WEAK DOLLAR CONTINUES TO PUSH PRECIOUS METAL ASSETS HIGHER -- SILVER HAS ALREADY EXCEEDED FOURTH QUARTER HIGH -- COEUR D ALENE MINES APPEARS ON VERGE OF BULLISH BREAKOUT -- GOLDCORP IS LEADING GOLD MINERS HIGHER
DOLLAR INDEX CONTINUES TO WEAKEN... After peaking in early January, the U.S. Dollar Index continues to lose ground. Chart 1 shows today's dollar drop approaching a test of its 200-day moving average. When the dollar drops, commodities rise. And they've been doing just that since the start of the year. Chart 2 shows the DB Commodities Tracking Fund (DBC) having already cleared its November high and its 200-day moving average. A pullback in energy prices today is causing some temporary selling. Precious metals, however, continue to rally. Chart 3 shows the PowerShares Precious Metals Fund (DBA) rallying 1.8% today and challenging its November intra-day peak at 63.63. Most of today's strength is coming from silver.
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Chart 1
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Chart 2
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Chart 3
SILVER BREAKS OUT... Chart 4 shows a 4.6% jump in the Silver Trust iShares (SLV) pushing it above its fourth quarter high (and its 200-day moving average). That constitutes a bullish breakout. The same is true of the Global X Silver Miners ETF (SIL). Chart 6 shows the SIL also trading above its November high. Last Thursday's message showed that silver stocks as a group were rising faster than gold shares. That's still the case. That earlier writeup also showed Silver Wheaton (SLW) leading the silver stock rally. Chart 6 shows that Coeur D Alene Mines (CDE) gaining 7% today and appearing to be on the verge of a bullish breakout of its own.
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Chart 4
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Chart 5
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Chart 6
GOLDCORP IS LEADING GDX HIGHER... Chart 7 shows the Market Vectors Gold Miners ETF (GDX) moving up to challenge its February high (in addition to breaking through its 200-day average and a five-month down trendline). The GDX/SPX ratio (below chart) also appears to be bottoming (see circle). Last week's message showed Yamana Gold (AUY) and Randgold Resources (GOLD) at or near 52-week highs and leading the gold miner rally. Chart 8 shows Goldcorp (GG) gaining nearly 4% today to hit a new two-month high.
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Chart 7
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Chart 8
GOLD MINERS BULLISH PERCENT INDEX ON VERGE OF BUY SIGNAL ... Chart 9 shows the Gold Miners Bullish Percent Index ($BPGDM) turning back up from deeply oversold territory below 20. That was the most oversold reading by the gold miners index since 2008. [The BPGDM measures the percent of stocks in the gold miners index that are on point & figure buy signals]. Chart 10 shows the point & figure version of the same index on the verge of a P&F buy signal. [A P&F buy signal is triggered when the last X (up) column exceeds a previous X column]. A move to 46 would accomplish that. This appears to be a good time to be buying into precious metal assets.
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Chart 9
