Best of the Week
Most Popular
1.BrExit Looks Set to Win EU Referendum, Final Opinion Polls Give LEAVE Lead Over REMAIN - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit to Save Europe from Climate Change Refugee Migration Apocalypse - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.EU Referendum Latest Opinion Polls Show LEAVE Halting REMAINs Surge - Nadeem_Walayat
7.Gold And Silver – Insanity Is World “Norm.” Keep Stacking! - Michael_Noonan
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.Gold And Silver: Security, And BREXIT - Michael_Noonan
10.BrExit Vote - "The Trend is Set" -- And What You Should Pay Attention to Next - EWI
Free Silver
Last 7 days
George Osborne's BrExit Excuse to Scrap UK Government Debt, Deficit and Borrowing Targets - 2nd July 16
Breakouts Galore in Gold and Silver - 2nd July 16
Forecasts, Commentary & Analysis on the Economy and Precious Metals - 1st July 16
Italian Banks & Moving The Risk During Crisis - 1st July 16
Gold's Final Warning of Impending Monetary Collapse - 1st July 16
China Can and Will Confiscate Gold When it Suits Them! - 1st July 16
Carney Sparks More RISK ON Market Trades - 1st July 16
Gold, Silver Reaction Following Brexit, Central Bank Desperation Never More Evident… - 1st July 16
Stock Market Rally is Wearning Thin - 1st July 16
UK Interest Rate Cut to 0.25% Imminent and More QE Money Printing - 1st July 16
Michael 'Little Finger' Gove Slays Boris 'Baratheon' Johnson in Game of Thrones for Next Tory PM - 30th June 16
Gold, Silver, Bonds and Stocks Path Towards Inflation - 30th June 16
Stock Market SPX Rally Nearing its End as DB Gets Slammed - 30th June 16
Brexit & The Precipice - 30th June 16
Gold and Silver Precious Metals Bull Market Update - 30th June 16
14 Signs the World Is on the Verge of Generational Chaos - 30th June 16
BrExit Stock Market Upwards Crash as FTSE Recovers 100% of Friday Plunge - 30th June 16
Stock Market Rally Runs Out of Steam - 29th June 16
Rapid Growth:The Financial Trends Of Online Gaming - 29th June 16
FTSE and Sterling Brexit Trading, Deconstruction of the EU Referendum Result - 29th June 16
Stock Market Bounce May be Over - 28th June 16
Stock Market Meltdown Likely to Drive Gold Towards $1,500 - 28th June 16
Brexit Victory over the EU Globalists - 28th June 16
Brexit Psyop: Greenspan Falsely Blames the Brits for the Crash and Chaos to Follow - 28th June 16
Greenspan Calls Brexit a ‘Terrible Outcome’ as Euro Area Tested - 27th June 16
Stock Market SPX Below Mid-Cycle Support - 27th June 16
Best Holidays for Summer 2016 - 27th June 16
Another Stocks Bear Market? - 27th June 16
BBC EU Referendum Result Highlights - YouGov, Markets, Bookmakers, Pollsters ALL WRONG! - 26th June 16
Investors Map Post-Brexit Strategies Amid Global Market Upheaval - 26th June 16
Gold Price Weekly COT Update - 26th June 16
First the UK, then Scotland ... then Texas? - 26th June 16
Stocks Bear Market Resumes or Just More Noise - 26th June 16
Gold And Silver: Security, And BREXIT - 25th June 16
Dow, Euro & Brexit Recap - 25th June 16
Resistance Holding Gold Stocks after Brexit - 25th June 16
Venezuela vs. Ecuador (Chavismo vs. Chavismo Dollarized) - 25th June 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Market Volaility

Junior Gold Mining Stocks Have Bottomed

Commodities / Gold and Silver Stocks 2014 Jan 16, 2014 - 07:22 PM GMT

By: Jordan_Roy_Byrne

Commodities

There is no need to beat around the bush. Junior mining stocks have bottomed. The bear market is over. Sure we could be wrong. We’ve been wrong before and will be again. However, the evidence is too compelling and is growing by the day.


The TSX Venture (CDNX) is the market for juniors in Canada. The market consists of exploration companies focused on precious metals and other minerals, energy companies and some technology companies. It’s not a perfect indicator for the junior mining industry but it’s good enough for the experts. On Thursday the CDNX closed at a nine month high. No, that is not a misprint. The junior market reached a nine month high. It bottomed in late June, made a higher low in December and has surged 10% since.

For an American, GDXJ is the proxy for junior gold stocks or junior miners. I like to think of GDXJ as the “senior” or established juniors. The CDNX consists of many stocks trading under $1 and a $100M market cap while GDXJ is mostly comprised of companies in the $100M to $500M market cap range.

GDXJ declined 81% from its April 2011 peak to its December 2013 bottom. As we noted several weeks ago, GDXJ tried to penetrate its December low three times and failed. The market has since rallied back above the previous (June) low. Given the severity of the bear in terms of price and time, extreme negative sentiment and recent bullish price action I believe it is highly likely that the bottom is in.

Our frame of reference for the bear, the gold stock bear analogs chart continues to suggest that the bear market in senior gold stocks is all but over.

The juniors (both CDNX and GDXJ) peaked in April or five months before the senior gold producers. Hence, it makes sense that the juniors would bottom first. The assertion from the analogs chart (that the seniors may have bottomed or are very close) gives us further confidence that the juniors have bottomed.

Most of the stocks that we follow bottomed in June. The following chart, which was sent to premium subscribers is an equal weighted index of 15 of our favorite gold and silver stocks. The index bottomed in late June 2013 and made a strong higher low in December. It would have to decline 26% to test the June low.

Extreme bearish sentiment, compelling valuations and an extreme oversold condition can create a compelling contrarian opportunity. However, that opportunity can remain far fetched without some positive price action. We now have the positive price action that allows us to call a bottom in the mining stocks and strongly so in the junior gold stocks. The CDNX looks to have made a real double bottom and closed at a nine month high. GDXJ reversed course after failing to continue a breakdown when the time was ripe. Moreover, as evidenced by our top 15 index, the stronger and higher quality companies are showing leadership. The risk has shifted from getting caught in a final plunge to missing out on the rebound.

If you'd be interested in professional guidance in this endeavor, then we invite you to learn more about our service.

Good Luck!

Email: Jordan@TheDailyGold.com
Service Link: http://thedailygold.com/premium

Bio: Jordan Roy-Byrne, CMT  is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2013 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor.  Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.

Jordan Roy-Byrne Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife