Recently, gold and silver’s performance wasn’t what precious metals investors had expected, even though it seems that this turbulence is just temporary – fundamentals are great with the Fed promising to print even more money and continuous reports on rising demand for gold and its shrinking supply. Moreover, the trend is still up from a technical point of view. Yet waiting for the precious metals rally to finally kick off can be frustrating.
But the fact that the big rally hasn’t started yet is a great opportunity to take a look at the whole market from a distance and analyze it in search of some decent investments. Most investors focus solely on gold and silver, completely overlooking other profitable precious metals such as platinum and palladium and – what seems to be even more important – precious metals stocks. The latter are excellent for diversification purposes and can outperform the underlying metals (this hasn’t been the case in the past months, though). And this is why in today’s technical part we focus on both gold and silver stocks. We’ll start with the former (charts courtesy by http://stockcharts.com.)
In the medium-term HUI Index chart, we see a decline but not below the level of the December lows. This seems to be a retest of the declining long-term support line and previous local lows. It could be the case that the miners will not move much lower even if gold declines.
However, if stock prices move lower, which could be the case based on the gravestone doji pattern discussed in our last essay, lower prices could be seen here, though this does not necessary have to happen. On a side note – the general stock market (as measured by the S&P 500 Index) is rallying heavily today which further decreases the odds of a decline in gold stocks in the short term.