One More Lower Low?

The silence is deafening.  Week after week for the last 4 years has seen each lower low in metals and miners met with a bottoming cry by many in the market.  However, the silence has been noticeable at these current lows.  Are so many that certain that gold is going to significantly break $1,000?  Weren’t so many as equally certain that gold was going to break out over $2,000 in 2011?  What I can tell you is that the camp which expects sub-$1,000 gold has grown to the extent that one has to consider that they may be disappointed.

There comes a point in time when a market has been so decimated from a severe correction that it is time to begin looking the other way.  In the metals complex, it is just about that time.  While I have no confirmation of a bottom actually being in place, we are seeing signs that the market is ripe for long term bottoms being formed. 

This past week, I had the privilege of interviewing Doug Eberhardt, a wholesale dealer in the metals market.   For those that believe, as I do, that a long term bottom is forming in the metals market, I highly suggest that you hear what he has to say   Again, since I view this market as bottoming, one should be seriously considering purchases of metals as we have finally hit the “BUY BOXES” I put out several years ago, and all three products happen to be within their respective “BUY BOXES.” 

In fact, I remember when I put these target boxes out around 2-3 years ago, and many thought I was quite crazy since it looked so unusual, as it was so much lower than the price of the market at the time.  If you remember, 3 years ago, GLD was still over 150, and I was looking down to the 100 region at the time once the upside set up at the time invalidated.  And, when I was looking for the $14 region in silver when it was hovering near $30, people thought I had lost my mind.  So, even though there is a smaller “possibility” that GLD can drop as low as the 75 region, I think the time for action has arrived, and one needs to be buying deeper drops at this time. This is the deeper target region we set for ourselves years ago, even before the metals topped, so I believe now is the time for action.   

Think about it.  Gold now is on sale for almost 50% of what it was worth in 2011 and silver is running a 75% sale.  Given that opportunity for anything else you buy, would you not jump on it, especially for something that depreciates, like clothing or a car? So why would you take a different approach with something that will likely appreciate over the next decade?

After the interview with Doug on Wednesday night, our analyst team got together, and reviewed all the miners we have been tracking over the last 2 months since we opened our miner’s portfolio.  We have been noticing that a number of the miners potentially have solid long term bottoms in place, which has impelled us to be over 30% deployed in this complex at this time, allocated mostly to those we believe have strong potential for bottoms being in place.  But, while the GDX has the “potential” for a long term bottom being in place, the action on Friday is suggestive of this still being only within wave iv of the final decline in the GDX.  But, the set up on Friday left us with the potential for another rally to be seen in the upcoming week.  The question is if resistance will be respected.

Since there are still a number of miners which seem to need lower lows (such as RGLD, for example), I will be watching the GDX quite carefully.  Based upon the depth of the pullback seen on Friday, I am still a bit skeptical that the final bottom has been seen, even though the minimal numbers of waves for that bottom to be in place has been seen.  But, I am open to the market proving me wrong, and I have even been struggling with the decision as to whether I should be looking for a lower low in GDX. 

As for silver and gold, it is still quite likely that they still have at least one more lower low to be seen before they may finally bottom.  So, after much thought on the matter, my primary count is still going to be that we are currently in a wave iv within the final decline in GDX, GLD and silver. For now, the relative resistance region in the GDX is between 14.40-14.55, in the GLD it is 104.75-105.25, and in silver it remains at 14.50-14.75. Until those resistance levels are overcome, I will be looking for one more low in these products.

Lastly, for those that are interested in trading the 3X miner ETF’s, Larry White, our analyst that runs our short term miner trading service, is now approaching 200% returns for 2015.  And, due to the high demand, we have rolled out Larry’s service as a stand-alone service outside of our StockWaves service.  So, feel free to come join us at Elliottwavetrader.net for a 2 week free trial to trade alongside Larry and begin to earn some wonderful returns in this complex. 

See charts illustrating the wave counts on the GDX, GLD and YI at https://www.elliottwavetrader.net/scharts/Charts-on-GDX-GLD-YI-20151124953.html .