A few days ago I posted the graph seen below and suggested that we were in for some pain in the mining space. So far it has been going according to plan, with both metals and miners nosediving since the start of the week. I personally believe we will have to endure some more downside before this correction is over, but with that said I have already been nibbling away at multiple juniors since I am a sucker for value no matter the technical picture (for better or for worse).
- My recent base case:
- Current picture:
As already stated, I often start buying too early, but given some of the miner valuations out there I can’t bare myself to completely stay on the sidelines and wait for that potential “perfect buying opportunity”. Can this correction go lower than my “main buying zone”? Of course. Are miners already a bargain where we are? I think that is a yes for many of the juniors at least.
One thing to keep in mind is that sentiment is already very bearish and it will probably get worse. I am already now seeing calls for $900 gold and $8 silver for example.
We are entering peak fear territory. $1000 gold will look and feel more and more probable for every additional down day. But at the same time, every additional down day is one day closer to the next rally and sentiment is already at levels that are often accompanied with a mid term bottom. The more the metals and miners correct, the more you will feel like selling, even though the risk/reward actually improves.
For the more risk averse who hates catching falling knives, it might be better to wait for MACD and RSI to break the green trend lines in the graph above, which would suggest a change in trend has taken place. I personally hope that the correction keeps on going up until the FED meeting, thus I will be placing larger bets in multiple miners come next week. I will soon be publishing a post on what mining stocks I am personally buying currently.
Note: There are no sure things in the markets. These are just my personal views and thoughts. Always do your own due diligence and make your own decisions.
The Hedgeless Horseman
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