Silver was just breaking to new highs, gold stocks (HUI) were above the 205 level and gold was at levels not seen since August 2016. Gold and silver bulls were cheering. They are not cheering anymore. Even though the above was the case just several days ago, it was all invalidated, just like we expected it to be. Based on what happened on Friday, silver and mining stocks are at their new 2018 lows and their entire 2018 performance is one huge bearish reversal. Where will precious metals in the following weeks?
Lower. Likely much lower.
Why? Let’s see, starting with the short-term charts (charts courtesy of http://stockcharts.com).
In our previous analyses we emphasized that the small 2-day consolidation didn’t change anything because gold miners have recently broken below all important nearby support levels that could be broken and none of these breakdowns was invalidated:
- The mid-January high.
- The early January high.
- The late January low.
- The 205 level (invalidating the breakout).
- The declining, medium-term resistance line (invalidating the breakout).
- The rising, medium-term resistance / support line.
- The rising short-term (red) resistance / support line.
Consequently, the bearish implications remained in place and during Friday’s session, we saw their result. Gold stocks took a dive and closed at levels not seen since December 22, 2017. The HUI Index also close below the 50-day and 200-day moving averages. Both MAs served as important support and resistance lines (especially the latter), so this move is significant.