Evidence shows gold stocks have bottomed...

May 4, 2015 11:08 AM

The price action in nominal terms would have been far more encouraging if the miners had closed near their weekly highs. The weekly candle charts for GDX and GDXJ are below.

The miners are up for the week but failed to hold the majority of the gains. GDX touched $20.90, which is 7 percent from its 80-week moving average. If it could reach that resistance it would mark the third test in the past ten months (after previously no tests in two years). That would be a strong signal of a transition from a bear market to a bull market.

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The reasons for the gold miners’ relative strength are unlikely to be temporary. Sure oil has rebounded but its price remains well below the $100/barrel it averaged throughout 2011 to 2014. That is helping miners. In addition, local currency weakness has been a boon.

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About the Author

Jordan Roy-Byrne, CMT, is the editor and publisher of The Daily Gold. He can be contacted at Jordan@TheDailyGold.com.