Deep Dive: Gold Reversal

Gold Miner’s GDX

Fibonacci Projection

Rule of Alternation

Wyckoff analysis was used to identify the GDX up-thrust, reversal condition.

Nine trading days later, GDX is down a stiff -11.7%, from the analysis location.

It’s down -14.9% from its interim high set on May 19th.

What happens next?

This site offers a different perspective (more thoughtful, perhaps) than ‘stacking’ precious metals as high as possible.

Thoughts such as, major infrastructure disruptions (and more) are likely:

That includes nationwide power outages, food transport interruptions (or cancelled outright) along with massive ‘speck’ injected casualties (estimated past 100,000), see this report.

The very last thing you’ll need in that environment, is a stack of metal (not advice, not a recommendation).

Personal anecdote, skip to GDX Chart, if not interested.

These updates are originating from the North-Central area of Texas (DFW). When the historic cold snap rolled through this past February, the power went out repeatedly.

The first thought was not: “I’m sure glad I have my stack of silver to get me through”

No. The thinking was (in this order):

Food, water (water was second as there was plenty of it just outside as snow), munitions and ‘delivery mechanisms’, cash in case the gas station was operational … which is was not and then lastly, heat.

The location was using natural gas for heating and was available as long as there was power

Precious metals were nowhere on the list … not even considered. They had nothing to do with the situation at hand.

Precious metals come later … after the famine.

GDX Chart:

The original analysis from June 8th, is below:

Subsequent trade action (including the original notes):

Weekly chart showing Fibonacci downside projection to level(s) mentioned frequently by Steven Van Metre.

In the chart above, note the choppy action leading down to the most recent upside pivot (early March). That area expanded below:

If we’re in a reversal to much lower levels, the market tends to alternate.

It was choppy and overlapping action from the highs in August of ’20 to the March ’21, low.

Thus far at the pivot high in late May, its been essentially straight down.

With the planned outages discussed above, precious metals may become (temporarily) irrelevant.

If or when that happens, it may be time to consider a ‘stack’.

Of course, by then, no one will want to buy (and spend their worthless fiat cash) for risk of starving to death. This is how markets work.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

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