Well! It's been an interesting few weeks in the precious metals sector - - the patience of many (myself included) has been repeatedly stretched close to the limit. The breakdown of the symmetrical triangle patterns in gold and the PM stocks was a rough ride, but it may have been a blessing in disguise! In hindsight, when technical patterns are so "in your face" it's a good bet that everyone else sees them too - - and if one thing is for certain, it's when "everyone" is doing something, you should step out of the crowd before you get trampled.
The triangle breakdown may have been the final washout we needed before the bull market can continue. It also serves as a powerful reminder that there are no guarantees in the market, and anyone who tells you otherwise is a liar or a fool.
So - - what is the current state of things in the world of precious metals? That depends on how you draw the line...
As you can see, depending on whether or not you take the literal price or the "rounded" top back in March it makes the difference between a breakout and just sitting on the cusp of a breakout. We still have some room to move to the upside (but not much) so if we're lucky a breakout will be confirmed sometime in the next few trading days. The HUI is even more interesting!
There's a similar situation here in that we're approaching the downtrend line dating back to late 2004, but here we also have a strong sign of hope! There's an inverted Head & Shoulders pattern that has formed in the last 3 months which could lead to a powerful rally in the PM sector. I believe we're too overbought right now to punch on through, so I would recommend some profit taking if you're the trading type.
Over the next week I will be reviewing some of my favorite PM picks and providing some entry points to watch out for. Yes, Goldcorp is still my favorite - - but I have a few new darlings I will discuss as well including Meridian Gold and Desert Sun.