Beating a Dead Horse

I do keep a regular pulse on the precious metals market and I continue to be amazed at the resiliency of the (remaining) gold bugs in spite of the drubbing they have taken since the 2011 highs. We have seen repeated bottoming attempts only to have the rug pulled out and prices fall further throughout this entire 5 year decline.

Fast forward to July of last year. You can see in the chart below of the small cap miner ETF, GDXJ, price first found a bottom in the $18.20 area, chopped around and created a higher high in October giving the bulls some hope. Notice also, how that same $18.20 provided support during the entire 6 months + consolidation as it retested it many times. Sadly, the bulls hope was squashed in December as the next impulse move higher was lower than the previous, wiping out the hope for a new uptrend. The final nail was put into the coffin on Friday as the $18.20 failed support and prices are following strongly through to the downside today.

Bay area financial advisor secure retirement planner, cfp 1-20-16 gdxj

Unless there is some catalyst and we reverse back up here in the next few days, I see another plunge in the works. The head and shoulders pattern that was formed projects to a target around 15, some 17%+ lower than where we were on Friday. I don’t know if that will be it, but because of the carnage that has already taken place, I will be looking for the next flush down to be its final and the potential beginning of a reversal. But for now, the charts are telling us the bears are in charge and making money will not be done buying or holding.