Gold shares are showing signs of support buildup at current lows, explains Omar Ayales, precious metal expert and editor of GCRU Weekly Trading Service.
Gold, showing support at the key $1265 level, has jumped up from a mini double bottom support above 1265 and it’s testing the Fed downtrend near $1290. A break above this level would show a shift in momentum and a continued upswing would be likely.
The move is strong and telling of the gold universe. Could this be the beginning of the end for gold’s ‘B’ decline? We’ll have to wait and see. But if gold breaks above $1310 on a 2dc, a strong sign of renewed strength would be triggered suggesting the start of gold’s ‘C’ rise.
Another sign of a bottom can be seen in the senior to junior gold mine ratio. Typically, when junior mines have outperformed the seniors it’s been a bullish sign. And when juniors lag the seniors, a bearish sign.
The ratio has reached a key bottom that tends to mark a low favoring senior mines. Price action is telling us we could start seeing the ratio favor juniors and thus a stronger phase within the gold universe develop.
It is no coincidence the junior mines are gapping up. ALPS Sprott Junior Gold Mine ETF (SGDJ) confirmed support at $24 and it’s now rising sharply. Its next resistance is at $26.50. A break above this level confirms recent strength and opens up renewed potential for more upside. Buy some at market.
The rest of our positions are holding up well. Agnico Eagle Mines Ltd. (AEM) is rising steadily from the lows last month at $40. We recently added to our positions buying more at $40. Look for AEM’s rebound rise to gain steam on a bounce up above $42.50. Keep your positions for now.
Kirkland Lake Gold (KL) remains among the strongest. It held at its Nov uptrend showing impressive strength. Last week, KL pierced above its symmetrical triangle. With the continued rise, the move was confirmed, especially since it was on higher than average volume. If you haven’t bought, buy at market. Don’t miss the boat.
SSR Mining (SSRM) confirmed support at $11. It’s jumping up to a 1-week high showing signs of strength. Its technical indicators are struggling, but rising from an extreme. SSRM must rise above $12 to confirm. Buy some at market.
