After a long bear market of close to 4 years, it seems that precious metals are preparing a huge breakout.
The next chart, courtesy of ShortSideOfLong, provides a valuable way to look at gold, silver and the gold miners (mid-tier and senior miners represented by GDX in red and junior miners by GDXJ in green).
The chart below reveals some interesting insights.
First, there is a structural declining trendline in each of the assets. Note how it goes back to the start of the bear market for SLV / GDXJ or the huge collapse of April and June of 2013 for GLD and GDX. Gold bulls will undoubtedly like the fact that the price has been moving closer and closer to the trendline lately. Note how brutal the declines were in the early stages of the bear market, and how far below the trendline they ended up before recovering. That has a very bullish look.
Second, we arrived once again at a “make or break” level, right at the trendline resistance area, for SLV and all miners (GLD is not that far away). So far, none of the aforementioned assets were able to break out. In case we would see a break through the trendlines, all of them together, then we can be quite confident that we finally have a trend change and the birth of a new bull market.
The chart provides almost exact targets to watch for a structural breakout:
- GLD 125
- SLV 16.50
- GDX 21.50
- GDXJ 27
We could be heading for a very hot summer in precious metals.