The “clues” to where GDX is headed isn’t in the “fundamental” news; it’s on the Elliott wave-labeled chart.
In my line of work, you can get anyone’s two-cents for a nickel on the dime. But one of the most brilliant sayings I’ve ever come across that continues to pay off in dividends harkens back to the 1840’s California Gold Rush. It goes:
“It’s better to be selling shovels than digging for gold.”
Bullseye! When the prospecting heat was on, everyone wanted a shovel. But only a handful of prospectors actually dug up gold.
The same rings true for trading gold stocks today. 100% of traders who venture into the figurative hills of gold investments want to strike it rich. But the stats haven’t budged. In the long run, 85%-95% of all financial market speculators lose more than they gain.
The reason being: Everyone’s buying shovels. But only a handful of traders know where to dig.
On that, the financial wisdom “of market fundamentals” has held up the same bold-printed map since the time of Buttonwood Trees. It reads: “The news is the clue to future price moves.”
Let’s examine this claim.
Let’s look at the recent performance in the world’s largest gold miners exchange traded fund, VanEck ETF (ticker symbol: GDX). Early this year, GDX was down some 13% along with the broader metals ETF sector. And, according to the mainstream experts, the place to dig for opportunity was firmly in bear territory, care of a slew of negative “market fundamentals.” From Business Insider on February 20:
Gold ETFs Suffer Outflows, Await Clues Concerning US Interest Rates. In January, gold-backed ETFs experienced net outflows of $2.8 billion. It was the eighth consecutive month of outflows, largely due to heavy redemptions in North America, according to the World Gold Council (WGC).
Shares in gold miners and their associated ETFs have performed even worse. This is down to costs. Energy prices, mining machinery, permits, labor costs, have all risen. Taken together in percentage terms, the cost of producing gold has risen more than the price of gold in the past decade.Added Mining.com on March 1:
Virtually no one is interested in gold stocks today, speculators and investors alike have forgotten about this high-potential contrarian sector. The main reason is the extreme euphoria spewing out of this latest general-stock-market bubble. The greedy rush to chase AI stocks has overshadowed almost everything else.
And yet, despite these formidable “fundamental” blocks, our Metals Pro Service explained why the bullish ground wasn’t a complete pass. On February 27, Metals Pro Service said the “trend remains down [ONLY] while GDX holds under 27.24.”
Meaning, GDX has a line in the sand drawn for it not by “market fundamentals” but by a technical market analysis tool called Elliott wave analysis. That critical price resistance level had to stay intact for the bearish Elliott wave trend to continue. But in swift order, the level was breached to the upside, which immediately triggered a different – bullish – forecast scenario.
On March 1, our Metals Pro Service set the stage for a new, “enthusiastic” move to the upside with this labeled price chart and analysis:
Gold stocks are now high enough to raise the likelihood that… wave c of a zigzag is bottoming and the trend turning up. The outlook remains bullish above the [Fibonacci] 0.382-0.618 retracement level. Strength must be respected as having potential to continue.”
And from there, strength was respected as GDX sailed to 11-month highs on April 3, shown here:
We all know the other famous saying from the gold rush: “Eureka! I found It!”
Truthfully, there’s no such thing as finding a market forecasting model that eliminates risk and loss entirely. Elliott wave analysis is no exception. But while maps of “market fundamentals” offer a limited, one-way perspective into a market’s future, Elliott wave analysis provides a complete picture, including critical price levels to help manage risk every swing of the shovel along the way.
Right now, our Metals Pro Service brings subscribers intraday and daily updates on gold and other markets, along critical support levels that “must hold” for GDX’s bullish trend to remain.
Golden Opportunities in Global Metals Markets
Right now, our Metals Pro Service takes you from passive observer to armored participant. This means, you’ll learn how to recognize specific price patterns that show the trend and a price target; or a correction that’s about to end; or the vital support and resistance levels for risk management.
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