Friday, 31 January 2014

GDX - significant monthly gains

Whilst equities saw general weakness across January, the miners saw significant strength. The mining ETF of GDX saw net monthly gains of a very significant 11.1% @ $23.47. However, the broader multi-year down trend still continues.

GDX, monthly


*I thought it might be useful to highlight the monthly charts for spot Gold and Silver. Unquestionably, the commodity prices for the two key metals have a very powerful influence on the miners.

Gold, monthly'2, fib levels

Silver, monthly'2, fib levels

In terms of GDX, I can't take the January gains too seriously. Mining bulls have been teased before, in Aug/Sept of 2012, and July/August of 2013. Seasonally, the metals don't do well until the second half of the year. Indeed, the past two years have certainly reflected that.

GDX/miners facing multiple number of problems.

I still think sub $20s are viable before we reach a multi-year cycle low, especially if Gold slips to $1050/950 later this year..or in 2015. I realise the latter target will dismay many of the gold bugs out there..who have been getting overly confident with end 2014 targets of $2000 gold.

Further, if the main equity market falls 15/20% this spring/summer, that will only add to renewed downside pressure on the miners.

The miners remain my favourite sector, but for now, I still think it remains one to watch, rather than build holdings for the long term.