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The No 1 Gold Stock for 2019

Precious Metals Complex Monthly Charts Argue for Lower Prices

Commodities / Gold and Silver 2016 Oct 02, 2016 - 09:10 AM GMT

By: Jordan_Roy_Byrne

Commodities

The trading month doesn't always end on a Friday but when it does we like to take a look at the monthly charts. Generally, I prefer daily and weekly charts because they have more data points. However, monthly charts carry more significance than weekly charts which carry more significance than daily charts. You get the point. One reason and a good reason we expect the current correction to continue is the sector monthly charts.


The chart below plots the monthly candle charts of GDX and GDXJ. Earlier this year the miners exploded above their 20-month moving averages and into a new bull market. They were trading at three year highs before a bearish reversal in August that reversed the entire gains from July. September saw a recovery but failure to hold most of those gains. This tells us that selling pressure remains present and miners will likely see lower prices in October.

Market Vectors Gold Miners and Junior Gold Miners Monthly Chart

The metals show a similar picture. Markets moved well above their 20-month moving averages but the August candle engulfed July's candle while September recovered only to a small degree. That implies lower prices in October. Gold has support around $1290 while Silver has support near $18. Like the miners, the metals remain a healthy distance above their rising long-term moving averages.

Gold and Silver Monthly Charts

The monthly charts and in particular the action of the past two months leads us to believe lower prices in October are more likely than not. The monthly charts obviously take more time to develop (we have to wait an entire month) but they are the most significant. Time will tell but we see the potential for an important low in October. Traders and investors are advised to wait for lower prices and an oversold condition. We will focus on opportunities scattered amongst individual companies.

For professional guidance in riding the uptrend in Gold, consider learning more about our premium service including our favorite junior miners which we expect to outperform in the second half of 2016.

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 2010-2014 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.

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