Higher Stocks And Higher Gold Price? Miners Don’t Even Care...

Higher Stocks And Higher Gold Price? Miners Don’t Even Care Anymore.
By Przemyslaw Radomski of Gold Price Forecast
Friday, February 23, 2024 1:25 PM EST

The key event of this week is the breakout in stocks and… its complete lack of bullish implications for the precious metals sector.

So, let’s start today’s discussion by checking the big action in the S&P 500.


Stocks broke above 5,000, following the better-than-expected earnings report from Nvidia. The AI craze got crazier, and people bought even more, deaf to the voices indicating that the Fed might actually need to hike rates instead of cutting them.

Looking at the above chart – does it seem like the Fed did a good job curbing the demand? Nope.
When markets are in parabolic upswings, it’s a tough call to say how high can they soar but it’s quite clear that when the bubble bursts, the decline will be painful to many.

At times like this, it’s great if there’s a part of the market that behaves more predictably, thus increasing the chances of realizing good profits.

Fortunately, we have this sector right in front of our eyes.

Mining stocks are in a very steady downtrend, and after their ratios with gold and with stocks broke below their multi-year support levels, it’s obvious that their medium-term trend is down.



Stock market has been moving relentlessly higher this year.

At the same time, mining stocks have been moving relentlessly lower.

Yes, downswings in stocks boosted miners’ daily declines, but overall miners, have been declining either way.

It’s either a regular decline if stocks rally or a sharp decline if stocks decline. Either way, mining stock prices seem WAY more predictable than the general stock market.

Of course, looking at the stock market chart, it might seem that stocks are very
predictable because they can only go up. Knowing that price bubbles burst paints a huge warning flag on any long positions here – looking at the recent gains should not ensure one that this rally is going to continue for much longer.

There’s simply limited information that we can gain from past experience alone – logic and extra details have to be applied.

• But PR, what about the recent rally in GDX and GDXJ?

Remember when I told you that those were just verifications of the breakdowns below rising support lines?
On Monday, in the Extra Gold Trading Alert, I wrote the following:

There are two resistance lines visible on the above chart – one based on the intraday lows, and the other based on the daily closing prices. The latter are generally more important from the technical point of view.

Now, it is debatable whether the GDXJ invalidated its breakdown below the lower line based on the intraday extremes, but it’s clear that there was no invalidation with regard to the more important line based on the closing prices.

The situation is even clearer in the ETF focused on senior miners: the GDX.

Friday’s close was below both resistance lines – the breakdown was verified.

This, plus miners’ above-mentioned weakness relative to gold suggest that there will be a better buying opportunity shortly – a better one that what we’ve seen last week.

What happened was normal – we saw a breakdown, then a comeback to the levels that were broken, and now the decline continues. Quite profitably so.