SILVER JOINS GOLD IN PRECIOUS METALS RALLY -- MARKET VECTORS GOLD MINING INDEX (GDX) CLEARS RESISTANCE -- SILVER STOCKS LIKE SILVER WHEATON JUMP WITH METAL -- GOLD MINERS BPI TURNS POSITIVE
GOLD MINERS BPI TURNS UP ... Last Wednesday's message wrote about a potential upturn in precious metals and stocks tied to them, and showed the Gold Miners Bullish Perent Index ($BPGDM) in oversold territory (below 30%) and on the verge of turning higher. [The BPGDM measures the percent of gold miners in point & figure uptrends]. The message explained that the last two times the Gold BPI fell below 30% was at the end of 2008 and the start of 2009, and that both marked important bottoms for gold stocks. It also explained that most traders who use this indicator prefer to get their buy and sell signals from its point & figure version. At the very least, traders like to see a three-box reversal to the upside to signal a possible bottom. As of last week, the p&f chart had fallen to 28% which was oversold territory and needed a three-box reversal to 34% to signal an upturn. The message read: "Since each box is 2%, the indicator would have to climp 6% from its recent low at 28 to signal a possible upturn. In other words, a $BPGDM reading of 34% would be an added incentive to start mining for gold and gold shares again". Today's Chart 1 shows the BPGDM rising to 50% as of yesterday. A move to 52% would exceed a previous peak at the same level and would be an even stronger buy signal. [Note: The $BPGDM is not included in the BPI list on the Market Summary page. You can, however, chart it yourself by simply clicking in its symbol on a line or p&f chart]. That jump in the BPI confirms the positive action seen on traditional bar charts. The GDX has also given a couple of p&f buy signals of its own.
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Chart 1
MARKET VECTORS GOLD MINERS ETF BREAKS RESISTANCE... Chart 2 shows the Market Vectors Gold Miners ETF (GDX) breaking through its late May peak and its 200-day average (red line). And it did so on rising volume. The GDX/SPX relative strength ratio (below chart) shows the group outperforming the broader market for the first time in more than three months. Chart 3 shows a p&f version of the same chart (using a .50 box size). Although an initial p&f buy signal took place at 54.5 during June, the more impressive signal took place this week at 55.5. [A p&f buy signal takes place when a rising X column exceeds a previous X column]. The GDX also broke the 45 degree (red) resistance line. [P&f resistance lines are drawn at 45 degree angles from a previous peak]. I've shown a number of gold leaders which include Goldcorp (GG), Yamana (AUY) and Kinross Gold (KGC) which have also broken out to the upside. Virtually all gold stocks are starting to rise. It's important to know, however, that silver stocks are also starting to rise along with that metal.
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Chart 2
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Chart 3
SILVER STOCKS JUMP AS WELL... Although silver has lagged behind gold (which hit a new record), Chart 4 shows Silver iShares (SLV) shooting higher yesterday and exceeding its 50-day average for the first time in two months. It's now pressing up against May resistance around 38. Silver stocks have done even better. Chart 5 shows the Global X Silver Miners ETF (SIL) having already cleared its late May peak at 26 (on rising volume). The SIL/SPX ratio (below chart) has turned up as well. Chart 6 shows Silver Wheaton (SLW) looking pretty much the same. Some other silver leaders are Silver Standard Resource (SSRI) and First Magestic Silver Corp (AG).
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Chart 4
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Chart 5
