

17. The USD Index Rallies
• As the USD Index rallies, gold is likely to move
lower.
• And as gold moves lower, gold stocks are
likely to move lower faster, as they’ve been
underperforming gold for months.
• And as senior gold miners move lower faster,
junior miners are likely to move lower even
faster.

18. XAU/USD –Gold Spot US Dollar

19. XAUUSD Chart

20. On The Race To The Bottom, Miners
Beat Gold

21. THANKS FOR LISTENING
On The Race To The Bottom, Miners
Beat Gold