Friday, October 9, 2015

Precious Metals Sector Looks Better But Something Is Still Missing

Most recently precious metals shares have gone quite substantially. For example, GDX (the ETF comprising the big miners shares) increased its price by 28.8% in comparison to its bottom established in September 2015. Many other miners and juniors followed GDX.
However, the whole picture is still not bright - please, look at the chart below:

As the chart shows, big miners are still stronger than juniors, which is definitely not a bullish pattern. During the typical bull market in gold, juniors should be stronger than big miners.

On the other hand, this could be a trap. Since 2012 the entire precious market sector has been out of fashion. At this stage probably more money goes to less risky investment - and in the case of PM market, big miners are less risky. So who knows...

Another chart:

Most recently the PM shares hit another record low against the broad market (represented by S&P 500). From a contrarian point of view, it could be a buying opportunity once again.

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