8 ‘flash crash’ and bounced back above its June lows, the yellow metal’s renewed sense of swagger hasn’t been mimicked by its precious metals peers.
And with the bearish underperformance often a precursor to profound medium-term drawdowns, the precious metals are behaving like its 2012-2013.
On top of that, with the shape of gold’s recent price action, its RSI, and its MACD indicators all mirroring the bearish signals that we witnessed back in December 2012, the current setup signals that we’re likely headed for a similar swoon.
and at the same time, the HUI – a flagship proxy for the gold stocks… Declined by 1.37.
As a result, with the HUI Index’s ominous signals still present, if history rhymes , medium-term support will likely materialize in the 100-to-150 range.
To explain, right before the huge slide in late September and early October, gold was still moving to new intraday highs; the HUI Index was ignoring that, and then it declined despite gold’s rally.
For example, when the HUI Index retraced a bit more than 61.8% of its downswing in 2008 and in between 50% and 61.8% of its downswing in 2012 before eventually rolling over, in both all started with broad, multi-month head-and-shoulders patterns.
And what was the eventual climax? Well, gold made a new high before peaking on Oct.
As further evidence, let’s compare the behavior of the GDX ETF and the GDXJ ETF.
The flag is perfect, and it took place on relatively declining volume, suggesting that another move will also be to the downside.
Junior miners broke below the previous 2021 lows, and they held this breakdown, even though gold rallied quite visibly last week.
And while many investors have forged through the smoke in 2021 and suffered a loss of breath in the process, our medium-term forecast does not change our outlook for gold, silver and mining stocks over the long term.